good morning everybody. welcome to "squawk box" here on cnbc. i'm beckky quick. the dow back above 18,000 for the first time since july. from the 52 week lows back in february, the dow rallied and the others. you will see they are in positive territory again. we have three dow components reporting this morning and that could effect those averages as well. in the early trailed or at least overnight in asia you saw that

the japan nikkei was up by another 3.7%. you see the hang seng and shanghai was up as well. the dax is up by 2 and a quarter%. also check out crude prices which managed to end down by only about 1% yesterday. up 1.5% today. couple big earnings stories this morning. ibm repeated first quarter earnings thanks to a double digit increase in arrive from its cloud service. overall arrive falling to a -- >> say that again. >> falling to a 14 year low. >> absolute arrive numbers were what?

a 14 year low. >> yes, sir. >> wow. >> and how many straight quarters of the arrive decline. >> i'm not going to speak for the company but they would claim some are empty calorie arrive components. >> but 16. i don't envy what they are trying to do. difficult, hard work. but 16 straight quarters of arri revenue decline. >> the data analytics and cloud business haven't been enough to offset declines. on cnbc's closing bell yesterday, martin schroeder explaining the transition is still a work in progress. >> traumatic investments in r&d but that is constantly changing and going towards things like the cloud and block chain and things like watson. whereas in the past it may have gone to develop and build out new semi conductor manufacturing technology. so the shift is ongoing and will

always be moving the business model to where we see value. >> and as you see shares of ibm tumbling after hours. >> i can't imagine that. they beat handily on revenue and by a wide margin. >> doesn't matter. >> well that goes into what we've been talking about all week long. whether you lose lower expectations or year over year. >> teactual numbers my friend. >> in the ibm case it went up from 120 something to -- >> that was -- >> but this is a number that -- warren, god bless him. but its stock has dropped 17% for instance mr. yusuf mehdi took over in 2012. >> down 17, ibm, up 65% on the

s&p. as you like to say "there you have it. >> there you have it. however, warren i'm sure would say if you look at all of the buybacks that have taken place there's been huge value in that. >> doesn't help. >> in the past when it goes down he likes to buy more. >> his pcentage of how much of the company he owns. he still owns it at 175 the shares that he does have. that makes no sense. >> -- the -- >> the buy backs don't help you on. >> sure. >> not in the immediate tirm. >> the stock price goes up. >> bingo. >> it is not going up. >> well look i'm not long or short a company as you know but i have my own views. >> the only thing buy backs do for you it lowers the float a little bit. >> the float. >> so the earnings per share doesn't look at bad when it keeps going down.

>> he'll own a bigger percentage of the company overall even though -- >> -- market cap of the company has gone down in the meantime from where you bought it. >> but you have to believe the company is coming back if you are going to invest in that position. >> it's not even big blue anymore. it's petite blue. >> is that. >> let's talk about netflix. they are topping the streets estimates on every metric. but disappointing guidance over shadowing the streaming giants report. the firm specifically saying it expects to add about 500,000 scribers here at home and that is below what analysts were expecting. part of the problem is crowding in the space. >> the only inhibitor is how

great is our service? can we make it so there is never a buffering? so it always starts instantly and the recommendations are incredible and the content is exciting? if we do that we'll continue to grow globally even though the others are also growing. their growth doesn't take away from us. >> a possible head wind for the subscriber growth is the subscription price page hikes in may. goldman sachs this morning, johnson and johnson. the cfo on johnson and johnson will join us for a first on cnbc a little later. >> i just can't believe goldman sachs is a dow component. it is. >> it is. three dow components. >> the world keeps moving. is kraft still? kraft's out. >> kraft's out. >> kraft going in is still new to me.

>> kraft split with -- >> i kind of remember healthcare. i kind of remember nike. but barely. >> yeah. by the way 2013. you are getting old. >> i know that. but goldman sachs? and nike has been in for three years? >> september 10, 2012013. who else went in that day? >> visa. >> how about kodak? they should still be in there. united health, arrive beat forecasts. company also raised 2016 earnings outlook as well. united health points to strong organic growth as well as good customer retention levels. gop front runner donald

trump reorganizing his campaign. politico reporting pa ining --. trump's former campaign manager corey lewandowski will take on a reduced role and reassigned after the shuffle. it is primary day in new york and the candidates continue to duke it out for delegates. in the latest maris pole donald trump is in the lead. and here with more is kelly ann -- thank you both for being here today. let's talk about the story on the front page of the journal getting more attention lately and just that fight over the rules for the conventionist.

the journal points out today that the party is going to be in a difficult behind explaining that donald trump has the most votes but party rules could allow them to nominate someone else. >> i think the nominee is going to be trump or cruz. and speaker ryan spoke about that last week and took himself out of the race and said the nominee should be someone who's actually run for president. and speaking the of rules, i think it's important to think how the trump and cruz people spent their weekends. the trump people spend their weekends in the trump tower and on tv. the cruz team spends weekdays at conventions winning delegates. the last five contests. >> but it goes back to popular vote and it's the rules of the party that goes with it. >> you have to win delegates. >> he has a strong point when he

says that more people are showing up for me and the republicans are trying to steal my nomination. >> so you don't think there is any blow back? >> no i think it is is playing right to his base. focus who are anti-establishment, anti-rnc. i also think the trump people are starting to figure out the rules that have been in place since last august. actually in october 2014 they were first introduced and solidified about ten months later. seems like they woke up and finding some of the rules particularly in some convention states like colorado and wyoming. and i think it's important there becky is if you can perform well at the state-based conventions now it portends you can perform well at the cleveland convention. >> okay. . so we'll continue to see as this polls on. new york today is probably going to go to donald trump. cruz has already moved on to pennsylvania which is one of the

next big ones we're going to be watching. >> senator cruz was in new york for a little bit. in maryland. the other thick about new york is winning your home state is sort of a low bar. so easy to do even john kasich did it. >> and by the way, trump has given cruz grief and rarely chocks off texas is a huge win. >> -- there were 12 contests on super tuesday and ted cruz got --. today in new york there is one contest and you have had two weeks to prepare. and look at donald trump, he changed his travel schedule to be in new york for two weeks. his new team said you have to focus. you have to run up the totals in new york. >> let's talk the democrats who are running today in new york. looks like hillary clinton is probably going to win but bernie sanders thinks if he can get the vote out that this is really going to be something that he

has a potential chance an upset. >> feeling the bern. >> he has a chance to do better than expected and he'll amass more delegates. i don't think see anything that happens tonight fundamentally changes the democratic side. >> he's not going away any time soon though. >> no. try to amass the delegates and --. eventually she'll get the support. >> why? >> it hasn got an little nasty. it's bickering. there is an open civil war in the republican right now that is a little different. i think in the end the democratic party will come together behind their nominee. >> bernie sanders is still getting 25,000 showing up on rallies. >> as you know the race is not won based on the national poll. >> you are taking a playbook right from the republicans.

he's given the republicans everything to talk about with hillary in terms of money and -- >> that's the problem. >> and her negatives just in that latest poll just in that one month t spread from positive to negative doubled in --. he's hitting vulnerable parts of her and hurting the candidate a lot. >> if you look at the -- >> -- talk about her for a second. >> he doesnshe doesn't need a l drawn out fight. her opponent's a 74-year-old crazy haired socialist. i mean it's -- >> i'm not one that thinks clearing the field and letting her -- >> [ inaudible ]. >> important development in the last month joe. i completely agree. hillary clinton's negatives have

increased and she doesn't seem to be resilient. and the thing about hillary, she can't even benefit from the three advantages that a female candidate usually has down ballot. one they are usually seen as the fresh face. oh no woman has held that position. nobody confidences hillary clinton for a fresh face. voters tend to look at -- and three, female candidates are often seen as more ethical, less corruptible. there is a reason you have never heard the term the old girls network. there isn't one. and she can't even benefit at a basic level from what female candidates usually have as advantages. >> i love the faces michael is making as you're speaking. >> if you look at the conversation that's going on in the republican party and you look at the conversation that is going on in the democratic party, i think it is much more likely that conversation is going to help hillary clinton in

the fall among women. >> well men can't stand here. they dislike her. distrust her. don't want her to be commander in chief or president of the united states. >> you can't run a national general election based on essentially angry white men it is not going to happen -- >> unless some massive change at this point half the country is going to hate the person elected. >> historic, yes. >> what ted cruz is doing right now is very smart. the strategy they are pursuing is smart. while trump is trying rhetorically to insulate talking about the system as the system is rigged and set the stage for a potentially contested republican convention. ted cruz has been out there actually finding delegates and he's been doing it all around the country. >> might undermine the whole party. >> people like trump is they are nodding and agreeing are the 39 he's already got. they are the ones feeling disenfranchised. and it doesn't help get above that. and kasich --

>> interesting election -- >> -- i don't know if you saw that. >> why is kasich not in the 30s? he should be in the 30 percenti percentiles. he's been living in new york. >> why is kasich still in the race? >> well listen the one person to thank or blame is john kasich. >> you mention ryan saying somebody who's already run for president. that doesn't marrow it down. might as well be paul ryan. god almighty. >> -- beat hillary in the fall too. >> kernan is the white knight. >> yeah. yeah. coming up an earnings round up and the theme of the morning red arrows for technology companies. ibm and netflix under pressure. we'll do that right after the

break. squawk returns. actions speak louder.

something we'll show you. through small things, big things, and spur of the moment things.

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box." netflix quarterly results out. but shares falling after disappointing guidance. subscription growth slowing. joining us is somebody. how upset were you about the guidance part? >> upset? i have a -- i wasn't upset. it was somewhat consistent with the theme that it kept me cautious on netflix. that i was arguing we were at peak subscriber growth. for a stock like this it is very much momentum driven. lots of leverage on subscriber growth. i thought that was a place to be cautious so i stepped back on the stock with a market perform. and i think what we saw on the guide was more deceleration than expecting and i think you have to have a longer term view on how long it takes them to

penetrate their market internationally which is the key to the story right here. >> and they talked about growth being lumpy. how lumpy? and growth can be lumpy but what about the costs? >> they are spending more. $5 billion this ear on content, ramping to 6 billion next year. the key is to grow subscribers. which comes as the pure contribution margin. the growing subscribers more slowly than anyone thought. because the bulge they had in the first quarter was just a launch phenomena. the growth is stepping down next quarter to about two million subs versus 4.5 internationally. and something that makes me not want to chase the stock at this valuation. >> so what would you chase it at? what is a fair price for this stock at this point? >> we're arguing that this is a

$104 stock. and if you get a decent discount to that you can take a look at it. there are other things to be concerned about with netflix. one i think is amazon. they are monk others launching a cheaper streaming service than netflix. and i think netflix argues this expands the market. our concern is there is going to be a lower income consumer whose not going to get the services. and if you see someone like amazon who's a very powerful brand globally i think that limits netflix's open to take pricing up longer term. so growth is good but not a blue sky opportunity as the bulls might have hoped. so i think you can buy the company but be careful where you pick up the stop. >> -- content? >> i think they are going to be able to make money on the salesman thspend they put out. you can support the spend with this number of subscribers, but

you have got to be aware of what you are talking about here. this is a company that is burning $1 billion of free cash flow this year. another billion next year. training a hundred types ebitda. with that higher hurdle, you have to be careful, keep your eyes open and not chase it in any price -- >> all being english language at the moment. they are learning -- now they do an interview online. they talk about english language but then how they are learning. and a lot of lessons and then they are going to eventually get into foreign language. what happens once you do that? and the incremental cost of the foreign language? >> i don't think the foreign language content is expensive. in fact it's probably cheaper than a lot of the american content. i think it's true that american content is incredibly

exploitable and netflix is leveraging that. it is one of the strengths of their model. but i think what we're going to see overtime is that it is not just netflix. it is nechx. amazon. cbs all accuracy in the u.s. there are going to be more and more people coming at streaming and i think the impact on netflix is one of less price and growth. and at some point some constrain on ability to add subscribers. >> thank you barton. one thing i thought was fascinating on this call yesterday. was this idea they asked would they ever do live sports or live anything? they are saying they could if they had wanted to do it live. i wonder eventually they get there. also they now do the conference call live over youtube. >> i sue that. it's weird. >> think about that. >> getting more and more like a

network who's model is supposedly -- >> -- failing. >> -- broken. drove it home to me yesterday all the different streaming services have different content and once again, going to be like a network. you're going to need a hit show. >> the whole business. >> back to content. back to wishing you could invent something like a "squawk box." >> yes. that is what most network executives sit around thinking. >> how to replicate that 20 year sort of a juggernaut. >> 21. >> juggernaut a good word for you in. >> ibm we're talking about, with that juggernaut. >> but sarcasm is the domain of losers. you know that. >> thank you mr. sunshine. >> --. thanks to stronger cloud service sales but medium size, medium to

small size blue. still suffering its 16th straight quarter of revenue decline. joseph joins i now to break down the numbers. managing director of technology and business services at kanter fitzgerald. it took me a second and a half to say 16. but you need to think about that. 16 straight quarters of arrive decline. is what's going behind the scenes interesting enough to buy a stock that has had 16 straight quarters of arrive? that is not a growth stock, joe, in any universe that i know of. >> yeah i think they deserve some credit for consistency. but what i would say is -- >> what do you think that 16 straight quarters is consistency for going down in revenue. >> it's -- i'm obviously joaquin

around. >> oh, sarcasm. thanks jim. >> to your earlier comment. the strategic is 30% of revenue and growing about 17%. but the math backs into about 60% of arrive actually declining 10%. and that is the area we're most concerned. if you look at projections on the top line we don't have this company returning to growth for another two years. and given the size of their restructuring charge i think it is fair to say that there is enough noise still going on that it will be a while before they return to that level of growth. and growth is the life blood of a business. so they really need to get to that level not only to support the business but to support the multiple. >> and then you think of the areas that you just mentioned that they are trying to get bigger in and that are growing faster. is there any reason to think that an old tech company like

ibm will be the leader in those new businesses? because of what? their financial muscle? can they out innovate businesses that want to get into those same businesses? why do you think ibm is going to be doing that? past performance is no guarantee of future success. >> no but ibm deserves some credit for two things. they have a tremendous global reach. and they have a very very good ip. so when you are a services company and you deal with technology you by default have to adjust to whatever the new technology are. the problem is that the businesses are so large is that the adjustment period could take years and that is what we've seen and whether you saw in the declining arrives. >> microsoft didn't become google and google didn't become facebook. i know they are totally different but it's nice to be big with all that reach and

client base and everything else. but i don't know if it becomes a given that they will be a leader in terms of cloud and all the other stuff they are trying to get in. so you're in navifavor of the b backs to keep things rolling. you know, you are trying to get into these new businesses. it might be better spending on r&d or something other than just financial engineering? >> yeah i think it is a balance. paying dividends and buying back shares actually helps the shareholders. but their focus has been on acquisitions. they have done a tremendous amount of them and it is going take time to see those acquisitions there thank you numbers. again, this is a very large tech compa company. if you survive as long as they have you become into the portfolio management firm. and it is really about getting the portfolio organized to go through the global delivery network. >> all right.

it is a big company. it is only 140 billion now. you would have thought that 20 years -- you would have thought by now it would be 2 or 300 billion. right? >> right. >> it's been tough there. all right. anyway, thank you joe. appreciate it. >> sarcastic there? right at the beginning. >> we never are in. >> no. >> we have goldman sachs around 7:30 we are expecting. first though we'll be getting numbers from johnson and johnson.

an exclusive.

welcome back to "squawk box." time now for the executive edge. retailer target has begun raising employee wages to a minimum of $10 per hour. the $1 per hour increase is the second wage hike from target in the last year. in a statement to cnbc target said it doesn't disclose details of competition programs but the company plays market rates and benchmarks the markets regularly to help recruit and retain good talent. all you can ask for. look at the marketplace and try to recruit the people you want and the market will set whatever the actual per hour wage should be. >> more trouble for theranos,.

>> what is she doing, doing an interview? she comes on does this interview with maria shriver yesterday. tries to take responsibility and look we all want her to succeed. however, seems crazy t whole thing -- >> to be talking in the midst of the investigations. >> the news hasn't come out. is here she is not able to address that. the whole things diabolical. >> i don't know if it's enough to say we all want her to succeed. >> yes i don't want thoer succeed if she's lying to the public.

>> right. so the jury is still out on the whole sequence since 2003. what went on. i get e-mails from people who supposedly know things -- you know, it is a black box. and everyone on the board is how old and we still know how the technology works for competitive reasons. if it turns out in hindsight -- and i'm not saying it will, but if it does your not going to say you wished she would succeed. i hope the singularity comes true and we all live to 800 years. >> are you -- >> i got to live to like 85 or something. and boom i'm downloaded. i'm an avatar. you avatar at this point hasn't been spoken for.

and i was wondering if you would have a problem with me stealing your body and. >> you're going to steal my avatar? >> i don't know. i have to think about that. >> imitation is the highest form of flatly ry. >> the yahoo process. is sun is coming up. there is something on yahoo. and piper combined with yogurt. but the sharks from shark tank smells the sweet stens of cash. and when come back. we'll take quick check what's happening in european markets. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack.

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welcome back to "squawk box." in seven seasons, barbara corcoran has made a lot of deals. and this one though is the one she underestimated the most. a naturally deodorant. she's a prime time investor. she's a shark. do you want to be called a shark. >> i don't know. just call me. >> -- natural deodorant company, piperwai. they have been business partners since they started a lemonade stand back in the fourth grade. and how did you come one this and what is the distinction between this deodorant and others. >> consumers these days are increasingly savvy about what they put in and on their bode body bus people aren't willing

to sacrifice something that is good for them and natural. so with piperwai you don't have. and it lasts all day with both men and women. and that's why i create id it. i have an active lifestyle. sara too and we're both very dedicated to wellness. >> what happened that led to this? >> i was -- just from a young age i was inspired by wellness as a way to improve health and appearance. but natural deodorant is the one product i couldn't make a switch. it is impossible to find an effective deodorant that is not irritating and can hold up. >> and doesn't have aluminum. so challenge accepted. i can do better. >> the aluminum is a big deal because that can create potentially cancer. that is the thing that freaks people out the most. >> what does the ahamo mean? >> ah. i was just tinkering around with

ingredients and relying on trial and error and research into body order. this was not intended to be a business. it was just to find a natural deodorant that worked for me. and when i found one that worked for me i of course gave some to sarah. >> why you didn't just take the stuff off the rack and call it a day. >> it doesn't work. >> none are effective. irritating and don't last long and jesse came up with a the great solution and i tried it out and said this is very effective and we should just sell it on the side and had no idea it was going to blow up to the level it did. >> you were doing that research yourself? >> i was my own guinea pig. >> how do you do that on your own armpit? how do you quite manage that. >> if i smelled, it wasn't working and i went onto the next batch. >> i think in the old days

people just tried to cover body odd odors with perfume. don't you have to be some bactericidal. isn't -- how do you get something that does the job like that? can you tell us what you used? >> basically charcoal. >> i know that absorbs -- because you put those in those cushions too. the. >> the cushion that jane -- >> yeah the cushion -- but what actually kills the bacteria? >> charcoal absorbs moisture and neutralizes odor and the other ingredients in the deodorant. there is a little bit of baking soda. and dietary magnesium which is a vital element that you lose when you sweat. and essential oils, our proprietary blend that also have

anti-microbial properties besides just smelling like a day at the spa. >> is the other sharks were not taking this. >> i wasn't taking it easy. i have to say. when they appeared i listened to the same pitch you just heard and i thought what's wrong with the deodorant i use? it's perfectly fine. so what do i need this for? but i loved these two women. and i made the offer of $50,000 of 20% fully expecting to change the product line. i thought nobody is going to buy this stuff. nobody wants to put their fingers in a jar and slop it on in the morning but was i surprised. i was never more wrong on a deal in my life but i was never more right on the entrepreneurs. >> can you change the form factor eventually? do you think you will get it

into some stick and spray? >> it is in development. >> not only in development but i made a contingent deal that they had to have a stick deodorant or they wouldn't get my cash. and they haven't gotten it yet. but they are about that month away. but in hindsight i shouldn't have made a contingency. so this works fine and people are ordering it like crazy. >> >> did you give away too much or or too late. >> absolutely not. having barbara on our side is incredible. there is no one in the world who doesn't answer the phone when she calls. so having her on board our team is invaluable. >> and free deodorant. >> barbara thank you. >> my pleasure. >> johnson johnson posted poor results. arrive in line with the street.

forecast and j&j did give a full year forecast that for the most part is above expectations. stock indicated higher and has been trading at a series of new highs as you can see right there. coming up we are going to the dig through the numbers we just saw with dominick caruso. t-mobile does data differently. so it can do more for your business. when work takes you across the globe, your unlimited data travels with you to 140 plus countries and destinations at no extra charge. and that's not all. because with t-mobile there's no overages. ever. switch your business to t-mobile at work. and get four lines. with 10gb of 4g lte data each for just $35 per line. nobody does business data like t-mobile. you're down with crestor. alright! now there's a way you can get crestor for $3. adding crestor, along with diet,

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johnson & johnson reporting quarterly results. dominic caruso joins us to add more color to the quarter. he is cfo of johnson & johnson and a member of cnbc's global council and cnbc reporter meg terrell is with us. dominic, before going into specific details and products that did well for j&j, could you just comment on the macro, on the dollar, on, you know, geographic sales and, you know, just the state of the world economy right now. >> yeah, sure, joe. good morning and thanks for having me on. our overall macro look is that the economy has continued to grow but at a slower pace perhaps than previously expected. we see health care continuing to be a really robust growth area. economies may grow with various

economic factors. oil, i know you've been talking about this morning, but overall health care is something societies want to invest in and with new innovations in health care we see health care as a robust growth area and are happy to be in that part of the business. >> the biggest bright spot in terms of -- let's talk pharmaceuticals to start with. >> well, i guess overall, joe, the pharmaceutical business has continued to deliver stellar results quarter after quarter with launches of promising products with significant benefits with unmet medical needs. more importantly also, the business continues to build a robust pipeline to continue that. we've just recently got approval for an important medication in multiple myeloma. that's off to a great start. all of our products we've recently launched continue to build momentum even in the face of competition and the business

continues to build a robust pipeline. >> i have to ask you about the biosimilar to your biggest product. what are your expectations now that the product has been approved and is in litigation about when it was launch? >> right. good morning, meg. we gave guidance this morning, sales guidance, that did not anticipate the launch of a biosimilar competitor remickaid in 2016. that's the same assumption we had in january when we gave guidance, despite the fact that a recent biosimilar has been approved. we do have intellectual property that we believe protects our position and intend to defend it vigorously. >> it seems like analysts think it could launch as soon as october 2016. is that a big risk to your guidance? >> i don't think it's a big risk. even if a biosimilar would launch at the end of the year, even though we didn't anticipate it in our guidance, we believe the overall strength of the

business is such that our guidance range we provided would certainly be sufficient to absorb any potential impact. >> i want to ask you also just about sort of your philosophy as a conglomerate because we've been seeing so many investors cheering the splitting up of companies, you know, pfizer for one, folks really seem to want to see that happen. tell us your philosophy on why j&j is better with all of these three parts together. >> well, overall, meg, you know, this business of ours is a health care business. so we believe that the health care market overall provides great opportunities in various sectors. we're in pharmaceuticals, medical devices and consumer health care. we have a long track record of performing very well in all three of those markets and actually, if you look at our stock performance over various periods of time and you compare it to what's commonly known as a sum of the parts analysis, the majority of the time we trade above the sum of the parts, so we're able to run these

businesses efficiently and we're able to get opportunities throughout the health care sector wherever they may arise. that's been a major factor of our performance, strong performance and consistent performance and we think it will continue to benefit us going forward as well. >> we're just -- looks -- >> no. market cap is now 304. that's pretty close to the -- one of the largest. >> very large. i want to ask you about getting larger given that biotech evaluations have come down folks think it's a good time for m&a. you're always talked about as a potential buyer. how do you look at the opportunities now? >> you're right. valuations in biotech have come down. i am not sure the owners of the companies agree that the current valuations are at the right place, so we'll continue to work through various acquisition proposals that we look at, and we want to do the right deal at the right time with the right partner at the right valuation. we're looking very closely at the field. >> dominic caruso, thank you.

we appreciate it. >> thanks for having me on. >> near a new high on the stock. all to do with him, right? maybe the ceo. >> they've never missed on their eps since dominic took over as cfo. on their guidance. >> thank you, becky. >> andrew just cares about last year versus this year, right? not the guidance. >> i'm with jamie diamond. real hard numbers. when we come back, new york state heading to the polls today. we'll take a closer look at the delegate math and bring you the latest headlines from the campaign trail. later we'll talk politics with gene sperlg, the former economic advisor to president obama. "squawk box" will be right back economic advisor to president obama. "squawk box" will be right back. incredible bladder protection from always discreet

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battle for the big apple. up for grabs. 95 delegates on the republican side. 247 on the democratic side. can sanders stay in the race? will a big new york win help trump regain his mojo? we'll look at that straight ahead. the earnings parade continues. goldman sachs' quarterly results. blue chip names that move the markets today. diamonds are forever. sothebys ready to auction off a ring chershirley temple war. ♪ on the good ship lollipop, it's a sweet trip to a candy shop ♪ >> live from new york city, this is "squawk box." ♪ welcome back to "squawk box" here on cnbc.

first in business worldwide. i i'm rebecca quick with joe kernen and andrew ross sorkin. the futures this morning have been higher once again after the dow closed above 18,000 for the first time since last july. both the dow and s&p are within 2% of all-time highs. right now it looks like the dow is indicated up 62 points. s&p up eight points. nasdaq looking higher by about 16. oil prices managed to close down by about 1% yesterday. and they are picking up that and more this morning. wti gaining 1.4% back at $34.30. the ten-year note. treasury market this morning looks like the ten-year yielding 1.787%. today's big stories at this hour. united health group beating estimates by 9 cents reporting quarterly profit of $1.81. revenue beating forecast and the health insurer raising the full-year outlook.

johnson & johnson beating by 3 cents. the company raised its full-year forecast now largely above street forecasts. watching shares of ibm after the company reported a 14-year low in revenue over the company's quarterly earnings, revenue did come in -- >> that's all that matters! >> they did great if we're playing against estimates. we'll hear from goldman sachs in 30 minutes. revenue of $6.7 billion. the dow breaking through the 18,000 mark for the first time since last summer. dom chu joins us with more now. i have been looking at that -- it looks like a reverse -- no. looks like -- is it a regular -- it's one or the other. >> head, shoulders, knees and toes. hands. >> ♪ knees and toes >> there is a high coming up if it gets through. there are a lot of shorts too, aren't there, dom? could get interesting if it gets

through a little bit of -- i'm not a technician, but there is some resistance coming up if it gets through. i don't know. >> there is a 2% higher from here. you have record highs. so you could say that's resistance for sure in the dow and s&p 500. we're not that far away from there. if you look at the run we have had, we live in a different world. it's not that different but there are a lot of things that have changed since we saw the highs that we saw in july of 2015. and we have seen all the volatility. we have the first interest rate increase from the fed in almost ten years. chinese concerns about their market, their economy. they got really, really blown up and all of a sudden they're subsiding a bit here now. we rallied 203 points from the lows in february of this past year. the dow has come back a lot. let's look at the drivers behind it, the stocks that made most of the impact, if you will. mcdonald's. no surprise. been talking about it. a value play there. people seem to have liked it

pushing it up 32% since july 20th. home depot the other big winner percentage-wise in the dow. biggest drags on the financial side. american express down 20%. goldman sachs which will report earnings down 25% during the span as well. ibm from yesterday. goldman sachs, two of the most heavily weighted stocks in the dow. they'll have an impact today. as for what it was like then and now. it's a very different picture. we mentioned the fed interest rate increase. the price of oil. you mentioned the losses yesterday and the gains today. back in july 20th of 2015, oil, it was fundamentally still not great but it was $50 a barrel. today, we just saw that chart. there was $40. the close yesterday $39.78. oil significantly different than it was back then, also interest rates as well. so joe, it's a very different world right now, but again, if we get towards those record highs, it might be one of those scenarios where people say, all right, maybe things have changed and fundamentally the market

still has room to run. but for right now energy stocks still in focus, guys. >> worst-case scenarios in a lot of our biggest worries, they didn't happen, dom, nom one. people say it's been a broader rally and it's been a quiet rally. not a whole lot of media coverage necessarily. it's been kind of a dull move higher. all those things plus the big short position of a trillion supposedly out there. we are -- we're in a different place now. >> we are. and remember, since then how many more countries and central banks around the world have pushed their interest rates into negative territory. even back then our interest rates a year -- not a year ago. july 20th, ten-year yields were about 2.4, 2.45%. today they're down at 1.79. it's a very different world in terms of rates on the u.s. side of things as well. >> plus a rise of bernie sanders. if we finally get a decent economic system in place here, you can imagine --

>> the rise of donald trump on the other side. we have all kinds of things. it's balancing out. it will all work out in the end. >> really? you promise? >> i am an optimist, joe. >> you are? >> i am. >> we need you down here in a few minutes. thanks, dom. >> sure. it's primary day in new york state. results from the latest nbc news "wall street journal" poll pointing to an unpopularity contest for the presidency. nearly 7 out of 10 registered voters say they can't see themselves supporting the republican frontrunner donald trump. that makes him the most unpopular candidate in history. in a head-to-head race, hillary clinton leads trump by 11 points. almost as many registered voters say they can't support ted cruz. nearly 50% viewing him in a negative light. yet in a general election he only trails hillary clinton by two points. as for clinton, 58% of those polled say they can't support her. just 19% gave her high marks for

being honest and trustworthy. joining us now with more on this, democratic strategist steve mcmahon. and from her bunker where she is just waiting for 2020, republican strategist and cnbc contributor sarah fagan. both you guys are going to say trump can't win, i don't know who will argue with whom on this. let me start with you, steve. i would say at this point -- there is a big piece -- some of sanders' criticism could be hurting hillary with independence at this point, at least that's the thrust of the piece. are you worried about that? >> i mean, the tone of the campaign on the democratic side has certainly gotten nastier. and there is some concern about the kinds of things bernie sanders is saying and whether those are going to be recirculated in the general election. but ultimately the election will be a choice between two candidates, and hillary clinton, when that choice is made, actually looks a lot better than trump or ted cruz as the nbc

poll shows. a little concerned about the sanders campaign and the negative tone, but in the general election i think democrats right now are feeling pretty good. >> steve, do you think that -- we've made this point a few times -- when we know who the president is, in 2016 and whomever it is takes office, 50% of the country will just have a visceral -- hate to use the word "hate," but a deep dislike of whoever the president is? that's unfortunate, i think, for us as a country. you think eventually we would start liking hillary if it's her? >> i think politics today is polarized. you see it in the polls that you're looking at. and politicians today -- establishment politicians in particular, just are not popular with voters and hillary clinton is no exception. i think at the end of the day america has problems to solve. we only have one president at a time. it will either be hillary or donald trump or bernie sanders or probably ted cruz, and -- and

you know, at some point congress and the president will have to decide whether or not they want to solve problems or keep fighting and drive the partisan divide even further. if hillary clinton is the president i assume she'll reach out. she has a history in the senate of reaching across the aisle. >> sarah, i don't know if i would refer to you as an establishment republican. but i have talked to you and others about, you know, you have a hand that's dealt and so you just heard what your hand is. it's not a five-card hand. it's a four-card hand. >> yeah, right. >> you have bernie sanders, hillary clinton, donald trump and ted cruz. so what are you doing? you just -- you're out of here on the card game and you're going home and thinking about mitt romney or something? what do you do? >> well, i think, look, there is still a lot to play out in the republican primary process. donald trump, you know, should pick up 80 delegates tonight in new york. he'll have a big night.

but he probably comes up about 60, maybe 70 delegates short at the convention. then the question is, is cruz really organized enough to get it on the second or third ballot. if that's the case he will in fact be the nominee, which i think is probably the most likely bet at this point. but, if he doesn't, then i think all hell will break loose and anything at that point could happen. there is all this chatter about the rules committee and what that means and people forget the rules committee could meet throughout the week and change the rules if it's required. >> the second the rules committee meets the whole game is -- >> sure! it's going to be a really rough and tumble summer for republicans. no matter how this plays out. it's just going to be a really bad, i think, june. >> they settle on cruz as the nom -- for argument' sake. could be trump as easily. but they settle on cruz. will you have a full-throated defense of ted cruz? will you canvass for him?

>> sure. will you vote for him? >> i'll vote for ted cruz for sure. i used to work with ted. he's a bright and capable person. there has been a lot of discussion about his personality and his relationship with colleagues. leaving that aside the average voter doesn't pay attention to those things. they don't know the ins and outs of what happens in washington. and ted is a conservative. i think his rhetoric is wrong on some issues but he is largely in line with some of the other nominees particularly on immigration. he is a conservative. he'll have a tough time beating hillary clinton in this economy, frankly, as would any republican given where president obama's approval rating is. it's lining up strongly for the democrats. but it is early. and, yeah, i would be happy to support ted cruz. he is not my first or second choice but i would enthusiastically vote for him. >> or your third. >> that's weird. i don't know. a lot of people talk about the economy as not lining up for --

necessarily for the incumbent. when we were at 47 or 46 on the president's popularity that that portended -- so a couple of points makes the difference to where you think no republican could win at this point? >> i think if john kasich's strategy to win the hearts and minds of delegates on the floor because he is in the race works, he is a strong candidate against her. in fact, he beats her in many polls. i think there is other young, dynamic candidates in the republican party that would, given her unpopularity, you know, where you could see a situation, you know emerge where a republican beats her, even in an -- i mean, there are mixed signals on the economy. you talk about them all the time on this program. >> right. >> overall consumer confidence has trended upward over the last several months, and that usually means the incumbent party wins. >> i don't see that the john kasich -- i don't see how that

works. i mean, john kasich -- jim gilmore -- >> jim gilmore. he is still in. still in the race. >> rubio is out of the race and has more delegates than kasich. >> he does. it's very narrow. >> when kasich points out that trump doesn't have -- 60% of republicans don't support him. >> that's right. >> 95% of republicans haven't supported kasich. >> look, it's a very, very narrow path. and you know, the interesting thing for kasich right now. >> it's like a tight-wire, the narrow path. >> it is. i don't disagree with what you're saying. we're talking about, you know, scenarios here that are unlikely. but possible. >> the other point. kasich keeps bringing up the general election polls. bernie sanders beats everybody, including, you know -- beats by wider margins than hillary. general election polls at this point in time -- >> paul ryan -- >> they're like popularity

contests. >> they're largely meaningless but the contours of the race and the general election are being set now because of where the economy sits and because of what's happening in these primaries. it has been a race to the bottom. as it relates to john kasich, the only path for him, which is very narrow, is that donald trump and ted cruz basically get to parity and neither of them get enough. >> right. >> and then they dead-lock on the floor. then, if that happens, which, you know, again, i think ted is the most likely scenario at this point. if it were to dead-lock on the floor, all hell will break loose and anything can happen. at least he has the argument that i'm in the race. i'm running. i've been running. >> 16 guys have. so, steve, i would like -- i actually did have a moment of clarity where i said, you know, i can't worry about this anymore. i'm just going to become -- i'm going to switch and become a limoci limousine liberal.

if i were, i would look across the aisle and be laughing when i have seen so many establishment republicans throw in the towel and say, it's going to be hillary, let's just try to keep the senate, you know, maybe. you must chuckle when you see this. you must love this that they're ready to take their ball and go home and not even play. because it's trump. to like ted cruz very much more. >> no, they don't! it's funny. it's like, what happened. >> a shout out to larry sabada who writes a piece called "the crystal ball." according to his analysis if the democratic vote goes up one point nationwide democrats pick up nine congressional seats. if it goes up two they pick up 35. and if it goes up just three points, the democrats would pick up 56 seats. so you're going to hear a lot more republicans who are going to start saying, we have to let

the presidency go and worry about the senate and the house because, if larry sabado and his numbers are right -- se a very good political scientist -- you could be looking at down-ballot problems for republicans. >> i think that's the difference between trump and cruz. trump probably costs us more than ted does. ted may lose to hillary but i don't think he'll cost us the house and probably not the senate. >> but trump would, right, sarah? >> you're in a dark place, sarah. >> at this point based on the numbers trump would cost us at least the senate. >> you're in a dark place. >> i am. it's sad. >> i don't know what to do to help you. >> clinton 46, cruz 44. that's what -- >> that's within the margin of error. >> and it's also months away. >> steve and sarah, thank you. when we come back, the dow closing above 18,000 for the first time since july. plus, oil is on the move this morning. opposite direction from where it was headed yesterday. we'll break down the rebound rally after the break.

futures right now are still indicated higher. dow futures up by almost 60. s&p up by 7.5. nasdaq up by 15. "squawk box" will be right back.

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spoke investment group co-founder. thanks for being here. >> thanks for having me. >> you're bullish that we'll hit new highs. part of the concern is the highs we've been hitting have not been as high as we'd seen before. lower highs coming through this year. you're bullish. >> two concerns. valuations, we've been in a sideways range. by the time we get to year-end earnings will catch up a little bit. then the lower highs that we have been seeing. we ultimately think the market will follow. we've seen energy break out of its downward range. the s&p 500 total has returned, hit a new high just yesterday. we saw breath in the s&p 500, hit a new high last week. these things are underneath the market are breaking out, and we think that the market overall will also make a new high here. it's within 2% now of these levels. >> going back to valuations. when we were looking at things a couple thousand points lower were you one of those

complaining about valuations at that point? >> valuations are not necessarily a catalyst for a market to climb. they're more of a fuel. you need a catalyst or a spark for things. in the beginning of the year we saw oil and the fed -- oil crashing. we saw the fed looking at four rate hikes coming into this year. so those two factors in an over-valued market are not a good mix. where is oil now? oil has rallied over 50%, one of the biggest two-month rallies we've ever seen in online. stabilized. yesterday's news where we didn't see the freeze in output in oil actually held up and now it's at levels it was at last week. that's a positive. and the fed -- janet yellen's -- the only thing she hasn't done is say go out and buy stocks. >> you think -- >> they were above average at the start of the year and they're still. you don't see market decline because valuations are

excessive. you see a market decline because valuations are excessive in relation to something else that happens. you start to seeing credit tighten. credit was tightening in the beginning of the year. the high yield market has rebounded considerably. and just last friday we saw loan growth is growing at a double-digit pace on an annualized basis last quarter. >> what about earnings so far for the most part? they seem to be better than expected. >> this is the big debate. expectations were very low. and when you do expectations -- do expectations matter? last week jamie diamond talking about it should be focusing on the year over year numbers. in the long term you want to see earnings growth year over year numbers. looking back historically, when you see earnings expectations -- when you see analysts cutting forecasts at a greater rate than they're raising forecasts heading into earnings season 85% of the time the market does rise during earnings season. when you see the opposite, analysts raising forecasts going into earnings season, the market

averages a decline with gains less than half the time. to expectations maybe in a year from now, in the short run expectations into earnings season definitely matter. >> paul, thank you for coming in. >> thanks for having me. coming up, the troubles for blood testing disrupter. the feds launching a criminal probe. counting down earnings from dow component goldman sachs. numbers and the instant analysis. that's new. straight ahead. "squawk box" will be right back. >> new to you.

welcome back to "squawk box." theranos confirming it's under investigation by federal prosecutors and the sec. in a statement the blood-testing firm says it's cooperating fully. other agencies have opened probes against the company including the state department of health in pennsylvania. also in arizona. the centers for medicare and medicaid and the fda. theranos's ceo elizabeth holmes sitting down with maria shriver saying she is devastated by her company's failures. >> it's not enough to just fix the issues that they identified to us, and to me we have to overhaul our whole system, right. and so that means reorganizing

our whole company. that means rebuilding literally from scratch the entire newark laboratory. my job is to make sure it never, ever happens again. and not only that, that i put systems and people in place that ensure that we're best in class. >> you weren't best in class. >> in the newark laboratory we were not. >> holmes says the company will survive. goldman sachs ready to report quarterly results. numbers and instant analysis right after the break. was created 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.

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among the stories front and center this morning, yahoo! might have a new suitor. the digital ad business of what was formerly called yellow pages.com are planning to submit an offer. ype has controlled and service capital management holds a 53% stake. 47% owned by at&t. yahoo! set to post quarterly results after the closing bell today. shares up 30% since the announcement of the sale. we'll see whether the numbers come in where they are expected to be. target planning to raise its

minimum wage to $10 per hour according to reuters, who would match a move earlier this move by rival retailer walmart. eric rosengren saying the rate hikes might come more rapidly than expected. he says investors have an overly pessimistic view of the economy. take stock. couple stocks to watch in addition. harley-davidson earned $1.36 a share for the first quarter, 7 cents above estimates. revenue above street forecast and harley maintained its 2016 shipment outlook. used to be a lot of great symbols. that's probably the best one now to describe in three letters. >> panera bread upgraded at jeffrey's to buy from hold on favorable, comparable store sales on the trends there. panera, as you can see, up

about .6%. ebay down-graded by morgan stanley to underweight to equal weight. that's like a sell. the firm says ebay shares will be weighed down by lack luster growth as well as increasing competition from amazon. netflix topping the street's estimates. check out the shares. under pressure yesterday and are this morning. you can see down by about 9% this morning. that's a decline of $9.65. specifically the firm saying it expects to add 500,000 subscribers here at home and 2 million net international members in the second quarter. that's below what analysts expected. part of the problem is the streaming space is getting crowded. reed hastings addressed that. >> the inhibitor is how great is our service. can we make it so there is never a buffering. the recommendations are incredible and the content is exciting. if we can do that, we'll

continue to grow globally even though hbo or dish or others are also growing. so their growth doesn't take away from us. >> another possible headwind for subscriber growth is the planned subscription price hikes that go into effect coming up in may. >> i don't understand the idea that he doesn't think that the success of hbo won't eat into his business or, as we talked about, the fact that amazon prime now has made itself available at a cheaper price point, that there are certain customers that will say, you know what, that's cheaper. i'll take that. >> especially if you're planning rate hikes. >> so much of the program that people don't think about is about kids. i think that's a huge components for netflix and amazon and many others. hbo now trying to get into that with sesame street. the reason i mention it is, if you think of it as i don't want to say a baby-sitter for your children because that's not what it's supposed to be -- >> but the reason you'll pay for these things are because there are programs your children want to watch. on amazon prime there is a

dinosaur character that my son loves. >> if amazon has a show your child is desperate for and netflix does also, you might be convinced to buy both. >> whoever wins, teenage mutant ninja turtle is going to win our dollars. >> still? >> he has a bike, helmet. leonardo. very big. in other tech news, apple says u.s. law enforcement agencies asked for information from the company 4,000 times in the second half of 2015 covering more than 16,000 devices. the numbers are up from the prior six months, but down compared to the same period in 2014. apple says it handed over some data in 80% of the cases. the disclosures come in the company's biannual transparency report. in washington today, the house energy committee holds a hearing titled deciphering the debate over encryption.

industry and law enforcement perspectives. aening apple's general counsel will be appearing. ibm under pressure. the company beating the street but coming up short on revenues. stock up 11% this year. is the rebound for real? we'll go inside the numbers after the break. later, sotheby's auctioning off shirley temple's rare blue diamond ring her father purchased her in 1940. 9.5-carat ring expected to fetch up to $35 million. we'll have it on set in a bit. i'm going to go get a shirley temple to drink. "squawk" returns in a moment.

knee-jerk reaction on goldman sachs, it looks like it might be a little lower. it's down about 1.3%. the company is reporting a bottom-line number of $2.68. >> which is above. >> if we assume it's clean. 268 versus 245. the estimate for revenues $6.73 billion and they reported 6.34. investment banking revenue $1.46 billion. institutional client services revenue, 3.44 billion.

investment and lending revenue, just 87 million. investment management revenue $1.35 billion. the ceo, chairman and ceo said that the operating environment resulted in headwinds across virtually every one of, i guess -- every one of its businesses. i guess that was cut off of the headline here. highlights, according to the company, if we're going to play pr for them. goldman sachs ranked first in worldwide announced mergens and acquisitions year to date and common stock offer. assets under supervision increased to a record 1.29 trillion with net inflows of 26 billion during the quarter, including 10 billion in long-term assets under supervision. noncompensati

noncompensation expenses which are not the real problem for most of these companies where everybody is a 1 percenter. 2.1 billion for the first quarter, the lowest quarterly amount in nearly seven years. >> lloyd has comments. the operating environment this quarter presented a broad range of challenges. >> 40%. >> what is it? >> it's about 40%. they said 40% lower than the first quarter. the ratio -- the comp ratio is 42% which is unchanged since 2015. they talked about even changing the mix of the staff. there are now a lot more younger people getting paid less. >> mm-hmm. >> and more -- and less managing directors. >> but you're willing to, many times, give this industry a pass on compensation because you own an apartment in new york and you would prefer large bonuses so that the real estate market stays firm and perhaps even rises.

>> i don't know what you're talking about. i am feeling the bern right now. for more on goldman sachs results. let's bring in the director of bank and equity strategies. he joins us on the news line. the comments from lloyd bankfein, resulting in head winds across every one of the businesses. marty, looks like they beat on the bottom line and were shy on the top line. what do you think of the quarter? >> when we saw the revenue number, that's what we're really having to see a bounce-back as you go into the second quarter. goldman was in the eye of the storm that hit in the first quarter. what will be more important is what do we hear on the conference call about foreshadowing about march was and what we'll see in the second quarter. >> the revenue number was significantly down from year ago. $10.6 billion that they turned in actually a year ago. what are the head winds you're talking about?

when you say they're in the eye of the storm. what are the problem areas? >> what we had was a freeze of activity. so we had market disruption, the january and february represented. you didn't have equity trades. you didn't have any underwriting, no deals coming to the street. what you have to have is what we've seen is a back-on-track type of capital market. investment deals flowing through. all the things are what we were looking for. that's under way. now we'll see how they rebound going back into the second quarter results. >> what did you expect, i guess, after what we heard from jp morgan? many similar places will there. jpmorgan was better than a lot of people had been anticipating. what was the weakness in terms of the revenue? >> we have two things. the revenue. they don't have the diversification that jpmorgan has in the revenue base. jpmorgan benefited from the rate hike in december. goldman sachs doesn't have enough net-interest income to

get that benefit. the other thing you see here at goldman sachs is really a convergence of two things. it's a revenue dropping. but it's also the sequential growth that you have in compensation where it this is a high rider mark of what they pay out in revenues and it goes down throughout the year. they had expenses going up and revenues coming down which is the squeeze that we're seeing in the first quarter. >> that stock was trading well above $200 earlier this year and is now down at 158. >> when you see the rebound and the expense flexibility moving forward, you should start to see them move back to somewhat of a premium versus the discount that they have here. they've had quarters before where you have seen a dropoff in returns. this quarter represents a 6% return on common equity. in the sequential quarters they've bounced back to double-digit returns quickly. that's what we're looking for at go

goldman. we think we'll get back close to 190. >> marty, thanks for joining us today. >> thank you. let's talk a little ibm. out with its first quarter results after the bell. beating on both the top and bottom line. that's the good news. the big blue continuing its streak of revenue declines now for 16 consecutive quarters. joining us o break down the quarters the clsa managing director. hello, lou. any way to look at this in a positive light? >> yes. i think there are a number of things. we looked at the quarter and say there are four positives and two negatives. the software business last quarter was down 6%. it was down 1% in this past quarter. one of the biggest trends going on in tech, social, analytics, cloud, mobile, was actually up 17% and is now 37% of total

revenue. so there are a number of things you can look at. granted, their business is still in transition. but they did make some progress in the quarter. >> you see light at the end of the tunnel in terms of this business, at a transition point, getting rid of the empty calories is what they say about some of the revenue when we talk about revenue declines and they say at some point it will move in the other direction but when. >> sure. that's a very good question. you know, we still have modest revenue expectations for the year. we do show a bit of growth as we get to the end of the year. obviously, fx was a head-wind and has been for multiple years now. that's actually moving from a negative 300 basis points, expectation. to at least flat and actually a little positive in the back half of the year. so that actually could help. so nothing stellar but maybe we'll get back to -- >> when are we going to stop with it -- so we see the headlines and we always say, another revenue decline. 16 months. next time it will be -- or

16 quarters. next time it will be 17 quarters. will it always be that way or is there a time when the whole game switches? >> i think the ball game can switch. when you look at their global business services business, you know, it's a disappointment that it took them too long to restructure the business. 20% of total revenue. down modestly in consulting and application management. the competition is up double digits, about 10% in those categories. if they take this year and they can restructure that and show growth there, that along with basing an improving the software should give them a chance to bounce back and actually show some growth sometime in the not too distant future. >> 79 billion estimate for the year. lou, do you remember 2011? i just happened to look at one -- one number from -- this happened to be, what, five years ago. do you remember the -- what the company revenue was in 2011?

79 -- >> 106 -- >> 106. did you look to -- 106! it's 106! 106 to 79! going the wrong way! >> they have sold a lot of businesses. >> i know, i know, i know. >> look at the operating profit. they did a fantastic job increasing operating profit from 2006 through 2013. it was actually -- the main issue basically has been the last two or three years when, you know, they had to obviously break their long-term guidance and really start to restructure. so, you know, if you look back from the '06 to '13 period, actually, ibm stock was a winner. >> how much stock did they buy back from '06 to -- they were still doing the financial engineering, weren't they? >> yes. i mean, somewhere between $13 billion and $18 billion to free cash flow -- >> is there something radical in acquisitions or something else you'd like them to do with the cash right now?

>> i don't think so. i think that their focus of spending 3 to 4 billion annually on acquisitions is likely the better approach. usually we've seen companies that go for big acwhichcisioqui usually they don't work. >> should they continue to buy back stock? >> i think buying back stock and returning to capital shareholders is always a good thing. in proportion. >> we'll leave it there. appreciate it. >> thank you. thanks, lou. when we return, former director of the national economic council, gene sperling, joins us at the top of the hour. first, though, robert frank brings us a rare find. hey, becky. this blue diamond going up for auction at sothebys for an estimated $25 million to $35 million. we'll tell you what makes it so valuable and tell you who the famous owner was and why actually it's been a better investment than stocks. that's coming up.

brings us a rare find. that's coming up. you shouldn't have to go far to get the help you're looking for.

that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. welcome back to "squawk box." let's get you caught up on the earnings news. united health group beating estimates by 9 cents. >> reporter:ing praft of 181pers. also, another dow component. johnson & johnson beating estimates by 3 cents with earnings of $1.68 per share. company raising its full-year forecast largely above street forecasts. goldman sachs crossing the tape with its earnings.

earnings $2.68 for the first quarter. that came in above estimates of $2.45. a 9.54-carat blue diamond ring once owned by shirley temple is up for auction at sotheby's. >> this might be the most expensive thing that we have ever had on set at cnbc ever. joining us to talk about that is lisa hubbard. co-chairman of sotheby's international division. >> thank you for having me. >> the reason i say that is that this is estimated to go for what tonight? >> between $25 million and $35 million. >> what's the most expensive diamond ever sold at auction? that was the blue moon, right? >> the blue moon last fall, which was a 12.03 fancy vivid blue cushion shaped diamond that in the end sold for $48.5 million. >> if this sells for $30

million, $35 million. this will be top five, right? >> yeah. >> let's talk about what makes it so valuable. let's give it to becky. exactly. >> i'm holding -- how much? >> $25 million. >> talk about the history. that's what really impresses me. >> incredible. >> the diamond was purchased in 1940 by shirley temple's father and given to her. she was finishing filming "the blue bird." he paid then $7,210. >> in 1940. >> in 1940. at the time there was really no distinction made between the values for a colored diamond and a white diamond. they were just diamonds, this was just an interesting thing. in the ensuing time, it's -- >> shirley temple -- everybody knows who she is. did she wear this throughout her life? did she keep it? was it ever sold?

>> she did keep it. she didn't wear it as a little girl. >> i should hope not. >> she didn't wear it as a little girl. she did wear it -- we have a picture of her being sworn in by president nixon, i think it was, when she was going to the u.n. and she is wearing it then. >> i compared this to the dow. dow is up 12,000% since 1940. this diamond is up 346,000%. should someone buying this look at this as a piece of jewelry or -- is it really an investment? going forward will it appreciate that much? >> it should. but if i were looking at it, it would be a piece of jewelry in the short run. and then, if you're willing to hold on to it long enough, 1940 to -- right. >> good point. wear it on special occasions or is that your daily? >> honestly, you can get away with this daily because i have talked to clients who were in the market for a 30-carat emerald cut and then realized that the colored diamonds were smaller, rarer and more

expensive and more subtle. those who know, know, those who don't, don't. >> lisa will you hold it above that? could we get a shot of that again if you hold it above -- because we took a great shot of that. put some of the side -- hold it right there and take a shot when it's down on that. down there on the stand. and take a shot of that. now, on the stand. where the stand -- you had all the stuff -- >> we've only got ten more of these, and they're going very quickly. if you want to call in right now! i saw that with the side thing. it looked like qvc. if someone was going through the channels -- >> it really is all about the depth of color and the rarity. if it doesn't seem like it's rare because so many are coming out it's really because of the demand for them. >> there is a good point. there are three big blue stones being sold this spring. >> there you go. see, look. >> put up the phone number! because this is -- what did you

get your wife for -- >> no, no. >> that doesn't look like qvc? people who are channel surfing are going i'm not going to watch this. >> qvc doesn't have room for all the zeroes in the screen. going back to the market. it's an asian market. colored stones, a lot of buyers are asian. >> a lot of them. because they can afford the very, very best and right now the trophy is, you know, a colored diamond. >> and it's a portable store of we wealth, right? >> you can put it in with a 100-carat that we saw lost year in your pocket and keep going. you can add them together and it goes to a different -- it appeals to a different buying base. so you are broadening the audience. >> you'll be selling this tonight. can people still register to buy this? if they're not going to call in now to the 1-800 number. >> they should call the finance people at sotheby's and give them the bank references and we'll register them. >> thank you so much.

>> five more minutes! >> with the centurion card you might be able to. >> you can, actually. >> will you take the credit card? do you charge a fee? >> people bought hundred million dollar paintings with the centurion card. there is no limit. you can do it. you get mileage. a lot of airline miles. >> there you go. >> you're so welcome. >> thank you. when we return, your money, your vote. are we still using that? the former director of the national economic council, and we'll have some mypillows for sale. (patrick 1) what's it like to be the boss of you? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you...

(patrick 1)than me. i mean, you...us. (vo) go national. go like a pro. 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. something we'll show you. through small things, big things, and spur of the moment things.

earnings parade. three dow components, three very different stories. the numbers, the corporate commentary and market reactions straight ahead. a new york state of mind. it's primary day in the empire state. new this morning, an nbc news poll showing that donald trump has a strong lead but john kasich is gaining ground. the race getting much tighter. now too for the democrats. and all you can eat fries? we'll tell you about the newest promotion at the golden arches as shares of mcdonald's trade near an all-time high. the final super-sized hour of "squawk box" begins right now.

♪ ♪ cheesebe burgher in paradise, heaven on earth and an onion slice ♪ ♪ welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with rebecca quick and andrew ross sorkin. economy economic report this hour, march housing starts and building permits due at 8:30 eastern. less than 90 minutes away from the opening bell on wall street. the futures right now, i can't help but think of yesterday. yes, yes, yes. lead story in the "journal." the failure of the doha court could put a cap on the stock market. we ended -- >> first time above 18,000 since july of last year. >> love that article. yeah. the doha court will put a cap on

stock prices. up another 60 today so far. checking out the markets in europe. which were up a little bit -- nah, germany wasn't up that much but doing well from yesterday. a rebound in crude today. back above 40. up 1%. other top stories, earnings front and center with united health group beating the street on the top and bottom lines. raising its full-year outlook. check that out. dow component looks like it's up 2% this morning. another dow component. johnson and johnson coming in with earnings that also beat estimates. raised its full-year forecast as well. now largely above the street forecast. j&j cfo joining us earlier this morning. >> our overall macro look is that the economies continue to grow but at a slower pace perhaps than previously expected. we see health care continuing to be a really robust growth area and we're happy to be in that part of the business. a mixed quarter for goldman

sachs. earnings beat consensus but revenue came in a little bit light. the stock is slightly under pressure down by about a dollar. mary thompson covering goldman and joins us from cnbc world headquarters. good morning. >> i think the banks are glad to have this quarter behind them. goldman's earnings as becky said beef while revenues came in shy of forecast. goldman hit especially hard given the trader arm. impacted by the volatile environment. earnings of $2.62 a share down 55% from last year. net earnings fell 60% and revenue of $6.34 billion was off 40% from last year's strong first quarter. the beat, courtesy of a decline in expenses. non-compensation expenses the lowest in nine years at $2.1 billion. compensation expenses coming in also lower than expected at $2.66 billion. in a statement, goldman ceo lloyd blankfein saying the operating environment this

quarter presented a broad range of challenges resulting in headwinds across virtually every one of our businesses. and speaking of those businesses, all four of the company's business segments posted double-digit declines in revenue. only investment banking posted results ahead of estimates. helped by stronger than expected numbers from debt underwriting. trading business hard hit as revenue and ickes iffed income commodities and currencies dropped 47%. equity trading dropped 23%. more than expected. and the decline larger than most of the firm's peers. the company's return on equity, measure of profitability. 6.4%, lowest in a couple quarters. the conference call starts at 9:30 a.m. we'll be back with any headlines. andrew, back to you. thank you, mary. netflix earnings beating the street but shares are under pressure after the streaming service gave weaker than expected subscriber guidance for the current quarter. ibm earnings and revenues topping forecasts but overall profits and revenue lower than a year ago as ibm tries to grow

its new businesses fast enough to offset declining revenues. >> beat on top and bottom line. beat handily on the top and bottom line. down $7. shows you. finally, yahoo! will post quarterly results after the bell today. ahead of that, though, reports that say the company has gotten bids for its assets from yellow pages' parent yp holdings. private equity firms tpg and verizon. so we'll see what happens to that. it is primary day in new york. the candidates are duking it out for the coveted delegates in the dig apple. change topping experience in the latest nbc/wall street journal poll. 57% said they prefer a candidate who will shake up current policies versus 38% who said it's more important to have an experienced candidate, even if it means less policy change. joining us now, gene sperling, former national economic council director and advisor to the

hillary clinton campaign. gene, it's good to see you, as always. good morning. >> well, thanks for having me. >> gene, just looking at the big picture, you know, there are disagreements between the two parties on economic issues, republicans and democrats. but the rise of bernie sanders and the embrace of bernie sanders by a lot of young people -- is that a good thing for us at this point? i mean, you know, you worked for bill clinton, you know that he was a private-sector guy deep down, wanted jobs. i mean, is this a good thing for us that suddenly, after this election campaign we're going to think of socialism as a viable alternative to what we have done for 250 years? >> well, look, i think what you're seeing is there is a tremendous focus on the economic situation, and i think there is a great appreciation for how much barack obama has taken the country back from a near

depression. but there is also the frustration that goes for at least 15 years that typical, median wages are still down from 2000. they're down for house holds. a lot of young people entering the labor market in the last five, six years, you know, have been -- have been affected by the scars of the great financial crisis. and i think that ultimately people are going to respond to what hillary clinton is putting out because the one thing she is doing that no candidate on the republican side or her opponent is doing is putting out the tangible things that will address the middle class in security. she is the one putting out detailed plans on infrastructure, on manufacturing, on bringing jobs back, on energy. she is putting out important things affecting people's family security, like college, opportunity, family medical leave. and i think that people -- i think the point she has made is there are a lot of people diagnosing problems out there, but in the end i think people want a solution. and i think that is where she is

standing out is saying i am the one who cares so much about making things better from day one that i am going to be ready to go, that i am putting out tangible plans that can make people's lives better. >> you know, gene, it's -- it's an interesting dynamic because we hear the economy is great and unemployment is 4.9% or 5%. we hear that on one side and immediately on the flip-side we hear about a total lack of raises for the middle class and everything else. i know hillary clinton hasn't had her chance yet, but the policies of barack obama, you know, there is no corporate tax reform. increases in regulation. entitlements have grown. as a result, the fed was the only game in town, and we got zero interest rates to raise the price of assets and to move people out the risk curve which in the last probably seven or eight years has made income

inequality even worse than it was the prior eight. anyone with an asset has done better and it's exacerbated the whole problem. a continuation of those same policies which sort of mandate zerp because we don't have growth anywhere else, that won't help. >> i think most people can very much understand in all sorts of areas of life that some things have gotten dramatically better and still not be good enough. in fairness, it's not like the republican congress just handed over and did whatever president obama wanted. i work closely with president obama on the american jobs act. that's very close to things hillary clinton is putting forward. those would lead to demand-led growth, tighter labor markets, more infrastructure, more fixing our deferred maintenance, putting people to jobs. those are exactly the kind of things that republicans said no to barack obama on. those are exactly the kind of things where them saying no to him put more pressure on the federal reserve and monetary policies around the world. and i think she is going to have

a very robust and strong policy in those areas, and she is not going to have to come in having to fix -- prevent us going into a great depression. she'll have more of the ability to come in and bring about change in areas like investing in the united states, in some of the areas where president obama couldn't give the full focus because either he was fighting with the republicans, successfully, i should say, we took down deficit from 10% of gdp to under 3%. but she is not going to be dealing with, or the new president will not be dealing with the worst financial crisis since the great depression and i think there will be a greater ability to, yes, change policies from the past 20, 30, 40 years that didn't do enough to allow more women to come into the work force by having better child care, paid family leave policies and a focus on attracting high-value jobs and reforming the tax code to encourage job creation and reward those people who are adding value, investing

in long-term growth in the united states. >> gene, if you were a betting man, do you think that we will have corporate tax reform of some sort in the next four years no matter who is the president? >> i think we should, but it's going to have to be a compromise. >> would you have made the same bet four or eight years ago? >> look, i do think that in some ways we have the worst of all worlds. we have some companies that are not as competitive and we have other companies that are manipulating the tax code to pay virtually nothing. i think we need something where everybody pays their share. you don't have this -- these inversion and all the tax manipulation games. i think the idea that you could do this in combination with a new investment -- a significant investment in infrastructure and something that makes clear to people that, while we're bringing down the tax code and the corporate tax rate to make it more competitive we're cutting out loopholes and cutting out tax evasion and

having a system that is not only competitive but the american people can believe in. right now a lot of taxpayers rightly feel that major, large corporations are able to manipulate the tax code to pay less than they do when they're a hard-working, middle-class family. >> okay. gene, stay tuned. do you realize today there is a primary? you're down there in the beltway. >> i do realize that. i was in -- just -- just in new york. i do realize that. i do think that people in new york are going to remember not just these policies but the degree fought for them. they'll remember how she fought after 9/11 to get the money to redevelop the world trade center for the health issues affecting the first responders, what she did for small manufacturers in new york. those are the type of things where i think her record and, in fact, people have seen her go to bat and work hard to get things done is going to affect things. you know, i hope it will lead to a victory tonight for her.

>> they'll remember that. i am looking at this huge building called trump tower. i wonder if they'll remember that. that's huge. gold letters and everything. gene, thank you. >> thank you. okay. we have a developing story out of the southwest today. at least five people have died and hundreds rescued in massive floods throughout the houston area. more than a foot of rain fell early this week. closing schools and knocking out power for thousands of texas residents. the governor there, greg abbott, declared a state of disaster in nine counties with more storms expected today. we're also following a deadly attack in afghanistan. at least 28 people killed in almost 200 injured after suicide bomber rocked kabul outside the office of the country's main security agency. the taliban has claimed responsibility for the attack. when we come back, shares of netflix under pressure as expectations tore subscriber growth spooked investors. the full story straight ahead. stay tuned.

you're watching "squawk box" on cnbc. first in business worldwide. actions speak louder.

something we'll show you. through small things, big things, and spur of the moment things.

welcome back to "squawk box," everyone. retailer target reportedly begun raising employee wages to a min of $10 an hour.

the increase markets target's second wage hike. it said it doesn't disclose details of compensation programs but pays market competitive rates and benchmarks regularly to help recruit great talent. this comes after walmart raised its minimum wage. target's shares up 14% year to date. netflix shares falling after first quarter earnings were reported despite a beat on the bottom line. julie has more on what's going on with netflix's earnings. good morning. >> andrew, netflix shares plunging on concerns about second quarter subscriber guidance. ceo reed hastings saying the company is facing challenges. no new countries coming online this quarter. he dismissed concerns that amazon's new monthly video service poses a threat.

>> hulu is doing great work. amazon is. hbo, showtime. there are so many competitors. and everyone is working hard to build the best content. and so, you know, we're seeing growth in the overall internet tv market. of course, that's displacing linear tv. and it's natural that everybody is coming in as they realize that the future is internet tv. >> hastings also said he is not interested in m&a and would rather grow organically. saying netflix is not interested in sports writes or live video. saying live doesn't fit with netflix's focus with on-demand content. hastings said he can't wait for the company to top 100 million customers which he sxhekexpects happen next year. joe. >> amazing growth. coming up, breaking economic

news. housing starts and building news. shares of mcdonald's trading at an all-time high. what could be even tastier for investors? how about all you can eat fries. a new promotion at the golden afternoons. >> wow! i would be there for that. >> eat fries with the shake. "squawk box" will be right back. ♪ 98,352 what's that? the number of units we'll make next month to maximize earnings. that's a projection. no, it's a fact. based on hundreds of proprietary and open data sets folded into a real-time, actionable analytics model. nine. eight. three. five. two. you're not gonna round that up? you don't round up facts. powerful analytics driving decisions for the world's most valuable brands. ♪

you're watching cnbc, first in business worldwide.

welcome back to "squawk box." futures right now are indicated up about 61 points. which was what -- would add to yesterday's gains and we're back above 18,000. less than 2% are 2% away from an all-time high. all this happening even though ibm shares, a dow component down. some others are doing better. calling all mcdonald's french fries lovers. prepare to rejoice. >> wow! >> one mcdonald's franchise is putting all-you-can-eat fries on the menu in honor of its grand opening in st. joseph, missouri. the location is being dubbed the golden arches of the future. customers will also be able to customize their burgers, chicken sandwiches and desserts by ordering through a kiosk. where you don't have to pay that thing $15 an hour. the location will open in july. check out the shares of

mcdonald's trading at all-time highs. >> that's how they afford to do it. is there unlimited ketchup? >> there is always unlimited ketchup. >> andrew, nobody should eat more than a large fries, dude. do you know how many calories -- >> have you seen the calorie count on large fries? >> 510. 510 calories. i know there is appeal to all-you-can-eat but really it's just like the end of civilization. >> he has amazing metabolism. >> we have an obesity problem already. you can't do all-you-can-eat mcdonald's fries. >> he'll eat six doughnuts. >> you seen jim gaffigan do his piece where he finishes them and looks in the bag and there are a couple of stragglers and he goes, oh, hello! >> i used to go to the all-you-can-eat red lobster buffet. >> you can afford as many fries. i can see the others. hitting drudge right now.

phones. >> phones. >> to replace cash by 2025. so, your entire net worth. >> yes. >> will be on your -- >> phone. >> -- on your world, your unencrypted, nonsecure, big brother phone that you want everyone to have a key to to get in. that's all. i hope you're comfortable in a world where there is no encryption, where everybody has a key to get in. where there is no terrorism because now you can hack into phones. so i hope you're happy when your whole net worth -- >> because the government doesn't already have access to all of your funds at the bank, right? because the entire banking system is completely -- >> it is safe. kind of safe. >> -- it's completely -- it is completely and utterly accessible to the government. >> you need it encrypted. >> that's the point. >> tim cook is right. you're wrong. if we're going to be paying all this with cash on your phone, you need a safe, encrypted phone. come to the dark side.

>> moving on. >> okay. protecting the terrorists again, are you? we have a road bump for uber in its quest to conquer food delivery. the company announcing it will shut down its instant delivery feature. in a letter to uber eats customers this comes one month after the stand alone app launched in new york city. it promised to deliver pre-fixed dishes in under ten minutes. uber continues to offer standard delivery service, however. creates some questions about the future of uber -- everyone said uber is a car service company but there are other services they could layer on top. this raises questions about how much you can really layer on top. you may never need to walk into a cvs again. introducing a curb side pickup service that would allow customers to order most items using a mobile app and get the items delivered to their vehicle. cvs is promising to get orders ready in an hour but prescription drugs will be sold

in store or drew the drive-through window. 70% of products will be available through order through the service. sad news. actress doris roberts, you may not know the same but you certainly know this lady. she was an emmy-winning star that was probably best known for her role as the mother on everybody loves raymond. she was in a million other things. movies and tv shows. 90 years old. it says here the cause of death is unknown. at 90 it's always kind of -- cause of death is that, you know, probably natural -- you get to be 90. 90 is a good number. i don't know if i'd write a call on 90? >> maybe today. where would you be in 20, 30 years. >> how about you? you'll live forever. you are immortal. >> my grandma is turning 90. >> you make a call at 90? >> no. >> you guarantee you'll get to

90 but not beyond. >> right. >> all the things you worry about that can happen to you every day. all these lumps, the cough -- you're out driving in a car -- >> do i get 90 at perfect health? >> perfect health. >> like really great health. >> like you're going to get an ice pick in the eye in a subway station. anything can happen, andrew, right? >> i try to avoid thinking about things like that. back in a moment. you shouldn't have to go far

to get the help you're looking for. that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it. we're doing everything we can to give you the best experience possible.

because we should fit into your life. not the other way around. welcome back to "squawk box." breaking news. march read on housing starts and permits. we are down 8.8% on starts. 1.089 million. seasonally adjusted, annualized. there was a bit of a positive revision last month. originally released up 5.2, now stands up 6.9. permits, 1.086 million. down 7.7% from our last look. 1.117. so last month revised from minus 3.1 to only down 2.2. this number takes it down minus 7.7. i guess the big news in the market continues to be the hurdles of the equity markets,

kind of in a sweet spot in terms of central planning and the central banking, whether it's the u.s. or overseas. and of course, thursday this week we have draghi. next week back of japan, the f 1 c. those are the conductors of the orchestra. the horn section sounds pretty good for the moment. joe, back to you! did you vote today? you're in jersey, not new york. >> i am in jersey. rick, i just thought about this. >> yeah. >> if bloomberg were still mayor, would you outlaw all-you-can-eat fries at mcdonald's? >> i think he would outlaw mcdonald's if he had his druthers. >> sorkin, seriously. he would yacoutlaw all-you-can- fries. the salt -- the. >> if mcdonald's tried to do all you can eat fries. >> is it for one day only? >> it was in celebration of the grand opening. >> it's not forever. >> it may be. >> they always speak so negatively of mcdonald's.

everybody loves other things, whether it's starbucks or all the fancy burger joints. you ever see how many calories are in one of those frappuccinos with the vanilla bar on the side? i am not really a big person. i enjoy my fast food every now and again, you know. if the higher authority from above wants to do our menus, i think it's only fair that the people they are taking the fries from get to take away bloomberg's airplane or his jets or his large carbon footprint. >> i miss him. what did he change? the city charter. >> he did a good job in so many ways. a lot of people are from new york and say -- he had his downside like everybody does, but all in all, pretty fond memories of his tenure, actually. >> i'm with rick, one of the great mayors of all time. >> dwe're in the heart of the

spring housing market. you can't blame it on weather anymore. what i am looking at specifically. rick threw out the major numbers, down 8.8% for the month in total housing starts. you have to break it down to single-family versus multi-family. single-family starts down 9.2% for the month. multi-family down 8.5%. now, multi-family, we need to see it cool a little bit. a lot of construction there. but single-family, this housing market desperately needs new homes. you talk to see real estate agent, mortgage broker, they'll say prices are overheating because we have no supply. to see that single-family starts down over 9% for the month. still up year over year 22% but off a weak number last year. looking at building permits. building permits for single family down 1.2% for the month. they're down in multi-family over 20% for the month. so again, it's better to see them down in multi-family, but single family we're not seeing the construction we need to cool

off some of these overheated prices. the builders blame that on lack of labor but we are hearing more and more reports that it's not so much the labor. it's the land and the permitting problems. if we don't start to see more supply come onto the market we'll really see the prices move a lot higher. we were expecting to see unchanged at least after a big jump in february but this is a disappointing number for the builde builders. it's about supply. >> thank you very much. let's bring in an economist in the housing market. michelle, weigh in on the permit numbers. it does sound like it's a disappointing number especially considering we're in the spring. this is supposed to be be the prime season. >> it was disappointing. single family starts were down. we expected that. multi-family down as well. it's also permits, not just starts. the housing data is very noisy on a monthly basis, especially

around seasonal adjustment issues. even though this is march and the beginning of the spring selling season, it could be that the better winter in january and february pulled forward activity for march and april. so we're just getting a lot of noise in the data right now. even considering that it's disappointing. >> diana mentioned three numbers. first you can't find labor. the second is trying to find land. the third is coming up against a difficult permitting process. what do you think the biggest problem is? >> so we hear regularly from builder surveys that labor is a significant issue, that they are -- deliveries are taking longer because they can't find labor to complete the orders. you do see that with the bls number, the labor market numbers released monthly. construction jobs are picking up but the labor force is tight for construction work right now. >> why is that? >> because it's been such a big disruption to the industry. the crisis happened. you had a significant drop in

housing activity. it remained subotubbornly low f years. >> the workers left. >> if you look at the average age of the construction work force it's significantly higher than during the housing boom. >> what does it tell you about the overall economy in terms of whether there will be high-paying jobs that eventually low people into these jobs? >> i think it's encouraging for the prospects of a further increase in labor force par 'tis rates. we've seen an increase in participation which was unexpected. i think the majority of people were assuming structural changes for the labor force mean demographics are unfavorable. in the past six months it's headed up in a fairly dramatic way. so, if that can continue and maybe if you start to see people retrain, get into the work force where there is a demand for these types of skilled jobs, it's much more encouraging for the labor market and for the economy. >> that in turn will mean what for the fed?

>> that's the key question. it's very interesting because, if it's the case that the participation rate continues to rise, that means more capacity for further growth in the business cycle. so it suggests maybe the fed has to be on a slow trajectory. >> what if we continue with the participation rate increases and it becomes an actual meaningful trend? >> yeah. >> i thought it was because of retiring baby boomers and there was nothing wrong with it and everything was, you know, that it was only a a mirage. that it's not really a 40-year low. it's not really a reflection of the job market it's just the baby boomers. what if all of a sudden everybody comes back? then that was total b.s. >> that explains some of the political upheaval. >> it does. i never thought it was because of retiring -- people don't retire anymore, unless you're retired. >> you can't fight the aging process. the labor force is aging. if you control for the adjustment in population shares, it adjusts at about half of the

drop in participation so far is due to demographics. you're right. a lot is somewhat unexplained and people chalked it up to structural force. >> an excuse! we have all -- the three of us have been on the show a long time. we've seen guests aging. and it's weird to see it happen. >> we have. >> a lot of the guests have been aging and we just -- nothing happens. we wonder. why are they aging and we're just, nothing, right? sorkin? >> we've also seen some guests age and become -- >> we have. >> reverse the aging too. >> modern science. >> saunders has products for that. >> he does. >> came right off my tongue pretty easily like i might talk to him. maybe. why don't we see him anymore. >> he was on "squawk on the street" like a week ago. >> they need it more than us anyway. coming up, primary day in new york. presidential hopeful hillary clinton casting her vote a short time ago.

john harwich joins us to talk all things political. the highlights of his latest speak easy series with joe biden. hear what the vice president has to say about carried interest when "squawk box" comes right back.

it's coming. >> welcome back to "squawk box," everybody. here is what's making be headlines this morning. the panama canal authority is taking reservations for the wider and deeper locks. they're scheduled to open on june 27th allowing bigger and

wider ships like oil tankers, container ships and bigger cruise ships to use the canal. ups pilots could be moving to a strike. the union says it appears the two sides are nearing an impasse. mediators are currently involved. if they decide there is a stalemate it starts a 30-day countdown to a possible walkout. now that we're done with the busy morning of earnings. high profile alerts due after the bell including the numbers from dow and yahoo! couple other stocks on the move that might not be dow components but worth watching. anheuser busch accepting an offer from a japan group for a number of beer brands owned by s.a.b. miller. anheuser busch is in the process of buying miller for more than $100 billion and working on regulatory approval. stay with advice. philip morris international falling short of estimates. company said the bottom-line impact of unfavorable currency

trends was 19 cents during the second quarter. alumina warning its first quarter revenue will fall short. the company makes gene sequencing instruments and it's pointing to disappointing results in europe and slower than expected sales of certain devices. presidential candidates on both sides vowing to abolish the carried interest loophole. the obama administration has been trying to get rid of the deduction for years, to no avail. john harwood caught up with vice president joe biden for his take. >> you guys have tried to tax carried interest as ordinary income. big wall street guy said the obama administration is like hitler invading poland. how do you react to criticism like that and, i would note, you guys haven't been able to get it done. >> i would say it's like us d

liberating death camps. there is no justification for a hedge fund paying 15% to 17%. no justification. everyone from warren buffett to other -- anyway. but -- >> why haven't you been able to get it done? >> two reasons. one is that we haven't had the -- because of -- as i kid the president. i say, mr. president, everything is landing on your desk but locusts. we haven't had the clear space to do nothing but talk about how unfair the tax system is as it relates to the tax expenditures, loopholes we want to eliminate. consequently what happens is a lot of people can go home, if you're a republican, and say these democrats are just going after business. well, if i sit here and explain to everyone -- i don't have to. your camera crew and everybody is bright. and i say let me tell you what carried interest is. this means you're making -- you're paying at 30%. they're paying at 17%, and

they're making -- some of them made a billion dollars. 28 made a billion dollars. do you think that's fair? well, maybe, if they do something super special with that billion dollars that makes it -- that's why they should be rewarded. they're playing with other people's money! you know. what you do is you charge for -- if you take a risk to start a business and you make money, you pay less taxes, because you took a risk. you used your own money. >> trump said he wants to get rid of it. you see the next president win on that? >> it's not going to be sustainable. >> of course this is one of many topics we talked about with the vice president. the way vice presidents get stereo typed, the political system's performance on the economy. his role in the crime bill and supreme court nomination process. a touching piece on his relationship with robert gates, who has been a famous critic of joe biden on policy terms.

we'll roll out all of those today on cnbc and also you can find them online at cnbc.com/speakeasy. john, were you the only one eating or was the vice president the only one eating? >> he was the only one eating. we had the amtrak fruit in the middle, and he picked out of it. i decided to leave that to him. >> all right. >> you've got to get the -- the buffalo chile. they got stuff -- they don't try to do -- >> it's tough. it's tough. >> the amtrak cafè selection is not the greatest. i will have to say. the ride was fine. >> i do like shooting on a train. that's pretty cool. >> and guys, let me also tell you, joe biden lived on that amtrak train for 40 years as a senator. >> going home to delaware. >> and he talked about, in very evocative terms, you know, looking out the window after he had lost his wife and his young daughter and looking into the kitchens and the dining rooms of people through the neighborhoods he was going by and how that was

a source of support for him. it's really -- it was an extraordinary conversation that we had. >> two questions, john. one on the merits of the conversation and one may be a silly questions. do you think whoever becomes the president in the next four years actually will close, to the extent you want to describe it as a loophole, the carried interest issue? >> i would assume so because you have both leading candidates on the same side of the issue on -- in each party. donald trump says he wants to get rid of it. so did marco rubio when he was -- >> you're going farther down the chain and it becomes more complicated. >> well, that's right. that's the hedge, which is that the financial industry has clout. chuck schumer will be the senator majority -- democratic leader whether it's in the jarre majority or minority. will he push it through? i don't know the answer. certainly you have to see the inability of the obama administration to get it done as a data point that casts some skepticism. >> my other -- i don't know if it's a silly question. when the vice president goes on

the train like that, do they clear out the entire train, or that -- i mean, how does the security work for that? >> usually they don't because i have happened into a car that he was riding on -- on an occasion before we did the interview and they blocked off about half of the train, with his aides and secret service detail. but on this occasion they did clear an entire car for us just to make the shooting process easier. and i think they picked a mid-day train that wasn't likely to be sold out to make that easier to accomplish. >> okay. thank you, john. >> you bet. when we come back, jim cramer joins us from the new york stock exchange. we'll get his take on the morning's big earnings reports next. first, check out oil prices. they're rebounding after yesterday actually wasn't that bad. at the end of the day down 1%. this morning back up at $40.19. stay tuned. you're watching "squawk box" on

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few stocks to watch this morning, harley davidson.

the motorcycle maker posting better than expected revenue. maintaining 2016 outlook. spirit airlines reporting better than expected first quarter revenue, but the key metric of revenue per available seat mile fell by 14% during the quarter. spirit said the fares remain low in the markets it served and stock is up, again, by 1.9%. in terms of rambus, the earnings beating by a penny, earnings in line but the chip technology licensing company gave a second quarter outlook that was short of analyst forecasts. calls for rise in revenue for patent royalty falls. stock down by 12.5%. let's get down to the new york stock exchange. jim cramer joins us now. all over the map here, jim. ibm, netflix, goldman sachs, johnson & johnson, what do you think? >> j & j was fabulous. they got double digit pharma growth. they are just on fire. and there isn't a division i don't like. medical devices turned around.

gor ski is leading that harsh. so far best in show drugs. goldman sachs, look, i was struggling for something good. i saw 40% cut in expenses. they need to do that. but almost every line was down. i compare that to morgan stanley, i prefer morgan over them. i am not willing to writeoff ibm. i don't think it was nearly as bad as analysts say. but i recognize the decline. netflix, i could have watched on -- i could have binged on "daredevils 2" by the time i figured what was going on with netflix. it was so hard to understand, they need to give me a guide to the guide. >> jim, when we try and do like short-term to intermediate term which way the market's headed, so we came out of we haven't made a good enough bottom. that was where we were about a month or two ago. we didn't have blood on the streets. now for a while we were in just a dull market. wasn't going to be any reason for it to go up. i saw some guests on with carl

that said no more upside and i said i'm writing that down. i think we've had 12 straight up days or something like that since then. how close are we to the, well, i can't buy now, it's already gone too far? and then it continues to go. where do you think in this whole game -- 19,000 in reach, you think? >> i don't know. but we're in a rolling bull market. i mean, all the stocks that are responsible for this year's increase for the most part were the most hated stocks going in. caterpillar is the biggest winner in the dow. they report friday. maybe they see some cold water, but that stock doesn't seem to want to quit. >> jim, isn't it a broader advance right now? i mean -- >> it's much broader. >> what's that? >> it's much broader. that's what people don't realize. i mean, you could close the gap between book value on some of these banks and you would find that they could go up 10%, 15%, 20%. i'm looking at the areas that haven't worked and saying, listen, maybe we give them a

break, a coca-cola. maybe they'll be just okay. that won't move. that's already moved. utilities have already moved. but some of these deep cyclicals, if they play catchup you're going to have a very big run. >> i'm wondering when we get to the next level that it's total disbelief if the market goes up if it gets there, that's the next we go where it can't go up because it's so boring and then it does to where people say, well, i can't buy now and then they don't chase it until it's much later. >> well, they need to look to see where things were for some of these groups. you look at a morgan stanley, that was not a bad quarter. not a bad quarter if you think things have gotten better with the equity markets in the last four weeks, which they clearly have. it's a scrub book. it doesn't have fick. it's a pretty good situation. i mention that only because that's an example, again, of like what the heck is that stock doing at 20 something? i mean, come on. i'm not saying clorox is valued incorrectly or proctor although i think proctor could have a

weaker quarter if the dollar is weaker. there's a lot of stuff that hasn't moved. >> we built a heck of a base. i bet you one out of ten people would tell you 19,000 is possible. >> well, i went through the top callers that have come on our network, it's so easy to call top, but what are you calling top on? are you calling top on stock like united health? which looked toppy and up big today? >> jim, quick on netflix. i know you said you couldn't make sense of it, but help us try to make sense of it. how much could it possibly be worth? >> i think the international guide is just way too low. and i think 42 billion -- look, if they're right about how great hbo is and they follow in hbo's food steps, it should close the gap with time warner. it's just they picked that 2 billion number, i don't know how they picked that number. they have -- also the call doesn't sound good when they talk about like how certain movies are. that stuff only works when

they're talking about momentum and signups, otherwise i really don't care whether that movie is going to play well in brazil. or orange is the new black 14. you got to have numbers before you can talk about the movies and they didn't. >> jim, thank you. when we come back we're going to talk about the biggest stock movers in the morning. they say that in life, we shouldn't sweat the small stuff. but when you're building a mercedes-benz, there really is no small stuff. every decision... every component... is an integral part of what makes the 2016 c-class one of our most sophisticated cars ever. because when you're setting a new benchmark for refinement, it is the small stuff... that makes the biggest impression. the 2016 c-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.

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thanks for joining us today everybody. we'll see you right back here tomorrow. right now it's time for "squawk on the street." good morning and welcome to "squawk on the street," i'm scott wapner with jim cramer live from the new york stock exchange. di va david faber is at 13 d. monitors investor summit -- >> he's active, he's not passive. >> he's very active. he's going to have many live and exclusive interviews today from that event. uptown carl is off today. let's look at futures the day after the dow closed above 18,000 for the first time since july. the 10-year note yield today as well is worth looking at. it is yielding