ators weren't informed about the injury and denied the shot two hours before the fight because they had no previous indication there was an injury. he'll have surgery this week. >> i wish they would let him get the shot because it might have been a better fight. >> exactly. it will take a while to come back to a $100 fight after that. >> you don't know whether it's real or not. join us tomorrow. "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. disney's bob iger and a cnbc exclusive. company results beat the street. later this hour cisco's john chambers stepping down as ceo after running the company 20 years. big show today. the premarkets slightly negative. plenty of earnings. moments ago oil cracked $60 the first time this year.

the ten-year yield up to $2.12. we'll get ism services in an hour. >> this is very big day. we'll start with disney. disney shares are rising precip precipitously premarket. higher revenues at its theme park. joining us for an exclusive interview the chairman and ceo bob iger. great to see you. >> thanks jim. good morning. >> i feel like i have to do a congratulations. i think you are going to hear a lot on your conference call. marvel franchise, parks and resorts, which were the ones that drove the earnings? >> parks and resorts and consumer products had great quarters. all our business did. there were numbers that weren't comparable. the studio had a great quarter. last year this quarter we had "frozen" particularly the video.

media network side we have extra costs on espn because of the college playoffs. all our businesses had a strong quarter. from a percentage increase parks and resorts and consumer products led the way. >> how much is the tech you added, new things you put in during the down turn and how much is gasoline? >> i think we have a great business in that we offer the consumer a grade product and experience. it's great service, great use of intellectual property and great price-to-value relationships. i don't think you can look at gas prices or what's going on with the dollar, currency exchange issues. i think you just have to look at what is the product we are offering. what is the experience? how much in demand is it? i think clearly over these years, demand for our parks and resorts experience not just in the united states, but globally is increasing. >> consumer products i don't

think it started here. i've got "star wars" coming in q-4. what are the merchandise plans there? can they eclipse the movie? >> we are not going to make predictions about merchandise. we certainly have grand plans for "star wars" merchandise. you are talking about the number one franchise in the world in terms of merchandise. there hasn't been a film release since 2005. we've already seen interest in this film starting to generate increased interest in the merchandise for this film. the film p is seven months away. i think you can expect the number one franchise in the world is only going to strengthen in terms of value, particular lion the consumer products front. right now, what we are mostly focused on is making a great film. i can't wait to show it to the world. >> bob, it's carl. you spent $15 billion on marvel pixar, lucas film. people snickered a long time

ago. you said on our air recently you are fairly confident those were good deals for the company. is your appetite sated for additional m&a on the studio front? >> we have a great hand on the studio front. and as a company in terms of our intellectual property. disney was strong and adding pixar added to the strength particularly on the animation front. they turned disney animation around. marvel a phenomenal brand, a great franchise. the success of marvel in those films since we bought it has been well beyond our expectations when we purchased marvel in 2009. i talked about lucas and "star wars." the best is yet to come. we have six "star wars" films in the works. there will be three released between now and may 2017. i think as a company, we've got a great hand. we don't really need more. we clearly demonstrated interest

in intellectual property and ability to leverage it across our businesses over time. over many territories around the world. i don't want to suggest whether we are sated or not. there are no holes to fill. >> bob, it's david. during this quarter, verizon's fios came out with a new plan to tier various offerings for its video customers. sports obviously always figures prominently in these bundles, but in this case it appears they may have run afoul in agreements and reports suggest you guys at espn may undertake legal action against them. can we expect more of these type of different tier offerings when it comes to the bundle? are you going to get or have to get more litigious when it comes to these companies violating your programming agreements?

>> first of all with regard to verizon, it's specific. we believe they violated our agreement, and therefore, we have taken legal action. we are certainly willing to work with various distributors to come up with packages that are of value to their consumers and also continue to provide value for us. i don't think this is the beginning of an era of litigation between the programmers and the distributors. i think there's a lot that needs to be said and considered as it relates to the bundle. i don't want to sound like polyanna but i don't believe the bondle asundle is dead. we believe the bundle basically provides great value to the consumer in terms of choice and price. we are in a new era of great consumer choice and consumer authority where there has been a shift. consumers will demand more flexibility and customization. we've been at the forefront offering that and being willing

to offer more. technology we believe is friend not foe, both to the programmer and to the consumer. i think the key in terms of bundles is how much value is the consumer getting? how much choice and at what price? is the navigation good? that's critical. user experience is going to get more important. the last thing i want to bring up because a lot has not been said or considered about skinny packages when you unbundle broadband, broadband costs are going to go up. a lot are buying the expanded basic bundle are getting broadband bundled with that at a bargain rate. when you go to a skinny package, you are going to have to pay for broadband separately. that's going to be expensive. i haven't seen a skinny package that in my opinion creates great value to the consumer yet. we are open to discussion about that. >> you raised the issue of cost of programming. i didn't. obviously, this matters a lot

for sports. is there a cap? s is there some way you would be able to pit these leagues against each other? be able to say we are not going to pay more for nfl? we'll say to the bcs, this is all we'll do and find new sports people watch because we are not going to tolerate endless increases in the price of sports no matter what because we need live programming? >> we bought some things aggressively. the college football championship is one more recent example of that. we also passed on some packages. we feel at espn we've got a great hand in terms of programming. we don't believe anybody comes close. that's enabled us to drive ratings and advertising growth. also to continue to drive sub fee growth which creates huge value and hits the bottom line in dramatic fashion. we did say, by the way, that the cost for espn programming would be higher this first half of the year because of a new nfl deal. the nfl wild card college

football playoffs. you are not going to see costs rise in the second half of the year for espn the way they did in the first. espn has also extended multiple deals over the next decade. so the next balloon is going to be due to the new nba deal which kicks in in 2017/2018. beyond that you are not going to see the dramatic cost increases we've seen the last few years. espn costs are going to flatten out. we are not going to buy everything. we can't. we'll buy what we believe the viewer wants and we believe will create value for the company. >> when i talked to investors who are almost uniformly happy if they owned your stock any level any period of time. they talk about disney becoming basically a consumer discretionary company a la procter and gamble and say it deserves a higher multiple given that. do you agree with that? >> we are story tellers first. if you look at whether it's espn and their coverage of sports you look at our movies television, we tell a lot of

great stories. people like stories. they demand stories. they like to be entertained. they like to be informed. i don't think that we are similar to procter and gamble except in the collection of great consumer brands that we have. i think our product is consumed in vastly different ways than people will use tide or crest tooth paste, as a for instance. i think there is some similarities because of the brand value, but i think there are a lot of things that are not like the big consumer products companies. >> last question. you talk about not necessarily willing to buy all sorts of programming. i saw you were in there buying a huge amount of your stock. you're in there on the days the stock goes down aren't you? >> we are going to get more specific about that on the call but we've been buyers of our stock over the last number of years. we actually looked at returning capital to shareholders in a variety of different ways.

clearly, we had a great run in terms of our stock price. we've also managed to continue to increase the dividend over the years. another big increase this past year. we've been buying back our stock. on top of all that we've been investing in our businesses and acquiring companies. we think we managed to deliver a great blend in terms of how we've returned capital to investors. i don't know that's necessarily going to continue in the exact fashion that it has. we talked about acquisitions for instance. i think this company's free cash flow is likely to continue to be robust. decisions how we return capital will have to be made on an annual basis. i guess dividend increases and share buybacks are going to be part of that. >> thank you so much. i know it's a tough schedule today. bob iger chairman and ceo of disney. congratulations on a quarter that really pleases pretty much everybody. good to see you, sir. >> thank you. >> iger was named ceo march '05.

stock is up 300% since then. four times the s&p. i like the viewer who wrote in and said bob iger can bench press you with one hand. >> probably can. when bob comes on "mad money," how many people do you think are in the greenroom when he's there? nobody. just sits there. why? because he's a humble man, despite the fact he doesn't have to be. >> very little drama with him which i think we are accustomed to now you forget the eisner years. you don't forget them where there was a lot of drama. >> when you see this company, it makes me think, i know we are all supposed to index. no one is supposed to own individual stocks. i listen to the mumbo jumbo from people who say you should be a passive investor. first thing i ever saw was "snow white." this is probably one of the most obvious stocks in the world to own as long as this man has franchise after franchise. "star wars" comes up next. shanghai the year after that.

there is more marvel in the pipeline. the "star wars" merchandise, every one of these retailers is claimering to have the right merchandise in it. what can i say? this is why you own stocks. you own stocks because of disney. >> they have something like 80% incremental margins on consumer products they put out that come along with the things like "star wars" or "frozen." it's a heck of a business. interesting i thought his willingness to engage on the bundle and talk about the potential value. that is something we mentioned a number of times as we try to navigate the changing landscape of viewership and are seismic changes going on. that idea that there is something economical about the bundle and if you start to tier thin packages you are going to have to pay more for your broadband. your question, your follow up is the key one. what about sports? it's so expensive. how can it continue to get more expensive? or does it start falling off these bundles? >> we didn't ask him if he expects to face google in a bidding war.

we didn't get to a bunch of things. not enough time. >> stags will be on the call. now he's coo so he will be on the call. >> offline not from disney but other people in the sports exec world. i hear we've got to lock these up long term. google might decide to have all the rights. there are rights issues left. the bcs i thought was brilliant. move bcs to espn. suddenly they have to take bcs. can you really afford not to take espn in a bundle? in an unbundled situation, step back for a second. darn that, was a great quarter. you are up against "frozen" dvd up against comparisons. the next one we have $180 million lease domestically against what was probably the most exciting sports weekend i can recall. >> right. >> well done. >> second biggest weekend ever after the first one.

when we come back this morning, a lot more to come. cisco chairman john chambers who is stepping down as ceo after two decades on the job. amid signs of a turnaround at olive garden we'll talk about darden ceo eugene lee. and jeffrey smith. a little bit of weakness as we kick off this tuesday morning. more "squawk on the street."

netflix receiving an upgrade to buy from underperform. taking a positive view on their long-time subscribers citing its rapidly growing portfolio of original target. doubling its price target to $7.22. jeffries initiating tesla with buy ratings saying concerns of china sales are overblown. netflix stock is $568 today. they take their 2016 numbers from $196 to $432. >> if you want to eat crow you might as well eat just a whole crow of the tree of crows we saw in the movie "the birds."

this was an extraordinary reversal of how a guy feels about a stock. $722 target used to be $350 target. underestimated the impact of original content. content is king. thank you very much. wow. my favorite. 2016 estimate $1.96 goes to $4.32. >> is that all? that's all the increase is? >> that's all. >> saw something he likes apparently. >> i would have called this is wrong. i would have said wrong. wrong. >> i don't think the words "we were wrong" is in the upgrade. >> misjudgment? >> the tesla call, jeffries initiates with a buy. they've done prop surveys that show the company could sell 500,000 cars by 2020. their upside case $4.50 on the stock. >> it's all about the battery. worries about china overblown. this is the kind of thing that shorts, there is a short story

out here. we know this from tesla. this says you are going to hear a repetition of the previous quarter. there were people betting on elon musk. demand concerns remain overdone. let's say if they deliver this quarter, there will be a lot of people very surprised. >> moving more aggressively toward selling used teslas as they need to as they come back from lease and things of that nature. seemingly putting a positive spin on that as though that helps to broaden demand for the car. perhaps that is the case. >> average selling price going up. also ties into the idea used cars are worth more than we thought. elon musk the battery halo from last week, even though people were saying this is vapor ware analysts want to believe, they very much when you initiate a buy and talking about huge

ebitda people don't regard it as an earnings story. jeffries saying this is a big earnings story. shorts out here will be saying jeffries, please give me a break. they are talking about model three launch before 2017 commercial fleet. production ramp faster than expected. you hear wait a second. ford makes more cars in the time that i said this than they will make all year. the fact is this is a loved stock by some people because the car is such a blast. we'll get cramer's mad dash and countdown to the opening bell. stay tune forward our live and first on cnbc interview with cisco's chairman and outgoing ceo john chambers. one more look at the premarket. more "squawk on the street" straight ahead.

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little less than six minutes before the opening bell. time for mad dash. estee lauder. >> strong dollar be damned here. it didn't matter. these guys have a product people want. u.s. was strong uk was strong

europe was strong. when you charge a lot of money for cosmetics and perfume and can get away with it this is what you get. this is a very well run company. should be thought of as the king of consumer packaged goods, even though we don't talk about it enough. macy's biggest profit center is perfume. >> it's a global franchise. asia very important for this company which is run by an italian gentleman, i believe. >> yes. when you looked at colgate's quarter which is a terrific company and the stock goes down when they report when you look at clorox not as much international, coca-cola does okay. these guys have all the same headwinds as everybody else. when you have a superior product you can get rich people to buy, it doesn't seem to matter after currency. it says something about what people really want. don't forget ralph lauren did not deliver. that has historically been what we thought was the high end. this company is hitting on all cylinders. it's not talked about enough. it will be. it's going to be the blue chip

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you are watching cnbc "squawk on the street" live from the financial capital of the world. opening bell in 45 seconds or so. busy morning. a lot of media and consumer earnings. the likes of kellogg, discovery, sprint. we'll get to all those later on. big calls on netflix and tesla. oil above $60 as the saudi oil chief was asked about the price of oil. he says no one could set the price of oil. it's up to allah.

>> i don't want to go there. i know we had a lot of controversy yesterday about fracking. the negative story about fracking is case by case. be careful. so many guys are doing quite well. >> a look at the opening bell. at the big board it's darden restaurants celebrating its 20th listing anniversary. we'll talk to the ceo in about half an hour. at the nasdaq 1800 flowers.com celebrating mother's day this sunday. >> oh, shoot. >> get on that. it's going to come around quickly. we just talked to bob iger at the top of the hour about a bunch of different topics. the cost of securing sports rights. the quarter at large which at $123 beating $111. here is a quick listen to what bob iger told us. >> parks and resorts and consumer products had great quarters.

actually, all our businesses did. there are some numbers that weren't necessarily comparable. the studio had a great quarter. last year this quarter we had "frozen," particularly the video. that is not a great comparison. on the media network side we had extra costs at espn because of the college football playoffs and nfl wild card. generally speaking, all our businesses had a strong quarter. from a percentage increase perspective, parks and resorts and consumer products led the way. >> up 18% this year. it is the top dow stock of 2015. >> this stock ran into the quarter. i think it is important to point out bob did not talk enough about this buyback. when this stock goes down like many of the media executives, they are in there buying. people sell it. there's a lot of trading calls made on disney. a lot of people say i don't know how good the quarter can be. every one of these declines particularly the decline involved in ebola last year was just a major opportunity for disney to buy.

has to do with confidence and the ceo very focused on the operations and also the stock. >> your point is well taken on this, which is these are businesses overall in the media sector that produce a good amount of free cash flow that has typically been used to dramatically reduce the amount of shares outstanding through repurchases. thereby, obviously increasing earnings per share. other than disney you are not talking about top line growth for most of these companies. they are lucky to get 2% 3% on a good day. that is where a lot of the value some investors would argue has been created. they wonder whether it is fleeting. >> there is this formula. you asked about acquisitions. you buy a franchise like marvel and you bring in the stock you use. you go buy "star wars" and bring in the stock you use. you buy pixar. is there another one coming?

they have barely mined what they have. this is not a situation where "avengers" is played out, there is nothing left. there is a catalog that can go on for years here. "star wars," i am shocked. it's like harrison ford i was looking at him yesterday. he's younger noun then when he first did this. it's amazing how these franchises live. though live just the way that the seven dwarves live. you probably remember their names. >> i don't. >> you are sneezy today. >> i'm usually sleepy but today i'm sneezy. >> there is grumpy and doc. >> i never get doc. nobody ever called me doc. >> doc was like combat. he was like a sergeant. >> what was he doing? >> i don't know. >> it was a dark movie. >> mirror mirror on the wall. >> we are still not done dealing with various global conglomerates warning about

forex. >> emerson was horrendous. they already preannounced so it was a shocker. this is a company that used to me be one of the preeminent industrial companies. i'm trying to find out what's going on with their process business. this was a bad quarter. i don't see a silver lining in emerson. >> they cut their full year outlook. >> they had some unbelievable track record of growing earnings per share per quarterback in the '90s. different story now. >> emerson was the stediest of the steady ones. now we see others chiefly honeywell. dave cody gives you the growth emerson used to. i'm mystified. these are just bad numbers. there is no way to sugar coat it. bad. >> how about blooming?

is that a disappointment? >> given the faktct denny's was up. i like texas roadhouse. that was one great story. talking about they tried to throw cold war on their own story and it didn't matter. if you want to go back to the restaurants which darden is one, i've got to recognize you have 8% comps, it's incredible. >> we've got a treat here. we've got john chambers. shares of cisco just slightly lower this morning after the news that after 20 years in the job one of the longest reigning ceos in the business john chambers plans to step down this coming july. he got the company through the dot-com bubble. came out on the other side. he is going to remain on the board and as the executive chairman, john, i don't know. when i heard this i was sad. i remember when you got the job. where did time fly here? what is going on?

john? >> i'm sorry. i didn't know i was on the line jim. how you doing? >> just shocked to see -- i remember when you came in. this is a tough one to swallow for those of us in the business a long time. somehow we viewed you being the ceo forever. clearly not the case. you said this would happen. give us reflections over the 20 years. boy, has the world changed. >> jim it's been tremendously exciting from a shareholder perspective, the total return of shareholders is up 1600%. sales are up during that 20 years about 3400%. earnings per share 3300%. we changed the world many ways with the internet. we constantly reinvented ourselves through challenges like the bubble and come out even stronger. innovation engines on fire. it's all about our people including the next ceo chuck

robb robb robbins who is going to be awesome. our future is probably the brightest it's ever been. i feel tremendous about our future at this point in time. >> got to tell you, there is a moment on one of these conference calls you had where chuck says pause and enjoy the moment. when i saw you last you were doing anything but pausing. you were meeting with the heads of france and germany, creating jobs in europe. i thought this was a moment where you were thinking i capital quit this job. i love it too much. >> jim, i do love the job, but one of the most importants things you do as a leeredader is build a company with a seamless transition. we had five heads of engineering. we'll make this seamless. i will be moving to executive chairman, which means i'll be chuck's wingman where he wants

me in terms of key government relations, digitizing cities and countries, key strategic partners, et cetera. i love what i do. it's time for chuck to take the reins. >> i know this is a seamless transition, but when i listened to chuck on one of the conference calls, he is talking about we can move faster. i know that's not a criticism of your regime but he sounded tough, i have to tell you. as if to say the other guys are moving fast it's time for us to obliterate the competition. >> jim, you said it right. chuck is a tremendous competitor. we are very much alike in that. i would say my strengths are vision and strategy. chuck's strengths are understanding vision and strategy. he is an execution machine. he can and will move the company faster. he'll make it more seamless across many of our operations, our maker 18 product categories. he'll take us to faster growth than i would have done.

i think the company's in great hands. chuck will be a very great ceo. >> a lot of people are interested in your future separate from your duties as executive chairman. people have suggested perhaps there is a future in politics. did you work for mccain. how interested are you in that? >> well carl at heart i'm a person who views politics agnostically. i am a proud moderate republican. but i like democrats, as well. if i were to say what i'll do in the future you'll see me more giving back more in the teaching role, helping start-ups go public et cetera. i enjoy coaching. i think you'll see me do the executive chairman role. you'll see me involved in start-ups and giving back and teaching. then you'll see me spending more time with my family. >> i'm curious how you see your role evolving -- >> hey, david. >> hey, john. in terms of working with your

new ceo. you mentioned the words wingman. do you think that transition is going to be hard for you given how long you've been doing this one job? and when you think about it executive chairman is not an insignificant job here. you are still chairman of the board. how much time is it going to take? >> probably three questions. chuck will be the ceo. he will make the decisions, period. that's what you would expect. secondly in terms of time probably 50 to 60% of my time. third, chuck will set where i can make a difference. i will be his advisor and behind him all the way. he was the unanimous pick of our board. he will be able to analyze how things work together and speeding that machine up like jim said i think we'll go faster under chuck. i think it will be very very good. >> one question from me which is following up on what you just

said. you seem confident that growth can go faster under him. why is that the case? >> i think it's three things. if i were to outline three years ago when we started to turn the company around one more time jim you said it right, we've done this five times. my ideal scenario would have been three years later to have great momentum in the market do have a strong new ceo coming in and to be on the second cusp of the next generation of the internet. digitization is coming at us like a rocket. we are in clear leadership position there you are going to digitize countries. it will get innovation and job creation going faster. we suddenly are much more relevant again, david. we are in a position where heads of countries are coming here. heads of companies. we are speaking all the time at the board of directors on how companies become digital and how cisco could be their partner in that.

we are at the front end of a decade run in terms of next generation of the internet. we'll lead it like we did last one. >> you violated your rules. you are reporting next week at the end you said i'm not supposed to do this but reiterating my guidance. that means you've got great growth switching. you see a continual turn in europe. better times are going to continue in terms of not caring about a strong dollar or weak dollar. i'm taking that to mean you are going to have the same plane in terms of each month being better when we hear next week. >> jim, you are very good at getting me to cross that line. i am going to come on your show and discuss our new advertising campaign like you teased me the other day. in terms of next week we'll watch to see where next week goes. as you would expect in a ceo transition role, i want it to be smooth. i'm not going to let expectations get ahead on what chuck can deliver on. i feel good about our quarter as we go forward. most important i feel good about

the next year and next ten years. we are get the beginning of the next cusp of the internet and cisco will lead it. >> i've got a great two-minute video of what the internet of everything means. it's a cartoon. four times what comes up is cyber security. what is the edge cisco can bring to the enterprise the other guys don't have? >> well the difference what cisco can do for security is instead of being siloed products like our peers, we can go with an architecture that combines firewalls and malicious application, et cetera. we have a chance to do this architecturally. it's a perfect market for us a whole bunch of players. we are the largest player at 7.5%. we had the differentiation of intelligence in the network. it's a huge growth market.

you'll see chuck do that. >> is there a sense over the next chapters for cisco that the company will become more consumer focused than enterprise focused? if you talk about things like the internet of things that, lends itself to something that might be in the hands of your everyday person not just your i.t. manager. >> that comes back to a decision for chuck to make. we got burned once on that before. i think you'll see us be business-to-business or business-to-consumer. working with retailers to get to the consumer. not consumer-to-consumer. we tried that once before and missed. i wouldn't take it off the table, but i think the sustainable differentiation, goal having 40% less market share much better in a business community. >> you talk about reinventing the company. there was a period a couple of years ago where people felt the white box was going to do better. people thought you didn't have enough software. were you surprised at some of

the -- the comment was cisco had fallen behind? my take is you had such a good last quarter because cisco leapfrogged ahead of the guys who were bad mouthing your company and failed to execute versus you. >> jim, i think you gave me a softball on that and thank you for that. 4 1/2 years ago we said white boxes would be our competitor. we built architectures tying products together with services and applications. we are beating the white box competitors very well. transitioned this to outcome base which means customers pay a premium for it we embrace software defined networks rather than it being a challenge we are the clear leader there once again, we took our challengers, understood what they did well great momentum in both categories. we identify the market transitions well ahead of our peers. we usually beat them on the front end. if we miss it we go acquire somebody and beat them on the

back end. >> let me give you more of a hardball. when i read what you are doing enterprise, global, web, cloud this is what ibm tells me they are doing, sales force tells me they are doing. what most of these consultant companies tell me they are doing. what is the differentiation? everyone seems to be doing the same thing. >> the differentiation is we moved our company to purely outcome base results. you'll see that in terms of over the next year or two in our enterprise and commercial market. we combine every one of those, the number one position in cloud, the number one position in the data center with compute coming together with networks coming together as storage. number one position now in sdn and applications infrastructure number one position in security number one position of internet everything. we combine those to get business outcomes. that's why a country like france aligns with cisco from the

president to the prime minister to the ministry of the economy to ministry of the defense. it's why israel is largely cisco end-to-end architecturally. it's why walmart prefers cisco. it's why service providers like a verizon or comcast or century link align with cisco rather than individual players within it. this is a market set up for us in terms of architectural plays. you'll see us bring the home the next five ten years. >> in deference to you because of 20 years, want to talk about what you plan to do which is i know there is a stanford fellow on your board. you want to teach. i've been adamant the united states has fallen behind in digitization. is it possible -- not saying politics necessarily, but possible you become a crusader for the united states to catch up to what you are talking about, which is china, france germany? these countries you say, south korea, are all ahead of the united states right now.

>> i think you hit on the most important issue for our country. we used to talk about the internet being the highways of the future. it's now how you digitize every aspect of business, every aspect of government every aspect of our home life. we are behind europe and we are behind asia. i am going to invest a fair amount of my time and capital on trying to get both the current leaders in congress and the administration, plus the next generation of leaders that come in in 1 1/2 years to get our country back into a leadership role. this is so important in terms of start-ups. this is so important in terms of job creation. it's so important in terms of per capita income. and perhaps what happened during the '90s where president clinton grew gdp 16% plus real income 16% plus 22 million jobs. the next president of our country, i think, can do the same thing regardless of politics. it will be around the digital

age where president clinton did around the information age. yes, i would love to be part of that. >> you often talked about the growth of internet of things. people felt you were being way too optimistic. it turns out you were pessimistic in terms of the growth and the size of the market, weren't you? >> yes, i was. we said $19 trillion in profits over the next decade. it will be a number much higher than that. mckinsey said you're probable i off by three, five fold on that new. it will transform every company. this is the key take away jim. if companies don't change to a digital company, they will die. this is about you disrupt yourself you disrupt your market or get left behind. that is what we'll see out of our advertising. you'll see us drive that back where cisco is the partner that can take you there. >> john chambers cisco's outgoing ceo. good to see you, sir. >> jim, thank you, david, carl

appreciate it. >> wow. end of an era. it's actually true in this case. >> john is -- john is not cisco, obviously, it's a big team. there are people who you just think are part of the ferment. to see john chambers go up to executive chairman show you things have moved along. there's not many people left. >> between that and letterman. when we come back darden restaurants chairman gene lee. we'll talk to them at the top of the hour. an exclusive with the ceo of sprint marcello claure. find out how they are doing as they post earnings today in line. my feet felt so heavy at the end of the day. they used to get really tired.

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dow with a moderate loss here. any gains being led by disney and some of the oil components. we'll keep our eye on that. in the meantime we'll go to bob pisani on the floor. >> good morning, guys.

take a look at the futures. futures on the trade deficit. doesn't normally happen. the imports were up big. exports were only up fractionally. you'll see gdp revised downward. it was a terrible report and did move the market. energy, good news here. oil over $60 the first time since december. that is moving everything. technology to the down side. estee lauder historic high. great numbers. currency impact was 10 cents. >> tomorrow is the fifth anniversary of the flash crash. i spoke with s.e.c. commissioner dan gallagher. he said the markets are safer thanks to new s.e.c. initiatives, particularly the new circuit breaker rules. as for that london trader arrested for part of the flash crash, the s.e.c. stands by its original report but working out to sort out the facts. his strongest comments came on the subject of regulation and

reiterated his call for the s.e.c. and cftc to merge into one body. >> it makes no sense. we are one of the few, if not the only countries in the world that has a bifurcated system of regulation for futures products and equities. makes no sense. >> despite the expenses he supported a call for consolidated audit trail that will allow the s.e.c. to allow development and marketing audit of all trades. we don't have that right now. he says we need it. back to you. >> let's check in with rick santelli at the cme. good morning rick. >> good morning. rates are moving up a bit even though stocks seem to be moving down. two day of tens shows we are testing unchanged on the year. two-year notes at $61. should they close would be the highest yield close since mid march. it was the flattest ever in january this year going back to 2008. about seven years.

it's all it's been doing of late is steepening. let's look at the dollar index. since december 1st you could see it's turned over a bit. you overlay the next chart the dax, same pattern. the shanghai composite in china is up over 30% on the year but down 4% today. as you look at this chart starting april 1st you see deterioration as they try to control the speed. lqd and etf for corporate grade, investment grade securities. you can see it is losing ground at the lowest levels we've seen since early december. we'll be coming back in a few minutes for nonmanufacturing ism. back to you. busy night tonight on "mad." >> yeah. we've got ethan allen and xpo which is a new company for me. it's one of the most aquisitve

companies i've ever seen. and it is cinco de mayo. >> this is the biggest night of the year. if we get good weather? yeah. >> got the garden working? >> yes. the back will be working. >> we'll see you tonight "mad money." >> jeff smith and gene lee. ism services, too. ♪ ♪ ♪ at chase, we celebrate small businesses every day through programs like mission main street grants. last years' grant recipients are achieving amazing things. carving a name for myself and creating local jobs. creating more programs for these little bookworms. bringing a taste of louisiana to the

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let's get over to rick santelli in chicago. we've got breaking news on ism nonmanufacturing data. over to you, rick. >> it's april and it's 57.8. that's better than expected and sequentially better than our last look at 56.5. what's interesting is it's exactly one point under last november's read at 58.8. why do i mention that? because that particular read november 14 was a nine-year high. 2.18% in tens. one basis point down on the year for tens which didn't happen in all of 2014. we never traded higher yield than we settled the previous year. this is something to pay attention to. simon, sara back to you. >> feels like a change in the data. blowout numbers on the trade

front having a bigger effect on outlook. >> it's going to kill any revisions for first quarter gdp as well on that deficit number. >> let's get over to steve with the analysis. >> you got me there? good. so real quick on the ism services, this is a big change from the data we had previously in the sense that it's positive where we had really weak data. one thing we look at is the employment number here. that maintained a lofty level north of 56. that's a difference from the manufacturing. i want to get to this blowout in trade which everyone is talking about. it was the worse monthly trade number since 2008. it means as rick was suggesting the first quarter is on track to be negative. the surge is blamed on the easing of the west coast port strike. first imports couldn't get. in in march they appeared to have flooded in. what is unclear, whether we are also seeing an effect of the

stronger dollar. chief imports coming into the u.s. and challenging exports as u.s. goods lose competitiveness. trade balance minus $51 billion. $10 billion more than expected. exports challenged imports surging. you can see nonpetroleum imports overwhelms any gain we got from the declining price of oil. here is what happened first quarter gdp. it is negative. tracking cnbc negative for the first time. falling a full half point with the range of zero. stephen stanley says we may get it all back in inventories ant won't kin. the q-2 tracking continues to lose steam. we had been at 3% now at 2.7% with a wide range. some commentary, q 1 likely contracted thanks largely to mother nature and the ports disruption.

if imports continue to rise there is downside risk to q 2. a significant portion of this move reflects underlying weakness in exports caused by the strong dollar. hard to imagine the entire deterioration will be sustained. this is a very confusing number we don't want to draw too many macroinferences from this west coast port strike easing but still the q1 number remains negative for the first time. >> it did have a market impact which is unusual. >> i want to point out in the last several months with the stronger dollar, the trade data and decline in price of oil, trade data is followed more by wall street right now because those two big mac row themes are playing out in the trade data. all of a sudden it's become a much bigger swing factor in gdp and jot you the look for growth in the country. >> for those that say the strong dollar is helpful, just look at the export data. >> i need to make one other

point. these are preliminary numbers. it's seven of our ten panelists on the gdp tracking. we'll come back later if there is a significant change. right now it's negative at 0.3%. >> tracking negative growth the first quarter. that is a headline. steve liesman, thanks much. let's send it to carl and david on the floor for an exclusive interview. >> thank you sara what a treat for us. you might have seen darden ring in the opening bell. celebrating 20 years as a publically traded company. gene lee the ceo joins us with jeff smith. good to see both of you. good morning. congratulations. >> good morning. >> 20 years is quite a chapter. of course the past year has been an amazing chapter. we all remember those original slide decks. how would you characterize the reinvention of this company? >> it's been great. it's a great team inside of darden. it's been a pleasure for the new board to get involved with the company, to work with the management team and employees. we've been able to get inside

the company and think about it together, figure it out together and come up with plans for improvement inside the company together. a lot of it was happening before. there's a lot of renewed energy and emphasis as well. >> when he says figuring it out what's the main thing you have figured out, so to speak, since the time you've taken over as ceo? >> first i guess we've been focusing on the basics of the business. we've been focused on culinary innovation, full service and improving the atmospheres of our restaurants. we've been able to cut out $100 million in costs. none of those costs we cut will affect the consumer. >> like what? >> we've rebid our media. we redid our linen contracts. all where our consumer will not be hit at all we don't want to touch the product. we don't want to touch the service or labor. all the stuff that don't impact

the guest. we rebid it all. we pulled $100 million out of the business. >> why was lobster beyond saving or beyond anything you could do for it? >> you have to ask gene. we wanted to save it and keep it. >> we felt that red lobster at the time really needed to get into the private world. it needed a few years to reinvent themselves and do things for the business we couldn't do as a public company. >> does it speak to consumer taste or more about operational efficiencies and that kind of thing? >> i think it speaks to both. there were some efficiencies the organization will get as a private company. there are consumer tastes that were changing that needed to be dealt with. >> and he is still chairman, right? how is that working out? >> it's working out great. >> you have a new board of directors. they bring you in. it's an interesting experiment if you will. we have never frankly seen anything like it where he replaced an entire board. >> i couldn't ask for a better partner.

jeff and i aligned -- >> not just because he is standing next to you? >> we decided what is important that had to get done. i had the full support of jeff and the whole board. we are working well together. when i think back to the 300-page deck jeff issued a lot of what was in there were things that needed to be done. we discarded what didn't need to be done and worked hard every day. >> those who say what you are a beneficiary of is lower gasoline prices. you are paying less for linens for laundered, but that's why the stock is going up. >> i would say the consumer behavior we've seen is they changed their behavior inside the restaurant. we are seeing consumers willing to not buy on deal. consumers willing to buy and add on buy an alcoholic beverage but overall the industry hasn't seen the lift from the lower gas prices. we've seen the consumer change in behavior. >> now we've got crude above $60 the first time this year are

you worried the best times are over in terms of savings? >> no. i think that we still have an industry where brands with great value equations continue to do well. i believe that our brands all our brands have great value propositions and will continue to prosper. gas prices moving up and down. that's going to have a negligible effect short term. >> are you surprised you haven't seen more of an impact? you're not the only ceo who said similar thing. >> what drives casual dining is discretionary income. we need a greater increase in discretionary income to spur on the whole industry. not just a little decline in gas prices. >> where are you in terms of wages? we have seen a lot of focus on that and certainly mcdonald's, of course, has increased. there was a protest, an activist conference we went to. you weren't there. >> i don't know about that. >> the focus was on wages.

do you feel it's appropriate what you are paying people at darden and/or do you need to move up? >> we are a nonminimum wage employer. our average wages are north of $15 per hour. our servers tend to make more than that. our entry level jobs as hostesses and hosts make less than that. overall, our average wages are above $15 an hour. our retention rates for employees are 20% below industry average. people love to work for darden. we have 150,000 team members that come to work every day and create wonderful dining experiences for our guests. >> can this experiment as david pits be recreated? where would you put it if you could? >> it's about a partnership with the board and management team and ceo. when we get involved as owners first thing you need is a great ceo. it has to work well. it has to be a great partnership. of course it can be recreated.

gene has been a great partner as he mentioned. we are excited to continue to work with him. like we are excited to work with our managing teams as other companies. >> darden is what you may be best known for, but you've been extraordinarily active as an activist. yesterday you filed a d on brink, why? >> we think the company is undervalued, obviously. their margins are significantly below their competition. they can just perform better. the managing team knows this. we had good constructive conversations with them. we believe the operations can be improved. >> another name that we talked with you about, not in the recent past office depot, staples, that deal in progress. there is a lot of concern about anti-trust given how active regulators have been not the least of which comcast's bid for time warner. may that bleed in and/or color the review of that transaction as more activist expansion that we perhaps have seen from

anti-trust? >> we don't believe so. we believe the ftc is looking at it rationally. decisions will be made based on a rational analysis. if you look at the way the market was defined 1 1/2 years ago, this deal should go through. it's i similar to what we talked about the last time. could something happen? of course. something can always happen. assuming they are looking at the true analysis of the situation and they are defining the market the same way they defined the market before it should be okay. >> it's been an active week for restaurants in general. mcdonald's turnaround video announced yesterday. do you think the sweet spot is still in fast casual or is qsr interesting? >> i think all seg me. s are interesting. i think the consumer has a demand for great brands. they have great value equations. i wouldn't limit it to any for example segment. people performing inside each

segment are winning market share. >> can i take everybody to times square after this? i would imagine so. >> there is a capital grove here. >> we had dinner there last night we sent sandwiches to the whole floor. >> thank you. >> congratulations on 20 years. thanks carl. let's turn to the markets now. is the dollar rally over? after nine strayed months of strengthening, more than 20% historic climb, the search came to a screeching halt in april. euro shot up 4% best month in years almost to parity with the dollar what now? i talked to a number of strategists and traders. the verdict is the dollar rally will resume. watch for better u.s. data to drive it.

if the data turns better that will convince the market the fed will eventually raise interest rates even if it's not as soon as june. importantly, european central bank qe stimulus is going strong and powerful should continue to pressure the euro. remember how crowded the dollar trade was? everyone was betting on the u.s. dollar? the last few weeks some bulls have been shaken out now the net long position in the futures market is $35 billion, it paves the way for another move up in the u.s. dollar. let's bring in president of sri kumar global strategies. >> i have been a bull on the dollar for a long long time. i've turned bearish more

recently. i think the dollar weakness has further to run. why? because of what we just heard of what the first quarter trade balance much worse with than anticipated. while the strike may account for the imports, exports did not do well to compensate when the port strike ended. i anticipate while the ecb may continue to do the quantitative easing the federal reserve will hear alarm bells ringing when they hear the trade deficit pulled down the first quarter number and second quarter number as well. that means as i've been saying a long, long time there is no interest increase. the bond yields are headed downward. i think at 1.18 the u.s. ten year is a steal. 45 basis points the bund is a buy. i don't see any end in the bond rally.

at the same time in the short term the dollar is going to weaken. longer term, the dollar is stronger. >> it's a chicken and egg thing. trade data was impacted by temporary factors like the port congestion and stronger u.s. dollar which you don't expect to continue short term. should that pave the way for rebound in growth next quarter? >> good question. i think in the short term the strong dollar is going to continue to weigh on the trade balance. perhaps from the third quarter onward you see a positive impact of trade on economic growth. if the federal reserve decides to postpone a rate hike that is not good short term. dollar is packetimpacted by trade balance. the federal reserve move on which i continue to remain they

are not going to be increasing at all. that is going to be negative with the dollar and more powerful in the next few months. >> sri, the rubber hits the road friday when we get the employment report for many many asset classes because it obviously implies what the fed might do next. jeffrey gundlack was on the closing bell and said unfortunately there is a change of attitude at the fed and they are happy to see the economy run hot for a couple of quarters before they raise interest rates because they are so fearful they might raise and have to then cut and lose their credibility, which could have bigger implications. is he right? and if he is right, maybe even if we get good growth there are two more quarters without rate rises. what does that do not just for the dollar but for this stock market? >> simon, i agree that the fed is going to be very hesitant to hike interest rates, which has

been my position all along. even when you have positive growth and good numbers taking place, you still don't have significant wage growth. you still don't have long term full-time employment increasing significantly. and an unemployment rate which includes part-time voluntary workers continues to remain high. my point here is in terms of growth pick-up, even if it happens, the fed will delay the rate hike. second in terms of the equity market the market rallies as long as it doesn't, until it stops. in other words, the liquidity continues. if the rate increase is postponed, the stock market gets one more boost of encouragement. all it means is that the bubble is going to get bigger in the stock market. that's a short term move but i don't think decidable long term.

>> you disagree with this move and do not see we've seen the bottom in the ten year? and do you not think this is going to be a stumbling block for the equity market now are seeing higher yields? >> i don't think so. i think the higher yields took place because the german yield went up last week and pulled the u.s. yield up. if you see the u.s. economic statistics, they have not been so good as to costing the bond yield to rise. even though there's been an increase in the employment cost index, i don't think that fully explains the bond yield increase either. i believe it is mostly because of european developments more optimism about global growth which i think is not going to be sustained. that's why i say at 2.18% or 2.19% the ten-year u.s. is a buy. >> all right. it's a little bit pessimistic your view of the world, but always contrarian. thank you for joining us.

>> thank you sara. coming up, sprint ceo marcelo claure will join us for an exclusive interview following fourth quarter results. we'll get his take on the growing competition from t-mobile in particular and whether google will shake up the wireless industry. "squawk on the street" will be right back. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird. 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.

shares of trip advisor down 2%.

analysts cut the website to a sector perform from prior outperform citing portfolio preference for priceline, also expedia and greater concerns over trip advisor's display ad business. those shares down by about 2% to their worst levels in early trading. up next on the program, crude oil hitting $60 a barrel for the first time this year. this as saudi arabia's oil minister tells cnbc that only allah knows where prices are heading. m only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses,

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oil prices have clearly been volatile this year. that's not holding back extension in the kingdom of

saudi arabia. hadley take it away. >> saudi arabia is making a major push to diversify their kingdom and economy. part of that is opening up the kingdom's dow with $580 billion stock market to foreign investors this year. earlier i got a chance to catch up with the oil minister. i asked how low saudi is willing to go what price is going to be low enough? at what point are they going to have to cut that production? and is he worried about iranian crude? take a listen. >> i am not worried about iran crude. nor will i try to predict the prices. if i were to predict, i will be someone else gambling. >> of course in terms of taking a gamble, saudis are taking a gamble. this is a country with 90% of its revenues based on energy price. at the same time there's been a lot of criticism of that policy as saudis are dipping deeply

into their reserves. one man critical of that policy is billionaire investor prince hadal. part of his project is going to be kingdom tower. when it's completed, he is hoping it will be the tallest tower in the world with a whopping price tag of $20 billion. we had exclusive access. on the red sea on the western edge of saudi arabia the world's tallest building is under construction set to top 3,300 feet kingdom tower will soar above the saudi skyline dwarfing its closest rival in dubai and setting a new standard for the 21st century skyscraper. building the tallest structure on the planet is the first step. the prince has bigger plans for the site pouring $20 billion into the project to develop a

multiuse economic city just minutes from downtown jeda he hopes will lure foreign investors and create the jobs saudi arabia needs. >> this is his brain child, isn't it? >> he follows daily news of the project. >> on site an international team of advisors consultants and engineers using the tallest cranes in the world and toughest cement on the planet to stabilize 170 floors of residential, office and five star hotel space. >> i challenge anyone to say they have worked on something as massive as this before. never a dull moment. everything is a challenge. >> the fastest elevators in the world moving at 41 feet per second will take you from top to bottom in a minute and a half max. kingdom tower must be built to withstand three separate weather systems. that means erecting a series of support piles deep underground, 270 in total, fortified by the

most dense steel built 345 feet below its base. while it looks like i'm on the base level of what will be kingdom tower, they actually had to drill 30 floors beneath me just to get the foundations. >> the economic social environment today is the perfect situation, perfect timing for a project of this magnitude. >> set for completion some time 2018 kingdom tower could hold as many as 3,500 people. >> of course mega projects and big cities like this one are one of the ways the kingdom is working to diversify its economy away from petrodollars. they will need the private sector for the $580 billion saudi market is one just step making that a goal making that an achievable goal. >> thank you very much hadley gamble. straight ahead, a live exclusive interview with sprint ceo marcelo claure. that company stock heading

higher after quarterly results. doug. you've been staring at that for awhile, huh? listen, td ameritrade has former floor traders to help walk you through that complex trade. so you'll be confident enough to do what you want. i'll pull up their number. blammo. let's get those guys on the horn. oooo looks like it is time to upgrade your phone, douglass. for all the confidence you need. td ameritrade. you got this.

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it's important for me to get it right because this is my community... this is my environment. any time somebody is digging i treat it like it's my house or my family member's house. i want people to know what's underneath them when they're digging. i'm passionate about it because every time i go in the street i think about my own kids. my family is my life. they're the reason that i want to protect our community and our environment. and if me driving that truck means that somebody gets to go home safer, because now they know about 811, then i'll drive it every day of the week. together, we're building a better california. good morning, i'm sue herera. here is your cnbc news update. isis officially claimed responsibility for the garland, texas, attack over the weekend saying two soldiers planned the attack. there is no evidence to support their claim.

city of los angeles has filed a lawsuit against wells fargo over unfair practices in which employees allegedly opened unauthorized accounts for customers, allegedly sticking them with fees and damaging their credit. the bank says it will vigorously defend itself against the allegations. >> rescuers recovered the bodies of at least 100 people some foreigners at a village near a hiking trail popular with westerners in nepal. it was wiped out by the massive avalanche caused by last month's earthquake. >> another migrant tragedy at sea. migrants arriving in sicily said at least 40 people fell present rubber boats and drowned. more than 350 migrants arrived after being rescued at sea. that is your cnbc news update. back to you. sprint reported losses but

saying it added customers. it managed to retain its number two ranking. t-mobile not far behind. how will sprint keep up this new-found momentum. joining us is sprint's ceo mar sola claure who joins us from midtown. always good to have him. i talked to some investors of yours this morning. they are very pleased with the churn numbers which were quite good. your network seems to be improving at a rapid rate. they ask the simple question at what cost? by that they mean how much money are you burning through to achieve these results? one says you went through $914 million of what had been a $3.5 billion cash and marketable securities total in this quarter alone. are you burning too much cash to achieve the results that seem to be impressing investors? >> we have a clear plan we explained in the past. that is the basic thick in our business.

we've got to make sure we have that we are getting customers into our network. sprint had a tradition of losing customers, so we are back in the game and taking customers away from our competitors. this has been a remarkable quarter, not only in customer position but retention. we brought in the lowest churn, i think we dropped 46 basis points. when you put all that together, the company is on the wave of growth. in our industry in order for you to grow you've i got to invest money. it costs money to attract new customers, but we have a clear plan in terms of when does the company generate free cash flow. we have clear plan in terms of how we are executing on all fronts. >> when he writes, sprint is mind boggling 70% ebitda and would have reported a margin 3.4% and would have ended 2014 at debt to ebitda 6.1 times.

people might get concerned and say you are going to run out of cash by what 2016. is that a possibility? >> we have right now we have cash flow is good. we have over $7 billion in liquidity. we have done a lot. we raised $1.5 billion in debt. we increased our securitization line for billing and receivables by $2 billion to $3.3 billion. now we are in the midst of getting into securitization of our receivables. we feel good in the availability we. we know what our cost per acquisition of customers. there is a point of time which we start growing again. we start generating revenue for new customers. you always have to be reminded where are we coming from. we are coming from a company

that lost over 2 million customers in the past year. this year now these customers start generating revenue and profitability for sprint. >> absolutely. people do say or at least focus on capex and wonder whether you are underspending. you seem to be aiming for $5 billion. are you underspending on capex? >> no. we are spending what is necessary. all you have to do is look at network results. we've gone from being fourth or the worst network, not too long ago to today. our network is getting so much better. we have over 112 first place awards compared to 12th a year ago. our network is the fastest. in las vegas we've been ranked the best network. our network is getting better every day. best way to look at it is a

clear reflection on churn. the churn we have just had, it's incredible. we've gone from 2.3 to 1.84. that is the fastest drop in churn that any company has seen in a very long time. what that tells you, customers like the quality of the note work and customers are staying. >> mr. claure we put the figures on the screen there you lost 200,000 phone subscribers this quarter as you did the quarter before. the make-up is coming from tablet subscribers. 350,000 gains on the quarter what would you say to people who are of the view tablet subscriptions north as valuable as phone subscriptions? >> that is credibility. i think the best way to look at it is we have lost 200,000 customers and have to compare to the industry. at&t lost more customers than we did. right now we are almost the same as verizon. if you look at the difference

we still have a gap of over 2 million customer losses versus at&t and verizon. i think we've come a long way. our goal is to move to positive any time between now and the end of this year. we are focused on that. tablets are a nice addition to the customer base. we focus in terms of reducing the number of handset losses. both verizon and at&t had losses and we have surpassed at&t this quarter. >> just changing the subject, mr. claure, how do you think google could change the wireless industry? you've chosen to take part in their project fi where they have new technology that switches dine amically between yourself t-mobile wi-fi hot spots and allows potentially the customer further down the line to basically where they are getting their data from any number of different ways in a dynamic sense as they move around which

obviously potentially could have huge implications for the landscape in which you are in. what is your take? where do you think google takes us? >> we are happy to have partnered with google. this he are using our network. we are part working closely together for the launch of this you this project. sprint has a history of serving mbno. we are very happy that google has chosen to partner with us. competition is good. competition makes us all be better. we like the fact we have a new competitor. i've got to look at what we are doing. today we have 27 of our handsets work in a seamless way on wi-fi, including the latest iphones. therefore, we have also adopted

wi-fi as the fourth layer. if you see the latest agreement we did last week customers when they travel through any of the airports in the united states and in the world, they are going to be able to use wi-fi for pooh free and will connect seamlessly. the adoption of wi-fi as the fourth layer is something that both ourselves, t-mobile and google adopted. our other competitors are looking at it differently. >> we were joined last week by john legere the ceo of t-mobile. you are very close in terms of three or four whether it matters or not in terms of subscribers. he paid you a compliment but shared statistics. take a listen then respond. >> let's give credit where credit's due. i think marcelo claure is doing some great things. i said this before. he is swinging the bat. he is in there. i don't know if these things are work, but they're innovative and he is trying them. on the other hand as it relates

to t-mobile the porting ratios of sprint q-4, 2.2-1, q1 4.5-1. april 2.75-1. they are not coming from me. if he can take share from dumb and dumber i'm all for it. go forth. it's good for the country, good for competition. >> dumb and dumber being verizon and at&t. you are response to those porting numbers? >> i'm happy i'm not in the dumb and dumber category. i do like john and i think he is doing a really good job and he's proven a lot of people wrong. as he relates to the port numbers, we use different mathematics. i don't know what equation he is using. we look at our ports and we have been port positive when you look at all the carriers. we have more customers porting into our network than porting

out. that is remarkable. a year ago we were negative 551,000 port negative. this quarter we are 10,000 port positive. that is a variance over 506,000 customers who now have come to our network rather than leaving. we feel very good where we are. like i said in the past this is a transformation. this is a journey. i'm incredibly proud and pleased where we are today. we look at sprint today. it's a different company than what it was six months ago. incredibly feeling very optimistic about the future of sprint and our employees. >> we will leave it on that optimistic note. marcelo claure, ceo of sprint. >> thank you. thank you for the opportunity. mark zuckerberg's newest bed on education leading a $100 million round of funding for old school. it thinks it can change

education forever. altschool's founder will join us.

new data shows investors are running away from american stocks. could that be your best sign to buy? find out on "trading nation.cnbc.com. catch our live segment at 2:00 eastern time. [ male announcer ] your love for trading never stops. so if you get a trade idea about, say organic food stocks schwab can help. with a trading specialist just a tap away. what's on your mind lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are. and start working on your next big idea. ♪ ♪ ♪ ♪ ♪ at chase, we celebrate small businesses every day through programs like mission main street grants. last years' grant recipients are

achieving amazing things. carving a name for myself and creating local jobs. creating more programs for these little bookworms. bringing a taste of louisiana to the world. at chase, we're proud to support our grant recipients and small businesses like yours. so you can take the next big step. i'm dina ole nick with breaking news. average on the 30-year fix is going to 3.94%. we have seen 4% being quoted. 4% line on the 30-year fixed. not all lenders, but closer to half expect today to quote 4%.

this is the highest rate since two days in march briefly. going back to november that would be the highest rate since november. a big spike in average rates on 30-fixed mortgages. what that means on spring market coming up later. it's been a busy day for yield. especially the ten year. let's get to rick and the santelli exchange. >> absolutely. two-way team. we said last year in 10s at 2.17%. high water mark was march 6th. we are about ready to test 2.20%. this is my special guest. i've never met an expert on the finances of chicago, illinois, that i liked better. what do you think the chances are that chicago will be able to come up with that kind of balloon payment for pension liabilities in 2016? >> i don't think it's possible at all, rick. look at the board of education. it's got to come up with 1

billion. from where? the state itself has a $9 billion budget deficit this year for this fiscal year. city of chicago, rahm emanuel wants the money to come it. the state itself has could to come up with $9 billion. not going to happen. >> let's look at alternatives. the only way they're going to get this is basically through property taxes. and you said they did a study. how much would they have to raise property taxes for let's say a $400,000 house that currently pays $6 grand a year in taxes to meet these obligations. >> came up with a number of 50%. i think that number is optimistic. it doesn't count on the fact there will be capital flight people are going to leave. that 50% only fixes chicago. it doesn't fix down state. down state has its biggest problem as chicago does. and it also assumes returns that i think are unrealistic in the stock market. >> okay. so let me get this straight, mish. if approximate the city council

doesn't get its act together soon you have to make plans right now to make the payment in 2016. you don't think it's possible what happens? >> they're already too late. what's going to happen is default. >> okay. who is going to default? not the city of chicago. >> not the city of chicago. the chicago board of education is going to default. they need to come up with money right here, right now. >> so let me get this straight again. because this is confusing. they're already technically insolvent, right? >> the whole system is insolvent. >> okay. so what's the distinguishing factor between insolvency and bankruptcy at this point? >> chapter 9 bankruptcy, you have to be able to meet -- it's different for corporations. corporations can default on -- look at all their obligations and say, hey, there is absolutely no way that we can meet, you know all these obligations. however, for -- when you've got taxing authority behind you, like municipalities do the -- and this is what drug out detroit for so long was finally there was an inability to make some payments somewhere.

that's the chicago board of education that's going to be able to not be able to make that payment. you know unless either the city of chicago or the state of illinois comes up with it. good luck on the state of illinois. >> and this is only one of six funds, right? i mean we have the policemen, the firemen, the municipal employees, the laborers and retirees. chicago teachers and park employees. this is only one. police and firemen have a big issue being underfunded, as well, do they not? >> the funding ratio -- >> we're out of time. give me one general number for the state and the city how much underfunded they are in total. >> about $130 billion. >> $130 billion! so if you don't like your taxes raised or go through the drama in the courts, i guess there's always states neighboring us have much lower tax structure. thank you very much. "squawk on the street" crew, back to you. >> pleasure to be on the show. >> thank you. >> can you, guys. shares of disney are higher this morning after the entertainment giant reported

better than expected earnings. we spoke earlier about the success of the theme parks and their impact on the quarter. >> it's great service. great use of intellectual property and great price-to-value relationships. i don't think you can look at gas prices or what's going on with the dollar currency exchange issues. i think you just have to look at what is the product we're offering, what is the experience that we're offering. and how much in demand is it. i think clearly over these years, demand for our parks and resorts experience not just in the united states but globally is increasing. >> joining us now, s&p capital iq's analyst, tuna imobi. did you like what you saw in general? >> there is nothing not to like in those results. another outstanding quarter driven by consumer products theme parks and broadcasting. just when you think the momentum for disney may be rubbing

running out of steam, they outdeliver in all metrics. >> i guess one of the clouds on the horizon is the cable bundle and the degree to which they can protect their margins at espn one of the great profit drivers. bob eye gur, some skinny packages that included espn and this is what he had to say. take a listen. >> with regard to verizon, i think it's very specific. we believe that they have violated our agreement, and therefore, we have taken legal action. we're certainly willing to work with various distributors to come up with packages that are of value to their consumers and also continue to provide value for us. so i don't think this is the beginning of an era of litigation between the programmers and the distributors. >> nonetheless tuna he did talk about consumer authority as a result of the digital era. he also said the higher sports costs are fixed through to 2017.

if the cost to fix the revenues from espn may be under threat can he protect his margins? >> well, you know i think the question around the bundle is one of the biggest questions out there in the media space. how do you protect, you know the core business. but at the same time indicator to the needs of the margin you know constituencies, the millennials, et cetera. and i think bob eyeinger is always one of the most forward thinking executives in the media industry. i think, though in the near term, you're likely to see questions about experimentation. as far as margins, i think what we saw, what we have seen for disney past several quarters there's no reason for us to be concerned. sure espn is going to have the challenges of programming costs. but overall, i think still remains intact. >> obviously, the studio revenue was the big profit-driver here. are you concerned at all about this report in the "wall street journal" the movie theaters are having a dispute with disney over some of the new rules that

it's imposing over the new "avengers" movie? is that a big deal? >> not really concerned. and in fact bob iger addressed that on the quallcall. he made the point that disney obviously provides a great deal of value for theaters. looking ahead, though i think, you know there is no reason to be very concerned. the pipeline is extremely robust. they've got "star wars" coming up pretty soon. "avengers," "frozen." disney has added massive amount of shareholder value through its m & a strategy which is rare in the space. >> six "star wars" movies being made. good to see you from s&p. thank you. >> thanks. let's send it over to john fortt with a look at what's next on "squawk alley." >> walt mossberg talking about an iphone case that actually has a screen on the outside. we'll see what he thinks of that. also the zuckerbergs making an investment in a new paradigm for education alt school. we'll hear more about it. and billy corrigan of smashing

pumpkins does not mince words about tech wrecking the music business. all coming up on "squawk alley."

good morning. it's 8:00 a.m. at disney

headquarters in burbank, california. it's 11:00 a.m. here on wall street. and "squawk alley" is live. ♪ ♪ welcome to "squawk alley" for a tuesday. joining us kevin o'leary, chairman of o'leary ventures and investor on "shark tank." kayla tauschy as we watch the market down 48 points this morning. couple calls on the street. netflix getting an upgrade from bank of america, based on its rapidly growing portfolio of aaa content. they take i