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tv   Squawk Box  CNBC  April 28, 2015 6:00am-9:01am EDT

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>> live from new york where business never sleeps, this is squawk box. >> good morning and welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. baltimore burning. injuring 15 police officers. angry crowds were pelting police with rocks as they walked down the street in full protective gear. the violence broke out hours after the funeral for freddie grey that died after suffering a spinal injury while in police custody. maryland called in the national guard and declared a state of emergency. the baltimore mayor calling last night one of baltimore's darkest days and saying the destruction in no way represents the peaceful protest of many. >> i understand anger but what we're seeing isn't anger, it's destruction of a community. the same community they say they
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care about, they're destroying. you can't have it both ways. >> a city wide curfew starts tonight at 10:00 p.m.. baltimore city schools have been cancelled and several area businesses are telling their employees to stay home. we will have a live report from baltimore later this hour. >> behave businesswe have business stories to tell you about. we'll be getting pfizer murick,s by tomurick murick,s by bristol myers and we'll be hearing from twitter, go pro, kraft food and others. >> a two-day meeting an announcement due out tomorrow afternoon. the index in april consumer confidence numbers we'll get those this morning. in global news greece's prime minister is confident about an
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early deal after sidelining the outspoken finance minister that infuriated partners but if the talks fail the prime minister would have to resort to a referendum. >> in stocks to watch today, apple is going to be sharply higher in after hours trading after erngsarnings stopped revenue. a lot of that had to do with china. the company is also expanding it's capital return program by $70 billion to 200 billion. this comes from boosting it's dividend 11% and upping the stock buy back program to 140 billion. bp's quarterly profits beat estimates. earnings from its refining business as with so many others help to offset the drop in crude. ceo bob dudley is promising that the dividend is safe at bp and honda's reresults were short of guidance. quality related costs, weaker sales in the united states as well as japan and the auto maker
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is now forecasting flat profits for the year. murick's diabetes drug meeting the main goal of a long awaited heart safety study. the news remove ace cloud of uncertainty around the company's biggest product and barrick gold results were hurt by lower oil prices and sales of gold. the company announced it started a process to sell a stake in a copper mine in chile. >> let's get a check on the markets this morning. we've been watching the futures. at this point the futures are mixed. dow futures down by 2 points below fair value. s&p off by close to 2 points. nasdaq off by four points. in europe in the early trading at this point it looks like there are some weaker numbers for the mayor indices there. the cac in france down by 1%. ftse off by.8%. in asia overnight the nikkei
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ended up by about .4% but shanghai composite down. wti down to 56.76 and in the bond market this morning if you take a look at the ten year note this yield alt this point still below 2% at 1.923%. let's take a look at currency markets. the dollar is weaker across the board this morning. dollar euro at 10909 and the dollar yen at 11897. gold prices right now down by about $2. $1,201 an hour. >> let's get back to the corporate story of the morning. apple's blockbuster quarter. let's dig deeper. more than 61 million iphones were sold during the quarter but ipads came in lighter than what analysts expected. that's the trend there. it's now swelled to $194 billion. eugene covers apple.
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he joins us this morning. gene, i mean there's nothing -- what possibly could even worry you about this company? >> i mean nothing for the next year. i guess in the back half of the year it worries investors. the good news is the investors have been expecting these comps and any investor that bought the stock over the past few months has v known the stock is up 23%. so from a fundamental standpoint they're absolutely killing it as you mention. >> it's amazing. >> do you worry -- should we worry at all about the ipads? i'm not trying to look for clouds but it's like we could talk about this company as the greatest -- it's the greatest thing that happened since i don't know what. >> well in the context of how the iphone is doing i don't think we should worry about the ipad. they call it 10%, 8% of revenue right now. it's becoming a smaller part. if the iphone wasn't doing as well as it was that would be some concern and obviously the
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good news is here is this opportunity of greater margin with the iphone so that's the black eye is the ipad but in the context of the iphone it's not that big of a deal. >> do you like them giving back all this money? if i could channel larry fink i would imagine he might want them to invest some of the money back into their company. it's a little bit of a distinction. >> yeah, they're basically giving away their access. they're taking debt out against international cash so this is the right strategy. they still need to do something bigger in terms of mna. the beats deal is the biggest thing they have done and that doesn't have as much substance on the long-term to investors would like to take big herb push whether it's automotive or another sector but as it stands right now this capital distribution is the right thing and at the right size too. >> if it's the greatest company in the world how do you find another company to buy where you're not diluting the greatness of your own franchise.
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that's their problem. and it's not -- they don't need to invest 7 $20like $20 billion. the fact that got me is the increase in revenue in the quarter totalled 49 billion which is the annual revenue of nike. >> i have one quick stat to emphasize is that every 1% market share gain they had 2% in the last quarter. every 1% market share adds 17 million iphones or 5% to the revenue. can they grow market share? if they can, this story can continue. >> they talked obviously about many more people switching over to their phones. also upgradeing and that was in terms of the size difference. now it's already bigger and we're going to go into i assume not the spring but the fall where i assume they will do an s
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version of all of these things. it will be the same except for a little faster. how many more phones can they sell and what happens a year from now? >> well you have to believe this can continue. >> the s version will probably be remote charging. wireless charging. >> wireless charging? not like i can just walk around and it's going to charge in the air? >> no you just don't have to plug the cord in. you have to put the phone down on a mat kind of a thing. but the core real question here is what are we going to do about the big comps like we mentioned? it's going to get more difficult next year but investors are prepared for that. the good news is in 2016 we'll start talking about iphone 7. >> is there anyway the watch could be a negative?
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it doesn't have to be that big of a deal incrementally but is there anyway it could turn into a negative for the stock price? >> it could. one of the big things from last night's call was that the profitability on the watch at least for their guidance for june was less than investors had hoped. we believe that's a near term ramp. but that's one piece, if that doesn't play out, this becomes the ipad mini. >> but the margins overall for the company were quite a bit better than most analysts were expecting. >> yes, they were better. it did have a negative impact. >> do they care if people start buying laptops with keyboards? it's just a name. one is a laptop with a key pad. if they saw a bunch of them does it matter whether it's an ipad
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or laptop? i might buy one. >> what matters is the revenue. >> yeah. >> you get the keyboard. >> it's the typing issue again. yeah. >> all right. although what is that an operating system where suri knows what i'm saying. i only hit one letter and i look and the word is up there that i'm hitting. >> i sent something out on twitter yesterday or sunday that was totally messed up because the iphone changed it. changed it from tony romo to ton romo. >> do you see the words up there where it says i'm going and two will be there if you say going -- and then the -- >> it's unpredictable. >> maybe unpredictable. >> before we go what does this mean to google? in terms of the android ios fight? >> i think they're going to lose share for the next few quarters. it won't be huge share but they're not going to be gaining
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shares so this is advantage apple at least for the next six to nine months. >> thank you for joining us this morning. >> thank you. >> i'm just averaging 2 -- i'm averaging 2 letters per word now. >> she comes up with ridiculous stuff. say something clearly and i look at where it is and that's where you say someone. >> telephone game. >> but other times she gets the word. they have got it. it hears you and understands the words. >> do you get to know the person? >> i don't think there is a person. >> i'll have less performance if i could actually talk to someone i know. you saw what happened to that --
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>> her. >> totally fell in love with the operating system. >> are you in love with suri. >> you got a guy that falls in love with his operating system. who made that movie? who green lit that thing. >> and yet you know the story. you've seen it. >> have you ever asked the phone questions like -- hold on -- suri do you love me? now it's not work. that's how much suri really loves me. >> there is a -- >> what is it? if you don't have something nice to say don't say anything at all. >> it will say crazy things back to you. >> robot chicken suri falls in love with him and he won't date her anymore and she says take a right here and he drives off a bridge. anyway, the fed's two-day policy meeting could set the tone for today's trading ahead of that earnings and market caution dominated yesterday's session even though am was up and now
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dow comeponent so the dow should have been up. here now is ed campbell and reading the stuff that -- the preinterview notes a lot of the themes are things we have been talking about. that's sharp slow down in the economy. yet you think we go back to a run rate of 3% for the rest of the year. europe might be a better place if you're going to invest for equities and the weak economy pushed the fed back to fall at the earliest. >> that's a consensus view of a lot of things. >> yeah so when i was last here in january mentioned that i thought europe could be the big outperformer here and that played out. we've got the dax up 20 plus percent and that view was driven on europe rebounding from recession-type conditions last year. good valuations.
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policy tail wind. so i think the margin of out performance of europe over the united states is likely to narrow over the course of the year but that's a good play. >> so you've got your clients and maybe not all clients are completely nimble. we had someone say buy individual companies in denmark. not everybody is necessarily going to be able to do that. if you do lighten up in the u.s., what are you supposed to do? do you sit in cash? do you buy any fixed income at all? >> i would not be sitting in cash. we would be overweight stocks. we like u.s. stocks. we rotated overseas and we think you'll get more bang for your buck. >> how would you do that? etfs? >> we have done it with futures. we have done it with futures because we didn't want the currency risk associated with japan and europe because we thought the u.s. dollar would continue to strengthen. that happened in the first quarter and now we're starting
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to see the u.s. dollar flat line a bit here and consolidate. we think that's likely to be the trend for the next quarter or so. >> and you also think this is a market for the dollar and u.s. stocks will continue to have that head wind in currency. >> you have to remember that the u.s. is a relatively closed economy. just 13% exports so the u.s. can absorb the head wind of a rising dollar. in the late 1990s we had a very strong dollar and still had the u.s. stock market outperforming. so this year is going to be a descent year for u.s. stocks. i don't think it will be a great year. year to date up through last friday we're up 3.5%. you get to a number like 10% so similar to what we got last year. i don't think we can expect much better than that given the fact that earnings are likely to be flat to weak this year given some of the head winds we've talked about. the stronger dollar.
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energy sector taking a big hit on earnings but that's not going to be the case in 2016. so we think earnings get back on track because we think this is likely to be a very long expansion. possibly one of the longest expansions ever. >> long slow expansion. >> yeah. >> so you don't think that -- do bull markets ever end before the enof an expansion just because of sentiment? >> we have this rsvp frame work. you want to be in stocks except for recessions stocks excess valuation, and policy mistakes. so if you sort of go through each of them the probability of a recession in the current environment. the possibility of policy mistakes is a low probability in the current market. valuations are a little bit above average but not excessive. >> may have already made a policy mistake. made a series of them --
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>> which ones? >> fiscal and monetary tightening. >> the economy has been -- >> what fiscal tightening. >> we're still at 0. >> well -- >> the end of qe. >> well no i mean, we've had fiscal tightening for several years and now that's starting to lighten up. the economy is going to be at 1%. >> fiscal tightening. in terms of monetary tightening you know we're just beginning but i think the economy is strong enough to stand on its own and take off the training wheels of 0 interest rate policy here. so i think the fed will move in september if the economy bounces back in the spring as we expect. we think this weak first quarter, which you're going to see reported in a couple of days is probably going to be about 1% 1.5% or so. we think that's largely driven by one off factors. the weak winter less energy
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cap ex. >> but you think the fed will raise rates even if china gets into quantitative easing as europe is doing the same thing? >> i think the fed is going to raise rates but i don't think we're going to see a fed that's going to be aggressive here. i'm going to take them at their word that they're going to be data dependent. >> thank you for coming in. >> thank you. >> when we come back this morning, a bird flu outbreak in the midwest. millions of more birds at risk this morning. we will have the latest. plus the streets reaction to aetna's latest results. revenue coming in a little bit light. an analyst will join us on set right after this. first, here's a look at this date in history. ♪
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welcome back to squawk box. in global news today people in kathmandu spent another night outside. the death toll reached above 4300 from saturday's quake. the prime minister says the number could reach 3,000. nepal is still experiencing what must be horrifically frightening after shocks and, in fact one
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of the people that were told it was two minutes. the original quake was 2 minutes. they said it seemed like it was forever. but two minutes is -- you know -- >> there was one out in california -- i can't remember -- 1987. i guess it was maybe a minute. but the fear that you have as it's rolling -- you think that it's going to just accelerate into just -- and then it finally does stop and then the after shocks start but two minutes of a 7.8 and you know it's a scale so a 7.8 is ten times stronger than a 6.8 which is ten times stronger than a 5.8. the whole thing is frightening. completely frightening. it makes you worry about california. >> being on a mountain knowing that an avalanche can fall too. >> back here in this country a different kind of horror but let's not include it.
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bird flu cases said to be probable in iowa. initial tests positive at five commercial sites. in the state more than 6 million birds are effected. we had an analyst on that said we're not supposed to worry about it. >> this is 20% of the bird population in iowa and that's where you probably look at things differently. these numbers keep adding up and there has to be a point where they say this has great impact on prices. >> you're not going to get rid of it either. we could be talk about it for years. >> no right. >> different states. >> the problem is its wild foul that -- fowl that spread it. you can't control it. >> beef prices are already really high. >> and as we have heard from other analysts dennis was pointing out it's the corn prices where you see it first. some of the feed prices. >> maybe that will help the fed.
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>> aetna is out with current results. revenue a little light though. they're raising guidance to just above the current consensus. before they were at $7. now they're talking 720 to 740. joining us now with more is the managing director and senior research analyst. thank you for coming in today. >> good morning, thanks becky. >> your general thought is this is a good report? >> it's a good report. it's 30 cent raise. typically insurance companies don't raise by the magnitude of the beat. aetna has a specific issue as well. the state of kentucky rebid their contract so the second half of the year i'm estimating as much as 10cents of pressure from a reduced rate. >> so one of the things i wonder is we've seen a lot of companies with issues on the revenue line maybe coming in lighter than expected. especially international companies dealing with foreign exchange issues but when they
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miss on the bottom line sometimes they beat on the top line. not by 45 cents. what happened? how did they manage to have such a strong beat when revenue is not what analysts expected. >> aetna raised prices significantly. the consolidated medical loss ratio both beat expectation substantially and the miss on the revenue was for membership as opposed to pricing. it came from medicare and medicaid. it surprises me why it's so much higher. they lost a contract or something in the employee market. >> overall, how does aetn harksa match up with some competitors. it's good that they reported well on commercial margins in particular and government margins because they're very transparent on their reporting.
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it's some what hard to tell from united. i think this report should lift manage care erngs. it sets off anthem which reports tomorrow and is fairly focused in a good way. >> when you start talking about how profitability is up at some of these health care ensurers you get to the point where people say, why. obamacare was supposed to be defending these massive profit increases. is there pressure that comes back at some point. >> overtime commercial margins will continue to come in. it's more of a slow bleed down as opposed to a big cliff. aetna trades at a discount on this continuous fears that the margins will compress all of a sudden. cash flow yields are very high. i don't think we'll see this cliff, if you will. so it's a good report. the earnings should continue to be mid to high single digits on the core earnings.
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>> why do they have better margins? better operating company? >> well last year all the companies saw a lot of pressure because of obamacare so some of it is margins are normalizing from obamacare in the first quarter. some of it is that hepatitis c was a huge pressure point in the first quarter. they did not anticipate this so they raised prices quite a by. they then renegotiated contracts with gilead in december that did not account for the better discount they got. i think a bit of the upside on the margins is from exchanging and a bit from hep c. >> you like the stock? >> i like the stock. it's a value name i think. i have a $125 price target. >> all right. thank you for joining us. >> thanks becky. >> okay. coming up, baby bust. why millennials aren't having children. how the drop may signal a historic shift. first as we head to a break, s&p
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500 winners and losers. we're back in just a moment.
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e financial noise financial noise financial noise financial noise
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we're in the chairs this morning. we're playing this song because we have a problem with babies. there's not enough babies being born. there's not enough action if you will among millennials. well i don't know about the action part.
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babies are the problem. >> it's not translating. >> 2007 to 2012 we saw a 15% drop in babies. >> what were the dates? >> 2007 to 2012 according to the urban institutes new report just released and i don't want to say we're turning into japan, we have our other japanese economic problems if you will but if you have a prolonged period where people are not making new kids warren buffet always likes to say as long as there's new people they need new houses and they can't live in their parents home forever. >> but interesting that the dates coincide with the downturn in the economy. >> right. >> maybe you're going to put it off if you can't afford a down payment for a home. if you don't have a job at that point. >> it's a lifestyle thing too and kids are waiting longer and maybe there's a little lag. >> true of every generation. >> hispanic women in their 20s saw the biggest declines. 26%. that was followed by 14% decrease among african american
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women and 11% fall for white women. so i don't know what you think of those numbers. >> it lasted more than five years years. >> coke employees 60,000 people in the united states. it's one of the largest in the nation. it has taken the lead in removing questioning about prior criminal convictions. it's job applications. there's other companies that have done it. it was a movement to try to make it easier for offenders to find work. how many people how many american adults do you think have something that would come up in an employment check. >> 15%. >> 70 million. >> 70 million americans. all they're doing here is taking it off of the initial application. >> right. >> so that at that point it's called a ban the box move mentovement.
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wait until the employee is being interviewed. either they're being interviewed or have a tentative offer. then you ask them about their criminal histories. then it gives them a better shot at explaining what happened and being able to be in front of a human. >> he done do it in the very initial. >> you woen evenuldn't even get to an interview. the spokesperson for coke the industry says do we want to be judged for the rest of our life for something that happened on the worst day of our life. >> one of the things not to -- i know you don't -- you're not trying to promote the dock tomorrow but we have this documentary on white collar criminals but so many of the people we interviewed talked about how their sentence was a life sentence. that the second they got out of prison, even with the skills that they did have that they were just -- it's so hard to overcome the stigma and the fact that a company like this -- the question is do other big companies follow suit? but it is a huge huge problem
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in this country. >> the other question is we're not going to ask you before you get an actual interview but in the interview we're going to ask you. >> you still have to explain it. at least you get to explain it at that point. >> but then you're going to hear if something goes wrong. >> the point is they're still doing due diligence. >> you can get your foot in the door which is a huge problem for a lot of inmates that served their time. it's a real question about how society is supposed to think about all of this. >> i kept saying i wanted to see what the liberal take would be on this. it is charles koch too. so he is acting out of character. >> i think he is acting in good character. >> okay. >> all right. i didn't know how to think about it. >> now you know. >> let's talk a little bit about what espn is doing. we heard verizon has a new
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unbundling plan where you can buy certain teersiers of programming. we knew espn and a lot of other cable channels have been very upset about this. espn is actually taking the step of going before the supreme court in new york and asking them to override what verizon has done. now verizon is saying look we hear from customers. we hear from consumers that this is what they want but their point is basic, we simply ask that verizon abide by the terms of our contract. all along verizon said this is within their rights. espn has been equally clear that it's not within their rights. >> the bottom line is the bundles are going to be priced -- number one you're not going to be -- it's going to be hard to get the content. and two it might be more expensive that you have to offer to people -- it's going to be hard to keep prices low and have all content. that's common sense. i like where they said but fox
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sports, it's a competitor at espn that would like to rival espn. who wants us? fine go ahead. >> espn has the most right to be upset because first of all they're supposed to be on the basic plan. but on the tier they stuck them with. now if you want espn you're fieg getting fox sports and espn doesn't want anybody riding their coat tails. >> but it's also disney and they say you're going to pay up for espn and you don want my other stuff, fine. >> but the whole point of these con is the leverage points. >> you want the bundle to fail. you want football to fail with concussions. you want the american dream to fail. you are someone that likes to watch the world burn.
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i think it's your journalistic instincts because if things aren't bad there's nothing to talk about. >> if it doesn't bleed it doesn't lead. >> everything is bad with you. >> like a good story. >> is that what it is? >> can i just tell you one thing, remember -- >> i work for a cable company. yeah, i have to remember that. >> you know what you can always fall back on your print job. a bold call and reason behind that and a cure for earnings season. we need that. but we're not going to get it because we're going to have to talk about results from murick pfizer and bristol myers and now a two-day fomc meeting. we'll talk expectations curtesy of the fed survey and we want to know what story that you are buzzing about. is it apple? is it the fed?
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tweet it to us at squawk cnbc and use the #keep squawking. is that the number thing? >> yeah. >> or post it on our book page. >> where did we get that picture? >> i look scared or angry. >> are you pounding the table. >> i don't know. >> i like it. >> we're going to read them all. >> you guys look great. >> then we're going to share the best of the bunch at 7:50 eastern. >> you look aggressive. that's good. ♪
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major developing story this morning, baltimore is burning. hundreds of rioters ravaging
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stores setting buildings and cars police cars and vans on fire. also injuring at least 15 police officers from things being thrown apparently. wnbc's mark joins us from western baltimore with the latest. good morning, mark. >> good morning, right now on pratt street. i want to give you a live look right now. you can see firefighters up on the ladder right there putting out the hot spots from this building. this building is about two miles away from the cvs. the cvs was the first building burned and looted. this is one of the buildings following. i want to show you something else over here. this is a store. a beauty supply store that was looted. the windows smashed in. items stolen. multiple fires ignited throughout the city. police officers were pelted with rocks and bottlelssbottles. the violence he runerupted after the
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funeral of freddie gray. the situation is more under control in the last few hours. there's a deferent change here. an atmosphere. doesn't seem as tense. there's a state of emergency in effect. state offices here in baltimore city will be closed today. schools will also be closed today here in baltimore. 15 police officers reported to be injured. many of them have been treated and released. more than two dozen people residents, police officers officials assessing the damage as the sunrises over the city of baltimore. we're live in baltimore back to you. >> thank you for that. the market is flooded with natural gas thanks to the continued boom in shale production though our next guests expects it to be challenge for now. she with rbc capital markets.
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scott, i want you to make sense of this. headline in the wall street journal yesterday, natural gas prices plunge onslow stream demand blaming weather. that really can't be it, right? >> yeah, there's a lot of challenges in the market and obviously we had a very mild winter when you look at it as a whole. there's several demand changes that's going to occur. that's the next 12 to 18 months that we think is going to move gas prices to somewhere between 3 and $4. when we look further into the future and not too much future the u.s. becomes a net exporter and we get more excited with natural gas. >> that's how far out? >> by 2018 we could be an export
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exporter that could be a 10 to 12 capacity by that time frame. it could be significant quickly. >> as an investor who do you love? >> keep the focus on the companies with the best rocks. names like eqt corp., gulf portces, are our top ideas. >> always worth knowing, who don't you like in this space? a lot of people that look into is space think i'll just buy a broad basket and call it a day. >> absolutely. and again it comes down to the best rocks and companies with strong balance sheets so companies that don't have as strong balance sheets that are a little bit more gas focused would include chesapeake energy and sandridge energy. >> you're saying you don't like those? >> what we're saying is we prefer south western energy and eqt corp. as the best way to play natural gas. >> just to put a point on it?
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because? >> because of the quality of the resource and strength of the balance sheet. >> scott we'll leave it there. we appreciate your perspective this morning. >> thank you. >> thank you. >> coming up this morning, japanese prime minister shinzo abe in washington today. we'll tell you why wall street is taking note next. >> and then later, earnings central. corning cfo joins us to talk about the company's latest results and one of his best known customers, apple. seven out of ten power outages in the us are caused by weather. but utilities can now predict where the power will go out, within a few city blocks. working with ibm they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely
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japanese prime minister is in washington this week meeting with president obama to talk trade and further promote economic and military ties. chief asian market strategist at jpmorgan funds and it's the 70th anniversary of the end of world war ii. where don't know has there ever been a prime minister of japan to address a joint session of congress before? >> it is the fers time. and i think the importance of this joint session is really to reinforce the relationship between the u.s. and japan. and to be honest if you look at his agenda clearly not only economics but also on the reform of japanese military set up and although he's very popular in japan as a prime minister, his
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strategy on defensive, on military reform has not been receiving as much popular support as he would like. at least from an allies perspective this visit to the u.s. is very important to reinforcement that and bring back home at least some degree of evidence that there is support from those allies. >> what are the sticking points at home? what is getting least tractions and moves? >> i think the japanese got not particularly fond of being more open or aggressive on the military front. always been more conservative and perfectly happy with a defensive force rather than being very interactive in international relations or military exercises. and fukushima in 2011 the whole nuclear discussion is still very much in fear of the nuclear energy and also perhaps nuclear proliferation. so, all these put together the
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general public would like to have a more conservative, more reserve strategy when it comes to military ties rather than going out and joining the u.s. in various actions around the world. >> you must have to watch every comment from every politician about tpp and whether to go through with this. number one, it must be it's kind of surreal to watch the different strange bed fellow that we're seeing epithis.in this. is he right if we don't do it it defers it to china and allows them to dictate the terms of it. which japan wouldn't like that very much either. >> international economic force. i mean after many years of trying to stay low and keep out of the big picture is now the second largest economy in the world and therefore now very difficult to avoid taking leadership role and the fact that it is actively putting together the asia infrastructure
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funds and that reflects the chinese government and the chinese economy. therefore, it does make sense for the u.s. and japan to have its own trade set up but i think it's important also to realize that if you do this too quickly, you're not going to get the right results. if you want the right results, it will take time. >> add 0.2% of gdp in coming years to the u.s. i mean that's we're only doing 2%. so, if we got an additional 10%, that would be a big boost for us. but what are the prospects right now with the energized far left and its response to them? >> absolutely. i think the prospects of a comprehensive program is still very far from us. i think there is still a lot of debate debate, not just in the states or in japan, ask the members how we make the most of this deal without giving up as much as we should. i think that's going to be a sticking point and the truth is
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to me if president obama treating this as more of a geopolitical maneuver then that is going to be what it is. it is not a program and more about pivoting towards asia and rebalancing towards asia rather than a genuine trade pack that benefits the economy. >> is it allowed to finally turn the corner in your view? >> i think economics have done two good things. the monetary expansion which has helped to inflate prices both in equities fixed incomes and real estate. benefit massively from this operation. secondly, a very understated part of economics and that is a very subtle change in corporate governance in japan where switching more towards equityies and also there's an encouragement towards japanese
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corp corperates to step up their earning power and also dividend. all of which are actually making japanese equities or investment opportunities. >> they have to fear activists, as well. we'll come over there and we already have. in the 20-year -- >> favorite subjects. >> tai, thank you. i have no idea how to handicap what happens when you have elizabeth warren versus the president. it's so weird. coming up when we return this morning, a lot to talk about. a focus and interest analysis. check out the futures. you can see, well sort of mixed picture, i would say dow picture. "squawk box" returns in just a moment live from midtown manhattan. (music)
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earnings ahead, we'll bring you the numbers and street reaction. breaking overnight, violent protests erupt in baltimore, maryland declaring a state of emergency as riots, arson and looting break out after the funeral of freddie gray. we'll bring you a live update from that city. and a deadly bird flu outbreak is spreading. a new case raising the number of impacted chickens in iowa to nearly 10 million. we have new details as the second hour of "squawk box" begins right now. >> announcer: live from the beating heart of business, new york city. this is "squawk box."
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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 were watching the equities dow is now down by 36 points and started the morning relatively flat. nasdaq still positive. ford is just out with quarterly results. let's get over to phil lebeau. in the meantime let's get to phil. >> andrew this is a miss on the top and bottom line by ford. ford earning $1.4 billion. 3 cents shy of what analysts were expectsingexpecting. about $2 billion shy of what wall street was expecting. let's explain why ford believes there is a miss on the bottom lineup they say the tax rate of 34% is not what most analysts were forecasting. they say they guided analysts to
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expect the higher tax rate and most of those analysts came in with a tax rate at 29%. revenue coming in lighter because 70% of the miss was due to the weaker currency particularly the impact of osales over in europe. where you look at where ford lost money and made money in the future, north america continues to be the strength. really all the automakers making $1.3 billion there. they lost money in europe and south america and had improved results there. asia pacific, ford has maintained its over all guidance of making 9.5 to $9 billion this year but raising expectations going from 8% to 9% it up to 8.5% to 9.5%. finally, guys when you take a look at what they're noticing around the world, one interesting note they are noticing clearly a pressure on sales, as well as pricing in
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smaller cities in china. so, this is the first time we had an automaker come out and say, look we're seeing a slow down in china. it is noticeable and we'll talk more about that little later today. "squawk alley" a little after 11:00. again, a miss by ford on the top and bottom line. guys, back to you. >> crazy. >> phil that thing went to terminal pricing the minute it came out of the, it survived and need a bailout and ford recovered from single digits and went to terminal pricing and has been dead money for five years. has never gotten back above it. >> terminal pricing. and now it's great results but nothing happened to the stock for five years. >> you look at their margins, joe. even though they're improving their margins in north america, they are getting no love no respect by the investors. >> they've done a lot of in terms, there's the original right back there in 2010.
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got up there and never gone back up above that. let me tell you about pfizer real quickly. pfizer reporting 51 cents a share. that is 2 cents ahead and revenue of $10.9 billion was above the $10.75 billion. this was a, something to watch back in the, we forget in the late '90s that was one of the beloved, it wasn't a growth stock, but a quality name. i can't remember the high. $60 or $7 o0. huge market cap, $3 billion or $4 billion. never been back to those levels. the company has given guidance of $1.95 to $2.05 for the year and the estimate is $2.08. that is below where the street is right now. >> giving revenue guidance. street is already up $46 billion for an expectation there. >> conservative. >>ilatal bit lower even the company beat them bottom and top
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lines for the current quarter. >> 3.2% yield. when it was lower, it was one of those 4% yielders. now, 3.2 and they break out established farmer revenue was down 16%. think currency and then ino inivative pharmaceutical revenue was up 6%. one revenue $3 billion and then they got global vaccine revenue, which is pretty amazing, up 44%. purchase $6 billion of stock in the first quarter and we were talking off camera andrew generic viagra will hit at some point. >> it's bad news. i mean good news for individuals. >> bad news? >> bad news for pfizer. >> you pointed out $22 a pill. i mean that's expensive and it's not, what? i didn't point that out pp.
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>> i'm not aware. you mentioned it was $22. i don't even know what the price is. i heard that they're blue. that's about all i know about this. >> that was me that talked about the blue. you get a blue dot, what else to you know? what else can you tell us? >> i can tell you about merck's earnings. also beat on bottom and top lines. adjusted number 85 centses the 75 cents the street had been expecting. revenue was better than expected, too. $9.4 billion versus the $9.08 billion that the street was looking for. the guideance is better than what we're looking for for pfizer. as a result that stock is up by 4%. >> that is a 3.1 yielder. that was also much higher. it has a 52-week high of 62 or
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63 or so. that will help the dow. i wondfer the futures. >> the futures were weaker a moment ago when we checked. >> merck and pfizer both dow components. >> we were down 56 points between we heard from these two companies. >> both still on the dow. they keep changing the dow. >> annoying. >> we will talk to a pharma analyst at the top of the hour. >> okay. let's tell you the other big story this morning. not a business story but huge story. developing overnight. baltimore is burning. violence erupting following the funeral of freddie gray a man who died april 19th while in police police custody. you're looking at the front page, a maryland called in the national guard and declared a state of emergency to quell riots, arsen and looting. 15 officers were injured by flying debris. at least 27 people were arrested. the baltimore mayor announced a week-long curfew starting tonight from 10:00 p.m. to 5:00
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p.m. city schools are canceled today. a live update from baltimore later this hour. apple shares surging after an apple's beat. the company sold $61.26 61.2 million iphones. ipads came in lower. joining us now is brian white head of technology software at cantor fitzgerald. just raised his price target brian, obviously, a lot you like in this. >> it was a great report. it showed a couple things. this iphone cycle has legs. they're really starting to see a lot of momentum in emerging markets. we're up 60%. margins continue to perform. and we have a new product category that just launched in april. so, i think there's still -- >> product category being the thing on your wrist. >> apple watch, i think, you know, they weren't able because of supply constraints to put this in stores.
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actually last friday. so i think, in the next month they probably will be able to. and they'll probably start to launch in additional countries. we said we think this is the best new product selling history in its history. surpassing ipad. >> did they give any guidance or any information about sales of what they've seen for orders? >> they didn't. so, you know it's a little bit of a conundrum quarterly basis we will not update you on apple watch. initially they'll give you some type of view on how sales are trending, but they didn't. they gave kind of the superl superlatives and the feedback which is very positive. >> the one thing jean mentioned to us is that the margins are not as great on the watch as they have been with some other things. all in all the mix may actually get, when this is add under to the mix, it will hurt margins, are you concerned about that at
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all? >> i think at first because of the digital crown, all these massive technologies they have been investigating in. at first it won't be as high as it should on gross margins for the apple watch. i think over time it is above corporate average but at first it will not be. smart watches in general, actually, have great margins if you look at competitors out there in the market. >> you like it? >> i mean 11 times -- >> you like your watch? >> love the watch. >> you use it to pay for starbucks? >> yes, i think using apple pay is phenomenal. >> you just going into whole foods and taxi cab supports it. starbucks supports it. getting stock quotes and getting phone calls and e-mails. all the basic stuff. you can do uber and check into a w hotel. the list goes on. >> does apple pay work on gmo foods or just goes no no! is it really pc that way? have you tried? >> i only --
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>> only worked at whole foods. >> whole foods is where i have tried it and there is no issue, no issue at all. >> you're at 195. i think 195 share price, i think that's $1.2 billion. >> yeah. >> trillion. >> $1.2 trillion. >> i get used to saying the trillion word with the t. >> so you know in march we said, look we think this thing is worth a trillion. tonight we upped it after last night's results. again, i think this is a story that people need to get more bold on because we have a massive capital return program they announced last night. >> that's hard to get your head around. how much money is coming back to shareholders. >> you know merck's up 2.5% and apple is up 3.25. and the dow is down 80. >> why is the dow down still? >> what do you want them to do with all this cash? >> you want them to buy something, to invest in something new?
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new category, new something? >> a lot of money. >> i do like the fact that they return cash to shareholders because that has helped the stock. i want them to continue to invest. what i don't want them to do is do some large acquisition. >> you don't want them buying tesla. >> i don't want something big and crazy that hurts this company. i think they've been very good at that. when you return cash to shareholders you don't keep too much where it can get crazy and invest in a lot of technologies. >> think of ford gm and tesla with the cast that they have. >> they're definitely interested in the auto maerkrket. they can do it on their own. >> i think the stock should not buy any of those. >> if you were apple, would you buy gm? >> i wouldn't buy gm. i wonder long term if you need to own other stuff. >> if you're apple. if it's the greatest company in the history -- >> it is.
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>> then who can they buy? even when they bought beats -- >> because the great challenge. >> you remember beats? you were you were beside yourself. you were anguished. >> i thought it said to me it spoke to the larger issues that apple faces. >> now you want them to buy something. what is a company not good enough to buy. >> the great cuonundrum for great companies, it is hard to remain great forever. >> they do -- >> you get stock and locked into your own system. >> you might get a monology. >> there are issues. how do younovateing and at what point do you turn defensive? i don't think this is the moment for them to turn defensive. >> their market share is still small. so unlike these companies that have monopolyies and smartphones have 20% share. >> china is still coming into the middle class is still growing and everybody will want an iphone. >> in china surpass europe for
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the first time ever in apple's history in revenue and hit 29% of sales for apple. that's huge. >> and they're not phone. you hardly ever use. >> do you worry that given the size of the phones now, obviously, huge uptake on these new phones. what do you do when you get to apple 7 or 6s? >> i think we're seeing more of a two to three-year event. whether the success or the 7s it's a multi-year event. so, big theme on the call is emerging markets starting to see this momentum they've never seen. i'll point out that is still on the horizon and maybe it's china five years ago it's india. china still has a long ways to go, remember we have india. >> that is still a great point. >> there is still a lot for apple to do and the market share is small whether it's smartphone or even tablets and mid-20% market share and single digits.
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>> brian, thank you so much for joining us today and coming in. >> joe, i have been looking at every dow componant and i can't figure out why the dow is down. nothing that is a big -- >> now it is down only 30 -- i was looking at the futures earlier. >> 80 on the futures. when we come back this morning, the fed kicking off a two-day meeting and that means it is time for cnbc exclusive fed survey. steve liesman joins us next with those results. then another bird flu outbreak in iowa. affecting nearly a fifth of the hens in that state. we'll is the details coming up. we'll talk to the cfo of corning. out with quarterly results this morning. stick around, "squawk box" will be right back.
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welcome back to "squawk box" this morning. take a look at shares of coach. earnings beating the street by a penny and in north america same-store sales dropped by a bigger than expected 23%. feel like coaches had a tough time recently. the fed is kicking off a two-day meeting and the speed of the rate hikes may be changing. steve liesman joins us now and he has results of cnbc fed survey. good morning to you, steve. >> good morning. pretty big movements in this survey.
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fundamentally, it's low inflation expectations along with a stronger dollar has, strongest to our survey believing in a later fed and an easier fed. lets's go to the timeline here every time we do this comparing the private survey. the first rate hike was seen in august of 2015 and push that ahead two months and now it seems october 2015 with a median, of course of september. moving on, the next point of action from the fed, when will they let the balance sheet decline had been seen april 2016. push that ahead a month. balance sheet decline now may 2016. finally, take a look over here when will the fed finish hiking rates had been seen in the fourth quarter of 2017 at 3%. now you have to come all the way over here terminal rate 2.58% in the first quarter of 2018. as you see in the next chart, also push down in terms of the outlook for rates. now, remember what's important here is that the fed reduced its
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interest rates or its outlook on whole by 50 basis points. what did the market do? they came down as well. the new outlook for 2015 just about 50 basis points. two rate hikes seen this year. how about 2016, they brought that down by 40 basis points to 1.5% more or less. call it there down 40 basis points from the prior survey. one reason you can see here is the stronger dollar. we asked what is the effect of the stronger dollar on fed policy. 41% now say it will be easier than the original forecast. that's up from 32 49% saying it's the same. we still have a pretty big gap between the market and the fed. although near term that's erased. the fed averaged now over the 17 members in their forecast 63 basis points. that came down 50 basis points in the march forecast. the market now, much closer right there. we still have a problem that when we look out to 2016.
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we also have a problem in the long run here where the fed is forecasting 3.75 the market at 285. not a problem for right now, but as we move ahead, the fed may have to increase that guidance or bring on down its own forecast. andrew, in the next half hour the next hour, we're going to grade janet yelin versus ben bernanke and we have a comprehensive story on cnbc.com if you'd like to read it. andrew? >> thank you, steve. we'll talk to you a little bit later andthex int two days will be big for the markets, we think, sort of. we've been watching what has been happening with some of the earnings reports out this morning. let's take another look at what is happening with shares of merck. earnings better than expected eded on the top line and bottom line. gave guidance for the full year that was that high end, that bracketed where we saw numbers already going. i think they gave numbers that
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for the full year were 335 to 348 and an adjusted basis. that's compared to the 337 that the street was expecting. take a look at that dow component. up by 4.5%. coming up another outbreak of bird flu in iowa bringing the total of affected chickens in the state to nearly 10 million. we'll bring you those details. we want to know what story you're buzzing about. big pharma earnings. tweet it to us at squawkcnbc and use the little number thing. -- >> hashtag. >> keep squawking or post it on our facebook page. >> facebook page. you been there? >> no. i can't get in. we'll read them all. and then share the best of the bunch at 7:40 eastern.
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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.
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darcy spencer is there and she joins us with the latest. darcy? >> good morning. very quiet here in the city of baltimore this morning. a stark contrast to what happened yesterday afternoon and all throughout the night here in the city. we had the looting, we had people breaking into businesses. we had more than a dozen officers injured yesterday. some of them remain in the hospital this morning. we had a couple dozen arrests and then there were fires set all throughout the night here in the city of baltimore. the latest was little earlier this morning, a three alarm commercial building fire. but right now there is no protesting going on. there are no demonstrations taking place in the streets of baltimore. no clashes with police. so very quiet morning this morning. there is hope that that will continue throughout the day today. school has been canceled for the day and a state of emergency has been declared. the national guard is here and come 10:00 tonight, a curfew
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will go into effect. that curfew will remain throughout the next week. >> darcy spencer. coming up, corning's guerilla glass is on more than 3 billion devices and the company's ceo and vice chairman joins us to talk earnings in the next generation of display products. you can drop the glass and it doesn't break. take a look at u.s. equity futures. dow looks like it will open up 36 points. we're back in a moment.
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welcome back to "squawk box." siriusxm posting better than expected results. that stock looks like it is down just slightly. amazon is expanding business
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marketplace. known as amazon business and will offer some goods exclusively to business customers. wimbledon announcing a 7% increase in prize money. go to the men's and women's single champions with a total prize money racking up $40.6 million. a new outbreak of bird flu in iowa. a sixth of the state's egg laying hens have been impacted. morgan joins us with more. good morning. >> good morning. five more cases of bird flu reported in iowa including a facility with 3.8 million egg laying hens. and this brings the total number of poultry affected up to 15 million. just to put that number in ur. perspective a little bit, the biggest outbreak claimed 17 million birds. so this is rapidly escalateingescalating. health official os suggest the strain that is highly contagious
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and lethal to poultry poses little risk tahumans. but just to be safe the hundreds of farm workers who have now been exposed are being administered antiviral medication. the state produces almost a fifth of the country's table eggs. and you've got about 9.5 million layer erer hens that are now off line. chief commodity strategist says that's 3% of the nation's layer hen population. it's a big cut. the one that hasn't had a big impact on consumer prices yet, but, guys that's likely to change. so dermat hayes estimates that prices will increase 1.6% for every million birds. your eggs at the store could jump 15%, at least until birds are replaced. guys, that is a very costly process that could take weeks, if not months. not to mention that we could see more cases of how quickly this is already spreading. >> morgan, how long does it take to grow a hen and position into
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a place where they actually start laying eggs. how old are those hens? >> i want to say about 22 24 weeks. i got to double check the numbers there. but the actual process of growing the hens out takes, i want tao say, a little more than 20 weeks. you're looking at hundreds of thousands, if not millions of dollars to actually euthanize the hens at these locations and then dispose of the bodies and that process takes weeks and months and then do all the testing it make sure the virus isn't there before you can bring a new population in. it is a long time. >> this is your beat. have you realized that? we sent you out there. i don't know if you should have come back this early. apparently, more to cover out there. did you ever dream that this was, i mean it is now you're answering all the questions. you are our source on this. >> well, you know i could have never imagined that where would have been in northwest iowa where it took 12 hours to get out there by car and plane and standing there talking about birds and who knows, maybe it was too soon to come back
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because we're certainly seeing this escalate over the past week we've seen more than two dozen cases announced. it's definitely definitely getting uglier. that being said keep in mind this is still just a small part of the overall poultry population. >> it's a pretty well-known it's called the egg beat morgan. >> all right, well just keep your bags packed. hopefully you don't have to. but remember we ask you about it and you went oh, we were alsoby the whole idea of it. the way chickens we've seen the "60 minutes" pieces. let's not even go into it. >> it's gross. why are you trying to gross us out, again? >> slaughter houses chicken places. they are all, you don't want them in your neighborhood right, morgan? >> they don't smell too good. but i tell you guys i turned into an expert on how you
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dispose of chickens. we wrote a story about this for anybody who is curious and wants to click. but there's a whole process. a water-base foam that gets used particularly when you're killing off turkeys or carbon dioxide which they're using at the farm we were at and involves composting the birds. >> composting. >> boiling them down into industrial products. it's a whole process. >> they were talking millions. that's a lot of -- >> can i ask what kind of industrial products? >> so you send these birds to rendering facilityies that boil down the tissue into things like detergents, soap pet food. so you basically make a product out of a bad situation. >> you can put it into pet footd after food -- >> it's gross. >> look how you did the digital promotion. >> it's on cnbc.com. how could you, you search morgan
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brennan cnbc.com and it comes up. >> basically the headline is how do you kill 3.38 million birds? >> what a headline. >> i didn't know. >> but i didn't know. >> that's what they call -- >> we're pros. >> anyway, we just have people tago to cnbc.com. >> it is very unfortunate. >> thank you. and the birds. well, they were looking at -- >> in the meantime -- let's talk about corning just out with their first quarter results. earnings topping estimations. glass used in tvs and smartphones. corning's ceo joining us. good morning to you, jim. thanks for joining us. helped by tvs and phones. the phones are the big business, but, actually, i was going to say helped in large part by the optimal communication sales which is growing 18%. >> well good morning, andrew.
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you're right. we had a great quarter and we beat our own expectations and earnings per share up 21%. optical had a great quarter. sales up 18% there and our profits were up 85%. it was led by a growth in products for data centers and also fiber to the home networks around the world. we're delighted by our optical performance. >> when you look at the mix over time, do you think the optical performance. i don't know if it will ever catch up if you will to the gorilla sglasz the lcd glass makes a lot of money for televisions, i.t. products and mobile phones. optical is actually our second largest business and we expect the growth there to continue to be in the, you know upper single digits to low double dinltsdinl digits over time. of course, we have gorilla
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glass, which is a cover glass for products obviously, all those products also have an lcd in them but wae have a new cover glass with a gorilla glass and we had growth in gorilla glass volume by 22%. we were delighted by that. >> is it function of simply just more phones being sold and how much is that a function of bigger phones being sold? >> it's both. obviously, a number of our large customers are having great results with their new phone models. and we are seeing people get bigger phones and because we sell by the square foot larger phones matters to us. >> tell us about project fire. because that seems to be the next version of gorilla glass, if you will. >> that's right, andrew. we announced this a little earlier this year and should be available in the second half of the year. this is an attempt to make a product that has the fabulous break resistance of gor ella glass 4 and gets better scratch
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resistance. we think we'll get the best of both worlds for customers. our customers value break resistant. number one consumer complaint. scratch resistance is the number two. so we hope to be launching this product in the second half of the year. >> do you keep a case on your phone? >> i do not. >> you do not? everybody here has a case. are we going to get to a point where most people don't have cases on their phones and you can drop them all the time and they'll be fine? >> so we believe that we can continue to advance the gor ellagorilla glass and we think we can make it stronger. hopefully we'll get to the point where the three of you don't have to have a caisson oyourn your phone. >> you won't say whether or not you're doing the glass on the i watches, is that right? >> well, our customers,
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unfortunately, don't allow us to tell what product we're on. we're on the iphone and ipad and a number of other devices, but, unfortunately, our customers don't let us promote our products on their brands. >> that's weird. isn't that weird to you? i wouldn't understand why apple wouldn't allow you to do it. just help us with this. the automotive piece of your business. the next frontier, if you will. >> we're trying to take gorilla glass into the auto business. we've developed a product that is very strong and tough. and we can make it very thin. and we think we can break into the auto business and provide weight savings and some other benefits to car companies. it would be a laminate product and we think it's better. but as you know for car companies, weight is a big thing. glass is quite a heavy material. so we intend to launch into the auto business and we think that will extend gorilla in the
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marketplace. >> when is that going to happen? when are we going to see it first used? >> well we're already actually on one car, a bmw. it's a small usage. but what our goal is to start winning everyday cars and trucks and we hope to get some wins that we can announce towards the end of this year early next year. >> jim thanks for joining us this morning. >> thanks andrew. >> you bet. >> just thinking about how this would work. it's going to be interesting. >> you drop your phone all the time? >> never. >> we ask you to tweet us the stories that you're buzzing about this morning. up next, the topics you want to hear about. antibiotic free chickens and bird flu epidemics. is that related? one is a virus and one is a bacteria. how will it work? we'll talk about that in a segment we call "keep clucking"
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"keep squawking" i'm sorry. haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right. and we take it very seriously. because we love them. and we know you love them too. man: you run a business. could be any kind of business. and every day you've got important decisions to make, like hiring. where are you gonna find those essential people you need? with ziprecruiter, it's simple. we post your job to over 100 job boards with just a single click, so you can reach millions of qualified candidates. then we'll give you the tools to help you manage, screen and rank your applicants all so you can find the right one. try zip recruiter for free today.
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♪ ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ ♪ she can print amazing things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ ♪ my mom works at ge. ♪ ♪
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welcome back everybody. earlier we asked you to send us the stories that have you buzzing this morning. now, it's time for us to share some of your responses. greg romo tweets. he's arguing that antibiotic free poultry farms make for weaker birds. has it made poultry more susceptible to the avian flu? a topic in the headlines today. in addition the bird flu outbreak we also talked with morgan brennan earlier. tyson planning to eliminate the use of human antibiotics in its chicken flocks by september of 2017. you might think this makes sense, it doesn't. if you look at what's caused by this. bird flu is caused by a virus and antibiotics are not effective. >> same argument when you have what i would call an irresponsible gp general practitioner that dulls out antibiotics for colds.
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>> zpac when i get sick. you can feel better. placebo effect when you take something. >> could be bronchitis. you could get a bronchitis. >> do you think it is impacting you? >> super bugs in the hospitals. >> you think the antibiotics go into the chickens because you eat the chickens. >> i don't know weird hormonal questions you look over the last generation or so and i think it's unnecessary and it creates the potential for super bugs. >> but at the same time sort of the push and the craving and the millennial just sort of jonesing for preservative free stuff. some day you'll get something that didn't have preservatives that you wind up wishing it had preservatives. not pesticides or gmo stuff. what about, what about a crop that is resistant to what causes the use of pesticides so you
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never use a pesticide again because it just is unable to i mean, right now it's a blanket. millennials will not have anything with gmos regardless. >> you'll give the antibiotics. >> no because of what we were talking about. i'm saying the push -- >> the chicken can't tell you if he's sick. that's the thing. >> but by completely oversubscribing and overdosing. >> you can tell from the mood. you know how a happy chicken or at least a happy rooster walks around pecking and strutting his stuff and looking at the chicks. you know what i mean? i'm not saying that in a -- i'm saying chicks. >> your point about -- >> not a gender thing. i'm talking about chicken chicks. >> your point about preserves. i watched a video on how slim jims were made and what they put in there as preservatives so botulism doesn't go in them. >> unless you put the botulism
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in your forehead. >> did you know mother's day is sunday andrew? >> i did know mother's day is may 10th. new survey data says americans will spend an average of $172 on mom this year. that's nearly $10 more than last year. the highest amount in the survey is 12-year history. and this is one of the hallmark moments. i'm kind of pretty sure it was made up by hallmark but one i approve of that we have to have. >> what are you going to do? >> not sure yet. haven't done anything yet. but mothers, it's you know i have to take over for a half hour and i need to sleep. >> it's the most popular day for greeting cards. the most beats out christmas and everything. >> valentine's day, everything. >> everybody buys something for their mom. >> open something up on our iphone and it's one of those things. >> we get actual -- >> you spend money on the paper thing. >> we go get paper things. the boys going to make some
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stuff. exactly. >> all right. >> that's the best stuff. >> i don't think the ecards will work. >> don't try that. >> by the way, i bet in ten years from now people will send ecards. >> not for mother's day. >> it might be. i don't know. >> thinking about it. >> i'm not thinking about it. now you got me thinking about if it. >> bad idea, guise. when we come back street reaction from automakers. ford and honda both posting numbers this morning. you can see ford down by 2% this morning. stick around, "squawk box" will be right back. is there such a thing as a sure thing in business? some say buy gold. others say buy soybeans. i say, buy comcast business internet. unlike internet providers that slow down when traffic picks up, you get speed you can rely on. it's a safe bet.
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ford posted results today for the first quarter earlier this morning and fell short of expectations on both earnings per share and on revenue. joining us now with more on the quarter is carl brower senior director of kelly blue book. not necessarily a guy to talk about stocks carl but we made the point five years ago the stock recovered from single digits and they've done a lot of things really well. but the stock has never gone to new highs that is around 15 or $16. just to talk about the models themselves. ford has done a pretty good job in terms of quality and design in recent year.
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>> they really have. and the product is extremely competitive now with the rest of the vehicles that are in the marketplace, which is saying a lot because the marketplace is very competitive. so it's not like the products got any real weaknesses to it at all. it's very solid. >> the moves that they made and de-emphasizing some of the former models and, you know revamping lincoln and things like that. is it continuing under mark field now that he's gone? >> it is. everything is always in transition in the car world. whether it's the product lineup or the trend, the buying trend. and right now, trucks are hot. and ford is still not being able to take full advantage of it because they're ramping up production of their all-new f-150 and probably several more months before we see how well that vehicle does because it's brand-new. you have the car side of the market which every manufacturing is struggling to sell vehicles in and ford's product is maybe a
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little older in some of the segments than some of the other cars and they're getting hit that much harder because it's hard to sell a car right now and even harder if the car isn't brand-new and shiny. >> what about the competitive landscape landscape. remember, i can't remember the quote about the japanese yen, but it was so hard based on a weak yen and here we are, again globally with a noncompetitive currency, or at least a much stronger dollar is it are they losing share to japanesemakers in this country and other parts of the world? >> well, you know the yen swings around all the time and it's always funny to watch what happens because when it's not helping out the japanese carmakers and the americans say nothing but as soon as it swings the domestics jump all over it. it has swung. what is interesting, really to see manufacturers that are put a lot of work into making local production like honda. which now aren't benefiting as
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much from the yen swing where toyota is benefiting more globally and also in the u.s. because of where their production is. it's not quite so centered in the u.s. like honda. >> so if you were running ford right now and let's say that let's say you wanted to get shareholder value increase. i know you're a kelly blue book guy, but would it be with the design and be with different models and financial engineering? what do they need to do? >> they have the new edge coming, which is a mid-size suv and that's right where the market is right now. i'd like to make sure it rolls out like it does. they have an update to the explorer coming. the explorrer continues to do well. they really need the escape to do better. it really needs to do better. the escape is down. so if it was me i would hope there is a new escape coming as soon as possible. and then i think i'd still invest in the cars and the fuel efficiency technology because long term that's still where the
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market is going to be. it's not going to always be cheap gas and not quite this suv craze. so they should take advantage of it while they can and get those things in line so they can next time fuel spikes and be in position to take advantage of it. >> carl, thank you. >> good talking to you. >> i walked out of the hotel. saturday and correspondents' dinner. bumped into alan mualalli. i bumped into him, he was there, but not for the white house correspondents' dinner. >> he looks like he's about 30 still. so, i said you are no where near your -- >> just hanging out on the street? >> i don't know what he was doing there. but you know what his current passion is and spending all his time with now? >> no. >> it's on google's board. doing a lot of stuff with
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google. don't they have -- he'll spruce that thing up a little bit. he knows cars. >> looks like a golf cart. >> when i looked up matter of public record he's on the board. when i saw him, i think that's what he's involved with now. >> i still want to get a full-on weekend update from you guys. major pharma companies. we'll dig through the reports and get street reaction ahead of the opening bell. back in a moment. i heard you lost a close one today. look, jamie, maybe we weren't the lowest rate this time. but when you show people their progressive direct rate and our competitors' rates you can't win them all. the important part is, you helped them save. thanks, flo. okay, let's go get you an ice cream cone, champ. with sprinkles? sprinkles are for winners. i understand.
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corporate earnings in focus is big pharma the right prescription for your portfolio. we go inside the numbers and find out which one is a buy right now. breaking overnight. baltimore erupting. the national guard moving to curb the violence. the latest on the protests and the plan to restore peace. and it's car buying season. the ceo of true cartels us what is driving record sales and why they see no sign of the trend slowing down. the final hour of "squawk box" begins right now. >> announcer: live from the most
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powerful city in the world, new york. 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. check out the futures. we have seen a little bit of improvement. we were looking that futures down by 50 points earlier this morning. you can see right now they're down by 26 points for the dow futures. s&p futures off by 3.5 and the nasdaq is higher-up by 4.5 points. if you look at europe this morning in the early trading. wow, things have gotten worse there. the cac is down. the ftse is down by 1% and the dax is down by 1.1%. let's tell you what is going on at this hour. fed and policymakers gathering in washington for a two-day meeting with an announcement set for tomorrow afternoon. we'll get the s&p schiller and consumer confidence this morning and then in global news.
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greece's prime minister is confident about an early deal after sidelining his outspoken who has infuriated partners. if those talks fail the prime minister said he would have to resort to a referendum. outside the world of business this morning, a major developing story in baltimore. a citywide curfew starts tonight and baltimore city schools have been canceled and several area businesses are telling their employees to stay home, this after hundreds of rioters setting buildings and cars on fire and injuring at least 15 police officers. the violence broke out just hours after the funeral for freddie gray who died last week after suffering a spinal injury while in police custody. also an update on the recovery efforts from the earthquake in nepal. the death tol has now topped. rescuers continue to rescue bodies. and rain storm that began today has complicated that recovery process. banks and other businesses
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remain closed and fuel is running low according to a u.n. report. aid agencies say they're struggling to reach remote villages. avalanches triggered by that earthquake on mount everest. few stocks on the move this morning. apple earning revenue well above expectation and strong iphone sales. company expanding its capital return program by $70 billion to 200. this comes from boosting its dividend 11% and upping its stock buy back program to $140 billion. we got an analyst this morning with $195 price target which would make that stock worth $1.2 trillion. $1.2 trillion. >> a mixed quarter. mixed quarter for u.p.s. earnings beat by 3% and revenue missed the mark and coach shares dropping after the retailer fell short. north american same-store sales dropped a bigger than expected 23%. introduce you guys now, looking
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at bristol myers. i don't know if we mentioned it yet. very strange. all out with first quarter results this morning. joining us to break down marketing director and for a broader look pharmaceutical at the sector itself barbara ryan. she is a partner at clairmont partner. shamus we are, there was some royalties that were better for bristol. but supposedly bristol beat expectations by 51 cents or by 0 cents at 71 versus 51 but then lowered guidance for the year. it was at $1.72 and they lowered it to where 170 is the high end. 1.65 to 1.70. if they beat by 20 cents and now lowering guidance does that mean the next three quarters are well below where they were? >> my expectation is that they will do an awful lot of spending heading into the launch of their new product. so they have a new product that's coming out in the cancer
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space and i think it's more likely than not that they're really moving to execute there. in addition couple other things to think about. they are also affected by currency. so, the currency swings also affect bristol. they have a decent presence in europe, as well. >> they're 1.60 to 1.70 now and they had been at about 10 cents higher. and you should be an analyst because the company said the view reflects up front payments for business development of this drug that you were just talking about. and the stock, even though they're lowering year guidances up a dollar almost at 66 and change. how about before we get to barbara, how about pfizer and merck, quick comment. >> i think on pfizer it's interesting. they had a good quarter. the only thing that they lowered their guidance on this time, basically by $500 million, it wasn't that much. it was all currency. so it's currency effects. we saw it with j&j&j.
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what i will say is they had two good portions of the report and i would also point you to when you look at hospira, so pfizer is expected to close the deal some time in the middle of this year. i would actually say the pfizer report was okay. on merck, it was really a pretty spectacular quarter overall. they beat the top line handily. came in very strong on the bottom line relative to consensus. they they're talking about coming in at the high end of their guidance and also had a really strong number of their new onccology drug and i didn't mention the new breast cancer drug from pfizer came in at $38 million and that was only in the very early stages. >> in the quarter, too. did anyone listen to you to buy merck five years ago. >> absolutely not. it was a dog then. i think we talked about that
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before and shamewe were talking off camera. i think we're seeing proof that ken frazar's bold commitment when it wasn't all that popular and was very difficult because the industry was suffering from generic competition and had been miserably unproductive in rnd. merck blew away the quarter, i think it's fair to say, relative to expectations sglp never happens any more. >> it was revenues and it was gross margin. it was mixed related to new products. if you think a lot of the area the hot areas, whether it be oncology or vaccines. merck's participating in all of that. they also introduced a new sleep drug, which i'm very why? >> because i'm a very poor sleeper. >> why would it be better? >> why is it better? we're all trying to get sleep. >> do you go to the
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refrigerator? >> have you tried ambien? >> how about lunesta. >> that's for your eyebrows i thought. >> by the way, you're taking too much of it. but, anyway go ahead. >> i think belsombra every new drug with a new mechanism can affect different people differently. but i think one of the attributes would be helping people stay asleep. as opposed to just falling asleep. >> that's what i need. >> extended release type of stuff is for. >> well there are -- >> just a different approach to doing it. you're thinking of latiese. >> i knew exactly what i was talking about. >> not lunesta. >> you know what you need for your sleep? you need a 3:45 wake-up call. you'll fall asleep. >> i can fall asleep anywhere. >> don't do it now. >> i can fall asleep anywhere any time. >> this interview is that exciting to you. >> it doesn't have anything to
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do. >> can i just plug it called dream water. it's a natural thing. it's amazing. >> does it work for sleeping? >> totally. >> you know about it. liquid thing with meltonen and triptaphan. >> why did they take it off the mark isn't. >> was there a problem? should i not be drinking it? >> i think the supplies were you know contaminated. i mean -- >> okay. forget what i just said. don't listen to what i just said. >> but it's like turkey if you eat a big thanksgiving meal. >> anyway enough about sleeping aids. so, i can't believe it. so really outperformed it seems like it's been a long time since we had a story like that. big pharma, they spend all their money advertising or getting extended release. >> if you look at the long-term history of this industry. this industry has been
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continuously innovative. it's not a straight -- >> big pharma biotech. they're buying all their innovation. >> if you go back 30 years, right? >> go back that far. >> the industry probably got as many drugs as a percentage of their revenues from external sources. so it's a portfolio approach. no i just don't think it's all that different. but these companies are scaled in the development of drugs. and in the, matting of drugs, but they also you know from their basic discovery, some of these products come from internal efforts. and i think one of the things that we talked about is whether there is a bubble in biotech and pharma and we can talk about valuations. so you remember the dotcom drugstore.com. why couldn't we just have cvs.com. i think here you know we are seeing the fundamentals driven by good old-fashioned innovation
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which are improving the lives of patients driving this sector. >> maybe sell some biotech and buy some pharma. >> i wad say, joe, your point, pharma basically operates as the aggregator of drugs. you're pulling assets in and then, you know maximizing the potential of those products. i think that's one thing, look at the acquisition that bristol myers did. that's largely the driving force behind the company today. brought you humira and all those things are major drivers. i think without the large pharmas really driving the spend that goes behind it to actually have the kindning today, i think that's a big feature of the value ad of pharma. >> so what does the sleep thing do that the side effect profile is better for the one that you're taking. >> i think the main attribute is just allows patients to stay asleep. >> ambien is abused somehow at times, right?
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have you heard? >> some people just have a bad reaction. >> or a good reaction. they use it before like before like before they sleep? >> when you sleep eat and go walk to the refrigerator and eat. >> really? >> apparently. >> you're the expert. >> he knows how much he knows how much the blue pill costs. he knows a lot about it. >> i was just looking up tryptophan there's not more in turkey than in other birds. >> i was just trying to -- >> the dream water. the dream water site either we've crashed the site or the site's already crashed before we got there. so, anyway. >> all right. people do go out and drive and not remember driving and go in their refrigerator and eat everything. >> are you trying to say you do ambien and then the other thing. >> i'll read this to you in a second. anyway andrew -- >> read it during the commercial break for a reason. coming up an update from baltimore after a violent night of protests.
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apple are crushing it. the new iphone driving earnings higher and luring customers away from rivals. more on the results in just a moment. financial noise financial noise financial noise financial noise
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welcome back to "squawk box," everyone. we've been watching the futures this morning. red arrows. at this point it still looks like you're looking at red arrows for those two but the losses have narrowed significantly. the dow futures down by 23 points and s&p futures down by three and nasdaq still looking higher up by just over 4 points. etna shares are higher. etna says that members increased and spending on medical claims in the first quarter remained low. just above the current consensus and the stock up by 2.8%. in washington news today, supreme court justices will hear arguments on whether states must allow same-sex marriage. and recognize marriages performed legally outside their state. the last time the court weighed in on same-sex marriage was two years ago. it struck down a part of the federal law that denied benefits to gay couples.
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today, justices will hear from couples who sued because their legal marriages in one state were not recognized in another. a new quinnipiac poll where was i reading that this morning? that was in "new york times" that there may be the supreme court may decide there's aunse caitutional right for same-sex marriage. there are only a couple. i guess the advocate at "the times" is referring to here. they're practicing for tough questions from scalia. but i think probably there is at least five that -- i xoentdon't know. we'll see. it's amazing that public opinion moves much quicker than politicians. and -- >> just over the last five years. >> i made that point yesterday. we were talking bout bruce jennerp. >> not just bruce jenner but
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practor and gamble. cincinnati, cincinnati very conservative town. but a couple years ago there was a law that was anti-perceived to discriminate against gay people. procter & gamble put a person on the case to try to get this thing repealed. i made the point, even corporations figure things out faster than like the gop. i mean, the corporations you know why? because corporations have to sell things. if you can't sell things. so, they figured out quickly. the profit incentive is a good thing. >> i know it. >> the politicians are like no! no! until they're dragged kicking and screaming into the 21st century and you want people to vote for your candidates. you want as many people as you can. >> that's true. >> coodo i need to keep lectureing on this? in the meantime, to the west coast for a moment. apple shares surging after strong iphone sales boosting the bottom line. the company sold 61.2 million iphones during the quarter.
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ipads came in light, lighter than analysts expected. and then of course the cash pile that's just building up. a senior technology analyst at i always mispronounce that. i apologize. and john ford, he's cnbc technology editor. john, are you inside or outside this morning? >> we're inside for now. >> you're inside for now. you're not going to do the outside thing this morning. >> we'll do it a little later. >> joe is just laughing at me. that's okay. >> that was silky smooth. >> like butter. >> like butter. >> when you think about the uptake on new phones over time what happens once we actually get to an upgrade cycle where everybody already has the 6 or the 6plus? >> yeah you know what it's essentially that's the place where they've said 26% of the
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base has moved to 6 or 6plus. we don't know at what point it saturates. but fog forgoing forward, this is in a cycle or does well in one year and apple does well another year. going forward we think iphone sales will slow down. >> what is your price target on the stock right now? >> we're $1.25 past target on the stock right now and we think going forward the stock is very likely to move sideways from here. >> you're one of the few out there who feel this way. john, you know most of the people we interviewed this morning think this is going to be a trillion dollar company. what is the mood out there right now? >> people out here are very respectful of apple particularly because a year and a half we went through the cycle of people being down on apple.
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the iphone 6 and 6plus cycle has shown that it still does have legs. i would point out, though they did hit what appears it be supply/demand blaps inalance in the quarter. they hit the low-end of their inventory range and they actually added a million units to inventory. i've been concerned about the second half of the year and the effect of them shifting that inventory window a little bit higher. it now looks to me like that doesn't become a problem until potentially next fiscal year. if the iphone does tap out a bit, then you have to look to other lines to get stronger. the services business did just a hair shy of $5 billion in revenue for the quarter. so they're going to be above probably a $20 billion annual run rate just in services which is mostly app store. that bodes well for them. apple pay and the watch, potentially, bode well when you see all these iphones selling in more than expected. that is more expected apple watch customers. you have to look to some of the other things. the ipad number to me that is
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more of a slight miss and a bit of a concern on apple's ability to get momentum and keep momentum behind a new product. i think they're learning from that. tim cook will point to the deal and one way to get that going, again. to me, the gap in growth in the ipad is bigger than enterprise alone can probably solve. they have to do something with that product to get people interested. >> the thing i don't understand on the dividend and buy back. you have to say to yourself given the amount of stock they are buying back, how can you imagine the stock is going to drop precipitously, but your expectation is that it is going to go down materially and the multiple is not that high. >> you know couple of things on that. first off on the buybacks they have been doing those type of buy backs which have been offering support. $25 billion a year and they've been for the last few quarters. that support kind of stays around there. and in terms of the stock price, we added 14 times, 2016 earnings number and we don't think a whole lot of upside to that.
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historically, if you look at the stock, it has traded in direct relationship with iphone shipments. the stock had a hard time performing. and that's where we think the significant of shipments could weigh on the market poll. also one other thing like john just mentioned. we think december could be the very first time we could see iphone shipments actually post year-over-year decline and the company has never done that. you have to worry about all those things. >> gentlemen, we appreciate your perspective. thank you for getting up early. >> sure. an update from baltimore after a night of violent protests. but up next we head inside prison walls for a rare look. we'll show you what life is like behind bars. a new cnb documentary and we'll have a sneak peek, next.
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welcome back ta"squawk box" how accurate are the portrayals and new cnbc documentary airing tomorrow. we got access to federal minimum security prisons and while camp is a far cry from maximum security it is not club either. >> there are 14,000 women in
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federal prison just a fraction of them for white collar crimes. but their numbers are growing. many of othem committed crimes with a boyfriend or spouse. like heather bliss. she was convicted of morgan fraud. and conning some mom and pop investors out of their life savings. >> did you think what you were doing was wrong? >> i remember having a bad feeling about it. but i trusted those around me. >> just to clarify, though do you think that you were guilty? >> no i had no intention. my intention was not to defraud anybody. no. >> federal prosecutors told us that is a lie and there's more. her husband is also in prison for the same crime. and they have four young children. now forced to live with friends. >> to serve in federal prison camps, inmates have to be nonviolent and have a sentence shorter than ten years.
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we'll give you an exclusive look inside those camps tomorrow. life on the inside premieres wednesday at 10:00 p.m. on cnbc. heather bliss was involved in morgan fraud ripped off a number of people. in fact, we got an e-mail yesterday from somebody who saw the promo and sent in a whole slew of, i mean she's done -- falsifying documents. and it's just a terrible story. >> falsifying documents in terms of -- >> mortgages. >> trying to make people look like they were more likely to get the money than they should? >> falsifying what their actual assets were. >> income and assets. >> and then not paying people back. so, a lot of people who lost a lot of money. it's a terrible story. she went into prison pregnant eight months in. it's -- >> usually they will allow one parent to serve time and the other to serve afterward. >> not in this case. four kids all being taken care of by friends. unbelievable story. many like it. there you have it.
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>> that is again, tomorrow night. we'll talk more about it between now and then too. grading janet yellieen on her handling of the economy. car sales revving to new highs. true car is using the opportunity to grow their business. the company provides new and used car data and collects fees on sales from dealerships. we'll talk about the car buying season and sales trends with the ceo in just a bit. ...and takes the wheel right from your very hands... ...this isn't that car. the first and only car with direct adaptive steering. ♪ the 328 horsepower q50 from infiniti.
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there's some facts about seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right. and we take it very seriously. because we love them. and we know you love them too.
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baltimore waking up this morning to ashes, burnt car and broken glass. this morning, we keep referring to this as violent protests. almost as if that's the new style manual. is it not a riot? i'm not sure what the difference is. clashes with police overnight in these violent protests. darcy spencer joins us with the latest from baltimore. good morning, darcy. >> well good morning. as you know, the city of baltimore is under a state of emergency. that means the national guard has been brought in. take a look behind me. we're live here at city hall where you can see the national guard, as well as maryland state police troopers are here within a fence that was set up
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surrounding city hall this morning. this just went up here within the last half hour or so. we're not sure exactly the reason for this. if this was done just as a precaution because we've seen in some protests even in washington, where they'll try to storm buildings. so we don't know if it was because of that or some sort of threat that people are threatening to come and possibly try to go into city hall and take over or something to that degree. but we do know national guard are out here as well as state police protecting city hall here in baltimore this morning. as you said there was a lot of violence overnight. whether you call it violent protests or riots, it was devastating. we had numerous officers injured. some of them remain in the hospital this morning. 24 arrests. there was looting. and, to me the worst part of this was the fires that were set. that's when you can have serious loss of life. serious injury to people. an apartment building that was under construction was set on fire. a pharmacy.
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just important buildings enthis community were set ablaze and that's something that will take a long time to recover from. so a state of emergency is in effect and the curfew goes into effect at 10:00 tonight. everyone is hoping for a peaceful day and night today. back to you. >> all right definitely. >> darcy, thank you. darcy spencer from nbc. in the meantime the fed kicking off a two-day meeting today. steve liesman joins us with an exclusive look at the results of the cnbc fed survey. steve? >> good morning, becky. what we did is we turned the tables on the two former professors who had the chair, who had the federal reserve, bernanke and yellen and we asked our 38 respondents to grade them this time and they did okay. here is the grade for bernanke. this is from our april 2014 survey. kind of his exit grade. he got a b. yellen getting a b plus and we asked them about the individual classes and let's take a look at each grade here.
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leadership, b, pretty equal right there. moving on looking that next one. transparency, yellen does a bit better and in all of these she does a bit better. how about communication? yellen doing a bit better. put them all on here. economic forecasting. a touch better for yellen and overall monetary policy. what you see when you look at these, our group here you know not really ecstatic about overall policy and what you see here are the results of a split. and you can see that in this next chart. and these are those who say fed policy is too easy or just right. and you see it's about even. 50% say it's to accommodative. and 48% say just right. we've gone up and down and in general those who say it's just right tend to give yellen higher marks. giving her an "a." that's why you end up with that "b." more of a combination of as and
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cs. becky, you can read all of this online at cnbc.com. including coming up in the 10:00 hour is a look at the impact of the dollar. and what we find is that economists and those who respond to this survey are thinking the impact of the stronger dollar and they think it has more effect on weakening the economy than they originally thought. >> steve thank you. >> sure. the markets tend to take a wait and see approach with the fed's policy setting meetings and earnings report may have a big impact. rich bernstein is the ceo of richard bernstein advisors and also a cnbc contributor. let's jump off very quickly on what steve was just talking about. the marks that the economists right now are giving yellen are one thing. but what about the remarks the market is giving up? >> i think the market right now is a little tenuous. i think they would give a c plus, b minus. the bull market has paused here a little bit.
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the reason why is very simple. a risk the fed will raise interest rates and that would occur when the earnings are booming. off sets the incremental negative of an increase in rates. right now earnings aren't booming and steve's final comment was about the dollar and obviously, the dollar is impacting earnings. the dollar is not going to get weaker, it's going to get stronger. so, you could have a policy mistake. i mean, this could be the thing that causes the correction. >> some people have suggested that maybe what the fed does is raise once either in june or september and then leave it alone for some time. just it get past the idea of being stuck at zero interest rates forever. we could just say we've moved without doing potentially too much damage to the dollar or other issues. >> well, i think that happens every cycle. i think people always say, the fed will raise rates once and from there it will be fine and nothing will happen. i think if the fed is raising unless it is a big policy mistake and they're forced to retreat, we're starting a
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tightening cycle. where is the incremental cycle where is the incremental positive to offset the rising rates. that's what you get in every cycle at this point. i think it's a little unusual that the fed is considering tightening. that the majority of that survey said that the monetary policy is too accommodative at a point where earnings growth is on the verge of going negative. that doesn't make a lot of sense to me. >> companies have been doing great for years, right? they have been doing great for years. where is so how is it that all of these supposed negative policies and regulations, how is it that they're actually hurting business in the u.s.? and i'm saying that the way that it's hurting it is because zurp allows people to financially engineer good results and doesn't cause them to invest long term in plant equipment and cuts down on demand and everything. we're already seeing the effects. you are kensian on steroids.
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you've never met a government policy. >> why is there not more investment then. >> there has been. but we could argue whether it's traditional investment or not. think about all that is going on in california and silicon valley and think about what all we argue that are crazy companies that are coming public at monster evaluations. why is that happening? why is private equity and venture capital. >> because the money has to go somewhere. because the fed's balance sheet -- >> because that's happening because interest rates are zero. >> if interest rates are 5% or 10%. >> the startp market is not being funded by low interest rates. >> of course it is. you would never take that kind of risk if short-term interest rates were 5% or 10%. you would never take that kind of -- >> if interest rates are zero you are saying what do i have to lose? why wouldn't i take -- this is you hear people talking about creativity innovation all these different things.
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why is that happening? it's happening because rates are so low. >> so if the fed raises rates you think that knocks the stool right from underneath it? >> not initially. but i think that if the fed raises rates enough so the yield curve would invert i don't think you want to be in silicon valley stocks if that happens. >> what do you think people should be doing right now? i know you're concerned about the strong dollar too. people to focus on domestic only stocks. >> domestic only. if you think aboutthe im the impact the market is having. they talk about how their global strategy they're executing on their global strategy. all a big success when the dollar goes up they blame it on the dollar right? well that's true in many things. there's many things that go on here. plus, think of how people are in love with nonu.s. stocks. think about how people are in love with non-u.s. bonds. the reason those assets classes have done so well is because the dollar has been falling for 10
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or 15 years and that is now starting to change. >> rich is wrong, why zero rates are bad for the economy. one way to think about interest rates is to consider that at any given time an optimal level of rates to boost economic activity. deviations from the optimal rate up or down by definition create suboptimal outcomes. doesn't matter what the direction is. having too low interest rates is corrupt as a rate that is too high. he's a genius. >> okay. >> he doesn't win a nobel prize some day in something. >> maybe he can win a nobel peace prize because the bar is not very high. >> rich, thank you for coming in today. when we return we have jim cramer coming to us from new york stock exchange and bank of america under scrutiny from the sec. we have that story when "squawk box" returns. big day? ah, the usual.
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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.
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welcome back to "squawk box." the futures right now have been indicated lower all morning long, but they've improved as the session has gone on. with merck trading sharply higher. and dow component apple dow component apple is definitely helping the average this morning. it's indicated 134.50 to 134.52. and that will be a new high. >> merck's helping out, too.
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up by more than $2.50. >> said merck. and then every single penny that apple goes up from here it will be, again, set a record as the most valuable company in history. every single penny. it's at 775 or so right now. $775 billion. making headlines the sec, this is kind of interesting. is investigating reportedly investigating whether bank of america broke customer protection rules. and the "wall street journal" says that regulators are looking at whether they put brokage funds at risk. using stuff that was supposed to be set aside, did you read it? for capital crimes. they used it to make wagers of the other places. if elizabeth warren finds out about this. >> if mike mayo finds out about this. he's already on the war path. >> this is where they make bets and the public and, you know
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elizabeth warren mantra. check out shares of container store after earnings in revenue missed the mark. retailers blaming the stronger dollar and lower customer traffic exacerbated by winter storms during a key annual sale. when we return a west coast wakeup call with jim cramer at the new york stock exchange. he's still out there in that beautiful, join us from our san francisco bureau. a look at futures. sometimes the present looked bright. sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today.
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it's a busy morning in the auto sector. ford and honda both out with results earlier today. and automotive website true car releasing april auto sales. it is projecting new car sales will rise 6%. that's the highest level in a decade. joining us right now is scott painter, the foundered and ceo of true car. scott, thanks, for being here. >> good morning. thanks for having me. >> before we get into some of the forecast what we just mentioned, describe to people what true car is. i know it's information that comes from new and used car dealerships. consumers use it i guess to make
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sure they're getting a fair price. >> well information anddeck technology are transforming how they millennials and modern day shoppers just aren't going to buy the car the same way that used to. we are publishing information what everyone else paid for their vehicle. then we have a network of about one out of every three dealers in the u.s. 10,000 dealers that provide an up front negotiation free price without any negotiation price required. >> what i can't figure out. i hate haggling at car dealer dealership dealerships. i can't figure out why the dealers are willing it give this information away. the best defense they have and the best way they can get higher prices out of people. keep that information private.
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>> i think that the intuition around that is real. dealers were some of the last to really give up that data but i think it's much harder to be in auto retailer than most realize. people under the age of 35 that grew up on technology fundamentally believe that car dealers make 20% profit when they make a car and the reality is the national average is closer to 2.5 to 3%. so, the business of auto retail i think, is changing the way consumers come to market and the way shop is changing and affords the dealer an opportunity to be much more efficient. a real cost to selling a car in terms of how you acquire customers and how you process that transaction and how you ultimately have that resonate in your cost structure. taking costs out of the equation and what we do with dealers on our program is to help them cut about a third to about half of the cost out of their overall cost of sales. >> scott, that sounds to me the dealers were onboard because they had people coming in and
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haggling too hard. they were walking in with deals the dealer wasn't going to make any money on. the dealers are using this to say, here is what people are actually paying and you should get used to paying that too. >> well again, our fundamental belief is that truth is a better business model and that transparency is going to drive everybody to pay a closer price to one another. the price distribution is about 30%. so, when you take a look at that you've also got a lot of customers, nearly 25% that are paying below cost on a car. the average time to purchase a vehicle in the u.s. today is about four hours. at true car at true car, customers are buying a car in under an hour at participating dealers on our program. so we are focused on taking a lot of the inefficiency out, removing friction. >> let's talk about your forecast when you say you are looking for 6% increase in sales if april. what gets you to that position? what are you seeing so far? >> well the fundamentals in the car business are as good as they
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have ever been. we are predicting 17.1 million cars which is the largest buy absolute volume since 2001. the fundamentals in the business are also very strong. you got a low gas price where you start to see the a lot of consumer mixed shift towards suvs and pickups and luxury vehicles, which tend to be very profitable for the industry. but auto just in general is a very seasonal business. so you tend to have a q 4 q 3 plateau. we are coming into a period of time in queue q2, q3, we think we will have a robust quarter in the car business. >> are you talking dollars not necessarily volume. is that partially because we are seeing so many trucks sold the low gas prices and they cost much more than the average sedan. >> >> not only that we are seeing absolute volumes. 17.1 million cars is by contrast where we were four years ago at a ten million car mark. so the auto business has been
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through a volatile years. we are on a strong rebound. the car manufacturers and auto are tailers are making more than they have in recent years. >> scott i just looked at true car shares. it looks like they're down, lost a third of their value over the last several months. what happened? >> keep in mind we pent public this year and nearly doubled in value. i think we are transitioning our shareholder base. our story has to get out there. we are a new company. rein an unlockled position. we are finding that shareholder base and how we communicate to them. we are contending with not only are we a business and focusing on derievg results. we are a public company. i think in terms of where we are going in the market that we are in we are very unique. we are the only transactional platform operating its fail and automotive. not just the publisher. will is no advertising.
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you get paid when people buy cars. >> by the dealer. >> the market is by a huge market and auto manufacturers. >> you mentioned an unlocked position. does that mean insiders can sell stock now? >> it does. so we are now in a lace with where all of the shares are 43ly tradeable. >> how much have you sold? >> i haven't sold any. actually i'm a buyer and have been consistently since we went public. >> great. that's the ultimate insider, right? >> exactly. scott, thanks, so much for joining us today. we appreciate your time. >> thanks for having me. the futures this morning, we have been checking it out. they are off the lows of the morning. down by about 21 points. the negative lows for the morning. in fact all morning for the do you and s&p t. s&p down by about 3. nasdaq is up. it's clinging on there, holding up by about 2 points above fair value. we get a snapshot of big movers driving the stories moving the markets today right after this. why pause to take a pill?
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three dow components on the
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move the morning. apple earnings and revenues topping stills. shipments rising 40% year over year. the company is raising its dividend and stock buy back program. the street likes that. that stock is up $1 fine 70. an increase of 1.3%. merck is raising its goines up 5.3%. that's a dow component as well. pfizer is posting better tharn its quarterly rules. it's your honor turned around. it is up by about 12 cents. price os of stocks to watch, a mixed car door coke shares dropping after that retailer said residents fell short. they dropped a bigger than percent. >> trading higher earnings members increased and spending on medical claims in the first
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quarter, remained low. insurers are raising the four-year genes to just above the current year consensus. >> make sure you join us tomorrow. right now, it's time for "squawk on the street." they are live in san francisco. >> good morning, welcome to ""squawk on the street"." we are live once again from our studios at one market in san francisco. a busy morning. s&p case-schiller home market on your screen. so much to talk about yesterday, earnings from apple, pfizer ford, a two-day fed meeting begins today. we will get you a glance at oil and the ten year as

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