easy. tax day. squawk box begins right now. what a bounce in his step. ♪ >> live from new york where business never sleeps this is squawk box. >> do my little jig on my chair. i'm very happy. this is a very exciting moment. >> welcome to squawk box on cnbc. it is tax day. also spacex successfully sending an unmanned rocket to the international space station. it's carrying 4,000 pounds of food equipment, and an expresso machine to the astronauts living there. the delivery should arrive by friday but following the launch focus was on what has become a tougher part. spacex attempt to land the booster rocket on a booster platform floating a few hundred miles off of florida's coast. >> and the founder posted this vine. the rocket landed fine but tipped over just after touching

down. musk wants to commercialize space flight and hopes reusable rockets will reduce costs. we'll get you up to speed on the markets in terms of the futures. of course things will change in a big way but the dow looks higher and it's surprising because we'll explain why in a moment. 48 points higher now. nasdaq up 48 points and s&p 500 up over 5 points. >> it's official. this morning's big corporate buzz story, the eu is just now announcing the antitrust moves expected against google. these are just crossing the wires at this point. european regulators are likely to accuse the company. they could face massive fines of $6 billion. something like 10% of its worldwide sales are liable to be fined doing this and they'll be forced to change the business model. the eu has been looking at google for about five years now. what's interest as good the company only gets about 10 weeks

to respond. >> it's a different rule of law over there. >> let's tell you about other big stories we're watching this morning. new numbers out of china overnight. this is what i thought would impact the futures in the opposite direction. the economy growing at the slowest pace since the financial crisis. expanding 7% from the year ago. that's in line with estimates. more from our colleagues in beijing in a couple of minutes and then our special news maker on set this morning. former treasury secretary hank paulson is out with a new book all about china. he'll join nus 30 minutes. and the ecb meeting today policy makers there seen sticking with the qe program. now this despite recent pick up in the economy. we'll get a policy announcement around 7:45 eastern time and we'll hear from mario draghi. he does that at 8:30 eastern time and corporate earnings are in focus.

a couple of names reporting before the bell. we'll get bank of america, u.s. bancorp and delta in this afternoon. you have to watch for numbers from netflix. there you have it. >> certainly not my favorite media company. do you have to ask yourself if it's your favorite media company. >> my real favorite media company, comcast. >> nothing gets by you. >> are you going to be coming to my party tonight. >> huh? >> it's april 15th. >> i know that. >> we have to celebrate. bring your checkbook. we have a special postmaster that comes to the party so you can still get it right on the stamp. right before midnight. everybody puts the checks in. we all high five. >> are you done with your taxes for real? >> right after the show i have to send -- >> down to the wire. >> yeah. >> this is like -- >> we got close. >> this is basically your july 4th. your independence day. >> we do fireworks.

it's a different kind of fireworks. >> but it's a celebration. it is. it's a celebration. because the money is always -- >> i can only hope that viewers appreciate the sarcasm here. >> among our stocks to watch this morning it's official nokia is buying alcatel-lucent in a deal. will it really be nokia alcatel-lucent? it rolls off the tongue. $16.6 billion. remember earlier we said it's a $40 billion deal. that's not. 16.6. alcatel-lucent ceo talking to cnbc europe earlier this morning. >> everything is there in order to make this transaction successful. one is bigger than the other in terms of market cap which is nokia so we need very transparent, easy governance in order to avoid the mistakes of

the past. >> i'm going to have to check on this deal. i want to go over there and get this firsthand -- it's the least i can do in june at some point. the companies say the deal will be finalized. >> that's a good idea. >> don't you think? >> >>. >> shares of intel trading higher this morning. current quarter revenue in line with consensus and intel also announcing plans to cut capital spending. we'll talk to an analyst in a couple of minutes and then csx looks to be an early winner. the railroad company with better than expected earnings on increased freight volumes. also announcing a dividend increase in a $2 billion stock buy back. right after larry said don't do this stuff anymore. right in his face. >> everybody is doing it but he's going to come in here tomorrow and i think while the letter was meant to provoked

he's more measured on it. with ge he's okay with the buy back program because he says look, you're getting rid of ge capital. a substantial reason to do it. for him it will be about balance and we'll see how he talks about it. in the meantime economic news out of china, a big po cuss of the global markets this morning. eunice joins us this morning to tell us more about it from beijing. good morning eunice. >> good morning, guys. well china's gdp came in at 7% for the first quarter. this largely came in line with expectations but it is the slowest level of growth this country has seen since the depths of the global financial crisis. the focus was on the march data because instead of the pick up that everybody was expecting we saw a tapering and that suggests to many people here that the economy is decelerating and headed for even slower growth so the data was suggesting to many economists and raised many expectations among economists that the authorities are going to have to come in and take some

action. some combination of interest rate cuts or cuts to the rrr. the level of cash that bank versus to have on hand. the authorities, though didn't seem to be pushing the panic button just yet in the run up to the release of the data the chinese premiere actually came on state radio and spoke to the public and said that there was downward pressure on the economy but this is something that everybody has to get adjusted to and say that the country needed to prepare for even further economic challenges. now the employment number came out today in 5.1% and the interesting part was the commentary around it because the officials here said that the jobs market was stable and the government has been indicating for quite some time now that one of the key factors in determining how aggressive they are is going to be the jobs market. so the jobs market is holding up which suggests we don't see any massive stimulus. instead going to continue on this path to try to tweak the

economy and keep the engine going. guys. >> all right. thank you very much. now back to intel earnings. matching lower expectations but sales were hurt. ceo stacy smith was on cnbc yesterday and talked about the growth in the weak pc environment. >> we saw a little bit of weakness in the desktop pc segment. what i think is interesting is you can really see the expansion of our end markets playing out in our results. we had a enough growth in the data center and internet of things in memory to keep the company flat and grow earnings year on year. >> joining us to break down the quarter is technology analyst. and this is the one thing we noticed for awhile is this is going to open at 32.5 today. it will be up probably a dollar or so and 32.5 is a multiyear, not necessarily a high but much better levels than before pc started slowing down. in the face of what we thought

was the demise of intel was greatly exaggerate sod they transitioned to something. what is it? the internet of things? >> i'd say the first thing is they executed really well. they missed their numbers but gross margins came in better than expected. they're cutting capex and managing inventory as well. so they have done a great job in terps of terms of execution and they have a data center that has grown to 38% of sales. it's a big business and profitable business. >> what do you mean a data center? equipment today at a centers. >> they're selling a high performance processor into servers that go into data senors. >> google and amazon. >> google, facebook and amazon are buying these by the boat load to manage their internet

traffic. >> so it's a specific microprocessor that goes into that type of server? >> well all of their processors are based on a specific architecture and then they scale that architecture based on the device it's going into. so the processor that goes into a tablet is going to have a lot different horsepower than the server. and then the server they've got roughly 100% market share and it's a good business for them. >> it still has to do with how much it costs to make these really sophisticated things. they cut it up into individual microchips, right? and the yield makes a difference on how they do as far as execution, right? >> the yield determines the cost they incur to develop the chips.

>> to develop them and not just to make them. >> as well as to make them. the big chunk of that is the manufacturing costs which comes back to yields. >> it used to be buy intel when margins are coming up. so margins, their normal business is what? usually like 55 to 60. >> it's 55 to 65. you sell intel when margins are at the higher end of that range and buy them at the lower end. today they're right in the middle. >> let me ask you this too, you said they have about 100% market share in particular areas for some of these high end things. >> it's roughly 98%. >> how did that happen. it's a great business like that how come nobody else is jumping to get into it? >> you moe, they really struggled and that has given intel some market share gains but there is more competition they're trying to develop a low

cost alternative to intel's server offering and it's early but they are getting some traction. >> maybe the eu can throw intel into -- >> usually with something like 98cent market share. >> attach a rider to the google complaint? that business is way too going for intel too. we have to cut them off at the knees don't we? over in europe? >> it's possible. >> they're so successful. they need to be much more mediocre. >> that's a hard question to answer. they still have a pc business that is 60% of sales. >> just please, someone buy it so we can just keep our employees. anyway, we appreciate it. >> thank you. thanks for having me. >> coming up when we return could in flight entertainment systems be putting airlines at risk of a hacking attack. a new warning that could scare you. and then late you are our news maker of the morning, hank paulson is going to join us right here on the set. but first take a look at this day in history.

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>> the eu announcing antitrust moves against dpoogel. google could face massive fines. more than $6 billion and could be forced to change it's business model. the eu has been looking into google for five years now. it's charged specifically over the comparison shopping service and announced its looking into the android operating system to see if they're using market power there to hinder rival systems. >> a frightening warning today. a new report says that airliners could be hacked in flight by passengers using a plane's wireless entertainment system to access flight controls.

the government accountability office warns it's one of several emerging cyber security weaknesses that the faa has to address. we heard a lot of things. this might be the most frightening aspect to date. i don't know how easy or difficult or complicated but this is one of the worst warnings in a long time. >> what could they do exactly? >> if you could access flight controls you could fly the plain plane. >> but you could override the auto pilot though? i'm sure the pilots have ultimate control of the plane. the captain of the plane has to have the -- >> i don't think it's like just all of a sudden wow, i can't do anything. >> the other pilot was able to lock the other pilot out of the room. >> if you're in there -- i don't know. >> i don't want to go through hypotheticals. >> i don't know enough about it but i could imagine the person in the cockpit has probably the ultimate -- i would hope the

ultimate control. >> that's true on a boeing because it's mechanically controlled but on an airbus it's called fly by wire so if the computer was controlled by somebody else -- >> we need that guy that's always on nbc. you know what's that guy's name? >> he has a twitter account. >> i forget his name. he tweets out about it. >> if you're going to be on unfortunately you've been on a lot given the last 18 months or so with all the airline stuff. >> this is internet connectivity in the cabin should be considered a direct link between the aircraft and outside world which includes potential malicious actors. the threat will continue to evolve and is something at the forefront of our thinking. >> even the guy flying the the plane needs instruments to know

where he is. >> right. >> even if you did have control you still might. >> if you didn't have internet access it might be a problem. >> this is a real threat. it's what they talk about all the time. if you have a nuclear plant you don't want any access to the internet from the inside because that lets outciders possibly get in. >> what i don't know know is with all of these other services are those connected to the rest of the plane. >> i don't know. that would be the question. what you need to do is seal the cockpit so there's no way it has any access. >> and now the autonomous car. you don't want that -- they're going to hack that and you're going to be like. >> but the flip side of all of this was two or three weeks ago when the awful tragedy happened when the german flight there was a conversation about whether you should be able to control the plane from the ground in case there's a malicious actor in the plane. >> every solution presents a

potential problem though. >> yeah. >> let's talk washington for a moment. senate minority leader harry reid calling it quits. announcing last month he will not seek re-election. john harwood got a chance to sit down with him. >> people make the obvious connection. reid boxing washington. has the fight changed. >> the fights are unfair. we have now 15 people in the country that basically control most of what goes on in politics. >> the last few days a bunch of people are saying reid he didn't have an exercise accident. he got beat up by the mob. >> it shows the credibility of limbaugh. why in the world would i come up with a story that i got hurt in my own bathroom with my wife standing there. how could anyone say anything like that. i think a lot of people as i read, kind of don't like me as a

person. i think that's unfortunate. >> mitch mcconnell just sent out letters to states saying don't follow through with obama's plan. >> he comes from a coal state. i don't mean to be mean spirited but he is a slump of coal. i thought he did an outstanding job. he's my man and loves baseball. >> didn't he do pretty much what obama wanted. >> well he was long before obama was there. i supported him before and after obama. >> are you entirely comfortable with hillary clinton as the democratic nominee. >> sure. very, very much. i talked to her husband yesterday. clinton, i love the way he ends his conversation with me and he was so sincere. >> how does he end his conversation with you. >> harry, i love you. >> he says that every time. >> he says that every time. >> will there be a democratic race and should there be one? >> i'm not a big fan of primaries. i don't think they're help. especially when you're someone as noted as hilary. >> i love joe biden.

he's a wonderful human being. >> would you advise him not to challenge her? >> that's up to him. he's been around a long time. he can make that decision on his own without my advice. >> how do you see the republican fight? who is the republican nominee likely to be? >> you know i don't really care. i think they're all losers. >> and of course the electoral question for the senate is do they hold that seat that harry reid is giving up in nevada? harry reid says they will and the chances of democrats winning back the senate if 2016 are far better than 50/50. >> they probably do have a better chance of holding it now. >> i should have asked him about you joe. >> yeah offered without comment. no that's all. i don't think he knows me. >> i don't know. he might be a squawk box watcher. >> might be. might be. hope so. we want everyone to watch. we like viewers that like to

watch. >> joe i haven't seen a politician leave you quite as speechless as harry reid seems to have done. >> he didn't leave me speechless. i offer that without comment. they have a better chance of holding the seat now that he's not running. probably why he decided not to. you know i'm kidding but i just remember the senator that used to be a nevada senator. do you remember him -- >> wait a second. that was in a movie. oh that was godfather ii. he wasn't real or was he? no anyway. thanks john. >> two big events overseas. will have an impact on the u.s. markets today. china's economic growth numbers and ecb's decision on interest rates that comes later this morning. steven is here and is the senior investment strategist with wealth management research. thank you for coming today. >> those numbers from china, they're in line with expectations but disappointing

none the less and some are suggesting they could be beefed up a little bit. what do you think? >> if you dig deeper you do see industrial production numbers also released weaker invest m numbers were weaker and the sequential growth is quite concerning and ultimately i think that it's showing that the leadership in china is willing to have more short-term pain. they're trying to cushion the decline but they're not willing to boost the economy and that's what you're seeing in terms of the overall profile of growth. >> what does that mean for global growth? >> it does mean that you have more of this. you look at the shift with the u.s. and euro zone being the leaders. the pick up in growth and china and the plays being rather in a decelerating mode and it's snag at least we as strategists are

reflecting in terms of the markets we like. >> meaning that you like the u.s. and euro zone better than asia. >> more generally. >> which is better? the u.s. market? the euro he zone and what are you focussing on? equities? bonds? >> we have a tilt toward equities globally in portfolios and in the first quarter we shifted our emphasis which is our preferred market for a number of years in the euro zone. we still think there's upside but we think the euro zone is a better play. it's much earlier in the earnings cycle here. we haven't seen the inflection point in earnings. this quarter will be it and there's a better fundamental story coming out of europe. >> inflection point in terms of what? >> earnings. >> you're talking about euros. >> right. >> so you think europe still has great things to come.

>> >> earnings were below 2008 levels. more pornly also you're starting to see the banking sector starting to lend more freely and that's going to be a big boost. >> for u.s. investors how concerned do they need to be given the currency fluctuates we watched. >> i think it depends. if you're investing with a 3 to 6 month horizon it may be a good deal to hedge the currency exposure. if you're taking the perspective of a year and beyond it won't matter that much. >> thank you for coming in. >> thank you. >> coming up our news maker of the morning. former secretary treasurer is going to talk china, the economy, the eu's move against google this morning and much more. we have a lot to talk to him about this morning. no topic off the table. squawk box will be back in just a moment.

big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

♪ yeah still getting it done billy. there's hope for all of us. >> yes. >> 65. >> yeah. >> i love it but planes and vacations and everything else that's like he is going to be 67 and the kid is going to be 2. that's going to be hard to but, you know whatever. kind of cool. i would like you know -- i don't know if i can -- >> adding to the kernen family.

>> i don't know if i could talk my wife into it at this point. welcome back to squawk box. i know i can't talk my two kids into it. u.s. equity futures are up nicely. up 60 points or so. yesterday wasn't bad once it got going. >> it was a little weaker. >> some of the earnings helped. >> the financials today and that will add to the information we have on what is shaping up this earnings season. our top story is the eu announcing antistrus movesannounce announcing antitrust moves against google. it's looking into the android operating system to see if the company is using it's market power to hinder market systems. easier access to their own applications and websites. google just responded saying it strongly disagrees with the eu and will present it's side of the case in the coming weeks but

after five years investigating this the company has ten weeks to respond to these charges. >> we have joined now by a very special guest this morning. here to sound the alarm on china, former secretary treasurer hank paulson. the chinese economy growing at the slowest pace since the financial crisis. expanding 7% from the year ago in line with estimates and secretary paulson is the author of a new book. the book is called dealing with china. an insider unmasked the new economic superpower. you have been working on this book now for about two years. >> too long. >> 3.5 years and you were one of the great ones. >> one of the first american executives that spent an enormous amount of time in china. so given this economic news and i want to get into the pook but what do you make of that news and how bad do you think it could be?

>> well andrew first of all i'm not surprised by the growth rate. the growth rate isn't really what i look at. it's -- i look at the source of the growth. china had great economic success as we all know. second largest economy in the world. this is a country that has a growth model that is running out of steam and that they need a new model and they're too reliant on exports and too reliant on municipal debt to fund infrastructure. government investment in infrastructure and so what has happened is because they have a broken municipal finance system and i'm oversimilar ply identifying but mirrors when

they need revenues they don't really have access to a lot of sources of revenue that they need. so they basically go take farmer's land and then they he sell it. >> get the real estate. >> very much so. they take it. they sell it. they fund it with debt and they invest in the infrastructure and this municipal debt has been growing faster than the economy overall. that's not sustainable. the government understands this. they're focused on it big time but rebooting the economy is easier said than done. so what i do is when i look at the growth i would much rather -- and i know they would

much rather grow at a slower rate but have the right sources of growth. so the right sources are opening up markets and having the private sector do more. and so again, i'm looking at where that growth is coming from and as i look at it i'm not predicting a major problem any time soon but what i'm saying is that the longer they wait to address this the worse it -- >> we already argued about this yesterday as we always do. >> the more serious their problem will be. >> the two of us. we're like -- you see something in hanks book. i see what i want to see. i said yesterday that you with worrying and you're saying that peel that said that they discovered a better mouse trap they did not discover a better mouse trap. >> i'm definitely saying that. >> we already argued on this.

he says they're kmuncommunists, they're great. >> they had a set of policies that served them very well for a long time. anyone that says they developed a better form of capitalism i think is wrong. they have monumental problems. they're working to address them. there's a bigger risk in overestimating than underestimating. >> but i don't -- i don't go that far. they understand the problems or are addressing them and this is a country with $4 trillion of reserves. they have plenty of capacity at the government level. joe who runs the central bank ahead of the minister of finance

very very knowledgeable people. so as i look at it the key is -- the step back even further, every country known to man is going to have financial crisis from time to time as long as you have financial markets, banks, government policies so the key is when you have a problem and you have bad debts, how do you manage this to keep it from spilling over to the broader economy? and i think in china the key to that is dealing with the problem while it's still manageable. >> i think they're dealing with it. >> but i read into it in that eventually when the government tries to allocate capital using it's own ideas of how to do it normally something comes home to roost.

>> but here's the interesting fact. so reform had stalled for ten years in this country. so the new president inherits a growth model that's got to be changed. he lays out a vision and the vision is with the economy the markets need to be decisive. the markets need to allocate the resources and he is working to do that. to open up sectors to competition. now he has the same even though a very very different political system their issues are still political because in china, the top guy can't just give an order and have things happen -- and

the other point you made is if he doesn't manage the move to a freer society that allows for innovation and personal expression -- that could be -- he's trying to manage politically. if he doesn't manage that properly that could also mess up. >> that's another puzzle for people in this country and in the west. >> do you think there will ever be a time when china will be even remotely as open as the united states? where they can go in without being a state owned enterprise? >> the key to having that happen is getting a bilateral investment negotiated and i talk about that a fair amount in the book because we have two different models. we have a system where the united states we're open for investment. there's certain restrictions.

foreign investment in the u.s. where there's national security issues but basically any company can come in and make an investment. they made a major concession in negotiating a bilateral investment treaty where they would say here's a negative list. this is the list prohibited from investment. everything else is open and this is very porn because part of negotiating this will help the leaders of china who favor reform use this to open up -- >> but do you think the disposition will be that there's free markets and free speech whether you'll see a company like facebook or google decide they can do business in china? all of these things are related. >> let me talk about the

interrelationship because it's important to understand the thought process there because at the same time they're working to free up the economy and have more flexibility the new leadership is taking a tighter position when it comes to ideology emphasizing the party, tightening up on political control. toughening up on internet and the media. we look at it and say that's a paradox that makes no sense. the leadership looks at it and says that they see his party as a source of stability and he sees that as only organization of institution strong enough to force change. i look at it and i say that's

ultimately not going to work because how do you innovate or take something as simple they want to have outstanding global companies. it's been nine years since i have run a company but you need access to information, you need to know what's going on all over the world. it's hard to do that if you're cutoff from information, but i will say this there's a fair amount of good innovation coming out of china. i have friends at the national labs saying the quality of the patents willare getting better and better. they have a lot of smart people and they're becoming -- the reason i wrote dealing with china is because i believe this is by far the most important bilateral relationship and it's becoming more complicated and more difficult because china is

now a formidable competitor in addition to a partner and we need to figure out how to manage the competition so it is healthy competition. we shouldn't shrink from competition while looking to get things done in an area where we have a common interest. it's hard to come up with a global issue that won't be easier to solve if we're working with the chinese. >> we'll talk more in a moment if you'll stick with us. we'll get into the details on that too. we'll slip in a quick break right now but we'll have much more when we come back. then in the next hour don't miss john chambers. first as we head to a break right now check out the dollar this morning. we have been watching what's happening with the euro. you can see right now that it looks like the euro is still below 106 at 10595.

stick around, squawk box will be right back.

ideas come into this world ugly and messy. they are the natural born enemy of the way things are. yes, ideas are scary and messy and fragile.

but under the proper care, they become something beautiful.

coming up we'll have much more from former secretary hank paulson including what he thinks about what's going on in washington and wall street right now. plus we want to know what story you're buzzing about today. a china slow down europe taking on google. people hacking into your next flight on an airline. tweet it to us at squawk cnbc and use the #keep squawking or

post it on our facebook page which apparently we have one. we'll read them all and then share the best of the bunch at 7:50 eastern.

♪

we are back with our special guest, hank paulson, former treasury secretary as well as a former chairman and ceo of goldman sachs. he is also chairman of the paulson institute. i love talking about china. i don't know how it finally turns out, hank. and i think just to summarize what your proposal was, we may like them we may hate them we may disagree ideologically, they are going to be a huge part of our life no matter what. it doesn't remind me of the new obama doctrine with iran. it kind of does because they're going to be around too, we might as well engage i guess. it's not quite the same with china, but we need to engage and we need to be a partner with china no matter what we think of the place, right? >> it's in our -- it's in our very strong interests that we

have a constructive relationship, that we have areas where we have the shared interest and we get things done. there are -- you know if you -- you and i may be in a different view on climate change -- >> i'm not on the same view on environmentalism. i'm on a different view whether co2 is the reason for warming. >> i look at that as one of the biggest economic risks in the world. >> china's environmental problems aren't co2, right? >> they have got -- they are the biggest of emitters of co2. >> but it's filthy disgusting air with particulate and sulphur dioxide and stuff that can really hurt not trace amounts of co2 in the atmosphere. >> absolutely. and the paulson institute is working there with a program to work with the chinese to help address the problem of air quality and climate, but the reason i went to the environment first is if we're going to deal

with some of the very serious threats to our global ecosystem, the climate threat i don't see how we do this unless the u.s. and china cooperate. global economic growth sustaining that, very important to both countries. our economic problems become much more challenging if china has serious economic problems. stability. so it's very much in our interest to work with them and then we shouldn't shrink from competition. we have by far the strongest, biggest economy in the world. all those that say they're worried about china, i turn to them and say, listen you should worry about one thing and that's our own political system reform. if we do the things we need to to restore our economy, we're going to be the preeminent global power for a long time

and if we can't, we won't. >> do you want to talk china. >> i want to get this in because from my viewpoint, it seems to me that we have a worse relationship with china than when you were there because you were very good about going over and making sure that we were talking to them constantly constantly having them at the front of mind. it seems to me like we have a worse relationship -- >> what country do we not have a worse relationship with? except iran. >> is that your perspective too? >> my perspective is i'm proud that we set up this strategic economic dialogue. the obama administration has kept that that's evolved to the strategic and economic dialogue. i think that's a really good vehicle. i think the obama administration has done some very good things. i think this climate change deal was a very important deal. i think that the -- i'm very pleased that they will make a

visit here. we are dealing with a new china. the relationship has become very complex. there's a number of people in the u.s. that with china's rise that are able to say maybe what's good for china isn't good for the u.s. that's starting to break down. i think we need to be really quite strategic here. we need to maintain our own strength, be active but we need to i think, make an even bigger effort because it's more and more challenging to get important things done. >> let me ask you this quickly, because you're -- on a finance question. we've had zerp for six years and are trying to get out of this now. there are two camps. one thinks that if you artificially keep rates low, and you've basically set prices that there's going to be a misallocation of capital and maybe we've moved people out on

the risk curve and there's too much imbalance. but others have pointed out that rates are low everywhere so maybe we're not orchestrating low rates. maybe they deserve to be down here anyway. >> can we use that as a tease? when you come back after this break, we'll get your answer how about that. >> good. >> we've got hank paulson right here, secretary hank paulson. he's staying with us. he's got a new book. it's called "dealing with china." plus we'll talk about the eu much more on "squawk box" ahead. i care deeply about the gulf. i grew up in louisiana. i went to school here. i've been with bp ever since. today, i lead a team that sets our global safety standards. after the spill we made two commitments.

to help the gulf recover and become a safer company. we've worked hard to honor both. bp has spent nearly 28 billion dollars so far to help the gulf economy and environment. and five years of research shows that the gulf is coming back faster than predicted. we've toughened safety standards too. including enhanced training... and 24/7 on shore monitoring of our wells drilling in the gulf. and everyone has the power to stop a job at any time if they consider it unsafe. what happened here five years ago changed us. i'm proud of the progress we've made both in the gulf and inside bp.

earnings alert. bank of america set to report. we'll talk banks with former treasury secretary hank paulson.

kiss socisco's ceo brings his message to the white house on taxes, regulation and the future of the tech sector. plus hacking at 30,000 feet. flights could be vulnerable to cyber attack. that story coming up as the second hour of "squawk box" begins right now. live from the beating heart of business new york city this is "squawk box." welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we are digging through the numbers but on these headlines, it looks like it came in at 27 cents versus the 29 cents that the street had been expecting. >> that's not that horrific. >> that's not much of a miss. it's a miss but not a huge miss. >> 21.5 on the revenue is

online. net chargeoffs $1.19 billion. the stock at this point is just down a little bit down 14 or 15 cents. >> now there are some charges that are coming in. one of them is retirement eligible incentive costs of a billion dollars. that's six cents a share. >> three cents a share for market related net interest income adjustments. >> i don't know if those are numbers that still have to come off the 27. just looking at some of the headlines popping right now. >> in fact right now it's not down anymore, it's actually up up six cents. so tangible net book value is right around where the stock is trading $14.79. first quarter and deposit balances, a record $1.15 trillion. brian moynihan saying we see

continued encouraging signs with consumer spending increasing and utilization of credit by our commercial customers rising. this should bode well for the near term economic outlook. we will dig in more to these numbers throughout the morning. in the meantime we have some other quick stories to tell you about. the eu announceing antitrust moves over google. also looking into google's android operating system to see if the company is using its market power to hinder rival systems. >> google has very good products, and i think that is important. because dominance as such is not a problem. not in general and not under eu law. however however, dominant companies have a responsibility not to abuse their powerful market position.

>> and google could face massive fines, more than $6 billion. it could also be forced to change its business model as a result of all of this. also new numbers out of china overnight. the economy growing at its slowest pace since the financial crisis. also telecom news nokia buying alcatel lucent. it values the french company at $16.6. also the ecb will release the latest rate decision at 7:45 eastern time. we'll bring you that decision as soon as it hits the wires and a news conference at 8:30 eastern time. then u.s. equity futures. dow looks like it will open higher nasdaq up 17.5 points hire. again, our special guest is hank paulson, the former treasury secretary as well as the former chairman and ceo of goldman sachs. >> and the author. >> and the author of a new book

called "dealing with china." hank, joe asked you a question before we went to break. joe, do you want to rephrase it? >> maybe i can ask it a different way because you'd make a hell of a fed chief for a republican president too, i think. >> are you putting him up for that right now on the set? >> i tell you, an english major? >> look at your career though. but if you -- so take it from that perspective. would you have handled things differently if you had been sitting where either bernanke or yell in yellin are sitting right now? >> i have great confidence in them. the u.s. economy has essentially been growing since the last quarter of 2009 delevering you know i think this has been monetary policy that has worked the way it was supposed to have worked. but i think the question that you asked is really the key

question now, because how much more can we get out of monetary policy if all you had to do to solve all economic problems was to keep interest rates at a very low level, zero people would have done that a very long time ago. there obviously are some big distortional effects, i think, and i've always thought when you solve a big, ugly problem. you're never going to have a perfect, elegant solution. there are going to be some -- we're going to have some volatility. there's -- again, it's very distortional and benefits all of us who have big positions in securities. it hurts those on fixed income. those borrowers. so i look at this i think it's a very interesting challenge because there's no sign of

inflation. i personally believe that growth is going to be stuck around this 2% level. and with interest rates low around the world. and, you know raising rates puts more upward pressure on the dollar. i think it's an interesting dilemma. >> the people that worry, hank are people that say just -- the point you made. it would be great to stay at zero forever, except maybe something like 2007 2008 comes along. some people attribute part of that to the easy policies and stoto inflating the bubble before that. even green span said no evidence the fed had anything to do with inflating that bubble. if you're not inflating the bubble why not stay at zero forever? >> i think we've got to get back to a world where assets trade based on real economics.

and so there's no doubt we need to get there. and it's a little bit like people are addicted to these -- to these lower rates. so the question i think we're all discussing is when and how. and when i look at the economic numbers and look at the dollar i bet -- who knows, but the fed takes a longer time. but i -- i tend to be someone that says you know i'd like to go sooner rather than later. you know i have more of a concern about asset bubbles. you know you're trading off growth versus stability in the financial system. maybe i'm suffering a bit from recency. but i think it's very hard to know when you have these allocations which assets are

mispriced as people reach for yield. we know what this does to emerging market securities. so i just think there are secondary, tertiary effects. so i think we've got a lot of use out of this policy. it's served us well. but i would like -- you know if i were voting i'd vote for the transition to take place sooner rather than later. but fortunately i'm not and we've got someone who's very very good doing it. i have a lot of confidence in her. >> but you think the dollar has to be on their minds as they sit around the table talking about this? >> how could it not be? how could it not be? because when you look at what's happening to currency everywhere -- people for years pounded on the chinese for currency but they have been real heroes in terms of how their currency has held up here. and the dollar that's -- i've always been for a strong dollar. and i didn't just say the words,

i really believe it is in the united states' interest. but when you get these kinds of moves this quickly, i'm sure glad i'm not trying to run a global company right now. >> or i wonder if you were still treasury secretary, i wonder if you would at this point not be just giving the pat answer to a strong dollar. or i wonder if you'd be working behind the scenes to ease up on some of our multi national -- >> treasury secretary, that's something i don't have to worry about. >> will the treasury secretary ever work to weaken the dollar and not tell anyone? >> i just don't think they should. i just don't think they should. >> even now. >> our -- you know what makes the united states a great economy is we believe in markets. we have a market determined dollar. that's why it's a global reserve currency. even during the height of the financial crisis everyone wanted dollars because they knew they could sell at any time.

and so i just believe in a market-driven dollar. but i would just simply say when you're looking at -- you sometimes -- things move very very quickly. when you look at the kinds of moves we've seen it's not anything i -- you know i can't remember, at least in my business lifetime seeing things like this. >> where do you think we are just in the economic cycle? and do you think we're headed for some -- not necessarily a crash or crisis of the sort that you had to deal with but how do you look at sort of where we are? >> well i look at us as we're sort of a good news/bad news story. the good news is we're a bright spot in the global economy, we're growing, we're creating jobs real estate prices are rising but i don't think -- we're enough. and this income disparity is a really serious problem. and i think we're not going to

grow at the level we need or begin to solve this unless we get some important things done. >> like what? >> and these are -- so i could just tick them off. we need to restore the competitiveness of the u.s. economy. we need a corporate income tax system that lets our companies be competitive with those around the world. we need a federal income tax system that lets us raise the revenues we need and create jobs. we need to be i think, very active on the trade front. i'm all for trade agreements. i want to see the tpp and others done. the way i look at it is you know, if we -- we need trade policies so that the american workers and companies can have greater access to the 96% of the population that lives outside of the united states. so i just don't get it for all those people that oppose trade. we need an immigration system so the very best and brightest foreign students we don't send

them back home after they get a degree. we need to deal with our entitlements issues. these are important, important issues. and the only way they can be solved is democrats and republicans working together compromising, so again, i don't have much use for ideologues or people on either extreme. i just think that the issues we have are not economic issues they're political issues. >> having said that when you look at the potential candidates for 2016 who do you think will work across party lines? >> i am a republican becky, and -- and i think the republicans have a number of excellent candidates. i personally favor jeb bush because he's experienced, he's i think, done a good job in florida and i view him as someone who is able to work across. i think he's got the economic answers we need and i think

he'll work across party lines and i like his positions on immigration. i like that he's authentic. and so when you know he hasn't flipped on you know a number of issues. >> would you vote with the party if it's not somebody who's as centrist as jeb bush if it turns out to be a rand paul or ted cruz? >> let me say this i'm going to vote for who i believe is the best candidate and the best leader for the united states of america. so i am not -- i'm a republican but i'm not partisan. and if i thought the best candidate was a democrat i'd vote for a democrat. >> there's just not any of them around on that side that would be the best candidate. >> i see some excellent republican candidates. >> it would take a lot for you to cross over there. don't be so nice. >> listen, i'm not a --

>> listen, we have to go but i want to ask you about wall street. what do you make of what's happened to wall street the various regulations, the way it's changed, your old firm goldman sachs? >> well i'll have to step back a bit. i would say i -- i am -- the more i travel outside the united states, the prouder i am of our financial system in the united states. and when you look at the european banks, they didn't recap recapitalize their banks, look where they are. venture capital, private equity the banks, all of the financial institutions in the u.s. i think we've got the broadest deepest, best financial system in the world. >> but you like the configuration, the transformation of a firm like goldman sachs that doesn't do a lot of things that it did five or six years ago? is that a good thing, a bad

thing? >> i will tell you one of the things that concerns me the most is what's happening to market making because i think that many people don't understand the incredibly important role banks and investment banks and institutions play in helping people manage risks and providing liquidity to the markets. i'm also very concerned because i look at finance as being a noble industry. a lot of this book tells -- tells the story of the power of finance and financial institutions to play a role in opening up economies, generating reform, et cetera. so i look forward to the day when banks aren't being scapegoated for all the problems

in the world and were problems many of which start with bad government policies. >> how long does your successor stay around? >> i have no idea but he's sure doing a good job, isn't he? >> secretary paulson, we want to thank you very much for being here with us today. we really appreciate it. >> congratulations on the new book. >> thank you. thank you all. >> the book again is called "dealing with china." we hope to see you again soon. >> good thank you. >> you did a lot of public service. if jeb were to ask if he were elected, are you available? >> i'm done. >> unequivocally? >> he's done with the interview is what he's saying. >> all right. we're going to leave it at that. it will give us hope that maybe you're not done. our lineup of news makers continues. cisco ceo john chambers will join us next. he's in washington to talk taxes, trade and technology with lawmakers and administration officials. plus more details on the bank of america numbers. and we'll get the ecb's latest rate decision. please don't leave us yet.

a bipartisan group of technology ceos and top executives are in washington today to meet with political leaders. it's a one-day summit on ongoing policy concerns affecting the industry. tech net was co-founded by john chambers and he joins us now to discuss everything from tax and trade reform to cyber security. we've got to come back to this

now i get it. that's why you're on the big squawk box this morning, john. it's great to have you on so early in the day. >> it's a pleasure to be back with you again. >> it's good to have you. now, the main thing you want to get across from us at this point and then we'll talk about some other issues but we need to be the global leader in digitization is what's on your plate today. is that the crux of things? >> it really is andrew. in many ways what you're seeing is the information age during the '90s that drove the american economy, over 20 million jobs created, 16 18% real growth in gdp is about to repeat with the digital age. every country, every city every company, every home every car, everything you wear will become digital. it will get connected together. so from a country perspective, it will determine your gdp growth, your job creation your

health care systems. every company will become a technology company. it doesn't matter if it's a walmart or ge or your parent company comcast. the speed of this disruption will be brutal. probably 40% of global enterprises won't exist ten years from now. and even within the high tech sector, something we've talked about before probably half the major players in high tech won't exist in a meaningful way in ten years. so it offers tremendous opportunities but also challenges in terms of disruption. >> actually it's joe. andrew is here at well. >> hey, joe. >> i'm the guy that has the yips, you know and the problems with the three-foot putts. you remember me i think. >> joe, we had a great game down at pebble beach. it was fun. >> andrew is even worse than i am. >> i am worse. >> so you think that that took a long time and was hard to watch. john, europe is better isn't it just in general? that mattered to cisco in the

past. is it -- do you see some improvement over there in your view given the qe? i mean we were worried about them for a while, greece and everything, but things are definitely substantially better in your view? >> well every comment i make today doesn't refer to our current quarter. >> right. >> so talking past and the future, we've been optimistic about europe for about four quarters. we saw our business turn up in europe literally four to five quarters ago from negative growth to single digits to last year's growth of 7%. we saw southern europe change and grew over 20% last quarter. so i'm an optimist in terms of europe. they're doing something different, back to the original comments about digitalization. they are looking at gdp growth of 1 to 3%. cisco is partnering the way they

have never partnered with a french state. we have digital cities to smart grids to cyber security to training of 200,000 people in france on the internet of everything. investment capital investment if you will for start-ups. one of the hottest countries in the world for start-ups is interestingly enough france. you're seeing chancellor merkel do the same thing in germany. you're seeing cameron in the u.k. with his innovation engine and being great for business to locate. you're going to see a digital europe coming at us in this next year and our country probably needs to catch up. and that's part of the reason we're in washington. it used to be it was a safety net when government moves slow. in today's world if we don't move dramatically faster on everything from taxation to trade policy to intellectual property protection to immigration, we're going to fall behind. same thing is owe curing in asia. if i was betting on a single country, i'd bet on india.

they're going to digitize the whole country, a great place for business. this is one that i think american policy leaders on all sides have to move faster. >> john optimists say that corporate tax reform isn't dead. i don't know whether it is or not, but i do see a different -- a different individual announcing he's -- he or she is running for president in 2016 so some day there will bowe a different administration in washington. you've made some comments in the past that i thought were really honest and really frank. if you're going to build a plant and it's going to be better or more economically viable to do it with a foreign tax rate you're just mandated almost to do that at this point. and when we start hearing comments like that from you, to me it says we need to do something to make this the place where companies want to operate and build facilities. do you have an answer for how we should do it? what would be perfect for u.s. business in terms of getting our

tax rate comparable with the rest of the world? >> well i think, first of all, to your point, whether it's the democratic lead candidate or the republican lead candidate you all talked about, both of them will create a new tax system and i think create an environment that gives american business the capability to create jobs in this country. i agree with your concept that probably an overall tax movement in the next 18 months is unlikely. however, i do think that the international tax laws will have to be changed in this next 18 months. you see the needs for an infrastructure fund in the u.s. to rebuild our highway system. you see oecd and countries like china and u.k. and ireland suddenly beginning to say we're going to tax your intellectual property in europe or in asia if your own country doesn't move in a constructive way to deal with this. actually i'm cautiously optimistic that we might be able to do something on international

tax reform and that goes back to that accepts of urgency. in our industry five to ten of the top companies in the industry will be irrelevant in five years. and speed is suddenly so much of the essence. so we can't wait 18 or 24 or 36 months to address this tax issue on international tax laws we need to move now. >> john i wanted to get your thoughts on one of the big headlines of the morning, a company i imagine will still be around in the next five years and that is google and the european commission in europe going after them for antitrust concerns. your thoughts on that and your thoughts specifically on the eu regulations versus the u.s. >> i think what you see in europe is an understanding that if high tech is going to be led by many american companies, let's use cisco as an example, that you have to create a win-win environment. and so when we go into europe as an example at cisco, we partner with the french government, we train literally 2

million students on network academies, we work with deutsche and orange in terms of how do we win together and work very closely with the regulators to say how do you create a win-win in terms of working with the key businesses in europe. and i think that's very important, that high tech has to be very careful as we go into an environment, it isn't just about disruption, it's about how does everybody win together. google is a very well-run company -- >> you think google has missed this? >> you always have to be aware about how do you build trust and relations in a win-win as you go around the world. the same thing is true in asia. how well we do in china will be on how well our two presidents work together. intel results earlier today, the areas intel is growing in which are servers, and by the way our server business grew over 20% last quarter and we're starting to become one of the top players

in the data center and the $19 billion profit opportunity for high tech that will drive this next decade and determine the future of companies and countries. i think educating regulators on what that means and building a trust relationship is key, whether you're talking about europe or talking about asia. and our usdr is doing a good job in terms of reaching out both ways. >> we've got to go. >> all right. thanks john. >> let's get john back here. i have 100 things to talk to him about. >> in studio would be great. john, good to see you. >> that would be great. thank you guys. becky, andrew joe, thank you. >> good to see you. >> hope to see you soon. when we come back this morning, we're going to take a look at bank of america's quarterly numbers. we'll dig through the report with an analyst, but the stock down by about 14 cents. stick around, "squawk box" will be right now. time for today's aflac trivia question. how many times can you fold a

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trivia question. how many times can you fold a bill back and forth before it tears? the answer, 4,000 times. welcome back to "squawk box," everyone. in our headlines this morning, the eu filing antitrust charges against google. regulators are alleging that the company abused its dominant position, but google says it disagrees and will respond to the charges in the coming weeks. also the number of consumers applying for a mortgage falling 2.3% just in the last week. refinancings made up 58% of total applications. and a new study finds that one in six nfl players goes bankrupt within 12 years of retirement. that report by the nber finds little difference based on career length or on earnings. and bank of america posting quarterly results just moments ago. earnings 27 cents per share, two cents below estimates. let's get more on those numbers. joining us now is david hilder. trying to figure out here it looked like a miss but for some

reason the stock is up. explain it david. >> i'll try. i'd say the operating number was more like 32 cents a share. that 27 cents reported was net of three cents a share of accounting charges on debt largely because interest rates have remained so low for so long. and also two cents a share of litigation charges, both after tax numbers. >> david, i want to correct myself. initially the stock bounced, but actually is now down. if you're looking at the screen you'll see that it's down but i just wanted to correct what i was saying. go ahead, david. >> that's fine. again, i think the operating number is more like 32 cents. obviously whenever a company prints something slightly below the consensus estimate there's usually a negative reaction. i'd say the quarter overall was good, but not great. obviously jpmorgan set a pretty high bar yesterday showing investment banking fees up 22% year over year and core trading revenue up 20% year over year.

today bank of america's investment banking fees were down 4% year over year and their total equity and debt market revenue was down about 5% year over year. still very large numbers. investment banking fees of a billion and a half and total trading revenues of $3.9 billion. but not quite as good on a year-over-year basis as jm morgan. >> if you could get numbers from jpmorgan jpmorgan, wells, who would you give a dollar to? >> in terms of investing -- >> yeah. put them all against each other, who has the best shot? we had an analyst yesterday that said bank of america had the greatest chance of upside because they thought that wells fargo was already priced in. >> yeah. i would say that on a one-year time frame, i'd put it in bank of america.

i think it is a great franchise. they're bringing down expenses. and it's probably the least expensively valued the cheapest stock of the ones you named. >> okay. david, we appreciate your perspective this morning. >> happy to do it. thanks. >> thank you for helping us out. coming up it is always my favorite day, april 15th tax day. >> it's like independence day. >> like independence day for bernie sanders and myself. we have a special report this morning, a little bit of sarcasm. america's biggest earners -- >> at "the new york times" is it a holiday? >> we still publish the paper. >> there's a bounce in everybody's step? >> we have balloons hats streamers. >> everybody is smiling. >> the whole thing on the way in. oh my goodness gracious. we hold hands. >> and then someone brings up carried interest and everyone gets mad and puts them in a bad mood.

welcome back to "squawk box" everybody. we have been watching the futures and they have been in the green all day. the dow and the s&p up four out of the last five sessions the nasdaq was down slightly yesterday but this morning it looks like things are off to a good start for the bulls with dow futures up 58 points s&p up close to 7 points and the nasdaq up by 18. the tax bill for the

country's top earners is going up. the 1% are expected to pay nearly half of the federal income taxes they earned this tax season that's up 40% from 2012. add in state and local and obamacare and everything else. robert frank joins us now with more. and also some people that might write in and just say you're slime, you don't pay your fair share. when you see a number that is a pretty big number. >> it is a big number. let's show you just how big. yeah, they earn the most but they are also taxed the most. the top 1% of american earners are expected to pay 46% of the nation's federal income taxes this tax year. that's up from 43% last year according to the nonpartisan tax policy center. the bottom 60% of americans will pay less than 3% of federal income taxes. the top heavy nature of our tax revenue is partly a function of the income gap. the top 1% earn 19% of the

nation's total income in 2012. that compares with 16% in 2004 and 13% in 1994 so that's going up. but it's also a function of our progressive tax code. the 1% still pay a higher tax rate than the rest of america. it sounds basic, but you often hear that challenged. according to the cbo, the 1% paid an average tax rate of 29% compared to the average tax rate of 11% for what we would call the middle class or the middle quintile. the income tax revenues are more dependent than ever on the 1% for revenue and the oecd average is 24% of total revenue is coming from income tax. in the u.s. it's 37%. bottom line here the government is more reliant than ever on the largest, and here's the key, the most volatile incomes in our economy. because when we look at the 1% those incomes are directly

linked to the stock market. >> so a lot of this is what's coming from capital gains taxes. >> correct. the higher you go in the income the greater the share from capital gains. >> which is why you end up with a 29% average instead of 37% or 39%. >> exactly. but adding all that in they still pay, and this sounds so basic, but it's challenged so much. the 1% still pay at that 29% rate a much higher rate than any other income group because most of us don't even know what our actual rate is when you add in the deductions. >> in the top 10% pay 70% or 80%. >> the top 20 pay 84%. >> but there are many people that argue we need to be more progressive. >> there will always be those. >> yes, there will. they obviously don't look at these numbers. i'm not looking at you. but they don't like numbers and facts, no. anyway, thank you to robert frank. coming up the ecb set to

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welcome back to "squawk box." we are looking for the ecb's latest rate announcement. in the meantime let's bring in boris -- oh it is out, unchanged and that's not a huge surprise. but we are looking at the euro below 106 to the dollar and that is kind of stunning to still see the declines and not know if we've reached any sort of -- >> plateau? >> yeah. >> 105 technically has been the support level. we bounced off of that yesterday, really hard off the growth of retail sales. now everyone will be watching to see what draghi has to say. i don't think he'll change his tactics too much. but a lot of people are talking about it's becoming a tug of war between the ecb and fed. the fed doesn't want to see the euro depreciate too much because it could import inflation here too quickly. >> you know it was really funny because we did have hank paulson paulson, the former treasury

secretary here earlier. traditionally the fed has stayed out of making comments about the dollar and had treasury has stayed out of making comments about interest rates. but lately everybody seems to agree, including hank paulson, they have to be thinking about the dollar every time they're sitting around that table. >> they do. we talked about velocity. they don't want to see this drop like a stone very quickly towards parity. >> we're not that far off. five six cents. >> right. and the problem that five six cents sometimes used to take a month and a half. it could take a week in these very volatile markets and that's what they don't want to see. i think the fed, when it comes to what they want to do the most intelligent thing i heard was in the green room from somebody who said the best scenario for them to do is to just raise rates once and then communicate completely unambiguously they're not going to do anything for at least six to nine months forward and that will probably reset the market expectations and not have this frenzied dollar rally. >> i have heard about pulling a band-aid off very slow sleely but

that is the slowest. you're talking a quarter point? >> yeah a quarter point. why? ultimately we don't need a rate hike. the economy is not overheating in any way, shape or form. what's necessary is to lift themselves off this zero balance philosophically. they want to establish their credentials as a -- >> they're for real. >> that they're for real and after that they'll stop. i think that may temper some of this volatility that we're seeing because the market is really playing on this whole idea that dollar flows, dollar flows and we're trying to push everything lower. >> paulson also said he would like to see them raise rates sooner rather than later if he got to vote on this entire situation. >> yes. >> but when you look at the dollar like that that is something you cannot get off. >> it is an intelligent compromise. >> europe has got to do better. >> yes. >> it's not our problem. if we need to raise, we need to raise. they need to do better and keep up. >> it becomes our problem if the -- but it becomes our

problem if the dollar shoots higher. it hurts our economy. >> if their economy improves because of qe our dollar won't shoot higher. you go up a quarter in june and then see. i don't think you should -- >> i mean -- >> they'll go up a quarter in june and then step back. but they'll have to go -- they'll have to go in a pretty see kwent shal way. >> you talk about in europe that's what's going on that's where we're at. the thing that worries me about europe is something we stopped talking about, which is greece. it seems like everybody has given up on them. >> that's a good sign pause they can leave. they may leave. >> that's fine. but politically this now creates this whole question mark amongst the italian voters and french voters. that's where i'm a little concerned. >> it's better if they leave than if they give them great

deals everybody is going to ask for. >> it seems like economically it's better for them to leave. the question is how is it going to play out politically in the european election season. >> i think it could be best for greece. they could devalue and then everybody would go there and it would be half price and it would be a huge influx. that's the way you do things. >> we should go. >> wait until they leave. go over to cover the exit. >> remember we used to do it from miami. you should go straight there. >> would you eat octopus? >> i love greek food. best food in the world. >> you don't even have to fry it. >> i like it raw. it's like sushi but it's crunchy. tastes like chicken. >> thank you, guys. coming up we're going to talk about octopus and great food and feta cheese. we ask you to tweet us the stories that you're buzzing about. up next we'll tell you about the topics you want to hear about in our segment we call "keep squawking." we've got very cool stories just ahead.

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i don't know this -- i don't know this guy, but earlier we asked you to send us the stories that have you buzzing. now it's time for us to share the response. i don't know greg romo but he

tweets encouraging us that we should read a "new york times" article on the california drought. >> bravo. >> and "the new york times" says the drought in california is not caused by global warming, which would make it the only adverse weather event in the last five years that wasn't caused by global warming. he said anyone making that point -- and i had sent some people a mother jones article saying even mother jones is saying that the california drought is not climate change. even though jerry brown says this is the new normal it's going to be like this forever, there are things called megadroughts which you can look at tree rings to see when they occurred. a mega drought is defined as something that lasts two decades or longer. even the one that we have in california right now, few people say it's really in the grip of a mega drought, but they have gone back and actually looked at some ancient droughts. there have been some that -- there was one back in the ninth

century that lasted 200 years. there was another that began in the 13th century that lasted for a century and a half. >> i'm not going to get into the global warming issue. i thought it was a combo of the drought plus the fact that literally i think over the last 30 years in california, the number of people who live there who obviously now consume -- >> we're just talking about the drought. >> but now they have 38 million people living in a state -- >> and farming. >> and other things politically correct things that were well intentioned that have led to some of the problems out there too. but how long has it been five years? whatever it's been out there, it seems like an eternity but all of these things when you realize the earth is four billion years old, there have been periods that last thousands of years. >> look at our life spans. you're looking at more than 80 to 90 years. >> jay lang saying let's talk

about the ceo of gravity payments. he cut his salary he's going to make $70,000 per year. >> that's minimum wage at his country. >> so he's going to give everybody at his firm, $70,000. he's got about 70 employees. he's going to take his salary which is about a million dollars and it's going to come down to $70,000. he says they make about $2.2 million in profit. he's going to take some of that profit, put it towards his employees and he said he thinks this will make his company grow even more. >> did you see the reason he did it? he read an article about happiness and he said the happiest people are those who make $70,000 a year. that's why he wanted to go ahead. what i think is going to happen is the number of job applications to gravity payments is going to skyrocket. >> the happiest are people that make at least 70? >> no $70,000. >> so you make more than 70 you're less happy? >> 70 is supposedly -- look i was in butan and there are people making probably $1,000 a

year. >> he owns the company? >> it's a private company, obviously. >> he's probably doing okay. >> he's probably doing okay. we'll see what happens. we're going to hear from gravity payments ceo dan price. he's going to be on the show talking about this in the next hour. coming up also china's economy growing at its slowest pace since the financial crisis. a survey of chinese businesses shows an underlying credit crunch. it's a little bit what we talked about with hank paulson earlier. we'll get that from the president of the china beige book international when "squawk box" returns in just a moment. just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room. fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere.

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chase sapphire preferred. so you can. death of the pc market. intel missing on revenues thanks to a slowdown in sales. so can the company reinvent itself to float on the cloud? we'll talk results and the future of the chip giant. plus how worried are american companies about a cooldown in china? growth there slowing to a pace not seen since the financial crisis. what it means for u.s. companies doing business there and whether investors should be concerned. and happening now, the ecb's decision on interest rates. now the market wants to wait to hear from mario draghi. his comments are just ahead as

the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york this is "squawk box." >> this is our new orchestra. the most annoying music ever. >> it's euro techno music. >> we're talking ecb. >> move your head like that. good, good. >> germany is the leading economy and that's where german techno music. we're going to run with this. >> i want the animal orchestra back. welcome back to "squawk box," everybody. this is cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we are less than 90 minutes away from the opening bill in wall street. check it out, in germany it's up by 0.4 of a percent. this is all moves after the ecb

left rates unchanged. probably not a huge surprise but we'll wait to hear what mario draghi has to stay. you can see our futures picked up ground. the dow futures are indicated higher about 72 points above fair value. s&p futures up boy 8 and the nasdaq up by 20. the eu files antitrust charges against google. they say they abused their dominant position. how long do they have? >> ten weeks to respond after they built up an investigation that took over five years. >> it could cost as much as $6 billion in fines. we'll see what ends up happening. bank of america's earnings falling short of estimates. take a look at shares at this point. they were in the red. marginally down. we're going to get more from kate kelly, who is just off a call with that company in a couple of minutes. also new numbers out of china overnight. the economy growing at its slowest pace since the financial crisis. first quarter gdp expanded 7% from the yoreear ago period early

earl and that was in line with estimates. >> spacex sending an unmanned rocket to the international space station. it is carrying 4,000 pounds of food, equipment and that espresso machine. it's taking it all to the astronauts who live there. the delivery should arrive by friday, but after the launch focus turned to what has become the tougher part for spacex that attempt to try and land the booster rocket on an ocean platform floating a few hundred miles off florida's coast. spacex founder posted this vine. the rocket landed fine but then it tipped after touching down. here it comes. landing -- >> so close looks good but then -- >> not right there. >> not good. >> it also hopes that reusable rockets will reduce costs. that's why they have been doing this. this is three times now that they have attempted to bring this rocket down and three times they have lost it. >> in sticking with the space theme, let's tell you about another story. a little girl wanted to send a mess annual to her dad on the

space station. >> i saw this. i tweeted it yesterday. >> a message to space ad campaign. the company used 11 cars and the dry lake in nevada to create a two square mile steph loves you message. steph's dad was able to see it. >> i don't know what car company it was. i never heard of that one. >> the space station taking pictures of the message. it's one of the largest tire tracking image created as determined by the guinness world records. >> line us and then. >> hyundai. >> hyundai, hyundai. >> it depends where you're from. also benefitting with more than -- >> mars. >> yeah mars. >> more than 8 million views of the project on youtube. i told you when i was in hong kong i was -- >> it's hyundai. >> with the asia team. >> bernie joseph? >> they told me a different way to say it.

i'm just putting it out there. i may be losing points. >> what's your excuse on all the other ones? you can't blame poor bernie. few stocks on the move. delta airlines reported a quarterly profit of 45 cents a share, one cent above estimates. revenue essentially in line. delta said this was the best march quarter in its history. >> keep going. >> despite some headwinds from the stronger dollar. >> that's not nice. >> and france's alcatel-lucent will be bought. the companies expect the deal to close in the first half of next year. let's get you updated on bank of america. it's been making some comments about the quarter. we heard the earnings report earlier and it looks like the stock right now is trading just slightly lower, somewhere around

$ $15.4 $15.74. kate kelly has more. i just got off a phone call with the ceo. you know they had a miss on both the top and bottom line. on the top line really slight 2-cent miss and they attribute that to retirement costs and persistent low rates, particularly in that first quarter. but those are the numbers and they are a slight miss. some signs of positive and negative momentum. i think investors are a little disappointed when the global market's net income was down. legacy assets unit reports a loss of, you know in the neighborhood of $250 million. much less of a loss than a year ago when it was $5 billion or so, but nevertheless a loss. and then on the positive side you see deposits are up to a record $1.15 trillion at the moment. mortgage activity was up about 50%, that's production of new loans, that is improving revenue in that area. credit loss provisions declining

somewhat, net charge-offs also lower. credit card issuance up year over year. so some positive economic signs from my perception. i asked thompson about that and he said we're not where we'd like to do. we'd like to see a higher interest rate environment to benefit the business but he said one bright spot is company's use of revolving credit as a sign of economic faith, a willingness to rely on credit to make deals or get into new lines of business or what have you guys. so interest commentary from b of a, especially given that they touch on nearly half of american households. i think they're always an interesting indicator of the economy. >> kate has been following all of this. she'll let us know if other things happen as well. we should talk about choppy trading in asia as reports show china grew as its slowest pace since the financial crisis. it expanded 7%. hank paulson spoke to us earlier

in the show about u.s.-china relations. >> i think we need to be really quite strategic here. we need to maintain our own strength, be strong militarily economically diplomatically be active, but we need to i think, make an even bigger effort because it's more and more challenging to get important things done. >> joining us right now is john rutledge. he is the chief investment strategist and a cnbc contributor. here on set with us is leland miller. he just wrote an op-ed about new investment woes facing china. i guess you're not surprised by these numbers? >> we've been seeing this for a year. you look on the on yore data and on quarter data investment spending has collapsed. it's hit every region hit every one of our sectors and every type firm. so people look at the gdp number as a bellwether you can't see anything. but investment spending is

collapsing. so the idea there's going to be a bounceback in china's growth is almost impossible. >> when we spoke with hank paulson, he said they know they have to get to the good earnings versus the bad earnings and some of the bad investments like that. >> well, it is good because it's chinese firms acting like rational economic actors. they're seeing the economic uncertainty and deciding not to double down on business spending which they have done in the past. so this is what china needs. it needs some economic analysis injected into business spending. but people assume that consumption will simply take up the space and the slack that's made by default on investment. that's not happening at all in the numbers. >> john what do you think is happening? >> well you know we worry about china's lowest growth rate since a long time but -- >> since the financial crisis i believe. >> but china is growing two and a half times the rate the u.s. is growing, five times europe and seven times japan. that's still pretty good. and if you multiply that times the biggest economy in the

world, that's a lot of new -- a lot of new business. i agree with leland that there's huge changes under way in china right now. probably the most important ones are the political corruption efforts that are going on. reducing corruption, air and water quality, those are the kind of things that will make a big difference long term in china. infrastructure spending wrong way to grow but it's how they got through the financial crisis. and so i think it's going to continue to decline, but it will continue to decline in a gradual way. >> did you just call them the largest -- did you just call them the largest economy in the world? i thought they were second largest. >> if you measure them in purchasing power numbers, they would be slightly larger than the u.s. right now. >> that's not -- that's not a real way to do it though john i don't think. >> well wouldn't you want to measure by -- >> no. >> -- how much stuff they produce? >> it's used by people to -- you

know that have a -- some type of ax to grind. no, i don't think if you buy a starbucks coffee for 22 cents in china that it's the same as marking it up and it's $4 here. it's not the same thing. it doesn't make the economy as big. >> we clearly disagree. that's okay. that's okay. >> you were starting to say the good things. what are the good things you see there, john? >> well there are some good things going on in terms of the investments that are happening now along the silk road countries. china is trying to get some money out. and there are some worrisome things too. the biggest game in town right now is of course who raises interest rates how fast. and capital flows are very important for china and for their neighbors. one of the ways you see capital flows in china is the money that's moving out of shanghai into hong kong. another way you see it is by soft export numbers. there are capital controls still

in china, so if you're a chinese entrepreneur and you want to get money out, you send a boatload of stuff to your friend in australia and you charge him for half a boatload and he puts the rest in the bank account for you or buys you a ranch. you can likewise overinvoice imports. when you see soft exports, firming imports and weak gdp numbers and falling foreign exchange reserves and weakening rmb, all of that says that the capital inflows that push the emerging markets up in the last ten years are now sucking back out. and when the u.s. begins to raise rates, that's going to accelerate. >> leland why -- so how much bigger is the u.s. economy? 30, 40% bigger? >> something like that. >> and how long before genuinely that china passes us? >> you could be talking ten years or 20 years. but the important thing is if the economy is changing if they keep growing the way they have

been growing, which is through debt fuel growth -- >> they may never pass us? >> they may never pass us. >> however, one of the points that hank paulson made this morning, leland is that it's very important for us whether the biggest, second biggest, third biggest, they're a massive presence and it's very important that we have a strong relationship with them. would you agree with that? >> absolutely. we need to understand that we're going to have to work in conjunction with them on international issues and our relationship with china and with asia is going to be the single most important relationship going forward. so we have to have a very clear eyed view of what's going on in china. but the problem rizis people look at the numbers and people fear a weak china or a strong china. >> john one thing hank paulson has said is that this is a different china. the balance of power has shifted somewhat and we need to treat them differently. would you agree with that? >> it is different.

the biggest change in the last couple of years is that the center of political influence has shifted from some of the new technocrats to the shanghai gang in china. that's what's driven a lot of these political reforms that are happening. that's why shanghai has been favored in some of the policy changes since then too. china is getting more commercial. but of course it's getting bigger at the same time. they want to exert their own influence in the world and china-u.s. communication is actually not very good recently as witnessed by the new investment bank that created such a flap when they started it. >> john thank you very much for joining us. leland, thank you for coming in. >> my pleasure. >> when we come back coming up shares of intel rising despite revenues missing. the company expecting that the pc market will remain flat and reiterating its warning of slowing pc demand. can the company take advantage in the rise in cloud computing? we'll discuss it next. later, some wild weather in

las vegas making for some tough landings near the strip. that video and more just ahead on "squawk box. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2015 e-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.

welcome back. take a look at the futures right now. see how things are setting up for the morning. the dow looks like it will open up higher nasdaq up about 19 points and the s&p 500 up close to 8 points. intel matching profit expectations, but fell short on revenue. the company warning yet again of slowing pc demand. josh lipton joins us now from out in that area where you ought to have a better feel for things i think, my friend. >> look at that view. is that the new studio? are you in the new studio there? >> it's an impressive view for sure. >> the stock's up josh. we just sold it like it was a big miss but the stock is up a full dollar right now, so something was better than people thought, right? >> well you know intel enjoying a nice pop here in the premarket, joe but of course it's been a very tough year for intel because of that weaker than expected pc market. that's tough news for intel.

controls the market for pc chips. that does account for about 60% of its sales. we did have the company's cfo on cnbc, he gave us the outlook for pcs as he sees it for the rest of 2015. take a listen. >> for 2015 is that the pc market will be down in the midsingle digits. as i think about the longer term for the pc market we're planning for it to be more flat than a growth market. when we look at the other elements of our business though we still think we can grow the company. >> so not great news there on the pc market but what intel is focused on and what has intel excited is that data center business, which accounts for about 20% of its revenue. that business is growing strongly. you saw q1 revenue of $3.7 billion. it was up nearly 20% year over year. and that's winning over some new friends on the street. we saw rbc's doug freeman, he

just took intel to outperform raised his price target to $40. friedman's point being that bearish pc sentiment is priced in and investors should concentrate on that data center business as a key driver going forward. guys back to you. >> okay. josh, thank you very much. again, josh lipton. when we return folks flying in and out of the strip yesterday were in for a wild ride. we have that video next. and then the ecb's decision on interest rates has been made. we are monitoring mario draghi's comments. as soon as he starts talking, we'll be monitoring all of that. that news conference is expected to start shortly. in the meantime, check out the european markets at this hour. france seeing the biggest gain it's up by three-quarters of a percent. germany up by half a percent which is where we got this music.music music. ftse is up. dow futures up 64 points s&p

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welcome back everybody. a frightening warning from a federal watchdog agency today. a new report says that airlines could be hacked in-flight by passengers using a wireless entertainment system to access flight controls. the government accountability office warns that the danger is one of several emerging cyber security weaknesses that the faa has to address.

check this out, high winds whipping across las vegas area shutting down vegas hot spots and delaying flights in and out of the strip. wind gusts up to 49 miles per hour were reported at the international airport where many pilots struggled to land their airplanes in the cross winds. some choosing to avoid the runway altogether. dust and falling trees made it difficult to spend time outside. that's kind of incredible. coming up mario draghi his comments on europe's economy, plus more techno music. he'll be speaking shortly and you'll be happy for the techno music. later are companies catering through buybacks and dividends? we'll hear from wilbur ross in just a bit. as we take a break, take a look at u.s. equity futures. the lightest or nothing.

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welcome back to "squawk box" everybody. let's take a look at some of the stocks in the news. gopro was updated to overweight from neutral at piper jaffrey which means the widespread adaption of gopro cameras has helped. also staples was upgraded to a buy from a hold at bb & t. that's based on benefits from the company's pending purchase of rival office depot. and chipotle mexican grill got an outperform that was coming from new coverage at could youen cowen and company. they found an increasing desire for freshness and chipotle will benefit from that trend. >> and mrs. clinton in there, the first place she decided to go in was a chipotle. the news conference by mario draghi is about to get under way in europe. a short while ago the ecb decided to keep its rates unchanged, which was widely expected. gina sanchez joins us now with

more on europe's markets and bond buying program. she is chief executive officer of chantico global and a cnbc contributor. earlier, we were sort of tongue in cheek, gina saying we have things we need to do over here in the united states in terms of readjusting interest rates and we need europe to start getting on board. every time we raise rates, we can't afford to have the dollar get any stronger so we need europe to get moving over there, because it can't be all us. is that starting to happen? are you seeing something sort of in a nacent form that shows improvement? >> well, there's certainly kbrouchlt improvement in the european economy. we're starting to see some evidence of improvement. we're also seeing some improvement in terms of the deflationary situation that is really starting to finally get some stability and some grounding, so we're starting to see that. in fact there's been enough

improvement that there are concerns within the market that draghi could in fact announce an early taper to the program that he just launched last month to the bond buying program. we're not expecting that and i think the markets would take that pretty poorly if that were to be the case and so we're widely expecting that he's going to reassure the markets that there is enough concern around greece, et cetera political concerns that will keep the bond buying program intact for now. but you're absolutely right, with divergent policies in europe versus the united states the dollar is going to continue to strengthen and strengthen. that is good for the european economy and that has been hurting u.s. earnings. >> it would be nice if we could get synchronized sooner rather than later. so you've actually heard talk about a taper. we have tantrums over here when they do early tapers. i don't know what would happen over there. but where there's hope you know, where there's life

there's hope. it would just be better if we could eventually get where we're moving in a coordinated way. then there wouldn't be such a big differential. people are talking about 90 cents now. that would crush exports here. >> it absolutely would. i mean interestingly, this is going to probably come back to haunt the european economy as well because at some point the euro will have to strengthen. you know the situation in europe is right now very -- it's very -- it's certainly very aided by the fact that the, you know policy is very loose in europe and it's very supportive and that's one of the reasons why we're seeing some rallying continued rallying in the european equity markets. also bond markets are just incredibly tight in europe as well. at some point that's going to have to unwind but for right

now that continues to be a trend and i think it's going to be a trend in place for a little while. >> so europe even with now embarking on all the needed structural reforms, just based on where the currency is right now, we can expect much better economic figures over the next year, i guess. >> absolutely. we are already seeing better economic figures. we are seeing support in a number of places industrial production. we're also seeing as i mentioned, continued improvement in the deflationary front. so all of that is very very good for europe and very much needed. i mean we needed to see sort of a bottom really start to trace out here and that's what's happening. now, europe is by far not out of the woods, it still has issues to grapple with particularly around greece, so all of this -- you know it all comes with a big caveat. so i'm not entirely certain that the coordinated policy that you're sort of calling for is really going to be in the

picture for a while. i think we're going to see divergent policy at least until, you know the middle if not late 2016, and i think that has to be the case. >> well we definitely want it to last through the summer for people going to europe obviously. i don't want anything that quick. no, no not that i would base my decision on my own situation. do you think greece at this point is -- do you handicap it in terms of 50-50, is it 80-20 that it stays? it's almost like it's been kind of quiet there. we don't talk about it as much which makes me think that i don't know that the market doesn't care that much and maybe eventually they decide to part ways. >> look, i think right now the greek situation -- a big part of it has already been ring fenced and so the damage that it can cause has been contained over the last many years in terms of how lending has been happening to greece how the banking

systems have been dealing with that debt. it's not to say that there wouldn't be some damage. there definitely would be. and there would be spillover certainly to the rest of the periphery, but greek debt on its own really cannot cause the damage that it was set to cause in 2010 so i think that's one of the reasons why everything is very quiet. at the end of the day the data that came out today would suggest that grosseece is in desperate need for financing not only to pay basic coupons but also to pay its own financing needs and that's a very bad situation. and so there's no question that greece is in dire straits, that it could potentially part ways but the effect of that probably is going to be very limited in real terms. >> yes. okay. i don't know in life i just remember if i ever decided i was going to leave a job or something or -- once i thought about it well maybe i could

leave, it always ended -- it sort of goes to the terminal -- if people have decided it's okay if greece leaves it just seems like sooner or later they will. it just seems like it heads that way, it flows downhill. anyway, we'll see and it's something to watch. gina thank you. >> thank you. >> appreciate it. when we return we'll talk about boibacks and dividends, oh, my. are companies being too shareholder friendly? is that even possible? we'll ask wilbur ross after the graek. larry fink coming out pretty aggressively on it.

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all right, welcome back everybody. take a look, this is mario draghi who has just started speaking. we are monitoring his statements at this point. the only thing we've seen so far is that he's saying that the governing council is going to concentrate on trends on cpi, consumer inflation, so we'll continue to see what he has to say and bring you updates as we hear more. also we should tell you about a couple of stocks to watch, including pnc. the bank's earnings and revenue topping estimates, but the key metric of net interest margin did decline. that stock is down by less than 1%. >> the next one. >> this is a dow component. nike upgraded to overweight from neutral. good job, joe. this is coming from piper jaffrey. the firm says it is causing the

casualization of fashion is here to stay and nike will benefit from that trend. that stock is up by about 67 cents. >> larry fink urging ceos to stop worrying about short-term pressures. they are being too shareholder friendly with buybacks and dividends. wilbur ross joins us now. he's on the set with us. look at this shot. what is going on here? >> this looks like protesters who must have just come after mario draghi. again, he's been speaking -- >> oh they stopped it. >> they stopped the press conference as a result of that but mario draghi who was speaking, it looked like security guards were getting involved in that. we'll show you this picture again. this is what's been happening with the ecb, mario draghi speaking. it looks like the press conference might be over. >> they're shutting down. >> i'm not sure who that protester was. clearly a protester came who ran up and tried to go after mario draghi. didn't look like they had much

success and it did look like security guards -- >> jumped right on him. >> shall we do top three reasons for the protest? what's your guess? i wouldn't even know where to start. could be greece could be -- >> let's get steve liesman on. >> greece? >> are we sure it was a protester? that didn't look very safe and that guy was running at him. >> it almost looked like a woman. >> it was a woman, i think. >> steve, what do you know? >> i was watching the conference here on remote and drawingghi makes this face as he sees the woman coming and the woman leaps up on the desk and surrounded it looked like by security guards and she shouted a few things. it was perhaps in german i'm not really sure and she was wearing some kind of a t-shirt there that had some writing on it. and then. >> it looked like an anarchy shirt or something. i noticed the black with white writing on it.

maybe we can rerack that. >> he is sitting down right now. he's got a smile on his face. >> he is sitting back down. >> he is sitting right back down as we speak. >> all right. >> i'm trying to see from the wires here if they picked up anything. >> let's see what he says. >> well let's continue where i stopped. i think -- yeah well let me start. let me start with the positive tone. the implementation of asset programs is proceeding smoothly with volumes with the announced fig -- >> real quickly, he is moving on. it looks like he's pretty unflappable. for those of you who missed it let's go back and show you once again. this was just moments ago, mario draghi has been speaking at the press conference there and was interrupted mid-sentence when this happened.

she's dumping confetti on him. >> it looks like -- >> end the ecb dictatorship is what she's saying. >> would this be somebody we didn't see -- >> end ecb dictatorship. >> as usually the paparazzi are very helpful. can you just move a little so i can get a shot of that. wow, that's bizarre, his reaction. >> can you imagine if somebody jumped up on the desk there? >> there's her face. do you recognize her from any of the occupy wall street? >> do you see how she spelled dictatorship on her shirt? >> when she jumps up she's wearing a coat and then you see the t-shirt. does she take it off? >> that was security using it to secure her arms.

>> she spelled dictatorship d-i-c-k. >> i pointed that out twice. >> maybe that's how you smell it in germany. >> steve, are you there? >> yeah i was just wondering, i was listening to draghi but i think that raises questions about security. how a person with an "end ecb dictatorship" gets into the conference and what credentials she may have had. probably the question may be wondered by some people here what the federal reserve rules are. i'm pretty sure if andrew showed up with an "end fed dictatorship" t-shirt, he would not be getting into the press conference there. >> steve, we lost your audio. i think the audience might have your audio. in the meantime steve will continue to monitor developments with mario draghi's press conference and see what else he has to say. does make it a little more interesting than it normally is. we also have wilbur here and we do want to get his thoughts on this buyback/dividend debate.

what did you make of the letter? it was the larry fink letter to bring it home. >> there's too much political correctness in the whole economy and now it has spread to the investment world. you can't say anything negative about anyone anymore and i think that's a little bit silly. there's been about a trillion dollars this latest 12 months in stock buybacks and dividends. what's wrong with that? >> i think the point that he's making is that those buybacks and dividends are going back to shareholders as opposed to being used for r & d purposes or acquisitions or other longer term ideas. he raises this idea about changing the tax structure of the capital gains structure from being a year-long hold period to three years and maybe as far as ten years saying maybe there should be no tax. does that make sense to you? >> let's take those one by one. not all cash is needed by all corporations at all times for r & d or for cap ex.

in fact cap ex hasn't been that strong so i think what's needed is for boards to make reasonable decisions, that's all. if the boards had any sense, the only time they would agree with the activists would be if there was something right about the activist's ideas. usually the activist owns 5% of the stock, sometimes less so it isn't that hef athey have a new dominant shareholder that they must listen to. i think what it does is it brings their attention to questions that they should have focused better on capital structure, cost of capital, how much leverage is appropriate, what kind of dividend payment is appropriate and maybe there hasn't been enough attention paid to that. >> what do you make of the tax idea? >> i think it's absurd. >> it's absurd because? >> absurd. first of all, the big financiers of the hedge funds are entities that don't pay tax anyway it's the big state pension funds, it's the large foundations and

endo youmentu en endowments so putting that in would have -- >> but it would change the dynamic for people like yourself. >> well, we're long-term holders anyway, so it's very rare that we're out of something inside of a year having nothing to do with the tax. >> would you say there has been definitely a shift. you pointed out that cap ex has been going down. you can point to the demand picture for that but you can also say that maybe we're trapped -- i don't know if i blame the activists for this but we're trapped in some sort of cycle where there's not the demands and people don't stand which is why we're stuck at 2% growth. would you say that's fair? >> i think the average ceo would much rather build a new plant than pay a dividend. so it's not that there's an inherent bias on the part of management. >> what do you think larry is doing then? >> who knows with larry. it's usually about something that would benefit -- >> look -- >> i'd like to see longer term -- >> but black rock inherently

they hold their shares for 10 20 years. >> listen. >> it's a different business. >> the way that boards and ceos decide to do things there was a time when exxon, there was pressure on exxon. look, you've got to spend your money on going solar and renewable things because you're in the hydro carbon business. then there was -- there's certain people -- henry blaujtodgett says you need to force companies to raise wages. no matter what they need to raise wages for everybody. that's what they need to do to be good citizens. it's almost like the nanny state is coming. now every time a company doesn't do something you think it should do? the ceo and the board is elected and appointed to decide what to do with those. >> he's defending the ceo and the board to give them time to make the decisions. >> he's saying it's not the board's fault. >> activists -- >> activists are part of -- you know, there's no law against -- an activist -- birds are going to floi and fish are going to

swim. is that what happens? yeah, and activists are going to activate. >> the real problem is that boards don't mostly hire ceos. ceos mainly pick their boards. >> that may be the problem. >> you've got to start with that. >> that'scrony capitalism. >> i've been suggesting that they change the insider trading rules so the institutional community could designate people who would be just professional directors, not to pass on any information to the institution but not have any kind of attribution rules applied to it so that you could have people directly accountable to the main holders, which are the big institutions. something like 70% of most stocks are owned by the big institutions anyway. >> what do you think of glass lewis and iss? they're the ones who actually set the decisions on a lot of these things. there's been some pushback from elaine nguyen who didn't get the backing. >> i recently had a little go

around with them as well. they're complaining of sitting on too many boards and, therefore, you shouldn't bow sitting -- be sitting on more than four boards. well the reality is my business is sitting on a board because they're usually portfolio companies. so i think they don't necessarily have the best understanding situation by situation. i think they tend to be a little formulaic. what's the magic of four boards versus five? >> right. particularly if that's what you're doing as part of your work, following your companies. >> between howard schultz -- there's a lot of preachy ceos around today. i think it's what you said. >> yeah. >> as far as -- god almighty. preaching. preachy, self righteous. you really think they know best versus just letting things sort of settle? >> also the shareholders are the owners. >> right. >> and he's a shareholder. >> but in this instance larry fink is arguably the most shareholder in the world with $4 trillion. this guy is it.

>> i'm trying to figure out -- let me connect the dots. i'll try to figure out the -- there's an angle here somewhere. >> we'll probably play some video from wilbur calling it absurd. >> we ran out of time with you because of the situation with the protest. please come back it's great seeing you. >> i'll try not to bring a protester with me. >> we appreciate that. when we come back this morning, a rough start to mario draghi's news conference. take a look at what happened just moments ago. he was speaking withhen this protester jumped on the desk littered him with confetti and was shouting "stop the ecb economy. plus jim cramer from the new york stock exchange will talk europe, bank of america and much more. also google shares down in the premarket after the eeu announced they're making anti trust moves against the country. it's charging google over the comparison shopping service and looking into android operating

system to see if the accompanycompany is using its shopping systems.

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welcome barks. mario holding his news conference as we speak. been an interesting one. steve has been monitoring his comments. >> i think there's three stories this morning. the first is he wasn't up to the protester. i think the second story is after this disruption there's about a minute or two break and he comes right back on with every hair in its perfect place and really starts to talk about monetary policy. i think the third story is what he's saying. two messages here from the markets of draghi. there's been positive effects already and they show up with credit conditions and the second important thing here i want to give back to somebody is you had an analyst before he spoke talk about some concern in the market. there could be an earlier taper. he must have said two or three

times. he's leaning against that concern out in the market. there could be an early taper to the ecb's quantitative using guides. >> i guess we got to go quickly. so someone will figure out where she is from and what she was thinking. you think she was from the place where austerity didn't go down well with the ecb? what do you think the rational is? someone will figure that out and read about it. >> it's unclear. if you're the left in europe and that incompanies a whole lot of things different than the united states. i'm not sure what you have to complain about when it comes to the ecb. they have leaned against austerity unless you want to talk about what they have done with. they will done an awful lot of lending to greece. >> sometimes it's authority in general. >> could be. >> anarchist and stuff.

the autobomber. >> i thought she spoke in german. it sounded like a german accent but it was in english which is probably what you would want to do. >> one of the nihilist from that scene. let's get down thanks. let's get down to the new york stock exchange. jim cramer. is it safe jim? no one's going to pounce on your desk right now. did you see that? >> i would love some confetti. i've got to tell you. they fear growth over there. they fear this program working. i'm not kidding. i think the germans are like wow, this program is working let's end it. >> bizarre. entail, why is it higher? jim, i guess the people had been more negative than they needed to be. >> i think entail went down big because they said things are slowing and then they say things are slowing on the conference call and suddenly people get involved and three different

times people ask about what the acquisition is going to be. they have one business internet related. it's on fire. you see this one business is on fire. you know the other one is bad. you keep waiting on the on fire business to wait on the one that's bad. >> all right. >> thank you. >> see you. we'll see you soon jim. we'll see you soon. we'll be spending some time together. >> you talked about confetti. confetti and rice maybe. >> all right. a program for you tomorrow on squawk box another line up. black stone's co-founder and ceo. plus jack and susie welch all here with us tomorrow at 6:00 a.m. eastern time. make sure you tune in. we'll be right back. ...and takes the wheel right from your very hands... ...this isn't that car.

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welcome to squawk on the street. results out from delta and more. groggy leaves rates unchanged and is attacked. oil up for the fifth straight session and back in the green for 2015 and the ten year just below 191. a protester disrupting