live from new york, where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. check out the u.s. equity futures. we are continuing to pick up steam this morning, with the dow futures indicated up close to 90 points this morning. s&p futures up close to 12. the nasdaq is up by 35. overnight in asia, china's trade data for march showed a surge in export that was much stronger than expected. that was offset by weaker than expected export data. still, it was enough to spark a rally in stocks. the hang seng was up by more than 3%. the shanghai composite rose by nearly 1.5%. let's take a look at things in europe right now. you're going to see in the early trading there, there's strong gains as well. looks like the cac is up by

2.5%. the dax in germany up by 2.25%. in italy, stocks are up by 3%. oil prices hit their highest levels since november yesterday. you do see a little bit of a retreat this morning after comments from an official in saudi arabia. right now you see that wti is down by 64 cents. still well above $40 at 41.53. just days ahead of a meeting of key oil producers, saudi arabia's oil minister has reportedly ruled out an output cut. of course, yesterday the huge rally was sparked by a russian news agency report that russia and saudi arabia had agreed to cuts. still, you have a lot of things coming in. the expectation that low prices are really starting to cut in places like latin america and here in the united states. >> let's get you caught up on some of the big stories happening today.

bank earnings likely to set the tone for trading today. jpmorgan is the big one. it's happening at 6:45 a.m. eastern time. we'll bring you that news when it happens. analysts expecting earnings of $1.26 per share on total revenues of $23.4 billion. this would be the bank's first year-over-year earnings decline in five quarters. you can see what's going on there. it's all relative, which is what jamie dimon would say. in other news, u.s. regulators expected to reject the so-called living wills of at least half the nation's systemically important banks. that includes jpmorgan. a report says the announcement from the fed and ftic could come as early as this week. the decision could force the banks to scramble to change their plans for dealing with a potential bankruptcy.

there's a lot going on there. meantime in a report yesterday, the nonpartisan government accountability office criticizing the regulators, saying big banks don't have enough information on how the living wills are being judged. then a busy day for economic data. at 8:30 eastern time, retail sales and the producer price index for march. at 10:00 a.m., look for february business inventories. at 2:00 p.m., it is the fed's beige book. a lot going on. >> a living will, people get those. >> yes, but it's a little different with people. >> it is. they asked me the other day did i have one when i went for -- you know, katie couric on camera type, which is a little disconcerting. after your colonoscopy f you're a vegetable, do you want to be -- it's like, that's not typical, right? >> no, not usual. >> it's nice to know they ask

you. do you have one? you're too young. >> actually, i do have a living will. >> you do? you're immortal. >> well, hopefully. so is sumner redstone apparently. no, i have a living will. >> you do. >> it came with all the stuff, if you will. >> any type of will is -- >> what did you decide? >> i don't know if i'm going to get into it right now. >> but that's why these questions are impossible to answer. >> insurance, wills, things like that. >> when we had the kids, we had to get deep into that, so we did. >> you have not been here. >> two days. or three days. >> so you know what i keep saying, right, about a dull market. >> i don't know what. >> there's nothing positive happening. earnings are going to be crappy. although, the dollar is a little weaker, oil is stronger. i don't know if that's good long term. but the market is -- is it going to new highs, or are we at the high end of a trading range? we're back to the high end of

the trading range. >> to the extent you're right that the market could go up because it's such a tired market, a dull market let me make this suggestion. is it possible we have been expecting terrible earnings for the last month and there's a selloff on that? >> people might be below where the earnings actually come in, even though earnings are expected down. >> trying to rationalize what happens. >> one of our guests coming up thinks x energy earnings will still be lower. >> weak? >> just lower year over year. we'll see. they killed my stocks to watch. >> because we were talking about -- >> but the first one was valeant. it received a notice -- >> this was really interesting. >> except they have until june 11th. >> the company claims there's already somebody filing. >> they completely get rid of the notice if they file.

>> let's get to the next story real quick. we'll come back in a bit. >> no, we won't. >> 39,000 verizon workers are on strike this morning after nine months of talks between union workers and the telecom giant failed to produce an agreement on a number of issues, including pension benefits. the reason we're rushing is because we need to get to mary thompson, who joins us now. she's outside with the picketers. >> don't make her wait. you don't want to deal with that. >> mary? >> reporter: thank you, andrew. union members from massachusetts to virginia going on strike at 6:00 a.m. this morning. i believe you can see them right over my right shoulder here outside a verizon technical operations center. the unions and verizon still far apart on a contract. of course, they've been talking since this summer. the union workers, most of whom work for verizon's land line and internet operations, say they are striking to save good jobs. verizon says it wants to save good jobs as well, but it needs

the unions to agree to changes to legacy contracts. here are a couple of the sticking points. first of all, pensions. verizon wants to cap these pensions at 30 years of service. after that, workers could contribute to a 401(k). the workers want to keep the pensions as is. the union claims verizon wants to move regional call centers, jobs overseas. verizon says it only wants to change call center contracts to keep verizon from rerouting calls. lastly, they want to stop being assigned to two of month assignments out of their region. the two unions whose workers on average make about $130,000 a year when you include benefits and overtime say that pay raise is basically a wash because they have agreed to certain cuts to their health care benefits. as for customers, verizon says it has been preparing for this strike since last summer. it is training nonunion workers to take over a number of union

workers. while it is not expected to be completely smooth, do expect some disruptions to service calls on the land line and some of the fios service. verizon does say it is prepared, and its priority is making sure that its customers are served. this is expected to go on all day. keep in mind the last time verizon workers went on strike, it lasted just about two weeks. back to you. >> mary, thank you very much. again, mary thompson. >> here are the stocks to watch. they did put them back in for me. >> that's what the squeaky wheel will get. >> enjoy. valeant pharmaceuticals said it received a notice of default. the company then says it's got until june 11th to file the 10k form. that would cure the default in all respects. starboard value is upping its stake in depomed to 9.2%. sta

sta standboard said it intends to suggest a number of board members. mcmocormick saying it decid it would not be able to propose a price that would be approved by premier's board, while also delivering for its own shareholders. in the past, we have talked about -- you know about spices. you know what you need to measure. >> what? >> the rh factor. >> why? >> because spices come from places where there are levels of rodent hair. >> oh, yes, we have talked about this. you also have to cook with spices. i don't use raw spices. >> but they can be a high rh number or a low. it's never zero. you know that, right? >> that's why i cook the stuff before i eat it. >> rodent hair. they're everywhere. i'm sorry. it's just a fact of life. like bacteria.

>> you have been getting me used to it for over a decade at this point. >> as long as you know. as long as you're aware of what you're putting on your food. >> let me tell you a couple market metrics to keep an eye on today. first of all, treasuries. take a look at the ten-year note, which is yielding up close to 1.8% but not quite there. the dollar index yesterday hit its lowest level since august 25th. you can see this morning that the dollar is up across the board. euro is trading at 113.03. if you take a look at gold prices this morning, you'll see that at least right now gold prices, wow, down $16. that's a decline of just over 1.25%. also, take another look at the futures, which once again dow was up by about 165 points. this is the dow's biggest rally in about a month. you can see that after that, we're still looking at gains this morning. dow futures up by close to 87 points. s&p futures up by 12. the nasdaq up by 35.

>> it's like january didn't happen now. that's what someone said. if you took a nice long vacation to somewhere where you would go -- >> you don't get the updates. >> like a one percenter. if you didn't get any newspapers, you wouldn't even know. >> every one percenter has a sad phone. >> no matter where you are. almost like a special ops guy. if you're in a mountainous -- >> i was just thinking wall street, michael douglas. >> anyway, money never sleeps. jpmorgan kicking off earnings season later this hour, that could set the tone for today's trading. some optimism ahead of that for stocks. the industrials posting its best day in about a month. joining us now is steve reese, global head of equity strategy at jpmorgan private bank.

and joe tannius, principle strategist. do you know rebecca patterson? >> we do. she's great. we've talked about this a few times. she says hello. >> i wish you wouldn't remind me of things i've said. i think it's new every time. >> it's new. >> never is. >> we never talked. she says hello. >> good, good. tell her hello as well. so i was channelling you and referencing you earlier. even x energy year over year decline in earnings? >> i think even x energy, if you look at expectations, x energy, you know, the s&p 500 is expected to actually decline. you have to kind of take that worth a bit of a grain of salt. you've got expectations every quarter which are coming out lower and lower and lower. companies do such a good job now guiding analyst estimates lower that effectively you set the bar so low, companies can walk right over it. >> on an absolute basis, this could be the last quarter -- or

it could be the trough of the lower year-over-year comparison. >> i think energy. obviously at some point we're going to work through that. once that happens, i think we can see modest reacceleration. the interesting thing about this quarter's expectations, however, is that analysts are not only expecting revenue growth to just be benign, but we're also expecting to see margin contraction. it's not only in one particular sector. it's across seven of ten. >> you're basically saying stay long and the markets will be higher by the end of the year. >> i'm saying stay long. i think the markets will end the year higher, but i want to temper expectations. we're at a critical part in the business cycle. you've got valuations which have obviously been a little stretched. i don't think you're going to get a lot of multiple expansion. what you need from this point forward is going to be earnings. it's going to be critical to see what happens with those margins. >> has this been a recovery?

this is the waning stages? so zero growth we're going top get this quarter, that's the end of the recovery? what does the downturn look like? >> we're somewhere towards the end of the business cycle. >> you're talking about employment numbers. >> i'm talking about employment numbers. you're finally starting to see inflation. we're seeing wage pressure finally have an impact on profitability. as you start seeing profit margins start to roll over, these are just some of the signs that suggest a recession is coming. we don't believe a recession is imminent. but again, this business cycle is getting a little long in the tooth. i think you have to prepare yourself at some point. markets are going to roll over. >> so what is your estimate on jpmorgan's earnings? >> joe, come on. i can't talk about that. >> oh, that's right. that's right. i already said that. >> i've got a lot of thoughts about the broad market. it's going to be tough. everybody knows that. estimates have come down. i think what's missing is there will be pockets of growth this quarter. if you look at consumer discretionary, the estimates are north of 10%. health care will look good.

we're looking forward to a lot of volatility in the coming weeks. but there's also a lot of opportunities out there in sectors that have lagged year to date. dividend stocks. i think there's plenty of opportunity. >> so you also are sort of a meh type -- >> what does that mean? >> whatever. >> i don't know how to do snapchat. but i know that meh, my kids tell me, means meh. i don't even know the other word for it. it's such a good word. it means middling. >> expectations are so low. the bar is low. that's what analysts do. i do think, though, that corporates are going to be a bit cautious in terms of the outlook they give. why would you give an optimistic outlook at this point given all the volatility? >> so your ideas. you had a few things you suggested that investors do. one is consumer and health care. discretionary and health care.

so shift into that sector. >> well, consumer has done okay this year. health care has lagged. we still at this point in the market would follow sectors with earnings growth. we're looking at a 16 1/2 times forward multiple on the s&p 500. i don't think you're fully getting the value for the earnings growth we've seen. >> and growing dividends. >> absolutely. i think with the fed potentially on hold for longer, stocks yielding 3%, 4% that can grow those dividend yields look more attractive in this environment. certainly not the telecoms utilities. >> so you would both be flabbergasted if we did 15% just pure stock appreciation? that can happen or can't? >> anything can happen. it's difficult to make the math work because the earnings just aren't there. we're expecting flat earnings this year.

multiples could always go higher. >> 16 1/2 at at ageing stag i-- stages of a bull market. >> there's always enough risk in the world. it's not likely we see that level. >> so you'd be shocked. >> i'd echo a lot of steve's comments. >> next time we're going to get people that have different opinions. >> or we can just change topics. >> okay. thank you, joe. steve. >> good to see you guys. coming up when we return, news from the rail industry. csx out with earnings that were in line with expectations just a day after canadian pacific, of course, abandoning that bid to acquire norfolk southern. all three stocks are down nearly 25% over the last year. we're going to talk to a rail analyst next about where this is all headed.

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great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "squawk box" on cnbc. u.s. equity futures at this hour up 86 points. 86 on the dow. up almost 12 on the s&p. 35 on the nasdaq. yesterday when i asked cramer what's the most important thing to watch for earnings, technology. got to see tech.

>> why? >> i don't know. we didn't have enough time. >> we'll get him back today. no, i think that it is one of the most important -- how could the banks possibly wow us with, you know, zero interest rates? it's like, we know what financials are going. >> what are you looking at? >> i don't know. looks like you want me to move on. >> no, no, my neck is hurting. >> the same thing? >> i was just looking at you like that. >> i like when you do the whole chair move just to move. almost looks like -- >> the audience doesn't know. i herniated a disc in my neck about two weeks ago. i've been looking at you funny. that was not a look of, let's keep going. it's a look of, i'm trying not to hurt myself, so i'm leaning over. >> it's from sleeping wrong, right? so you said. not the trapeze. >> no, it's actually from grabbing a towel off the back of the shower door.

>> is that it? >> that's what happened. >> i was going to suggest my pillow. mypillow.com. >> oh, the one -- that's if you sleep on your side, i think. >> you don't sleep on your -- >> no, i did. i think i sleep on my side. >> peabody energy has filed for bankruptcy. the world's largest private sector coal producer. people happy about this? i'm not happy about this. the sharp fall in coal prices among other things obviously, people trying to put it out of business, left it unable to service a recent debt-fueled expansion into australia. eiffel arch coal, the second largest u.s. producer, filed for bankruptcy earlier this year, citing falling coal demand. stricter environment on mineral coals, and a glut in natural gas. there's a mccain running for office, i think, senate in wyoming. one of her main platforms is going to be trying to save some

of the coal industry in wyoming. it's tough. it's been a concerted effort to put coal companies out of business. those are jobs. >> it's having an impact on this next industry we're going to talk about too. railroad powerhouse csx reporting results that were in line with expectations. if yur looking at the numbers, they're down sharply from a year ago. revenue was down 14%, and it was dragged down by coal. the railroad expects coal volumes to decline by another 20% this year. shipments were already down 33% for the most recent quarter. joining us now with more on this and the state of the tran ports is chris weatherby, citi's u.s. air freight and surface transportation analyst. you hear about these coal numbers. shipments down 33%. that's kind of shocking. >> yeah, the coal dynamic is very negative for the railroads and will continue to be very negative for them. if we look at csx's peak to trough coal volumes, we're down almost 60% this year from 2008.

>> and this is because there's less demand from coal because there are fewer plants using coal to produce energy. >> certainly coal's percentage of the electricity generation is down from that peak level and ultimately natural gas is coming in and back filling that supply. >> what do you think about what's happening in terms of shipments overall when you strip coal out of it? i think their shipments were down 6.5%, but that was largely because of coal. >> lynn cheney. i was thinking mccain in wyoming. >> overall volumes are down around 5% for them in the quarter. i think ultimately you had coal dragging that number down. we are seeing still this sort of trough in volumes across the railroad space. it's a bit better here in the first quarter than what we saw in the fourth quarter, but ultimately, we're still dealing with tough comps from last year and sluggish freight environment. >> what does that tell us about the overall economy? the huge concern when the markets tanked in the first part of the first quarter was that, look, we're looking at things

like a real recession when it comes to the transports. where do we stand right now? >> so we're better than where we were in the first quarter. we have, you know, bounced up, even when you seasonally adjust for the dynamic between 4q and 1q. ultimately, freight slows have sluggish. i think we're seeing better consumer-driven markets but still weaker industrial and commodity end markets. that's going to continue to weigh here for a period of time. we wouldn't expect to see volumes to get back up until the end of this year. >> still, you have a buy when it comes to csx. why? >> what we're looking for is a cost-cutting dynamic. they're focused on pulling out costs. we think they're focused on pulling out structural costs because coal has come down so much. if you look at the quarter, they did a really good job on the cost side. head count is down 14% year over year. they also pulled out sort of their nonfuel expenses. that was overall down about 8% or 9% in the quarter. i think they did a very good job

in a very challenging revenue environment. as we see those comps get a bit easier, we likely see a little more leverage to the bottom line here. >> what about the canadian pacific norfolk southern deal falling apart? i know you weren't completely surprised, but maybe by the timing. >> we thought that the transportation board was the regulatory agency that looksed a the railroads was going to come back with a negative ruling in may. we were a little surprised to see them pull the offer before that. unfortunately for cp, it seemed like the deck was a little stacked, particularly from a regulatory perspective or a washington perspective. we heard a lot of pushback from people like the doj and other senators and ultimately i think they took sort of the right move to step away, just given the fact it was probably going to go against them. so i think that was sort of our view there. >> all right. chris, i want to thank you for coming in today. >> thank you. >> good to see you. >> liz. >> oh, lynn cheney is his wife. >> running for the house. she did not -- she was going to run for the senate and didn't. i'm looking at your buddy

denton. it's classic. she's described as the daughter of accused war criminal dick cheney. anyway, she's running on an anti-climate change, pro-coal agenda. he was vice president too, right? >> he was. >> so in addition to being a -- >> like henry kissinger. >> another, according to gawker, war criminal. coming up, a major key for one social -- where is that appeal? >> huh? >> where is that appeal with gawker? going to win that appeal? >> there were some huge concerns. >> win? i imagine -- >> they need to, to stay in business. >> i imagine the ruling will come down. >> if the number doesn't come down, they're going to have problems about their viability. >> all right. i don't know if you knew this, andrew. i should have asked you. instagram is no longer the top app for teens. we're going to tell you which company is boasting the most users now. you probably know, don't you?

>> well, i'm reading the screen. it says snapchat. >> yeah. so that's the answer. and one silicon valley heavy weight putting his money behind cancer immunotherapy. there he is right there. the details next. as we head to break, here's a look at yesterday's s&p 500 winners and losers. earning enok from bank of america to buy a new gym bag. before earning 1% cash back everywhere, every time and 2% back at the grocery store. even before he got 3% back on gas. kenny used his bankamericard cash rewards credit card to join the wednesday night league. because he loves to play hoops. not jump through them. that's the excitement of rewarding connections.

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welcome back to "squawk

box." time now for the executive edge. as joe was mentioning before the commercial break, snapchat has now passed instagrainstagram, w uses all the time, as the app of choice for teens. that's according to a new survey by piper jaffray. 28% of teens said snapchat was their most important network, edging out instagram at 27%. just last fall, instagram had a lead over snapchat. twitter continued its slow decline. facebook saw a slight bump. so facebook is for the old folk. twitter is for, i'm not sure whom. and snapchat is it. and instagram. instagram is still up there. >> even though teens don't really have any of their own money, you figure this should be valued very highly because it's aggregating eyeballs and somehow something is going to work. >> eventually that generation is going to use something else. except that the older generation

is on facebook and they're suck ther -- stuck there. >> but why would they have a high valuation because these people don't have money? >> they do have money. >> they have a lot of money. you'll see. sean parker is on a mission to fight cancer. the tech billionaire who foun d ed napster and was facebook's first president, is announcing today he's giving $250 million to six u.s. cancer centers, including memorial sloan kettering in new york. parker says he's targeting immunotherapy because research is at a turning point. sean parker will discuss his efforts today on "closing bell" at 3:20 eastern. this is like one of your running buddies over in davos, isn't it? >> we love having him on. his problem is he doesn't wake up early enough for us here. >> you've hung out with him. >> we've hung out before. >> like bffs.

>> he hasn't been to davos in a couple years. >> didn't he have problems meeting us in the afternoon? >> he was supposed to be on with us. our morning here in the united states, but from noon to 3:00. almost missed the show. i think he caught it at the tail end. >> he made it but he was late. >> once again, i like the justin timberlake version of sean parker more than sean parker. >> that's not nice. >> why? >> because he might be watching. >> well, i'm not saying i don't like -- i definitely like the jesse eisenberg better than the mark zuckerberg. >> they're hollywood stars. >> they're just better at being who they are than they themselves are better at being who they are. >> it's fun to watch. let me tell you also about president obama. >> you've said that before. >> what, i like to watch? >> yeah, it's fun. >> president obama will sign a bill that provides financial incentives to companies working on treatments for the zika

virus. however, it does not include actual funding. earlier this week, democrats and administrative officials lobbied congress to allocate $1.9 billion in emergency funds to combat zika. when we return today, you can't talk to a bank executive for more than 15 minutes without hearing the term fintech. how much change are they actually bringing to the industry? we'll ask the founder of bizfi. also, the results from jpmorgan are expected in the next few minutes. we'll bring you those number as soon as they cross the wires. take a look right now. you see jpmorgan trading at $59.30. "squawk box" will be right back. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally.

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get in the know. okay. we are seeing jpmorgan apparently reporting here. wow, cutting 5% of the positions. i think we heard in advance of that, didn't we, that there were some positions being cut. >> yep. >> in asia. the asia pacific wealth management unit. but the numbers here are trickling in. i don't see them on news edge yet. >> i don't either. >> first quarter results. they're due out. they were supposed to be -- >> apparently 1.35. i'm only being told that. >> the estimate was 1.26. >> this is just a headline number. >> it is down on eps from 1.45, which was in the same period a year ago.

we expect it to be down. >> in a lot of different second to b -- sectors. >> let's wait until we get the actual release. >> elsewhere, wilfred frost, we're going to throw it to him. >> we have wilfred standing by. i don't know if he's got the news right now. i think what we should do, if you'd indulge me, is have a conversation about fintech and lending while we try to assess what's going on here with the jpmorgan numbers. >> i think that's -- >> think that's a good move? >> the best idea you've had, yes. >> okay. let's do that. the lend it conference is under way in san francisco. we'll get back to the jpmorgan numbers as soon as they cross. in the meantime, where are are the biggest names in online lending? they're meeting to discuss the latest trends in the rapidly growing business of fintech. joining is us is the founder of bizfi, who is speaking at the lending conference. his company provided over $1.6

billion in financing to more than 29,000 small businesses. good morning to you. >> good morning. >> so, you know, it's funny. you come to us literally as jpmorgan's earnings, the old traditional stand by, those earnings coming out. you guys dtrying to disrupt tha business. the question i put to you, which is the larger question hanging out over all of fintech and i imagine becomes a conversation like the conference you're at. you look out two, three, four, five years from now. all of these startups in your space, are they independent companies, or door the big guys, like jpmorgan, ultimately say, we need to be your partner, or we effectively need to own you? >> i think you're going to see more collaboration in working with as opposed to acquisitions with the major banks. i think you'll see some collaboration and consolidation within the industry, but you'll see a lot of ventures like you've seen with jpmorgan chase. we just announced one with western independent bank association, an association of 600 banks with 7500 branches.

we're doing the deal with jack henry. you're really starting to see the clb ration pick up speed. >> how regulated are your businesses? that's the other big piece of this, the compliance issue that i imagine so many of the fintech companies don't have to deal with yet but know it's on the horizon. >> right. that's a great question. our businesses are regulated when we're lending money, but certainly the cfpb and other regulators are taking a hard look at it. we're looking and waiting for the regulation to come. personally, i hope we have regulation. i hope it comes on a national level so we don't all have to deal with 50 independent sets of rules and regulations. and we just hope that there's reason, prudent regulation put down. >> one of the things we want to do in this country is we want to spur innovation in this space. so how can we find a way to actually have some form of compliance but maybe the compliance should be different

than at a traditional bank. do you agree, and what should that look like? >> well, i think it's going to evolve over time. i think there will be different sets of rules to play by. i think at the end of the day, it's going to be about transparency and making sure the borrowers know exactly what's going on and that the field is as level as it can be amongst the competitors. >> when you look at the space that you can disrupt and you look out five years, what does it look like? meaning, what are the big banks doing? what are the small community banks doing? and what are the fintech guys doing? >> i think, as i said, you're going to see collaboration. so i think the fintech guys are going to be able to take as little information as possible from an owner or from a business owner or an individual and to make the front end of the process as frictionless and seamless as it can be. we're all going to leverage technology and big data to the greatest extent so we can get as much information as possible about that borrower. i think you're going to see the

major banks and the community banks leverage our technology and our ability to make decisions in fractions of seconds as opposed to the weeks and months it takes now. >> and when you look at the ability to actually make a good loan and the ability to do it in seconds, do you think you can do it as effectively? >> yes, i think we'll be able to do it as effectively. we're doing it now. i think at the conference, one of the things that's coming out is people are really starting to focus now on credit, and the addition making process and whose paper is really performing and not. i think you're going to see heightened attention to that. we went through 2008 and 2009. we continue to speed up our decision making process and our collection rates and performance continues to improve as we're doing it. >> in terms of which side of this is going to move the fastest, it's going to be small

business lending, big business lending. where's the consumer in all of this? >> the consumer lending is moving the quickest. next will be small business lending and large business lending, i think, will be the last of the three to catch on. >> could you ever see actually large business lending get taken out in terms of a fintech player as opposed to the big banks like the jpmorgans that we're waiting on those earnings for? >> i don't think we'll see loans for millions and millions of dollars or billions of dollars being made by fintech guys without sitting down with customers and really understanding exactly what's going on. i think that's still going to require some annual underwriting and face-to-face communication. >> okay. we appreciate it. we got those earnings now from jpmorgan. we're going to go to them. they actually do some of that underwriting. >> it's been five years since there was a year-over-year decline.

$1.35 versus estimates of $1.26. the revenue number, though s pretty good. revenue estimates had come down. they got all the way down on one group, 23.401. they managed 24.1. 24.1 billion in revenue, which also is below last year where it was 24.82 billion in the same period a year ago. i don't have a quote on this now. do we look at the chart? >> it looks like it's indicated to be up. did you get an actual press release? >> i do end have a press release. >> i'm reading stuff off headline services in different places. normally we have a press release that comes with it. i don't know if they're not releasing it the same way they normally do. >> we knew some things to expect. obviously you got negative interest rates in some countries. probably not great. or a low-interest rate

environment. market volatility wasn't as high as in previous years either. so it's hard to make money trading. also, and probably key, is stressing the energy markets, which is affecting the entire financial sector as well. but they're benefitting from a very low bar that was set because the numbers, if you even go back six weeks ago, the numbers were much higher, and they've come down to where they were $1.26 at this point. >> here's a headline takeaway from jamie dimon, the chairman and ceo. just making comments on the economy overall. he says the u.s. consumer remains healthy and consumer credit trends are favor potential. this is important because this is really the first of the major earnings reports that gives us a little bit of insight into what you can expect from the economy, what you can expect from the u.s. consumer, from banking, from a lot of the different industries they service. any comments they make are going to be pretty important. >> net interest income was expected to rise even though revenue is down. it was expected to rise from 11 billion a year ago. the estimates for 11.3 billion.

the economy was able to post 11.7 billion for net interest income. actually, revenue was not down. total revenue was not down as much as where the street was. this is a good way to do it. that is get people so negative that you can beat. >> this goes to your whole argument the market is going to go up. >> jamie dimon does point out these are challenging markets. they've done well even through the challenging market, but he calls it a challenging market, challenging environments, and talks about their capital plans. they say they plan to increase capital return in the first half of 2016 as the board approved an incremental $1.9 billion in share buybacks. >> the last two times the company reported, it fell 2% after the january 15th report and it fell 2.5% after the october 14th report. we're seeing a different

situation today. at least premarket. we're up over 2%. wilfred frost, he gets to listen to everything we said and gets to look at it for much longer. >> but we just took all the low-hanging fruit. >> we did. >> good luck with that one. >> you're filing from jpmorgan headquarte headquarters. >> well, from cnbc head quarts but following jpmorgan. total revenue coming in at $24.1 billion. that's slightly better than expected, $23.4 billion. the eps, $1.35. slightly better than forecast. i would also say some analysts that have updated their numbers most recently were even lower than that consensus. so eps beating that is a decent surprise, a decent beat. probably why we've got the share price up a couple of percent in

premarket, reacting most of all to that. if we dive down into some of the individual sectors, of course, a lot of people ahead of these earnings focusing on what the provisions would be, particularly in the energy sector. provisions provisions came in at $1.8 billion. that's a bit higher than forecast. the key number.

down 24%. a big decline on the headline. we were expecting declines in the sector. the other point to note, increasing capital return in the first half to 1.9 billion in terms of share buybacks. learn a lot from these guys in life in general. >> lower, lower expectations. lower them. >> and overdeliver. expect the worst and hope for the best. >> still, down a lot year to date. >> you are on the fast track, my friend. you are a young man, doing well, your expectations are consistently being exceeded and i think you set a pretty hard bar. >> doug, you are too kind. >> probably, i am. >> okay. coming up, we're going to have much more on jpmorgan's earnings. we are going to talk a lot more with analyst, marty mosby. we are back in a moment.

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and was not involved in how the companies were used. we haven't talked enough about the panama papers and what they mean. we were down there and interviewed the lead lawyer who suggested that they didn't know what was going on. >> in their own statements, didn't they say most of their work was legitimate. >> and that they were relying on all of these other law firms who actually knew the clients. i am not defending it. >> most of our work is legitimate. >> joe is being silent, because he has an account there. >> i don't know anything about it. >> you know what i think it is like. it is like the firm, remember that movie, the law firm in the firm. nobody really knows. people get killed and they are dealing with mobsters. >> we have to run. we are going to have more earnings in just a minute. back in a moment. sic plays thro♪ the first stock index was created over 100 years ago as a benchmark for average.

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earnings in focus. the first of the big financials. can china's economy stage a comeback? new data shows signs that exports are on the rise. are the government's efforts to stabilize the economy work and will a rising tide lift all boats? that discussion is minutes away. >> the super rich hit the high seas. >> it is easy to grin when your ship comes in and you have got the stock market beat. >> a megayacht that combines life on the open water with another super rich favorite pastime.

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quick and andrew ross sorkin. the futures are looking pretty good. jpmorgan reported earnings that were not as bad as people thought. the expectation was much lower than what the company post td in terms of revenue and earnings per share and credit losses. now, on jpmorgan, bidding $50.75 after a $50.89 close. back up 2%. it is getting a pop with the dow up 104. jpmorgan after reporting $1.35 beating on the top and bottom line. joining us from memphis to break down the numbers. memphis was also where that crooked law firm was. marty moseley, director of bank and equity strategy from vining sparks. marty, how are you?

it wasn't vining sparks. i know that. you looked at these numbers and were pleasantly surprised? >> yes. this is a perfect example of underpromising and overdelivering. when you look at net versus income, what you mentioned earlier, the rate hike in december was really advertised as being very minimal. the benefit was twice what we thought. the impact on january and february, the income was expected to be down, which it was compared to year over year. we are still seeing some uptick from where we are at the end of the year. looked like march turned out to be much better than what we saw earlier in the quarter as well. >> as far as the writoffs, everybody was worried about energy. did they do a better job than their peers at managing this as they usually do in risk management. >> they are the leader of the market. so what we are seeing here is that they got out in front of the issue like we talked about on investor day. they were out there talking

about what they needed to reserve for. they went right pretty much where they showed they were going to have about half a billion dollars there. we did see a big uptick in nonaccruals in the commercial side that is related to the energy. when we look at the broad portfolio, it is not showing deterioration. we are still seeing loan growth consistent with what we saw last year. we are seeing a much more balanced loan growth, which is a better picture going into 2016. >> the banks are responding to an environment that looks very strange to us in terms of almost like a hybrid environment with unemployment now almost below 5%. full unemployment but 0 interest rate. they can't make any money on the spread. they have negative interest rates somewhere but they should be giving out commercial loans. so it's very strange. have you ever seen a period like

this before. >> we really haven't. we haven't seen a recovery this far alone this growth peeked up for any period of time. what we have is a long, drawn-out recovery that has slow growth tied to it but still has some aspects where we are not going to see it burn out any time soon either. we have a monitor that looks at the cycle, we are getting from the most favorable period in credit to more neutral but don't see any signs of heading into recession at this point. >> i wonder about the whole business cycle. people are saying, this recovery is six years old. it is long in the tooth. i wonder if we are wrong about that. it has been a slow burn. we are not seeing any of the things that cause the fed to tighten, because of overheating. it usually results in recession. they don't die of old age. business expansions don't die of old age. maybe we are wrong about assuming that something is going to happen soon in terms of a

slowdown. >> what we can be seeing here is one of those gains that you kind of sleep through the first half. you pick up as you get in the third quarter. maybe by the time we get into the last phase which typically is the time it is starting to get over, maybe what we see is the best period in the next couple of years as it is continuing to percolate with some growth and seeing some stability come in from a much broader aspect of the economy. >> marty, this is the first of the big banks to report. how does this change your perspective from what we might be expecting to hear from the other financials? >> what this does, we were foreshadowing in our earnings preview that you didn't want to look at this particular quarter's results. this is the first quarter they have been down year over year. what you wanted to look for is the clues for what was going to happen as you move past the first quarter. we saw the surprise in income. we saw fee income pick up in the back half of the quarter. both positive, sustainable

progress as we move in the second quarter. we saw energy losses going higher and provision there. we didn't see the broad deterioration. we could get some reserving hyped us and much better earnings as we move into the second quarter now. >> what i will point out as you look at some other stocks, those are indicated higher and goldman sax looking up. jamie dimon did say he thinks the u.s. consumer is healthy. is that what you think too? >> it is. what we have had and like we have said in loan growth is double digit commercial loan growth and negative consumer loan growth. what we are seeing now is much more balanced with the consumer starting to show growth. we have gotten rid of a lot of the overhang for the last down turn, that you will we saw for the residential real estate. all this has been worked through finally. we are seeing credit card, auto and some initial signs of residential real estate will show some positive growth in 2016. it is a little bit of handoff

from the commercial to the consumer. that's what the banks would like to see at this point. >> are we just going to say all of these banks and perhaps all of these companies have sandbagged their earnings in terms of saying they are taking so low now that everybody is going to beat. s is that what's happening here? >> we have to remember january and february, which is a much different environment than we have today. when a lot of these estimates and forward-looking statements were put out, they were dealing with data that reflected that environment and not where we are at today. we also had a period of what we have been saying, as we have been from the december rate hike. we would see positive shifts and balances on the balance sheet from low interest to higher rate deposits. because of the stress and the slowness that we have seen, the verbiage that's come out of the federal reserve since the first rake hike. nobody thinks rates are going up

very fast. that makes that hike eve morn valuable. we just had some shifts in some of the things we were looking for more positive in march than we had in january and february. >> what kind of trading or markets do they need? they are saying there is no volatility in markets. i thought the stock market was really volatile in january and february. oil was collapsing. they need more volatility they are on the right side of. is that what they are saying? >> you will hear them talk about good volatility and bad volatility. the shock we are having in january and february made everybody back up and get on the sidelines and not do any trading whatsoever. >> they are not on the sidelines because of the volatility it sounds like. >> once it unfreezes and you start to have transactions, remember, with volcker, these banks are on not either side of the trade. all they are doing is making transactions. volume is what it is about now. it is not about direction.

you see trading come back, that's when you start to see the actual revenues come back like we saw in march. >> we have to run. what about the legal issues for any of these banks at this point point? we saw goldman sachs with the $5 billion finest they paid on monday. do you think there is more to come? we talked about this yesterday in terms of where we are in the legal finest cycle if it is a cycle. >> we're on the tail end of what we had from the financial crisis. it takes many years to go through this whole process. what we have said and seen is that basically earnings are paying for this as we go. these are unusual items. we are on the tail end of it. what we have seen is that over the years, the last three years, we have seen them lessening as we move forward. for most of the banks, they are out of it. there are still a few issues to deal with. overall, it is still very manageable. >> thank you. marty mosby. >> verdini, lambert and lock was

the law firm. he is still going strong and rode around on that horse doing catheters or diabetes. >> more recent. >> gene hackman, jerry winetraub. >> it was a great movie what i didn't realize, tom cruise insisted on being the only name above. gene hackman said, take my name off. >> we are talking about the firm, people sfwchlt . >> you have relocated to panama. >> you looked at ted knight and said, what the hell is this ted knight thing? >> that was caddie shack. let's get you caught up on other headlines. investors looking at key economic data.

retail sales coming up for last month expected to be unchanged. also out, march prices, rising. another key event comes at 2:00 p.m. when the fed releases its beige book region by region assessment of the u.s. economy. there is this, 39,000 verizon workers are out on strike after the two sides were unable to come to a new agreement nearly eight months after the old contract has expired. they started protesting and picketing at 6:00 a.m. this morning. ray thompson is hanging out down there this morning. >> when we come back, the bulls are in control after yesterday's triple digit gains led by the energy sector. the futures pointing to a positive open once again. we are going to find out if there is more room to run next. >> wow. >> hold on a second. another driver of the markets, china, exports rising at the fastest pace in a year. we are going to talk about a china expert about the world's

second largest economy. "squawk box" will be right back.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "squawk box." dow opening up higher.

s&p opening about 12 points higher. jpmorgan, the first of the banking giants to report. jj says they are the most important sectors to watch. he is chief strategist and you look at the jpmorgan earnings and have we decided, they look good. it's a relative world, right? >> it is the gaylord falker earnings. the ninth place ribbon. >> this is what we asked. has everyone sandbagged their earnings so badly that joe says we are in a dull market? i don't know if it is dull. but it is only going to go up, because we said it was going to be so bad to begin with? >> i think that is part of t the expectations have been set so low. financials have been in such an expectation. we felt rates are going to be

higher. specially those doing a lot of money, jp, revenues that go to credit cards, money that goes to the bottom line. when it doesn't come in, a little tougher on the analyst to get their arms around where exactly is this money going to be? they set their expectations lower. they haven't had any major legal fees. those two things combined made it difficult to predict. that all being said, i do think it is going to be very difficult going forward to get a take on where these earnings are going to be from the financials. if the financials perform, we can continue to rally. they are a great measure of everything going on in the economy. mortgages are touching them. more importantly, business loans are touching them. we will have to see their competitors come out over the next couple of days. >> we have had a number of analysts, investors and others, who said, they were going to wait, they wanted to wait through this to see what was going to happen before they actually put money to work.

p. >> is the train going to leave the station and we are all going to be sitting here? >> we are not going straight up. let's put it this way. it will be very difficult to believe we are going to go straight up. this is a good week to get an assessment of where the overall economy is at in my opinion. i don't think it will be too late at all. just like when we were going, people are like, is it too late to get out? if you think about january, i heard jose, if you would have took a month off, you would have never known that would happen. it goes back to the argument, specially for retail, who i deal with, sort of piecemealing in and out. you don't have to say it is too late. it is more about getting in a little bit at a time g sl you are a bond market guy. take the other side of this. >> i look at the marketplace and growth that's going on in the economy. it doesn't look that great to me. i look at revenue growth, more than earnings, to look at corporate revenue growth. it has been declining. i think one of the numbers today that's important to look at is

what are retail sales doing? what is the consumer buying? how much are they buying? all of those to us have been fairly suspect and concern. i think the other items that are a great concern for us, while it is not here in the u.s., the reporting and talking about negative interest rates, i think is a concern for most investors. if you look, if you happen to have gone to business school and taken the economics class, you can flip through the text book. you are not going to find anything that talks about negative interest rates. fact that we have never been there before and are trying things from a central bank that have never been tried before, makes people pause, maybe things aren't as good as we have seen before. >> you are expecting that negative interest rates will tend to keep our rates lower. >> i'm not expecting it within the u.s. do i think it can have an impact on the u.s.? back to talking about jpmorgan. how could that impact manifest itself? a slightly flatter yield curve. lower rates at the longer end.

those are things that can hurt a bank. it is a difference of what it borrows money for and what it lends it out. it gets squeezed. >> for you to say revenue growth is actually still dropping, that speaks volumes. it is five years ago we talked about revenues not growing. >> so the actual -- so it was flat five years ago, year over year for most companies. the growth rate is actually below. it has been getting worse and worse every year. you can't run a country -- that's tough when your get nothing revenue growth whatsoever. i don't understand what we need to do. >> finding out what we need to do. >> revenue growth comes from price increases, not just unit sales. maybe we need some type of inflation to grow revenues. >> does inflation truly grow your revenue on a basis of selli selling more? >> we are living in alice and

wonderland times. when was the last time ibm had a high rate. we have been complaining across the board, no revenue growth in the stock market. >> think about what's gdp growth been like in the u.s.? what's it been like since we started qe whatever? >> it has steadily been anemic. >> what do we see from groups of economists every time they come out with a forecast of gdp? she slowly go lower and lower and lower. when you step forward and look through that and go, what's going on with corporate revenues? it is slowing down. you asked me from a bond perspective, a bond investor perspective. what do i see corporations doing? look at this. they are borrowing more and more money. are they building plants, expanding stores? >> no, they are buying back their stocks. >> it makes earnings work. >> the only thing i would say to that, it makes sense to continue to borrow money at these rates. at some point, rates are going o go higher. you are looking on the outside and feel like that is not the best use of their capital.

i feel like they do do what's in the best use of their capital at that moment. buying back stock for a lot of companies is the best use of their capital. >> if the stock market drops precipitously, you can't say it is a mistake. >> they have cut expenses. they are so well-run. they have cut expenses to the bone, the banks. >> thank you, guys coming up, star wars fans, old and young, have something to look forward to this summer. are they going to replay those originals with that special neknek effects that look like little sticks someone is moving around? details after the break. time for today's aflac trivia question? which athlete holds the most olympic gold medals? the answer when cnbc "squawk box" continues. medical boyyy, y!

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the first stock index ♪ (musiwas createdoughout) over 100 years ago as a benchmark for average.

yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. now, the answer to today's

aflac trivia question. which athlete holds the most olympic gold medals? the answer, michael phelps. >> mark spitz before that. swimmers get a lot of medals. >> they do all the events. the original star wars trilogy will return to theaters this summer for one night only. al alow draft house theaters are showing the original "star wars" trilogy in august and they will screen a new hope, "the empire strikes back" and "return of the jedi." be prepared to act quickly and clear out your schedule. they start preorders on may 4th. each screening is going to show all three movies back to back. >> hours. >> you don't know apparently, darth vader is like skywalker's father. >> that's what i've been told.

>> this is really -- did you see mark hammel in the last one. it looks old and wise. >> china is sure to be a hot topic at the imf spring meeting taking place in new york. that will be a hot meeting. a lot of data out of the second largest economy. we will talk china and the global economy right at the break. we'll tell you about it. before we do that, take a look at the futures right now. dow up about 92 points in premarket. we are back in just a moment.

at mfs investment management, we believe in the power of active management. by debating our research to find the best investments. by looking at global and local insights to benefit from different points of view. and by consistently breaking apart risk to focus on long-term value. we actively manage with expertise and conviction. so you can invest with more certainty. mfs. that's the power of active management. something we'll show you. through small things, big things, and spur of the moment things.

welcome back. mortgage applications jumped last week. they registered strong gains. the average 30-year mortgage rate fell by 4 basis points to 3.82%. pultegroup member, james grossfield has re-signed from the board. it comes after he joined bill pulte in calling for the removal of the ceo, richard dugah. grosfeld will be a guest in the

halftime report. he said he was excluded from several board meetings and didn't see any point in staying on the board. after the bank's estimates of $1.35 a share. that was 9 cents better than the street was expecting. revenue slightly beat forecast. 39,000 verizon workers are on strike. they failed to produce an agreement on a number of issues, including pension benefits. mary thompson joins us. she is at the picket line outside the company's offices. good morning. >> good morning to you. workers from the communications workers of america and the international brotherhood of electrical workers walking off the job earlier this morning. the strike impacting verizon's wire line and some of the internet operations from virginia to massachusetts. the union says this strike is about preserving good jobs. it is also about money. dennis trainer, who is vice-president of cwa district one telling cnbc, it is time

verizon shared more of its billion dollars of profits with workers. here are the flash points. the two sides disagree on pensions. verizon wants to freeze them after 30 years of service. the union wants to keep them as is. the union says verizon wants to offshore customer service calls jeopardizing jobs in this region. verizon says they need flexibility depending on the time of day and call volume. the union wants to end the practice of deploying workers to different locations outside of their regions for two month stints. verizon has put a 6.5% raise on the table but the union says that is a wash since she have agreed to certain benefits. they say they are ignoring p today's digital realities. as for verizon customers, they say they have been preparing for this strike since last spring and it has people in place to

deal with customer service issues, et cetera. some disruptions are expected. verizon is saying its top priority is making sure its customers are served. we'll be here on the picket line all day. back to you. >> thank you, mary thompson. appreciate that very much. >> the imf and world bank convening for a series of spring meetings where china will no doubt take center stage on the agenda in light of a handful of key data points expected this week and just overnight. we have some evidence of that. asian markets were higher thanks to the strong export. a number out of china. helen chow joins us, chief economists for greater comply na and bank of america. merrill lynch has similar positions at morgan stanley, undergrad and china. masters and ph.d. from stanford. you published papers and all kinds of things. you need to help us. to this day, china is still

unscrutable for many of us westerners. what you are going to tell me is harder to understand. >> long-term, the structure and leveraging has not yet gun. near term, a cyclical releveraging is in place. i guess it means good things for the global economy. we can probably see that in the short-term in the way that china probably is quite some way away from what people were worried about in jan and feb. they were overwhelmed by the worry that is china could be deleveraging too quickly, too much unemployment and hard lend ng the economics and mpl shooting through the roof. i think that was people's worry back then. what we saw instead starting from march, specially going into april. we are seeing more and more investment going through and actually china probably is improving in terms of the industrial demand as well as imports. >> while other numbers have come down and developed economies, the u.s. gdp comes down.

the i.m.f. lowers the global. that's significant. we thought that china was still trying to find a bottom. has china found a bottom. >> from a medium to long-term perspective, we think that china is probably still trapped in this slightly downward channel where growth is continuously going to disappoint and go down. i don't think that has changed. i don't think from a five-year, to ten-year perspective, china has already dealt out from the recent slowdown period. it doesn't negate the fact that in the short-term, we are seeing some releveraging momentum going into the second quarter. >> i happened to be watching another network last night xwlchlt is it so the main commentator talked and was preparing to what bernie sanders was going to be able to do. he was 0 for 5 on his policies and what trump was going to be able to do.

he said trump could probably deliver on 2 of his 5 promises. >> which two? >> one of them was china. one of them was trying to change the trade imbalance with china in a way that's more positive for the united states. is this a discussion people are having? are they watching what's going on in the election? >> i think asian investors are starting to talk about the u.s. election. however, the very uncertainty we are seeing from the set of candidates is what is on top of everybody's mind. the upcoming presidential election is going to be a wild card. i would say at the same time people also worry about europe. i would say we are probably in a world today that is not short of surprises or potential downsize

surprises. >> one of the things that surprises me is watching volatility. asian and chinese markets. we think it is a big deal if we swing 1%, 1.5%. we routinely see the chinese market swing 3%, 4%, 5% in a day. do you expect that volatility to continue indefinitely? >> it is hard to predict whether it is happening in the equity market or other financial market. i would say there was a discrepancy specially towards the beginning of this year when the financial market was perceiving this unusual amount of uncertainty related to deleveraging. from an economic, fundamental perspective between the two. you receive this kind of struggling in the market. >> as china's exports improve and the trade imbalance, i would imagine it doesn't necessarily mean we sell more into china. so that's going to remain our

populous argument or talking point. >> very good point. in fact, i think most of the people would probably argue that they should depreciate against the dollar so we can see the trade imbalance improve. most of the time we saw in the last 10-15 years. actually, the exchange rate doesn't matter that much in terms of the bilateral trade surplus. in fact, what matters is perhaps how china is going to, for example, add on more leverage and probably invest more. if china can grow out of the current high debt problem, potentially they are going to import more. that's going to be much more helpful compared to 5 cents of depreciation. >> where do you live? >> i live in hong kong. much warmer than in new york, i have to say. >> i am thinking movies in china. i saw the "60 minutes" piece on it. >> i saw that. >> i want to get into that business, because i understand

there are a lot of people that want to see entertainment movies now. >> absolutely. >> hoist biggest star in china? do you no he? >> female or male? >> female, probably hui jung. >> she just had a baby. >> good for her. you can do both. >> interesting. >> we are fascinated by culture and they are fascinated by hollywood here. so we are all going to. i am going to buy everyone a coke, because the world is coming together. >> absolutely. a coke or a diet coke. >> coming up, building a fortress in the sky, eric castle leases commercial planes to 65 airlines around the globe. the company meeting win vest stores. they land on the squawk set for an update.

take a look at jpmorgan, which reported earlier this morning. we will have more on the result ns s in a bit. "squawk box" returns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.

airline prices are soaring. the airlines of 33 countries, here to check us on the industry is juan rachel. what has changed about the whole business in light of jet fuel? jet fuel is a third of what it was a couple of years ago. >> just 30 months ago. >> a third? >> yes. it has changed the business in a very positive way in general. air traffic was up 6.5% last year. >> that's good too. >> that's twice gdp growth. a big part of the reason was lower ticket prices and lower fuel. >> as a person that runs a company like this, how do you change the mix in the type of aircraft you buy, the age of the aircraft? do you jump on every new technology? what makes the most sense to

plan for the future? >> the opposite is what makes the most sense. the new technology aircraft, give you an example, five years ago, is when the new airbuses and boeing narrow bodies were introduced. at that point, fuel is three times the price. it was a great time for the manufacturers, because everybody was looking for the great new benefits that technology offers. since then, the value equation has changed. you can't make, as an operator, the same kind of savings from those kind of airplanes. >> does that mean as a consumer, i'm going to get to fly on wider body planes and have a little more space? >> this is all within the same size. the consumers benefiting in general because fuel prices are being passed through. >> those are temporary changes. most expectations are that this could be fleeting. how do you do long-term planning when some of these fluctuate so much? >> you do have to buy for the long-term. as a leasing company, the first lease is half the value of the aircraft. you have to get that right. as an investor, what we do is

look around and one of the things that makes us difference is that we tend to keep our powder dry and our investments closer in. things change all the time. at this point, most of our money is going into existing technology aircraft. the new ones just don't justify the cost sgchlt wi. >> airlines today, when they model out the price of oil whrks th , when they come to you and have to least plane, what does the model look like? >> i guess the question is, how big is the spread between one airline and another? >> it is quite big. it is also time frame. what we see as a general matter is a longer mind set is set in. more airlines are keep whag any have a little longer. that suits is well. we have extended our leases. >> oil prices drop and you think of a lot of alternative energy technology that doesn't work

unless it is subsidized. are these some of these planes that were being built lighter with composite materials? does it cost more to make them and buy them and you hope to reco reco recoup that from lower energy prices? that's what you are saying. >> that's part of it. there are environmental emissions benefits and a big deal in the world. as a general matter, in time, i'm pretty sure fuel prices will go back up and up and down in between. we are still interested in new technology. it is just a matter of price. >> in your business, is it like when you lease a car? do you have to know what the residual value is to set prices on how much money you are going to make? >> funny you mentioned that. one of the reasons they have expanded so much is because airlines make decisions very much on the same reasons you might in terms of leasing a car.

airlines are not that good at managing residual value. that's our strength. an airline that doesn't want to have to deal with that value risk says, hey, i'll least airplane and in 10 or 12 years, air capsule or some other company, you guys deal with it then. >> do you think eventually private aviation is going to become more accessible to more people? would you get into that business? >> would you divy up and not buy a full net jet? you have heard of this share. sna goi is that going to happen? it is still five or ten times higher than commercial. it could grow. our playing field is a half a trillion dollar business and it gross by 100 billion every year. there is a lot of stuff to do in our current market. the airlines need leasing eve morn as their profit margins are under pressure. as growth rates differ across the world.

>> their profit margins are under pressure even though there is no competition and they are all running? >> that was your question, andrew z do you wa andrew? >> not around the world. >> i'm not making that argument arnold the world. i'm making that argument in the united states. >> we started with how much ticket prices had fallin. >> he is talking globally. >> in the u.s., it has come down marginally relative to the fuel pri prices? am i wrong? >> you are both right. >> how? >> it is a big world. you have the big three gulf carriers intrude on the long-haul model? >> ticket prices are down. >> let's talk about the united states. that's the market we talk about the antitrust issue. >> very reasonable price ns my opinion. >> i can fly anywhere for the same price as 30 years ago

sfwlchlt cago, very reasonable z we had the ceo of virgin america on the day they sold to alaska. i said to him, could you start a new airline today? would you start a new airline today? >> there are a lot of barriers. he said, absolutely not. >> there are a lot of barriers to entry. it costs a lot of money. no slots. >> it is slotted. that's a government problem. >> i think in the u.s., it is a very different market. you have a lot of competition p. >> where? in the u.s.? >> you have a lot of competition in certain roots. so trunk roots, you are going to have a lot of price benefits flow through. if you have a less traveled route, you are probably going to be paying a lot more. >> the way of the world. >> nothing to jump up and down and scream about just because certain routes, you don't have a lot of choices. >> that's the whole point. >> in general, the more traveled

routes, there is plenty of competition. finally, the airlines are making some money after 20 years of not making a dime and you don't like it. turn it into a utility. >> try driving with your kids for 16 hours. see how you like that. >> i love that. >> when is it my turn to talk? >> we are out of time. >> if i can fly to california for the same price as 30 years ago. >> if you go to asia, you had these state-owned airline that is charged through the -- now, it is cheaper sflchlt reque. >> locally, we deregulated here too to make it cheaper. >> thank you. >> thank you. >> when we come back, a sneak peek of tonight's premier of the

new secret lives of the super rich. manly taking two things the super rich love, megayachts and golf and combining them. what you get is a little bit ridiculous. the details are next. take a look at futures this hour. we are looking at triple digit gains for the dow and after the gains we saw yesterday. the s&p up by 12.5 and the knack dabbing up by 35 cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision,

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have you ever been faced with a difficult decision, hitting the high seas or hitting the lynx? you do not have to choose. robert franks joins us. duane hagadon said he wanted a lot of sizzle on his 200 foot yacht, along with jacuzzis and grand piano, there is golf. >> all lady lola golf club. >> you have golf clubs to match your yacht. >> sure. flags on floaters out in the water. we have a system that the ball comes up, so you don't have to bend over and tee them up z lady lola has got some balls, all specially designed to float. >> we have a crew out in the tender with a net.

they scoop them up. >> there is a guy whose job it is to be out there and collect the golf balls. >> darn right, darn right. >> you must have the had a lot of people look at this and say, duane, are you crazy? >> says the sizzle. >> if you want that sizzle yourself, it could be yours. that boat is for sale for $55 million or you can charter it with its crew of 16 people including that guy that goes around for around $400,000 a week. >> there is a course right over here on the jersey side. the driving range is into the ocean. >> i think they are floating. >> floating and they pick them up z up. >> it feels like a regular golf ball. >> $400,000 a week? >> no putting green. does that include food? >> there is a lot of water hazards. do you tip on top of the

$400,000 for the week? >> yes, you do. it doesn't include food and beverage. >> $400,000 a week and no food and beverage. >> that's extra. >> it reminded me, i had always heard that larry ellison had a yacht and they had guys like that to pick up the basketballs. >> larry ellison had a full basketball court. they had a guy that sat in the tender and collected the balls. >> super rich. eastern standard time. >> do you feel questions that say, in this age of income inequality. do you ever feel guilty? i had some questions yesterday from someone asking me that. i said it is a meritocricy. doesn't that make a difference that you can do that here? >> it is earned success. the fans of this show say this is aspired to it. >> thank you. i was leading the witness.

>> coming up, more on jpmorgan's quarterly results. we'll talk about him in just a moment. the company out just a little bit ago. we are going to break them down when we come back.

shares of jpmorgan rising on better than expected results. >> new this morning, 39,000 verizon workers go on strike. why and what it could mean for the company and its consumers? music to the record industry ears. sales of tunes growing at their fastest rate in nearly two decades as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york. this is "squawk box." >> welcome back to "squawk box" here on cnbc. first in business worldwide. >> i'm becky quick along with joe kurnin and andrew ross. we are fgoing to get retail sales. take a look at the futures.

we saw some huge gains yesterday, the biggest gain and rally we had seen in quite a while for the dow. you can see this morning, the futures are up across the board. the dow futures have been indicated up by close to triple digits after better than expected economic news out of china and stronger than expected results from jpmorgan. you can see the s&p is up by 11.5 points. take a look at the markets in europe. the dax and the cac are up and the ftse, up by 1.5%. news on the banks and the so-called living wils. kayla taushi joins us now. >> these living wills are the resolution plans that the banks would use to wind down and effectively declare bankruptcy in the next down turn. the fed and the fdic at this

hour are announceing thing that the 8 banks have deemed not credible, bank of america, bank of new york, melon, jpmorgan state street and wells fargo. for a few other banks, the fed or the fdic noted some weakness ns the plans but because they could not agree on these tee fi defish y deficiencies, they sailed through. citigroup was found to have no major issues by the fed and the fdic. certainly, that would be a stamp of approval for a bank that has had issues on the stress test in the past. four foreign banks set to go through the resolution plans have had their deadlines delayed by the fed and fdic. we would expect to have the agencies weigh in on barclays,

credit suisse, doeutsche bank ad ubs. they are expected to submit progress reports as they continuously address these plans. some of the changes might require difficult choices for the banks that aren't necessarily ideal for day to day operations of these firms. we are waiting to see exactly what that statement means, how banks will respond to the claim by the fed and the fdic that these plans are not credible, since the banks and agencies have been working closely together to put these plans tog. several years after dodd/frank. we are still here. at least the agencies feel, andrew, joe, becky, that they are making progress. >> kayla, thank you for that big implication. i'm sure that will be talked about in this conference call that jpmorgan is going to be holding this hour after posting better than expected earnings and revenue. the bank raising its shared buy back plan.

shares, we are going to show them to you. brandon hawkins joins us to talk about what this all means. right now, you are looking at this stock. looks like it is up about 2.5%. brennan is here. help us with this in terms of what kayla was talking about. you had these positive earnings on a relative basis. now, you hear about these living wills and how that changes the game for a company like jpmorgan, now in the crosshairs again of the government. >> i don't know whether i would say changes the game. it is more like a continuation of the same game we have been playing for years. what it does is simply means that operating expenses, upward pressure from regulatory expenses are going to continue. we don't get relief there. i don't know whether that is incrementally new. we have to wait until we can really understand what the full implications of this announcement out of the regulators truly is before we can have a big conclusion z to

the extent this means higher capital, how are you going to change your models? >> it is impossible to change unless you know the actual implications. number one, the companies have to respond and then ultimately, we are going to have to figure this out. i hadn't been expecting capital returns in excess of 100% nor investors. to me, the more probably relevant application would be increase in operating expenses. getting back to the earnings front, what we can analyze in the near-term, better than expected results. expectations had come in really, really weak. there was some one-time head winds in the number. that $1.35 they printed, the core number is a little bit better. around $1.40 by my estimate. really, a pretty good outcome here. we saw both net interest margin do a lot better. everybody has been focused on the ten-year. the short-term rates have come up nicely, which should be a tailwind to not just jpmorgan

but all of the banks. >> here is a question on the tailwind. is that something you think is sustainable? >> trading revenues are very, very volatile. the good news here is that we had been prepped, analysts and investors had been prepped for really, really bad print on the trading revenue side. jpmorgan gave us a reason to believe it might not be as bad as feared. they do set a bar pretty high. we'll see how much carry-through we get with the peers. expectations are going to go up. >> they did cut a lot of costs. is that something they are going to continue to be able to repeat? >> the encouraging thing is we saw it come out of the noncomp side. compensation can be pretty volatile, given the volatility in trading revenues. to see the noncomp come down.

i view that as a little bit more structural. i this i that nk that is really encouraging. >> you look at these numbers and you see what? >> i see the potential broadly across the group. i think the read-throughs are pretty clear. we will get expectations are lowered so substantially. we should be able to clear a pretty easy bar and in the near term set up reasonably well for a good trading opportunity. >> we are going to leave it there, brandon, thank you. >> housing in focus this morning as well. mortgage applications jumping in the last week. diana olick is here with more. a look at a new product designed to guarantee your down payment on the home. >> mortgage rates dropped even lower last week thand pushand t mortgage applications up 10%, up 11%. applications to buy a home finally made a decisive move. they went up 9%. now, this, as the 30-year fix

fell to the lowest level since january of 2015. that's the fwogood news, folks. the spring housing market has been plagued by high prices. home buyers are not willing to overpay, specially knowing that about 5 million borrowers are still under water on their mortgages. that is the remnants of an epic housing crash. but what if you could ensure your home equity? i'm not kidding. dallas based values ensures is betting on it. they are launching a down payment insurance program today. let's say you put $20,000 on a $200,000 home. so then you pay a one-time, up front premium of about $1200. that, of course, will depend on what the value of your home is. value insured will ensure the losses on that down payment if you have to sell and, of course, if your home value has dropped. now, a lot of folks have talked

about a product like this over the last several years but this is actually the first offering. so the question now is, is it worth it? why not just pay into your home yourself? >> well, we're talking about it online right now. that's at realtycheck.cnbc.com. we will have the ceo of value secured. oil prices are under pressure as questions rise about this weekend producer meeting. we are going to talk expectation when "squawk box" comes right back.

wti, down by 55 krenlts after an oil price retreat from the 2016 highs they get yesterday. days ahead of a meeting in doe ha. sau saudi's oil minister has pulled out of a plan for cut.

the minister's response was forget about this topic. joining us to talk more about it is john kildef. john, i feel like this is deja vu all over again wechlt are talking about planned cuts. as prices come up therks say, never mind. >> forget about it. >> what happened? is this just a case of the idea that low prices may be the cure for low prices? we may be getting higher prices anyway. >> a balance between the low prices scorching most of opec. a lot of them feeling the pain. this battle between saudi arabia and iran to try to react to it and also battle each other at the same time. the iranian oil minister called it a joke yesterday as well. even though the russians supposedly were striking a deal to exclude iran. it is one big joke, almost, to

me. >> the iran januaians just can' up. >> they are like senator schumer. they race to talk and get on the record and the news wire. nothing against senator schumer by the way. >> the lead story in the "wall street journal" today talks about how, look, this is what we are going to see. these higher prices are probably coming at least by the end of this year when you start looking at production cuts coming from cash squeezed producers in latin america and the shale. >> all the same front page story. a great contra indicator for those in the commodity markers. we are usually an overlooked to this degree sector. when we get this attention, you generally fade it. there is no doubt the low prices have done some damage. a ton of emp project that is come off the board and won't be funded. down the road, there may be something of a balance. at the same time, the technology is here to be raced into

production once prices get above $40 a barrel. what's happened with this whole situation is that efficiencies have been rung out of the system incredibly so. the fact that you can make money with $35 a barrel is just beyond anyone anyone's imagination three years ago. >> they have left the industry where it is harder to flip a switch and turn it back on. i think there is still a level where you would be able to flip the switch partly? certainly to ramp up another 1 billion barrels a day. people will go where the jobs are. it is a void that gets filled. these towns up in north dakota that sprung up out of nowhere seemingly overnight also have now been abandoned seemingly overnight. you pay people enough money for that manual labor to make six figure toss drive an oil truck, they'll do it. >> where are new the camp of where oil prices are headed? you sound like you are very

skeptical. it sounds like you would be a seller of oil? >> i would. yesterday did represent a technical breakout, for example, on the chart. i think this is going to be to channel a phrase, this is going to be the mother of all by the room or sell the news events here on sunday. i think there is no way they come across with any kind of a deal or sufficient rhetoric to m satisfy this rally. i think there will be a pullback next week. i am not certain that the lows are in for the year. >> 26.05. >> you think we could potentially fall below that? >> absolutely. there are still concerns about the global economy. i would point out the imf just this week about that. if we don't get the kind of growth we need to sustain the outlook for oil demand, that will help it fall apart. also, as well, we are still in a terrific glut, becky, still

overproducing about 1 million barrels a day more than we need. i think that's going to dawn on this market. the next phase of refinery maintenance, the pre-winter maintenance season, will cause crude oil to back up in the system, traditionally a low period for prices on a semi-annual basis? >> i think the pieces are in place for it to go back down. >> john, thank you for coming in. it is good to see you sflchlt request appreciate it guys. thank you. >> coming up with headlines from the jpmorgan conference call including what jamie dimon has to say about the banks living will. stay tune, "squawk box" will be right back.

mark zuckerberg delivering the opening speech at facebook's conference yesterday n a thinly veiled attack, they took to criticizing donald trump and his trump of a culture of fear in the u.s. according to zuckerberg, the ceo of the social media giant saying, in his words, i hear fearful voices for calling for building walls

and distancing people they label as others, calling for blocking free expression, for slowing immigration, for reducing trade. he also said instead of building walls, we can help people build bridges. instead of dividing people, we can help bring people together. zuckerberg never mentioned trump by name, adding that the fight against this mentality is an integral part of facebook's ten-year road map. >> they have also installed all sorts of things within facebook in terms of hate speech to try to avoid that. there are a whole lot of things going on with them. >> google calendar is celebrating its tenth birthday with a new feature called goals. the scheduling app has users set personal goals that automatically finds time each week to accomplish them. i should try that. >> amazon is expected to unveil a new kindle today. an ali baba site linked it, it

is called the kindle oasis, nearly $290. nearly double the price of the kindle paper white. it weighs less than half a pound and has a rechargeable battery case letting users read for months without plugging it in. >> we are getting more details on jpmorgan's quarter from the media call and wilfred frost has been monitoring the call. let's head off the first issue that kayla brought on living wills. jamie dimon said, we will do everything possible to fix this issue. he followed it up by saying, we have tons of liquidity. they are not the only bank that has failed. the cfo following up to say it is not particularly a binary issue. it is a process. it is not like a red line as it

were in the sand that this is an out right fail that means they can't fix it moving forward and saying it is complicated set of requirements for everybody. they will continue to work hard to meet them. jamie dimon said in terms of the economy in general, it is doing finest. most economists think the u.s. will get stronger in the second half of the year. he says he doesn't think there will be a recession in 2016. if we move on and touch on the energy issue, we saw around about $700 million right down on commodity-related areas. he says the cfo, mary ann lake said it was possible by the end of the year, we could see plus or minus five in us dollars from that position. there is a high degree of ability and oil prices are the key factor in that area. in terms of investment banking and looking forward, they are saying, it will be less. very big elephant deals. this is playing out as expected. given the volatility.

they do see downward pressure on mna for a quarter or two but could pick up after that. those are really the key takeaways in terms of trading and saying that march, of course, much better than january and february. that positivity has carried forward into april. it is early days. they would say they remain cautious for the second quarter in that area in terms of trading and investment banking, guys? >> thank you, wilfred, thank you. sean parker is on a mission to fight cancer. he is announcing he is giving $250 million to six u.s. cancer centers. he says he is targeting immunotherapy because research is at a turning point. his cash infusion comes three months after president obama called for a $1 billion federal research program he dubbed moon shot. we will discuss his efforts on

closing bell at 3:20 p.m. eastern. coming up, breaking economic news. retail sales and the producer price index straight ahead. then, later, paypal cofounder, max levchin, will join us on set with his new online lending start-up getting a funding boost. take a look at u.s. equity futures. up triple digits. now, up 90 on the dow. 11 on the s&p and 34 on the nasdaq. [dad] i wear a dozen different hats

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great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend,

if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to squad b"squ box." jpmorgan reported better than expected earnings and raising the buyback plan by $1.9 billion. shares have been up about 2%. now, up almost 3%. $2.75. up 1.54 to $60.82.

elsewhere, 39,000 verizon workers are out on strike. they were unable to come to a new agreement eight months after the old contract expired. spikemaker, mccormick is abandoning its bid for premier foods after they rejected an initial $2.1 bid. mccormick was unwilling to raise its offer. >> peabody has now filed for bankruptcy. the world's largest private sector said it left it unable to service a recent debt fueled expansion into australia. rival, coal filed for bankruptcy earlier this year. we are a few seconds away from new numbers. retail sales and the producer price index, we are going to get both of those. the markets have been performing, strong advances for the futures markets. the dow futures are indicated up

by about 93 points above fair value. s&p up by 11.5. the nasdaq is up by 33. if you take a look at the treasury market, it looks like the ten-year note is yielding 1.78% and rick santelli is standing by at the cme in chicago. rick, take it away and let us know what those numbers are. >> drum roll. march data for advanced retail sales expecting up .10, down 3/10. if we strip out the all important issues of the day, autos, for example, it rises up 0.2 but half what we were expecting. autos, up 0.1. the sales group which inputted in. we were looking for 0.4. it is only up 0.1. ppi, expecting up 0.2.

it is down 0.1. lesson the producers side. also, down 0.1. they are both negative. we were expecting positive. we look at it year over year on core food and energy. i'm sorry. there is so many sub texts, it gets a little difficult sometimes. the year over year final demand number, we are expecting up 0.3. that's down 0.1. we missed on retail sales and the price appreciation. tla that's kind of what he would get to the consumer weekend. as becky pointed out, we were hovering around 1.78 before the number. preopening equities, they are now up 92. we are looking at up 88. a subtle gain there.

i personally think when it comes to the pricing side, listen, less growth, less pricing. on the retail sale side, this is something to pay attention to. specially when the end of the first quarter was the number of gdp expected. that was barely positive. of course, we are all monitoring what's going on in europe, what's going on with the plan to fix the italian banks. it all looks good before we get the details. dollar yen, it has been improving the second session in a row. we want to monitor if we want to get all the way back up to 110. back to you. >> thank you, rick. steve liesman is looking at the data and rick had some caveats and some comments. how about you? >> i have a few. >> yeah. >> yes. >> could you illuminate us? >> first of all, there is no inflation. the year over year on wholesale prices, on the top line, it is minus zero and on the core, just a percentage point.

this should help companies in the sense that their input prices are not going up. in some cases, depending upon what your inputs are, they are actually falling. final demand for goods down 2.6%. prices. foods down 2.5%. year over year. obviously, energy down 14%. this should be something that helps. unfortunately, what they are not getting is a pull on the demand side. that's where we go over to the retail data and it just takes me a second to find that here. what we find is big drop in auto sales. down 2.1% on the month. that follows a decline in january, which is a little bit confusing. anyway, some of the other stuff is okay. furniture up, 0.3. perhaps reflecting the stronger housing market that's out there. clothing and accessories down.

department stores down 0.6%. food and drink up last time 1.8. the overall comment, there has been a lot of hope that after a pretty lackluster january and february, the march data would help seed the way for the future. we did get pretty good ism manufacturing and service data for march. that sort of created a little optimism. this retail number is going again. i think probably bring down our gdp tracking number what was 0.6. it depends on inflation. we are doing very anemic growth. a lot of the fed folks are, not to toot my own horn here, but picking up on the work we did last year about the seasonality of this. i am not sure. i can't tell what we did report earlier this week. showing that the weakness has been widespread. it is not just a single sector. it is hard to know if it is seasonality on the gdp. a lot of the inputs have shown weakness in the first quarter.

>> we'll give you kudos for that. i get the feeling or i've gotten the impression that you have put more stock in the employment numbers than the gdp. >> every economist and fed official i ask about this disparity between the two, they go with the jobs numbers. in part, because the jobs numbers are not revised as much. they think there is a little bit more real data behind it. there is a survey out there. the establishment also. i also don't think and you back me up on this or not, that employers are stupid. bringing on a person today is a very big deal. you do so, i think, belate eded in the face of existing demand. you are doing so in a way that's like, hey, i think there is going to be demand. i need to hire somebody now.

i do it because i have existing demand. i am working my workers too hard. >> people aren't stupid. they don't feel like it is a rip-roaring economy. i was leading in to get to vince reinhardt joining us now. he is the chief economist at standish melon. vince, summarizing some of your viewpoints here, the overall temperature of the u.s. economy right now is not exactly gangbuster, right? >> absolutely right. the first quarter was definitely a soft patch. the question is, how much does it extend forward? i think the way to square the conversation you just had with steve to is, it is about productivity. we are hiring people but we are not getting much extra output per hour of their work. so incomes and, therefore, sales are sluggish. >> so once again, maybe we are both right. so that the employment numbers are good but you look at this

election and the general sentiment of the country and you look at the gdp numbers and some things are just not quite right, it seems like, for 4.9 or 5% unemployment. >> all those people working don't necessarily feel good about it if they are not getting wage increases. the big national challenge is increasing productivity. we haven't been very successful about doing that over the last couple years. to steve's point, what number do you trust morph its employment every time. you can count the number of people working. that covers a good part of the universe, where as when you talk about retail sales, you also have to ask what prices of those goods that were sold. that gets really, really tricky. >> so, will the fed have another increase this year in your view? >> the dot chart from the

summary of economic projections is their aspirations. they have told us they are going to tighten at most twice this year. all their tone and feel is that they could easily be convinced not to do that. i think they are probably going to tighten two times but i wouldn't be surprised if it only turns out to be one quarter hike in 2016. >> is this a global phenomenon or are we doing something here or not doing something here that we should be doing? >> the bad news, we are the best house on a bad lot. the problems in productivity are shared across advanced economies. the slowdown, the sluggish growth performance is shared by just about all our trading partners. in some sense, the striking thing is that the u.s. is performing relatively better than anybody else. >> vince, how much does where europe and japan are right now weigh on the fed? it looks like they are through

the worst of the effects of the dollar on the u.s. economy. i have to think they would not want to do something that would strengthen the dollar all over again. >> i think the answer is, we are through the worst part on the dollar, because the fed communicated they are not going to tighten as much as they planned in december. so what i read december is, as a scare. the fn c tightened. there was a big selloff and there was strength in the dollar, weakness in commodity prices that. just got them to reorient how much they are going to tighten and so, yes, the rest of the world matters a lot to the fed. because there is more of the rest of the world than there used to be. trade is more important. gdp by our trading partners is a lot bigger than it used to be.

>> is there any truth to the notion that if we were doing bet terks the entire world would be doing better? it's not just that we are slow like everybody else but that its partly our fault that the entire planet or the globe isn't growing as much as it should be? we are the leader. we are the engine. >> when you try to figure out who is at fault, you have to point your finger to a lot of different people and not just at the fed. >> is liesman partly at fault, vince, do you think? >> the notion of uncertainty and talking the economy down, that's part of it, yes. >> vince, thank you. i'm not sure if these are all relevant points. >> why am i at fault? >> i don't know. >> i am willing to take the

blame. i want to know for what. >> take one for the gipper. >> when we come back, we start up a firm looking to reinvent the way people get lopes. the founder knows a thing or two about the payment space. max levchin joins us next. "squawk box" will be right back.

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news just in involving valeant pharmaceuticals. ceo michael pierson agrees to be deposed. the deposition is scheduled for next monday. we have been keeping a close eye on these shares. news out monday sending stock down on the idea it could be in default. one of the shareholders pushing for that. they have until june 11th. a firm getting a fresh round of funding. growing caution for funding companies from offering for on-line purchases. appealing to consumers that have short line credit histories. joining us, max levchin is the ceo and founder of the firm.

you still think of yourself as the start-up. i am permanently in start-up mode. >> how much runway does it give you? >> a lot of money. probably with profitability and certainly for a couple of years. >> how many years until profitability is the question. >> that is not something i am going to say on live tvz h. >> how hard was it to raise the money? we are hearing there have been down rounds. >> i think all those things are true. before i started fundraising, i get the sense that the markets are really tough. everybody was telling me to be prepared for a down round. a flt round is a blessing. we did not have a hard time raising money mostly because we partnered up with people, so fundraising was both easy and pleasant. >> for you, you also are an investor yourself. >> yes, in different businesses.

>> have you participated in down rounds? do you think you, yourself, are tougher as an investor? >> i would like to believe i am always on the entrepreneur side. so i am doing the right thing. >> i have seen it in my angel portfolio, companies go out and come back cold sghchlt are it makes sense at this point based on the environment. >> the public markets, so many companies are staying private longer that public mayrkets are being talked about. one of the things we were talking about with another guest is what happens to all these fin tech companies. are you a believer that ultimately, there is a whole new wave of all these companies that are independent. are you of the view that ultimately the wall street firms partner up or take out of the fin tech companies? >> i think there is a lot of different categories. i think the majority are going to want to go in larnlger

institutions. i think many will become absorbed into the financial system and help it innovate itself from within. hopefully, a few, perhaps our firm included, remain independent and continue fighting. >> what does the valley of what's going on in the political environment? we talked about what mark zuckerberg said alluding to donald trump. you said, there is a lot of anger out there. >> i was referring to a local observation. i think there is some combination of disbelief. i think people are realizing there is an enormous unrepresented part of our constituency that has found a voice and that voice is pretty strong. i think a lot of people in the valley are generally optimistic by nature. they look at things and say, well, that's opportunity in some form. i just have the to figure out what it is. >> politics in silicon valley are increasingly an issue.

apple and the fbi are back at their battle. >> right. >> you have come out on this. where do you stand now? has your view changed at all? >> no. i think i originally was for this and i realized what i thought was really going on. i had a couple of these things. i think apple is doing the right thing. they are standing up for things that are very important. should be very important to everybody. >> what do you think about the first time? >> i was naive enough to think it is as simple as this one phone and the precedent setting didn't matter and it could be dealt with very quickly and taken away. i think tim cook and apple stand was really all about let's make this a public debate and make it clear to our citizens what privacy they do or do not have with their phones. so bring it out into the open and put it in front of congress and the supreme court was called. >> it is not going to happen in the situation where the fbi paid

hackers. >> at the very least, the fbi ha to step out and say, we can do these ourselves. what we wanted is a legal precedent. now that we didn't get it, we are going to give it. >> are you of the view that the fbi should turn over to apple how it accomplished this and what the actual back door was for this vacant fill? >> there are a couple million people out there with these devices. i trust apple engineers to figure it out fairly quickly on their own. >> other big issue in the valley is a headline that we talked about. you were on the board of yahoo!. you, i imagine, what would be a win for that company? >> at this point, i'm far enough removed that i can't tell from the outside looking in. the reason i left is because i had to focus on my own company. >> it wasn't because you looked at this thing and said this is a completely unmitigated disaster.

>> my view of marissa and the team around her is extremely positive. these people work like you would not believe. the heart they pour into that company, the effort is very genuine and extreme. >> we talk about we tall about companies every day. what are the important things that a lay person should be watching along the way? what's different? >> the most important thing to me that's happening at phen tech, what we're trying to stand for or trying to accomplish, the majority might say even all car financial business models and financial services to consumers are built around what i would call an incentive mismatch. they fundamentally pen fit when a consumer makes a mistake without trying to, a late fee, a hidden fee. >> your balance falls too low. >> all of these things are a

fundamental missalignment. it's about aligning the financial institutions so you don't make money when people make mistakes. you help them make fewer mistakes and save and inform and improve their life. >> you have the opposite opinion than i do. >> we've had this debate before. >> but whenever you get someone who agrees with you, you say, what have you, and then i have to answer. he says it and you accept it not like you do with me and call me stupid. >> i don't call you stupid. >> i'm wrong. misguided, assinine. >> you've got the right.

>> you should have stuck with the first two. >> when kwoem back, jim cramer is going to join us live from the new york stock exchange. stay tuned. you're watching "squawk box" on cnbc, first in business worldwide. a fair price, quality service, and that horrible smells are really good at hiding. oh, boy. there it is. ♪ ohh. ooh. [ gags ] so when you need a house cleaner or an exterminator, we can help you get the job done right, guaranteed. get started today at angie's list, because your home is where our heart is. ♪

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let's get down to the new york stock exchange. jim cramer joins us now. the dow market did what we thought yesterday, jim. i read some of your stuff. you want to hate the market. >> the stock keeps going up. it's not in synch with the negative story we have to have. the stocks didn't get the memo. it's frightening. >> today the economic data wasn't great and there will be, i'm sure, some results that throw people for a loop or cause some people to take a pause. do you think anything will be significant enough to derail this near term up trend we're in in. >> the only thing is the talk that the fed would have to do something soon and they indicate there's just no way. look. i know i'm not matt levchin. by the way, he makes us all feel stupid. don't take it personally.

i've felt so dumb around max, especially on my show. >> he was agreeing with me, so andrew might -- >> i noticed the way he deflected that. it was like billions worth of deflection. billions. but, yeah, i mean it's hard to derail when you don't have the fed with its brooding omni presence. look at the living will thing. basically they're saying don't pay a any attention to jamie dimon, we're going to come down hard on him. it doesn't seem like fort apache for real. i've got to tell you. i look at the oil and gas loans. i'm worried. but i'm not so worried if oil goes higher. wouldn't be something if it didn't go down since everyone in the world is shorting it? >> i wondered if head and shoulders everything would have to be perfect. >> max would know. why bother. >> thanks, jim. >> yep. coming up, music sales growing at their fastest rate in

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music sales are booming once again. up more than $15 billion in 2015. extreming services offsetting declines in both cd and download sales. >> we have exactly six seconds, just enough time to say make sure you join us tomorrow. as for now, "squawk on the street" is next. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla along with jim cramer and david faber. this missed sales curbing the enthusiasm earlier this morning. ftse is at a new high for the year. beige book at 2:00 eastern time and a lot of debate about whether you trust oil as opec sees falling oil demand. our roadmap begins with jp more indian, beating the s