increased slightly in february. >> national beer day. international beaver day around the world, april 7th. they're builders and they're amazing at what they do. big deal in canada. >> architects behind national beavers day. >> it's an international day known around the world. international beaver day. >> it's national beer day and beaver day. beavers should not drink. on beer day. >> right. >> however -- >> any other day's fine. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ ♪ ♪ you can feel it all over you can feel it all over♪ >> congratulations to coach k. and the duke blue devils on their fifth ncaa basketball championship. and to wisconsin on a stellar season as well. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber at the new york stock exchange. futures relatively steady in the

u.s. but europe playing catch up to yesterday's rally. the gains over there, about 1%. pmis looked pretty good too. oil settling back after rising 9 of the past 11 days. tip year's around 1.91. the first rate hike shouldn't come until the second half of next year. the deal in delivery space. fedex buying tnt express for $4.8 billion. that's a deal that u.p.s. failed at just two years ago. we do have the ceo of fedex coming up in a couple of minutes. speaking of deals, also the largest lbo of the year informatica taken private, $5.3 billion. >> samsung sees profits plunging 30% but still better than what the street was expecting, as apple ramps up the release of the apple watch coming in the next few weeks. first up fedex make ago move to boost its presence in europe. the company agreeing to acquire dutch package delivery firm tnt express for $4.8. the deal comes two years after

u.p.s.' attempt was blocked by european regulators. we'll talk with fedex chairman and ceo fred smith this hour. financing the deal entirely through debt. good dollar time to be doing european deals as well jim. >> i thought this was fabulous. i think that fedex is not even up enough in premarket trading, because what this says is here's the first guy, it's funny, he's an economist by trade, here's the first guy who recognizes not only is europe back but you can still get in and get in and just take advantage of the up swing. you nighted parcel an outfit i've been critical of because i think that they have made a series of missteps. there were problems with overlap there. look i don't think this a layup. fred may think it's a layup, just because europe's turned so negative on u.s. companies that unless you say, listen we're going to create x number of jobs and give this much money to the government to be able to create jobs, i'm thinking about the way

cisco handled things, you're going to run into resistance. that said this is exactly what we've been waiting, the strong -- this is how you get the dollar not to be strong by the way. >> that helps them with the purchase price. they are paying nine times ebitda, i mean you can low that down to as little as six if you include synergies, system analysts are doing. comment tear positive. they are talking about not getting the deal done let's call it until june 2016. it's a long time. >> right. >> frankly, my reporting this morning, also question about china, which comes up a lot now as you well know when we deal with antitrust questions. >> great point. >> so i'm certainly interested to hear his thoughts on what that looks like in terms of a road map for antitrust. fedex, conceivably worked against the u.p.s./tnt deal years ago, successfully in the background. >> right. >> made sure that deal didn't happen. they were able to agree to a deal to a lower price than what u.p.s. was willing to pay.

>> u.p.s. when it happened, people are like are you kidding me? there's about to a downturn in europe? if you remember, other than the breakup fee, it was great they couldn't get the deal done. but the fact is is that fedex is such a smart company. it's been a dramatic outperformer versus u.p.s. u.p.s. has done nothing. u.p.s. missed two holiday seasons. this is -- this really a tale of two companies, one very well-run, and one just not well-run. >> there's been some discussion that in terms of regulatory approval, fedex strong in the air, tnt strong on the ground. but that a competing offer, while unlikely is still a possibility down the road. >> i guess so. i think u.p.s. is in such frankly disarray. >> you think they're in disarray? >> i don't when you miss two holiday seasons that you really need there isn't much else to it. >> that would be the name that would come over the top here u.p.s. making a choice to come

back, i suppose. >> right. >> again, when you look at the respective market shares they have a bigger antitrust issue than fedex. >> yes. so this is just fedex taking advantage of a fantastic dollar. i mean one of the things that's driven me crazy, you've got a u.s. currency so strong and how come this is the one guy who actually says you know what? i'm going to take advantage of the worldwide sale as if there is -- 770 million people live in europe, that's a lot of people. >> a lot. >> a good market. >> no doubt. but to your point if you're looking to do a large did not that this is transformative it's not -- a large deal dealing with a long calendar. >> yes. >> it's quite a while until you pay for it because of the antitrust review and because, as you said, an tip think we see from regulateorregulators. >> we ignore how they are coming down on our companies. a level of protectionism we don't talk about. by the way, it not that our administration is out there

defending our companies. i mean -- >> well european regulator would argue they have a different mandate than regulators. >> that's why you've got to create jobs. you've got to say, look as far as we're concerned this the greatest job creator. i mean -- >> what g.e. was able to do -- >> they're not done yet, right? >> were they early? >> i think that you have to go in and say, look what we're go to do right now say you have 100,000 employees we'll have 120,000, you can't talk about streamlining, because they're wise to us over there. they know that what we do is we fire, we're great at firing. >> all right. >> we're an amazing firing country. >> but you look at fedex paying nine time but citi says six times pro forma if you take 125 million euros of projected cost savings. cost savings is typical of reductions in workforce often times. >> you can't do that. they're not going to let you do that. they're going to say, look you're welcome to come here but you know what?

we're not going to let you destaff. >> right. >> we're going -- you've got to give money, set up a national institute of freight. >> well a lot of questions for fred smith, of course. >> it's going to be great. >> we'll put to him in about, what 40 minutes. >> coming on our show the man with a tremendous breadth of knowledge. fabulous economist. i've always -- again, another thing, why don't -- why aren't there more ceos with an economic background? what is that all about? >> i don't know. >> there you go. >> i don't know. >> still basking in the glow of yesterday's win. get out of my face. >> the mets. >> the mets. >> you're a mets fan. now you're not? gave it up tried it on didn't fit? >> i can't do it. >> that's fine. i understand. i respect that. >> thank you. >> move on to another deal this morning. software company informatica confirming it's agreed to be acquired by permira and the canadian plan investment board. purchase price $5.3 billion,

$48.75 a share. of course it is cash given it's an lbo. the largest we've seen this year, lbos, this is their area now, 3 to 5 maybe is the big number. in part because of crackdowns on leveraged lending which have taken a number of players out of that because you've got the fed and the occ all over the bank saying don't lend to more than six times. but also because the strategic players are in there, in an aggressive way, able to borrow money and realize synergies we were talking about with the like of the fedex deal which allows them to pay a higher price. when it comes to this name informatica, talking about a pull fris, 15 times ebitda. you had a competitive auction, you had toma with ontario teachers. canadians -- >> 80 cents to the dollar. >> right. >> getting killed up there. >> but they are active parpts pants, pension funds in private equity. so partnered with ontario teachers.

my understanding silver lake with helman and friedman. a company where growth was materially slowing, jim. >> i know. >> margins had been going down. you need to spend more on r&d to maintain growth. hence, not a bad lbo candidate where you can do those things quietly and cut costs. >> transforming data management dateabase like, a thousand of these companies and i didn't think there was anything special with informatica. i looked at company, tried to recommend it couldn't find a reason. >> couldn't do it. back in january, elliott took 8% stake. moved up to 9.4%. they never got active in the name. they'll filed a date. 9.4%, the largest holder a nice return over a relatively short amount of time given only january when they took -- but, yeah, a big deal. >> it is a big deal. ooh i think team have to recognize,

there's got to be rationalization in splunking and the data splunking upgraded today. this is what ibm wants to be known as. everybody wants to be in this space. of course, the space is big than i'm making it. there's a lot of different permtations of data management. but understanding how to use your data. there's an overwhelming amount of data. >> so much. >> i had zebra technologies on last night. datea from everywhere, bar coding, wow, an overwhelming amount of data. do you feel overwhelmed about data. >> i do sometimes feel overwhelmed, particularly unstructured data. i can -- my unstructured data -- >> ibm, look when we see companies, service now upgraded yesterday -- all of the companies are about a million pieces of data coming in and nobody knows what to do with it. yes, i want to talk to squi workky works, 70 billion sensors by 2020. >> in this case informatica was

seen by some investors bloated in terms of cost structure, margins the lowest of the group. private equity comes in. >> it was bloated. >> spend more on r&d, you can cut, get margins up it's a good lbo candidate. hence the price tag. >> there you go. >> a couple of deals. >> exactly. >> exciting. exciting again. >> helping to give futures a lift this morning ahead of course of more news coming out later on today. one day after stocks reversed early post-jobs losses on the finish to the upside including triple-digit gain for the dow. investors hope signs of a slowing economy might mean the fed will push back time for the hike. you said yellen was -- >> everyone wants -- geez, can you give her a modicum of respect. >> after her performance during the crisis one voice that seemed to really --

>> she is -- she's thinking of the working person too, by the way. she's not playing for the hedge funds. she's thinking about how the working person is not doing that well. she also sees the fact that the gross domestic product, hiring we had, we had a couple of hiring from small, midsized business, we heard from paychex, it wasn't so good. i say, thank you, janet yellen, for not doing something precipitous, looking at data and making the decision on the data. march was not a good month in our country. and i think that we should accept that. i think that the dollar could be peaking because march wasn't so hot. i think yesterday's rally was dollar-based. >> yeah. on squawk a few moments ago, keeping most of his money in cash. >> he's been wrong. >> he admits -- >> he's been wrong. >> it's a money-losing proposition but argues central banks pushed asset prices to sell elevated -- >> digdick fish, does this, too.

united technologies up big. i'm looking at carnival upgraded by wells. bank stocks getting a number of bumps. i don't want to hear there's nothing to do or central banks inflated. let's not asterisk this. this is not juicing. this is not major league baseball where some guys are juicing. it's real numbers. you can drill the unh bid for a million shares. enough, enough with being wrong. >> there are no baseball players juicing anymore. hence, nobody scores any runs. >> dick fisher how wrong is dick fisher? but it's okay. i don't know. if i'm wrong like that you know they're going to get the hook i've been around for ten years on "mad money." if i'm wrong like those guys you think you're going to see me? money monster. >> what would that look like. >> george clooney and julia roberts. >> that would be nice. >> starting to film it. >> glass half-full for samsung and apple watch discount, we'll talk about that in a moment.

also ahead, we'll talk live with fedex chairman and ceo fred smith about his company's $4.8 billion deal for tnt express. dow and s&p going for three straight up days today, that hasn't happened since middle of february. more "squawk on the street" live from post 9 in a moment. s been a journey to get where i am. and i didn't get here alone. there were people who listened along the way. people who gave me options. kept me on track. and through it all my retirement never got left behind. so today, i'm prepared for anything we may want tomorrow to be. every someday needs a plan. let's talk about your old 401(k) today. let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable professional. would you trust me as your financial advisor? i would.

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quarter earnings guidance above consensus, despite what it sees as 35.5% drop in profits. looking for a boost in new phones set for release friday. as we count down to the apple watch release, the company's announced a 50% discount off of aluminum sport and stainless steel models for all apple employees but the samsung news is interesting. people trying to couch it as a comeback of sorts for the company. >> let's see, i think that all of the marketing and really the moan tum momentum is apple's, people say, listen, they like to play this game. apple/samsung horse race. good luck. i think that apple, apple pay, i

think that apple watch, the iwatch, these are all momentum and it's an ecosystem that i want to be involved in. samsung, a bit of an island as far as i'm concerned. i know that i had the zebra technologies ceo on, we have a new operating system based on android. when you sit down with the bankers when it comes to apple pay, was i think will be very big, and samsung won't be there. they don't have it. google has no pay system. >> right. >> i mean let's not forget it's an enormous company. a lot of people attracted to it in part i remember free cash flow yield so high. >> right. >> that didn't work. the stock has not been anything you wanted to own for any period of time here. >> you know -- >> they are talking about margins coming back up to a certain extent in mobile. fall tonight 20% to as low as 10% in the mobile division which is the most profitable. >> it's an underdog thing.

i know look, they have a great device device. it's i think the ecosystem of the watch -- look once again, i tell you we want the watch. but the watch will not be fast out of the gate. even though the advertising band's terrific it won't be fast out of the gate. not everything's written for. there is things written for it so you want the watch. >> are we in for the typical new product curse when it comes to the stock on apple? >> i've been trying to get -- >> you know what i mean. >> i've been trying to get expectations down because, yes, don't trade apple, own it. i don't like the perklation of apple. really good guy yesterday. i don't like percolate. i'm anti-percolation. >> tim cook wearing it at the ncaa game ad campaign people mentioned it's going to come with motions that are unfamiliar to apple users.

here's tim cook by the way, at the game wearing the watch. i mean there's people haven't used this before. >> no. it's a device that we're not used to and there's going to be a lot of blowback on that too. i don't want to wear this device. i have my phone. it doesn't do anything that special. dick tracy, i see a lot of the dick tracy stuff. lower expectations say that listen, when it comes out, people will take a hard look at it they may not switch immediately. people have watches already who want watchesen it's not going to appeal appeal people who have never worn a watch. it's a slow build. slow build as we hear all of the new things that come of it. look this apple payment system is not taking off like a rocketship. >> no, but it's making progress. it's had issues certainly security amongst them. >> which app are you using? starbucks? >> not using -- >> walgreens app? >> no no. >> what app are you using?

>> the wallet app you take your wallet out. >> are you using 2 inch x 3 inch app? >> the cash app. remember that? >> mostly in emerging markets. >> paper. nice seal on the back. >> washington? >> hamilton on one of those? hamilton play is good. hearing good things. he's on the ten. >> hamilton is very good yes. >> you saw it? >> no but i've heard it's very good. i like that good. >> he lost in a big dual like samsung's going to lose the apple duel. >> he's a huge talent. >> we'll get cramer's "mad dash." count down to the opening bell. fedex chairman and ceo fred smith's on the show. talk about the deal to buy tnt express. premarket, europe with a lot of green arrows today. back in just a minute. 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

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♪ we've got less than six minutes before the opening bell on this tuesday. time for our "mad dash." general motors. >> my charitable trust had good ones but this is disappointing. the canadians selling 73 million shares. one where, by the way, if mr. wilson would be there, maybe gm would buy. but no it's going to be bad. it's going to sit there, it's going to be placed badly. it's going to just be a big mess. and you know it's just in the end, it is -- >> why -- >> because there's no room for

this. >> why are you so negative? >> they're not -- the number of month wasn't that good. europe's not that strong. very to have europe come back. they have labor issues. why sell now? we're not in the boifz ownusiness of owning. you're in the business of making money. are you in the business of doing well? well if you think it's going up you should hold on. they obviously don't. now i'm sure they'll say, cramer doesn't know what he's talking about. we're not in the business of making money, we're in the business of cashing in. they're the same thing. and this upset me. >> all right. you seem to be having issues with gm's capital allocation or their willingness -- they are buying back. >> they're buying back stock. this would have been a great opportunity for gm to say, you're selling that? we're buying that. i'm not hearing that kind of chat. >> see how the market takes it. >> the canadians are active here. >> 0 canada.

move on to american express. >> this is -- >> not a good performer to say the least. >> this has been awful. hold to sell. when you read the report you think it's either way. is this the moment to be able to step up? they talk about than but they just say, listen no momentum no game plan not the kind of business model you want anymore. i know that they're losing share. they are -- this proud company, i'm a member since 1982 don't make it seem like -- you know what, david, i'm -- people who are in my age group, like american express. people who are like my kids they don't know what american express is. they like what is that dad? it's not part of their lexicon. >> they also don't know what that thing called a television is either. >> no it's true too. >> coming at us man. >> i'm a triceratops and you're a developraptor.

>> opening bell after this.

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opening bell and s&p at the top of the screen. down here at the big board, igt, celebrating the merger of gtech and international game technology. we'll talk to the ceo in the next hour. >> you know i just -- hats off to patty hart for putting it together together. >> what's a tough business for a while. over at nasdaq video con d 2h provider in india. a few upgrades jim burnstein, you mentioned, raising jpmorgan. >> i thought that was significant. people have been saying numbers are too high for the banks. bernstein saying they could be good. jpmorgan is a significant stock, i think the bank stocks have fallen behind the market. maybe if we get traction there,

you need to see rates up a bit, that could help the market in general. because they've been a real drag. >> catch up today. jpmorgan. >> in the morning they will. we had a big rally, and it was off the dollar and you've got to see the dollar continue to get weak in order to make a strong case for americans. >> today in "the times" big piece on food companies extending payment terms in a tough business. and then "the journal" has a tough piece on rail companies, shipments down safety concerns oil. warren buffett's rail burlington northern -- they're making a lot of money but -- look, everyone knows that pipelines are a better way to ship. and there are issues with how strong the cars are. greenbriar put up a good number a railcar company. but i would be very careful of the rails because we still don't have the big number cuts. must see number cuts before you go into union pacific as great

as it is or norfolk southern, great companies. they decided the country up and there's not a lot of competition in the railroad business but numbers will come down. >> shares of fedex up over 3% speaking with fred smith, of course shortly on their deal to acquire tnt. the market giving it a positive reaction here. >> positive if people didn't think you know what those pesky europeans will find a way to hold up anything. i think your china angle was not initially discounted by the market today. very good call. >> we'll see. chinese regulators -- >> antitrust regulation in china is a real issue. it's within that has been taken up by the obama administration certainly. we've seen it not just in m&a but in other regulatory impediments they're putting up to being able to do business in china. >> you wouldn't find the u.s. for instance, president obama saying to european allies i think you should let this deal happen. that's not the way our government works, no. we do big trade deals to help

other countries. >> yeah. >> carnival's close to the highest level since 2007. >> what a turn for carnival. is that something? that is just such a duly noted turn. a great job. a lot of ancillary once you get on the boat, paying for a lot of stuff. it's a good situation. >> wells takes it to outperform talking about pricing recovery. >> i like that. >> after what we thought was the death knell for the industry. >> oh my this group is written off and -- people are back that's how they like to travel. travel leisure's good. i applaud carnival. remarkable job. terrific. >> pharma and biotech, nothing enormous but green across the board, whether merck, pfizer j&j, celgene or gilead. >> celgene, a laggard yesterday. people on twitter saying why is that down? because it went from 20 to 130. i mean this group is like

there's bad money in the group because when you complain about a celgene, you're a holder who came in at the absolute top. and you know you've got to understand what you own and why you own it. celgene note today was very good from bernstein saying it's the psoriasis drug which has multiple uses. >> are we going to get a favored report on viacom? >> we are. we are. not down very much but we are going over the news that came out after the bell yesterday. >> there's pockets of weakness in the economy that are spreading, and you don't want to see that. it was great yesterday, it it was nice to see the market was -- you know reacted somewhat positively once the smoke cleared. i just feel like you've got to have the dollar be at 1.10 it has to. otherwise the number cuts are vicious. we'll see from alcoa. i think alcoa's going to be -- at 12 bucks it discounts

negative. but industrials are not down like al coa. >> oppenheimer throwing in the towel on american express. >> you know who you're up against? up against visa and mastercard. are there two companies with better ceos in one industry? i mean they're remarkable. >> yeah both strong. >> these are first name guys. >> first name. >> like cher. >> cher. >> like cher. charlie. cher. >> how is cher? >> i none know how cher is. >> she's great. >> still great? >> active on twitter. >> she can turn back time. >> if she could. >> cher, charlie, people in our business, we have first-name people. jamie, charlie. give me some other first name people, les. >> really? >> elan. >> i think les is a first-name guy. >> warren. >> definitely first name. i'm going to put together a list of first-name guys for "mad money." >> do a wul of those.

>> yes. guys just so incredible that we just accept them. you know we just accept them like sting. >> or oprah. >> oprah, sting. i'm going to do a comparison. tim. >> anytime you need help producing the show come to us. >> is tim oprah? >> tim? >> tim. >> i don't know. maybe he is. >> right. when i say tim, do you think of like i don't know timmy brown from -- who do you feel? you think tim. >> i think tim. the man with the watch. >> when i think charlie, who are you thinking charlie? >> charlie's tougher. most are not thinking charlie scharf that began the conversation. >> ergen. >> charlie ergen. >> geez. >> richest man in the media. >> charlie i, charlie ii. >> how about sumner? you think -- sumner -- only one. >> only one sumner. >> there you go. so we can do this game. >> we've got to move on.

>> dow's up almost well 55 points, about 65 points away from 18,000. let's get to bob on the floor. bob? >> good morning, guys. nice rally in that it's farley broad. take a look at some sectors. health care leading the way. financials up. industrials, tech. nice broad group, mix of defensive and growth oriented names. interest rate sensitive stuff on the weak side. take a look at reits for example. some of the utilities are to the downside. but secondaries out there in the reit business today. so that may have something to do with the weakness in the reit market that we have seen. we've also seen emerging markets doing very well. and down today but usually they're rate sensitive. look at e.em as the dollar has come off of its highs, weaker dollar generally benefits emerging markets and you can see how the eem is sitting at highs for the year. let's talk earnings. i have been noted for a couple

of weeks in earnings recession, the street's very concerned about this numbers, down 4% for the first quarter. this is the s&p, down 2% for the second quarter. we're trending down for the third quarter. we could go down anytime in the third quarter. this is an earnings recession, by any definition. and yet, i'm thinking that already a lot of stocks may be pricing in this earnings recession, maybe ready to bounce. this morning, for example, big recycler of scrap metal reported a much greater loss than expected. i mean much 33 cents loss expectation was 6 cent loss. boy was that big. look the stock's only down 1%. it's not far from a new low. the stock was $22, $23, went down to $15 and change. might point is that it's pretty washed out at this point. keep an eye on this one. now, there's a couple of other examples, not a lot. you guys were talking about samsung. they talked about profits decline of 30% quarter ending march 31st.

wait a minute, everybody's saying this is great because they had 36% decline in the prior quarter and 60% decline in the quarter after that. a rough 2014. you see the big drop. those trade's over in korea. using korean terms here. the stock's not far from a new high. numbers starting to turn around. in other words the stock was washed out at the end of last year. emerson electric yesterday, reported orders down 10% for the three months ending through february. everybody said that wasn't bad, that was better than expected. the stock stopped dropping though the news was overall lousy. monsanto reported weak sales, profit declines of 15% but the stock rose. so it's 125 at beginning of the year went down to roughly 112 and bouncing back. my point here guys is that these stocks are very heavily washed out and all of the numbers are bad, we're seeing numbers coming in bad, i think the street has overreacted a

bit. i know it's early. i don't have a lot of examples for you. keep an eye on that. this could be a real emerging story. bad numbers yet the stock's bouncing because they've reflected that news. guys, back to you. >> thanks very much bob pisani. as mentioned by my partner, mr. cramer i'm going hit viacom. the shares, by the way, yesterday when the news came out after the bell viacom's taking a charge of $785 million and suspending its buyback, many might have thought the stock would be down sharply. it's not. down less than 1%. still the news is interesting to focus on in part because it may at least give a sense of larger trends though some say it's specific to viacom itself. the charge itself much of it $430 million of it is coming from writing down essentially what used to be the expected life of your produced series that go into syndication. in this case for example, csi,

community, entourage, they don't have as long a life as they used to. why? netflix. they don't go into cindysyndication and produce the same profitability over a longer period of time. so the write-downs to a certain extent in programming of that the 785 million are related to that, and also related to competitive reality programming, which again they have to burn off after speaking to management over as little as three months when previously it had been six months or a year you could amortize the cost. now you've got to get it done very quickly. that's part of charge. another part of the charge expected lay-offs which will not be insignificant, i am told. "the journal," i think, had 400-person number in their story. i want able to get to a number but told that was a significant part of the charge. they're going to save $350 million a year that is at least once you do a full year for the

remain -- of this year talking about half of that 175 million bucks in cost savings. you can, of course throw a multiple on that get to a decent number. when it comes to viacom we talk often about buybacks and importance that has had for so many media companies but certainly this one. there is a chart out that morgan stanley had that i'd like to share because it gives you a sense of the importance of eps growth from share repurchases. yellow is organic, blue is what they got from eps growth by reducing number of shares remember? take a look at have a onviacom on the next one. beginning from dreamworks which had none. look at viacom how important buybacks have been 93%, over the last 3 years, of their growth in earnings per share is a result of reducing number of shares outstanding which is that important buyback of which they've done 15 billion, 2010.

>> seven years ago 416 million shares? >> yeah. >> that's like a creeping tender. >> it has been a significant reduction. so the fact that they're suspending the buyback which would be the remainder of the fiscal year is not unimportant. the company saying we're being good with -- we're serious, we want to show the rating agencies we're serious. they have a decent amount of debt. coverage ratio 2.75 between 2.75 and 3 times ebitda. the ebit line is not looking great right now. these charge-offs that we're talking about, hence, no more buyback. but overall, as you see, when it comes to the stock itself only down 1.5%. i did get a decent read on the mark speaking to executives we'll see whether that comes through or no the in terms of where we are right now in upfronts starting to sell more ads not by nielsen but over 200 million through over currencies things measured differently and

advertisers latching on to that. trying to get as much as 50% of ad sales away from neilson. head to the bond pits now. rick santelli at the cme group in chicago. rick? >> good morning, david. you know yesterday was about steepening, maybe it was mr. dudley new york fed bank that really put the market in hyperdrive with regard to stocks. but today we see that we're getting flattening. two-day of 5s, 5s up three basis points. tens closer to unchanged. two-day ten. both are escalating but not as quickly. open the chart up to early february. we can see we have turned the market, some say. technicians say neutral, use 1.86 as a pivot. we know that. two-day of euro versus dollar. this is interesting because so much has been written between the correlation of dollar and stocks. historically there's a big debate. as of late when the dollar goes up it hurts equities.

not so much today. europe was closed yesterday. foreign exchange marks always trade. it's coming out of the box on the weak side. another big, strong positive for the dollar index two-day dollar/yen. look at dollar fly, once again back over 1.20. both of those are putting the dollar index at a significant positive start to the morning and if we look at that dollar/yen starting around march of this year you see how this 1.20 level is key. back to you. >> thank you, rick santelli. when we come back fedex chairman and ceo fred smith on one of the deals of the day, his company buying tnt for $4.8 billion. dow's up 64 points. we're back in a moment.

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both in the gulf and inside bp. shares of fedex up more than 3.5% on news the company's agreeing to buy tnt express for $4.8 billion. we'll talk to the chairman and ceo of fedex, fret smith, on that deal in a moment.

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fedex making a big announcement overnight, agree buy tnt express for $4.8

billion, thrilled to join us now, first on cnbc fedex chairman and ceo, fred smith. it is great to see you. thank you for coming on. >> thank you for having me. >> fred, how much of this is strong dollar? how much of it is european turning? how much is it the opportunistic moment to strike? because you're the first major ceo in america to take advantage of the fact that the dollar has been so strong. >> well jim, i think you just read our play book. the dollar exchange ratio was very favorable. the quantitative easing and the lower oil prices mean that the european economy has better outlook now than it has for some period of time. we thought that the planets lined up perfectly for this move. >> fred, obviously we lad u.p.s. issue where u.p.s. had antitrust issues. it seem like that those are no overlap with you. are you concerned that the european regulators in the

interim have become so difficult to deal with and just seem to constantly be medalsome as if american companies have to play with one arm tied behind their back? >> we've looked at this transaction very carefully. we've got great lawyers and both in europe and here and we believe that the market share numbers support approval of this deal by the eu competition authorities. we look forward to working with them through that process to get this approved. >> fred, how's the world in general? i mean that last quarter of yours was terrific. seeing great truck business in terms of fedex, do you feel very xf dent confident? this move seems to indicate the world's a better place than it was six months ago. >> i think you're going to see the benefits of lower oil prices

throughout the global economy. it takes a little while for that to result in increased purchasing activities both in the united states and europe. so, yes, i think the world economy is in a better place today than it was six months ago. >> fred it carl. on the tnt deal are there any cautionary tales that come out of the rejection of u.p.s.' attempt and any possibility they could make a bid for that again, despite what they've said in the past? >> well the u.p.s. transaction was terminated. it was not approved by the european competition authorities. and the reasons for that are quite different in our case. we've looked very carefully at the market share numbers and each of the markets and we believe that we will meet the test for approval. and remember this deal from

fedex standpoint is not based on lots of redundancies to get the synergies. it's a synergy of combining networks for more productive operations particularly the pickup and delivery operations, and broadening the portfolio for increased volume share. and so we think this is a very good deal for both companies workforces as well as meeting the regulatory test. >> it's going to take some time talking about the second half of 20 2016 to get the deal done. that includes europe some wondering whether china on the antitrust front could prove to be difficult, if not time consuming. >> well it may well be time consuming why we put into the press release -- which by the way was very long to meet dutch law and i think that led some

people to believe we have greater concerns in that regard than is actually the case -- but the eu the united states china, and brazil will all be involved in an oversight process on this transaction. we believe will be successful in getting it approved in all of those venues. i think we actually file in 17 different locations. >> fred a lot of our american companies are now saying listen, unless we make a commitment to create jobs on the continent, people are very suspicious in the regulatory environment saying this is just a job cut. is it possible that fedex working with tnt might actually be able to create some jobs in central europe or maybe in spain or italy, where they are hurting for employment? >> well, i don't think there's any question over the long haul jim, that the combination of fedex and tnt will increase our employment in europe and we see very few redundancies in the

near term that are required to make this a successful transaction. >> finally, fred 90,000 vehicles 600 airplanes, when people can ask you what's going to happen to oil next what do you say? >> well, i think that the fracking revolution in the united states has been one of the most important developments in recent history. it been just a godsend to our country's economy, it's changed foreign policy equation. so there's a lot of supply. i don't think that barring you know geopolitical upheavals there's much impetus to see oil drifting up much higher than it is today. maybe 60 a barrel by the end of the year. so what many of the forecasters are saying but there's a lot of supply out there now. >> fred want to congratulate. this is monumental that you're moving in the only guy

understands the strong dollar terrific, great economist by background and a terrific guy, fred smith, ceo of fedex. great to see you, sir. >> thank you. >> covered a lot of ground in a few minutes. jim, what's on "mad" tonight? >> i always like that guy. we'll look at shorts stocks to bet against. looked like bad charts i'm want to warn people here i know banks are up, i'm not a fan of the banks. bioteches are up that's positive. watch the dollar. if the dollar gets stronger, it going to undo the move, a move based on the fact people are concerned maybe the dollar's peaked out so you can do acquisitions like fred i'm telling you, he's saying listen, dollar peaked out with that actquisitionacquisition, that's my take. >> "mad money" 6:00 p.m. goldman strategist david kostin.h in. . . and . . . exhale. . . aflac! and a gentle wavelike motion...

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♪ good tuesday morning. welcome back to "squawk on the street" i'm carl quintanilla with sara eisen, simon hobbs, david faber live at post 9 of

the new york stock exchange. few things working in the market's favor today. deal activity eurozone pmi's pretty good and dovish talk. we'll keep our eye on than dow's up 43 points. >> our road map for the next hour. stocks in the green today. one day ahead of the unofficial start of earnings season. david kostin chief u.s. equity strategist for goldman sachs, live on this set with his outlook for the markets. plus speaking of earnings season, negative expectations are piling up but that might not be a bad sign for stocks. >> after a $6.4 billion deal igt one of the biggest names in gaming. the ceo of igt will be with us live to give us his look -- his outlook for gaming and what's ahead for the new company. later, the ceo of el ppolo loco, his take on fast casual

the run-up on the stock and how the company's affected by the california drought. a nice rally on our hands after the wild sea saw yesterday. unofficial beginning to earnings season begins tomorrow alcoa, goldman says s&p will rise to 2150 by midyear. but we'll see a pullback in the second half. joining us on set, simon said david kostin, chief u.s. equity strategist for goldman sachs. >> good to see you. >> one thing people say about earnings season expectations for earnings this quarter are the weakest they've been since the crisis. why is that not a concern long term? >> well i think the first thing want to start about is focus on valuation. we'll talk about earnings in a moment. valuation is a backdrop that we are sitting at a very very high valuation. median stock trades 18 times forward earning. keep that in mind from valuation perspective. earnings, the dollar strength of the dollar means foreign earnings have been translated back relatively less strong.

oil prices down dramatically, that has a big negative impact on earnings for the energy companies these are known facts. so known facts to get priced into the market, market trades again at a very high valuation level. i think the earnings will be messy misquarter variables. so looking forward, what's the story, the narrative for the balance of the year? market base it will absorb this uncertain earnings look at underlying fundamentals economy growing reasonably strongly. goldman sachs' view economy will accelerate close to 3% run rate by the end of the year and the mark will be focusing on that. that will take the market higher, 2150. a fade in the back half of the year. forecasting fed raising interest rates first hike in september and that would suggest you get a little bit of p/e multiple. emphasize again, the market trades the median stock trades at 18 times forward earnings.

the 99th percentile over the last 40 years ev to ebitda valuation metric of choice that david likes to talk to trading 11 times. the market's highly valued. >> you know goldman sachs sees the u.s. dollar the euro to the dollar going to 95. that's one of the most bullish calls out there for the u.s. dollar. we know it's a problem for earnings. you already cited it. how much of a problem is it going to be this quarter and the rest of the year? >> the challenge in the market for the fund managers is in a relatively narrow dispersion market, meaning returns are reasonably tightly clus tired, how do you find interesting themes and strategies in the mark? one is dollar. a stronger dollar would suggest u.s. companies in every sector that are generating disproportionate amount of sales domestically ought to do better. have stable earnings. look at financial sector discover financial services all revenues, even in technology

80% of revenues are domestic, relative to other technology companies that have more domestic revenue than is one strategy to address and work in an operating environment where the dollar is strengthening. >> sorry, i didn't mean to interrupt you. complete your thought there. >> the other recommendation look at technology or the nasdaq 100. relatively speaking growth at a reasonable price. better growth 10 percentage points better growth than the rest of the market and trade a relative p/e multiple among the lowest it's been in a while. >> to change the subject, people will be -- sitting at home will be aware of the fear that the fed has to raise interest rates. and they'll be wondering why that is. did you see carl mentioned it suggesting that interest rate rises could wait until the second half of 2016? >> why are they fearful? >> well economic data has been a little bit mixed more recently and argument would be to perhaps

err on the side of caution in terms of beginning the initial tightening process. the goldman sachs view is first tightening will take place in september. certainly an argument in favor of perhaps going earlier or later. that would suggest historically speaking the multiple contracts after the fed begins to tighten. >> see, my concern is what is said behind closed doors and what is not said to the public. mohammed mohammed el-arien paid $230 million a year to be a lead or the pimco. he repeated it on cnbc he's gone into cash, he's not in the public marks. let's read the bond market or equity market. the reasons he's laid out he doesn't think the fed is doing what it should be doing dealing and with risks of the economy, imbalances and instability. it's to sweet talk the markets so that they don't sell off. in his view they are too risky. take a listen. >> heavily trafficked part of

the risk/return is the public markets. why? because the fed has been pushing everybody into the public markets. i'm confident that i can get out as i see the turn right? i'm not confident that i will see the turn coming and turns have happen quickly. we have are in the mid of the central bank trade, it's been incredibly fulfilling. if you play it now, play it abroad. >> when i see somebody like mohammed el-arien saying i'll do private equity, i'll do long-term start-ups but i won't put my cash in the public markets, the stock market or the bond market what do i take away from that? this guy was paid a fortune to deal with big investors. >> what are the fundamentals? operating with the best margins at 9% net margin. so corporations focus on actual corporations, you are buying an investor is buying a share of an operating business and the operating business is simply

more profitable today than it has been in a long period of time. what are some of the reasons why companies have record profitability? well lower tax rates. lower interest rates. manufacturing, inventory, outsourcing all of those have contributed to a rise in technology, the chang in the composition of the index, all of those are positive developments over time helped companies generate more revenues and margins and that's what investors are paying for. >> why did bill dudley say that they are targeting the economy in raising interest rates but also explicitly financial markets? it almost sounded as if he was scared there was a bubble in the bond market help said if we see a big move on yields we'll hold back on rate rises. isn't that a concern? >> well certainly many concerns, questions about greece or what's happening in europe questions on the growth trajectory in china, a lot of issues out there, investors always confronting different issues.

but from a fundamental perspective, u.s. corporations are operating with strong balance sheets and they're operating with high margins and pretty lean. that's obviously reflected perhaps less hiring but in general companies vigilant in running bazs and that's what's investors are looking for and that is reflected in a high valuation. it's not the most extreme but it's certainly at a higher range of values than we've seen a long time there to put a period on it selling going away in may. >> may, june july. think about that. the market trades reasonably around fair value, trajectory of earnings take the market higher but not much. >> buybacks continue? >> buybacks absolutely continue. absence of uses of cash that's what companies are doing. spending a lot of money, one of the biggest users of cash this year. >> good to see you. great stuff. david kostin goldman sachs. >> republican senator rand paul announcing his 2016 presidential

bid this morning. chief washington correspondent john harwood is live in louisville with more on that. good morning, john. >> reporter: good morning, simon. we're about two hours away from rand paul coming into this ballroom and saying out loud what he announced on his website this morning he's running for the 2016 republican presidential nomination. you can see from these nbc "wall street journal" poll number his starts in the middle of the pack with numbers comparable in terms of people being willing to consider voting for him to jeb bush former florida governor considered a front-runner better off than ted cruz not as well off as scott walker and marco rubio. rand paul's got challenges to overcome if he's going to break into the top tier. first of all, he's got to make sure his bedside manner is something when he connects with people, the prickly interview style that he's had that allows him to broaden his appeal. secondly in terms of fund-raising he's got to show he can break beyond the niche

libertarian grassroots financial base that his dad, ron paul had. he done have a lot of connections to big business and business donors at the moment. and finally, he's got to overcome the skepticism of republican foreign policy hawks who are already out attacking him as a noninterventionist, too dovish in an ad on iran policy this morning. >> rand paul supports obama's negotiations with iran. he doesn't understand the threat. >> you know, it's ridiculous to think that there they're a threat to our national security. >> rand paul is wrong, and dangerous. tell him to stop siding with obama because even one iranian bomb would be a disaster. >> reporter: now, of course the fact that scott walker the wisconsin governor, is in a public scrap with president obama, the last 24 hours, underscores rand paul's challenge on foreign policy. and ted cruz is drawing a contrast between rand paul who he's competing with for the tea

party vote, over the balance between intelligence gathering and national security, sara. >> john i was going to ask you whether you think based on what you know about the republican party right now in the current threats that the united states faces he can win his party with the foreign policy stance with that, spread of isis tensions between united states and israel and other threats that we've got going on. >> reporter: no, i don't think so. the question is does he adjust in a way that is persuasive to those people? this is a hawkish party. we've seen this as a threat from icy and other elements of the middle east as risen, we have seen that on the iran issue. ron paul's going to have to deal with that if he's going to win the nomination. >> john harwood, thanks very much. up next, the dollar's big rise this year has been one of the top stories on wall street. but does it really resonate on main street? we'll find out. new results of the all-america survey. "squawk on the street" will be

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the u.s. dollar has seen huge historic gains this year hurting companies in all sorts of industries. but it turns out most americans have no idea it has been on the rise. cnbc senior economics reporter steve liesman here with result of the all-america economic survey. steve, how can it be? >> we asked this question for you, right? i mean you're into the dollar. but you're not the only one. we've been talking a lot about it on cnbc. the fed talks about. corporate ceos are talking about it. seems like everybody's talking about it well except for really everybody. our cnbc all-america economic survey, a national poll of 800 people around the country, all income groups, all regions here we asked them what's happened to the dollar recently? well, 29% got it right, that's a starter i suppose. they say the dollar's gone up. and then there's, well the other 71%. let's see what they said about

what they think happened to the dollar. well, 23% think it's gone down in value. another group here 17%, believe it stayed the same. and of course, there's a group here that i have a lot of respect for, 31% say i don't know enough to know. and that's a really important point because we went on to ask the question about will you be spending more on imported goods, traveling more abroad? 71% of the public doesn't know. as we do every quarter, we ask people, is it a good time or bad time to invest? a little tick-up, last quart we're kind of held that 39%. what's amazing about this graphic, we ask all people how flat it been. while the dow of course has gone straight up. we look at financial elite, those with $50,000 or more in the stock market and incomes of $100,000 more more you can see, first of all, optimism on the market is rising. pretty high number. it's been higher before. interestingly, the number was at 68% when the dow was at 16,000.

that was well placed optimism there. again, they were pessimistic here at 48% when the dow was at 14,000. take your pick whether the 58% is a good or bad sign for the market. certainly those with money in the market have been more attuned and benefited more from the rise than all americans have. one thing i want to show you, we asked people the dow being at an all-time high which it was not too long ago, we're not too far from it, does it affect your investment decisions? 10% says makes it more likely to invest. i'll come back in a second to those numbers here. 11% say less likely. 76% says it makes no difference. i want to show you the difference back over here if you don't mind of those with more than $50,000 in stocks in the market, only 8% says it affects their -- they're more likely to invest. those with less money, they're more likely to come in. little bit of a danger there, carl. on this issue of the dollar i don't know from a journalistic standpoint if that means we

should be talking more about it in other words endangering the idea that we're talking to people who don't really care or talking less about it. >> i think clearly, steve, you know the answer we should be talking more about it. a lot more work to do. >> we have teaching to do. we have to tell people what's going on. that's an idea. but what are the ratings guys going to say sara? >> i don't know. i think it's very important. clearly it's important every single guest that comes on the network talks about it fed's talking about it corporate america's talking about it. >> certainly been very consequence for economic outcomes. we just recently had one of the fed speakers say that it's -- bill dudley earlier -- it's going to be a drag on economic growth. many ceos come out and say it's a drag on profits. and so it's really changing things a lot out there. >> you know what that means, more dollar stories to come. thanks, steve. >> sure. >> when we come back gtech fine i'lls its $6.5 billion act si

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international game technology officially officially completed $6.4 billion merger today. the biggest lottery systems provider with the large of the slot machine maker. what's next? fresh off of ringing the opening bell, marco sala. >> good morning. >> a huge day. a long time in the works jumping through regulatory hurdles, international headquarter moves and the like. how long has this been going on? >> how long. >> how long has this deal been in the works? >> one year it's been a long period of time. but look, this was a company that was 12 years ago, one in italy, now here at new york stock exchange the leading company of this industry, being number one in lottery, number

one in the gaming machine space and even in the interactive space. >> what does that increased scale that you're so large now allow you to do? >> i think the most important thing is that we are already serving one of the governments in the world, governments are looking at regulated business regulated gaming as an opportunity to increase their revenues. and with this comebinationcombination, with the portfolio we have, we are able to follow they development that they might have in mind. >> business is under pressure, though it would seem. lower gross slot gaming revenue in the u.s. dealing with regulatory compliance issues overseas, we know asia should be a growth market. but given all of the benefits of a merger are you still able to argue that you have growth coming? >> yes, i think of the market expected to grow over the next years. by the way, we are seeing in the last months some copper in the

gaming revenues. if confirmed we can expect commercial operator buying more machines over time. and internationally, internationally we see some important developments such as in greece where there's a program for introducing 35,000 awps in that market. and of course, we are awaiting the opening of new casinos here in the u.s. in '16, '17 in new york and massachusetts. >> just if you pick out greece what makes you think you'll get your bills paid? they might not pay imf for pension bills. why would you seek to supply plant there? >> there's a correlation between their recovery of u.s. economy and the gaming space revenues. we see lower unemployment

expected wage increase the lower priced gas will help the kind of targets of casinos to get back enjoying more than before. >> what about the rise of online gaming and pseudoonline gambling? is that a threat to your business or dow kro have you have to join that crowd. >> if we look at europe, it has been progressively regulated over time because the demand is there. you can decide to regulate that segment or decide not to regulate. but players continue to play serve the providers. >> thank you coming by and bringing a slot machine to the new york stock exchange. marco sala ceo of igt gaming. >> there it is. straight ahead, negative earnings expectations are

mounting but that might not be bad for investors. we'll talk about that when we come back.

i'm courtney reagan. your cnbc news update at this hour. iraqi forensic teams have begun ex-huming bodies from eight mass graves in tikrit discovered after iraqi forces retook the city from isis militants, believed to contain bodies of

iraqi soldiers killed by isis. starbucks expanding its employee college tuition program to cover the entire cost of getting an online bachelor's degree at arizona state university. workers who log 20 hours or more a week which is 80% of starbucks' workforce, are eligible. new harvard study reveals false/positive mammograms cost the system $4 billion a year. experts say mammograms save lives the unnecessary costs are much higher than previously thought. the skuller toculptor will replace the statue for free. residents criticized saying it looked nothing like the comedian. he originally said he would fix it for $10,000 fee. that's your cnbc news update for the hour. back to you. >> thank you for that. so it's not just energy 5

out of 10 sectors looking at negative earnings growth going into earnings season which unofficially starts top. robert kaiser at s&p capital i.q. joins us live. >> good morning. >> this sounds pretty tough, it's not just energy. >> the influence on the energy sector earnings expect to be down over 60% is havingitis weight on the s&p 500 but not only energy sector story. 5 out 10 expected to post negative earnings growth. s&p 500 down 3%. but, if you look at just the change in earnings all sectors of the s&p down multiple hundred basis points in 2014. cumulative impact of depressed energy prices, the dollar the soft patch in the first quarter which started in really november of 2014. cumulatively lowered the bar significantly for first quarter

earnings. >> my central question would be given analysis that you brought to the table, are those stocks kind of trading at fair value to those earnings expectations? in other words, if they beat do investors get gains? >> here's how we think you should look at first quarter earnings. excludeing energy earnings growth up 5.8%. so the four five sectors will post respect ibl 6% to 10% earnings growth and need to overshadow the energy story. traditionally 2000, 3000 basis point beat. it leaves the market with a sense of optimism for the rest of the year i heard david kostin's comments, full agreement, 17.5 18 times earnings market needs good news. come out of the soft patch and see stronger than expected first quarter earnings season. >> strongest outlook for consumer discretionary? >> financials number one, but easy comps with a year ago.

we're expecting 10.8% earnings growth but revenue growth in the financial sector is weaker up 1%. so you have to look at balance of earnings growth and revenues to see the true underlying state of the economy. >> what about the consumer stocks? >> consumer stocks look, you had a soft patch in the first quarter, retail sales started to weaken in october/november of last year going into the end of the year. but you look at things like automobile sales, 17 million annual run rate suggests the consumer's doing okay. something i've been starting to think about in terms of earnings, one of your strongest sector not only the current quarter but the balance of the year is health care. revenue growth in health care is respectable. you wonder how much revenues is health care siphoning away from other sectors of the economy? it's a good question to ask. >> estimates higher in january than now. >> 500 basis points. >> come down because of oil, the

dollar, because of the macro picture in q1 or a combination of three? >> i think a combination of everything particularly the soft patch. the economy looked like it was going to end 2014 on a strong note and then we started seeing weak innocence retail sales, ism purchasing managers numbers moving down to 50 when they were close to 60. conservatively analysts have taken down numbers. >> you couldn't swing a cat on this platform for people who said lower gasoline prices qed without question good for corporate america. what happened to that argument? >> i think it takes time for consumers to change their behavior. if you see -- >> or not spend, save instead. >> we're seeing that steve liesman's numbers where people are paying down debt they're saving a little bit. that's understandable because consumers probably don't believe that we're going to see gasoline prices stick where they are today. i the longer that you see crude oil hang around current prices

consumers will loosen up especially as they see downward pressure over the employment rate and confidence starts to creep back into households. >> good to see you. bob kaiser from s&p capital iq. fedex announcing $4.8 billion deal to acquire tnt express a dutch shipping company. investors supported that news. shares up over 3%. we talked to the chairman and ceo of fedex fred smith earlier. we asked him, why now? >> the dollar exchange ratio was very favorable. the quantitative easing and the lower oil prices mean that the european economy has better outlook now than it has for some period of time. we thought that the planets lined up perfectly for this move. >> smith also said he's confident the deal will in fact receive antitrust approval. one of the big questions over there right now. when we come back mlb advanced

media helping to service hbo's new live streaming service. the ceo will join "squawk alley" live later on. tune in on thursday a first on cnbc interview with the managing director of the imf, christine lagarde. dow's up 80 points. we'll be right back.ee in business, mistakes are a luxury you can't afford. that's why i recommend fast reliable comcast business internet. they know what businesses need. and there's a no-mistake guarantee. if you don't like it, you have thirty days to call and get your money back. with comcast business internet you literally can't mook a mistick. i meant to say that. switch today and get the no mistake guarantee. comcast business. built for business. ♪ ♪ the pursuit of healthier. it begins from the second we're born. after all, healthier doesn't happen all by itself. it needs to be earned... every day...

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83. a look at health care sector also traying higher with the overall market. dom chu? >> the best performing sector in the s&p 500 health care stocks continuing bull, run, standing out as top performing s&p 500 sector on the day. bead leader biotechs alexion, up 2%, gilead honorable mention, up as well. year to date, sector's up 6% outpacing the market. simon, ibb, etf that tracks it, up 2% or more today as well. >> interesting. let's send it over to rick santelli in chicago for the morning's exchange. rickster? >> thank you, simon. i like to welcome our guest this tuesday, lewis woodhill thanks for tyking the time. >> good to be with you. >> listen we have a real lack of productivity we're 6 1/2 years into zerp the fed has, of

course discontinued quantitative easing and we see unemployment rate closer to 5%. how do we reconcile all of that? why isn't the economy doing better and is fed policy a problem or is it just it's the wrong medicine? your thoughts? >> the fed policy isn't just a problem, it's the problem right now. the fed has let the value of the dollar rise when it should have kept it stable. the real unemployment rate last month was -- went up from 9.8% to 9.9% adjusted for labor force participation. >> all right. well let's just stick real quickly with the labor force. you know when the administration talks about how many millions of jobs it's created, i can go back through the numbers and it's accurate. about what the part-timers? how do we incorporate that? what does it mean? is the economy recalibrated to 30-hour work week based on

obamacare? what's the issue? >> we have more people working part time than we used to. that's why i use full-time equivalent workers to track things. in the last 1/2 years 16.9 million people have joined the labor force and only less than a million of them have found jobs. >> wow. unreal. okay. if you're king for a day, how would you normalize rates given -- i'm assuming that you believe rates need to be normalized -- but after what you said about the fed being the problem i would think you would go along with normalization, even if it isn't directly just raising rates? >> well we don't need normalization. we need -- we don't need normal rates we need market rates. the fed shouldn't be messing with interest rates at all. they should be using their monetary tools to stabilize the crb index and let the markets set the interest rates. >> when it comes to the dollar obviously we're going in a different direction than the

rest of the world, even if it's only qe. how can we do this and keep a foot on the dollar? how do you reconcile those parts? >> if you stabilize the crb index, you stabilize the dollar as well. both the dollar and the euro have gotten more valuable relative to commodity prices since june. it's just the dollar's up 46% and the euro's up 12%, the dollar's up against the euro. >> well in the final 20 seconds, sir, interest on reserves, how would you deal with that moving forward? >> phase it out, as long as the fed pays interest on reserves they lose all control of the nominal gdp and therefore lose all ability to do their basic job. get rid of it. >> excellent. lewis, i like your nice, short, easy to understand answers. it's a pleasure. thank you again. carl, back to you. >> rick santelli thanks so much. a new episode of cnbc's "secret lives of the superrich,"

robert frank here to tell yus about major vip hotel guests. >> they're picked. by chauffeur, brought to the vip suites treated to spa services and given pedicures, we should say pawdicures they're all dogs. >> hollywood and new york luxury hotels send chauffeured super cars to pick up guests. we can only tell you first names, in the yellow lamborghini, baxster. inside the bentley gt lyle la. new york city, holding in a low key mercedes suv, dane. the superrich passengers aren't ceos or hollywood superstars. they are pampered pooches. on their way to depet hotels. where dogs of the superrich come to stay and play.

♪ >> now guy, rooms at the depet hotel cost $200 a night. one of the regulars is bayne, an english bulldog, had his birthday party there and has 11,000 instagram followers. >> there is an instagram for rich dogs profiled in the "new york post" a while ago. very hot on instagram. thank you. robert frank. tune in to "secret lives of the superrich," the ceo of el pollo loco. the stock's up 30% what happen does he see for the future? we'll be right back.

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been absolutely on fire this year. up about 30%. but between california's severe drought and growing competition, can the company keep the momentum going? talking first here on cnbc the ceo of el pollo loco steve sather. good to see you on the east coast. >> thank you. >> it's been a wild ride. you went public last year at 15

shares are up a lot since then. investors want to know are you the next chipotle? how do you answer? >> we greektlyfrequently get that question. we think they're a great company. we're pleased they've burritos and tacos to the entire country. right now we're focused on the southwest as you know and the five states there. we have about 416 stores today. and not trying to be the next chipotle. trying to be a great el polo loco. >> and you mentioned the expang plans. a big portion of your sales are in the l.a. area currently. how do you build brand awareness on the east coast and the rest of the country? >> well, for example, we went in to houston, texas, last summer and we did a lot of -- had food tastings from bloggers a lot of local cable advertising on tv introducing people to local people we're making them aware of the product and that's done very well for us.

we now have three stores open in the houston area done very well. five to seven more this year and we're moving to dallas now. dallas in 2016. >> there was a repositioning of the brand. we talk a lot about mcdonald's and the problems that it has. i'm reading here from analysts that you were talking about the advisory groups, you brought the franchisees in to what was going on, you redesigned the stores and remodeled many of the stores. a focus on antibiotic free and hormone free offerings. can you talk us through the learning curve you've been on and what other people might learn from that. >> when i became ceo in january of 2011 we had a strategic vision that we followed and we first of all embraced our franchisees put them on every major committee and looked at every aspect of the brand. first our food quality, we've had our great -- our chicken is very craveble it's always been great. we brought in a great executive chef and she's made the balance of our men knew very strong.

we've remodeled our stores a new design. it's a revitalized brand. >> what surprised you most through that process? for those that aren't embarking upon it what are they missing out on? >> well first of all we started what i call that strategic vision. it started with a tremendous amount of research. we did a full deep dive segmentation, we really understood our customer very well and then wrote our positioning from that. and that was kind of the filter that we passed everything through. so i would suggest anyone you first got to understand your customer be and how do they feel about your brand? >> do you have ambitions to make it a national chain? >> i get asked that all the time. i wouldn't be here it if i didn't think it could be a national brand. that being said we're focused on the five southwestern states we're in and focused on the southwest. we have about 320 sites in the southwest that we've identified with which we could go into now. southwest right now, texas is a big part of our expansion.

but ultimately i think because the food tastes great, it could go well anywhere. >> i'm curious about labor costs. we see minimum wage rising at places like mcdonald's and walmart, statewide, how much of a challenge is that going to be paying higher wages and higher health care costs? >> well we first of all, california we already have our current minimum wage is $9 an hour and going to $10 january 2016. we're experiencing that. we'll leave that up to the local lawmakers. we focus on creating a great environment for our employees. many of which are first time -- it's their first job and many have grown into management positions at el polo loco. >> what is the franchise environment like at the moment? you would like to expand your number of franchisees. you have to sell the concept, sell the cost pace at the same time. there seems to be, television is full of restaurant start-up shows and the like you walk down the street there's always

some new ideas. how tough is it for you to win over the entrepreneur to take your brand? >> it all comes down to the unit level economics and if you look at the el polo loco grand in the last since 2011 our average unit was a million five per unit. now we're at 1.9. >> what does that mean? >> sales per annual sales per year. >> okay. >> we've increased our sales 400,000. we've -- our restaurant operating profit is just under 22%. those are some of the best metrics in the business. that attracts franchisees. that being said i thinks the relationship is very important and that's why i embraced four years ago our franchisees, put them on every major committee. 70% of our franchisees have been with us over 20 years and they're expanding. we signed an agreement in utah with an exist franchisee, and have a new one in texas, jack in the box's largest franchisee is doing 8 more units in san antonio with us and 12 in

houston. >> we had the head of sonic on a while back and asked if he was stealing any share from mcdonald's. his answer was a little bit from them is a lot from us. i wonder if you're doing that against kfc or chick-fil-a or mcdonald's? >> i think it's a little bit from all of those as well as fast casual. if you look at our brand it's really we call it qsr plus. we have the quality of food that you would get at fast casual at a panera or chipotle and speed convenience and value you would get at a taco bell or chick-fil-a, so very, very strong. our per person spend is about $6.04. it's just a little bit higher than qsr and probably 10 to 15% below the fast casual. >> a lot of the articles mention the rise of the hispanic population in this country as a reason for your 8% sales growth and the profit growth that you've seen. is that it? or is it changing tastes of america? how big of a portion of your growth is that? >> yeah. first of all the hispanic is wind at our back very

favorable. we have about 30% that's a strong part of our demographics is hispanic. also when we did the recreated the revitalized the brand in our new hacienda design we embraced the general market as well. the food tastes great, it's very healthy for you, name grilled, not deep fried. we have a 5 under 500 menu. we do well in general markets as well as the hispanics and all income levels. look at l.a. we penetrate all of l.a. >> and i know you're going beyond chicken, shrimp avocado toe sta da i saw on the web side. >> we've added shrimp and about to embark on our steak. >> we'll see how it goes. thanks for coming by. >> my pleasure. >> steve is the ceo of el polo loco. >> high time we checked in with jon fortt as to what is coming up on "squawk alley." good morning, jon. >> good morning. we're going to talk about apple. a angela airntss has a culture

shift in mind. walt mossberg from re/code will join us to talk about what they found when they went inside a foxconn factory in china and finally, major league baseball will join us to talk about why they are banning meerkat and periscope and what other technology challenges they might be facing all and more coming up on "squawk alley." tune in.

angela ahrendts

. good tuesday morning. it is 8:00 a.m. at uber headquarters in san francisco, california 11:00 a.m. here on wall street, and "squawk alley" is live. ♪ ♪ communication breakdown is always a sign ♪ ♪ having a nervous breakdown ♪ ♪ welcome to "squawk alley" for a tuesday. joining us this morning kevin o'leary chairman of o'leary funds and investor on "shark tank." kayla tausche, jon fortt on a day where the markets are doing well for the third day in a row.