♪ >> live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" on cnbc. we are live from the nasdaq market site. i'm becky quick along with joe kernen and andrew ross sorkin. looking at u.s. equity futures, the dow moved up. markets higher. th this morning, the dow down about 32 points. the s&p down by 4 1/2. the nasdaq down by 16. yesterday apple shares were picking up as we headed into the close, before they came out with the earnings. apple, as a dow component helps across the board with these things. that did boost things as we headed into the close. we'll talk more about apple shares and what happened after the bell. that's an indication of why you see things lower. overnight in asia, markets in japan, hong kong and south korea

were closed for holidays. in the early trading in europe this morning, ahead of that final debate between the last two candidates in the french election, you can see the cac is off by a third of a percentage point. ftse is also down. crude oil yesterday down, and down once again as pumping in libya and the united states more than made up some of the cutbacks. we closed below $48 yesterday. right now 48.04. >> on today's agenda the fed concluding its two-day meeting with a statement at 2:00 p.m. eastern time. the central bank expected to hold rates steady. investors looking for hints that the economy is on track for a rate increase in june. another big earnings day ahead. we will hear from time warner

and yum brandtbrands, after the close, facebook, tesla, aig and fitbit will report. adp private payrolls at 8:15 this morning. later services pmi and ism non-manufacturing. we are just four days away from the final round of the french election. candidates emanuel macron and marine le pen face off in the final televised debate today. ahead of the event, le pen making comments about the euro after days of mixed messages about ditching the currency, which is an unpopular move with the majority of voters, le pen made it clear she wanted to take france out of the single currency. haven't been following it that closely, but she's cut into his lead but it's still 20 points, 30 points. so the polls would have to be really wrong. but i heard there's a lot of energy and crowds at her

rallies. >> not only that. some of the con state wencies that you might expect voting for macron are saying he's too much of a free capitalist and free market guy for them to support him. >> it's a weird -- they're both -- they are like a mixture of all the political things. part bernie sanders, part capitalist. you don't even -- if i were there i would have trouble figuring out -- >> who to vote for? >> certain things about le pen that i like, but i think she wants high tax rates. not a free market person. i can see the best in people. then macron, he worked for hollande, right? he was a hollande --

>> yes. >> when is it again? >> sunday. just in time for the markets. >> that and the derby on sunday. >> the derby already? >> it is you got a hat? >> no, i don't wear one for that. you have had a mint julep? >> i have. >> i'm not a big bourbon guy. >> dave evans, one of our producers. >> from kentucky. >> from kentucky having a derby party. >> did you get invited? >> i'm not going. >> did you get invited? >> maybe. >> maybe i didn't check my mail. >> check your mail. >> did you get invited? >> i was not invited either. but i'm comfortable about it. >> you're okay with it. >> you're not going to new jersey on a weekend. >> we're in omaha this weekend. >> that's right. i'm thinking mint juleps with warren. apple reporting earnings of $2.10 a share, 8 cents ahead of estimates. revenue missed the mark ahead of

weaker iphone sales. tim cook saying we are seeing a kind of delay in purchasing behavior that we think is a consequence of a number of rumors and reports about future products that is happening. if you look at the iphone outside of greater china, they moved up nicely. we had more switchers than ever before. bricking it down is a senior analyst from maxim group. good morning to you. so a lot of people freaked out when they saw the earnings. in any other context of the world, these would be the greatest earnings. you would say what? >> i would not say they're the greatest earnings, but decent earnings, but i think the headline here is that the iphone growth on a sellout basis, that's what consumers are buying, was only up 1% year over

year, that includes china, which is down year over year. in the mature markets it looks like units were up 5% year over year, which is healthy growth but not fantastic. the key is that he said we're seen the greatest number of upgraders ever. you know iphone users continue to be iphone users. two, the greatest number of new i phone users as well. within china, he excluded that in the number of new iphone users. that means the upgrade rate, or the new to iphone users rate in china is weak. that's a bit of a problem. >> here's my real question. it feels like now all the eng e are in one basket. that's on this next phone. this next phone has to be like magic. if it isn't, if the phone is anything like last year's phone,

do you think people will upgrade the way the market needs them to? >> yeah. yeah. our data point suggests three main incremental features for iphone 8. >> using the word incremental already is a bad idea. >> one of them could be big. but based on our analysis of what it could be, we don't think it will be that great. that would be augmented reality. that is the next paradigm of computing. the processor of the iphone will be weak to handle real time processing to provide what is a terminator like augmented reality. which is really the next generation of computing. the other key things are an infinity screen like i have on my galaxy s 8.

the third is wireless charging, which the galaxy already has. the processor included on the iphone 8 probably won't be strong enough to have a fully immersive augue ivive augmented experience. >> this resonated with me, when he talked about people who have not upgraded because they're waiting for this next phone. frankly the 6 to 7 didn't seem -- way the way, three years old now. 6 to 7 did not seem like a big leap. i could still download the latest operating system. i felt like i haven't missed much. >> and it's a pain to upgrade. >> whether or not you're upgrading now or later, you always will have, i think, a bit of extension of your upgrade rate. that's a drag on the overall year over year growth. >> i'm going to harg heargue he. i think there was a time when the technology upgrade felt like

such a step change each time that either every year or two years people bought a new phone. the last three year period it did not feel like the technology moved the needle. so people did not upgrade in the same way. i could be wrong. tim cook could have better numbers, you could have better numbers than that. >> you are absolutely right. what you've seen over the past three years is constant evidence of iphone life cycles extending. not just iphone, smartphones. we're getting to a mature state. so, i do agree with your assessment that you are going to have extending upgrade life cycles. for the key for apple, it is whether or not they will continue to grain market share like they have for the past 12 years in the mac franchise. that's the power of the apple brand. >> bottom line what is the stock worth? >> we have a $170 price target

eps of $9.50, so that gets us to $130. 15x is a discount to what we are trading at. we think that's valid given the limited growth prospects they have. >> if tax policy changes and they can bring money back, does that get more interesting to you? >> not really. i'm assuming that net profit return to share is for shareholders. >> what else can they do? i don't know what else i want on my phone. >> that's what apple is so good at. better camera. >> if the battery lasted, that would be a meaningful -- the battery is not marginal for me. the battery is a significant -- if i could get even three or four hours extra. i don't want one hour, i want three or four hours more.

>> what about after that? what feature that you don't already have -- >> i would like the phone to physically be smaller and the screen the same size. >> but not lose the screen. >> which you can do. >> these are not qualitatively different things. >> for me, it's meaningful. >> you need to shave with it maybe? >> that's a good question, you're right, samsung and others do have a full -- >> it's like would controlling your heating and -- i guess you can already do that. you can control your environment. you can watch your heart rate. >> if siri was meaningfully better. i would like to be able to say to it -- >> all these things are improvements, it's like making it water proof or headphones wireless. it's all on the margin. >> i'm with i. >> we don't need a patent office, there's no more inventions. >> no. >> what else can a smartphone do for you? it could be a pipe.

>> here's what i want to know. i want to know when series can do two-step stuff. i would say ask joe and becky to lunch and schedule it. and just make it happen. i don't want to go back and forth. i want them to figure out if i need to get a subway or taxi there. have the uber there. i want it to do five dimensions. >> i want it to figure out when my plane leaves. >> that's not a new i phone hardwa hardware -- >> no, that's software. how long away from that are we? if cars can drive down the street by themselves. >> my phone is pretty good right now. but i don't like the battery. >> the battery story -- how is the samsung battery? >> awesome, actually. >> even you saying that doesn't

make me want to switch. >> as phones age, the battery life does deteriorate. this is a new phone. that's part of the reason why. >> how many hours do you get on that thing? >> i don't know, it's that awesome. >> wow. >> hmm. thank you for coming in today. great to see you. >> thank you. a couple other stocks to watch. twilio shares are plunging. >> i was listening. you took a shot at me. yes, she's talking about twilio. >> twilio out with full-year revenue lower than expected. the ceo is blaming uber saying the ridesharing company will be reducing communication services over the next year and doing more stuff in house it makes up like 12% of twilio's use taj. that stock got slashed by 30%. weight watchers beating the

stretc street adding subscriber force the fifth straight session in a row. yesterday thiey had ra 14% gain and mondelez was helped by cost cutting, strong sales of the chocolate brands and better product pricing in latin american markets. stock price up 2.6%. >> odd chart. something goes from 40 to 46, it looks like an earthquake. it's done nothing for the year. we have steve n whiting and chris rupkey from mufg. do you always say mufg? >> mufg, yes. >> no one thought about whether -- >> i'll get you a hat. >> no one thought do these ledsers go together in a meaningful way? >> mitsubishi. >> mufg.

>> you a your branding people, d anyone ask -- >> this is above my pay grade. >> m stands for mitsubishi. >> i know what it stands for, it just doesn't look good. all right. i'm not going to argue with you. i think you both say the 0.7% gdp and the weak job number last time, it may not be reflective of what's actually happening. >> next to nearly useless. we got nearly a 13% eps growth in the first quarter. >> that's the more important number. >> that's more important for equity. >> in your view it justifies current stock prices and justifies staying fully invested. >> a lot of folks come on and say this will be a 6%, 7% eps year. if you have a 13% first quarter, it's going to be a lot better

than 6%, 7%. we had a nithird of that gain fm the energy sector, oil. this will be a big eps year. a big gain this year in the united states before any tax cuts. then the rest of the world is also accelerating. gdp will do better later, but we always had these quarters that have been weak. i don't think you'll see the fed reflect on that and say this is ab important s an important statistic for them. >> if underlying things are better in terms of earnings per hair s reflecshgs share, it reflects, but puts the fed on hold. the fed are not champing at the bit to go again. >> they were only going to go two more times this year. >> still? >> that's what they said. >> maybe they won't now. >> when i heard your prior guest, iphone sales are down a

bit. boeing jet orders are down. car and light truck sales, 16 million annual rate two months in a row now, sounds like a recession. >> i don't know if that's true. >> i'm exaggerating, but it is odd. car sales came off last year, same way. picked up. we had turbulence in world fim markets. we had credit spreads blowing out. this time it came off why? >> auto finance is giving us travel. look at net tightening of lending standards. weakening used car prices making it difficult to get a great deal and sales were powerful as a driver of domestic growth. housing can pick up slack. we have a lot of other statistics. ism readings in the 60s were way ahead of everything else. if we come down, it won't be a

miraculous growth recovery, but industrial activity in the second half will probably be stronger than the first half. >> mike jackson from autonation was with us, he talked about how the incentives got to such levels that he thinks they're stretched thin. maybe we've seen the peak. he's not suggesting they fall off a cliff, but it's sweetened the group. >> it's consistent with past growth -- solid growth periods for the u.s. >> all right. we have to go. the europe notion now, one guy said stay out of europe. other people are saying it's undervalued and they'd go there. >> is it a frefrnl problem or a broader cloe eer global risk pr. the u.s. is still going to get lower interest rates from the influence of europe. that will be something that's important for the relative value of equities. >> all right, guys. thank you, steven, chris, mufg.

you flown southwest? > >> yeah. >> you? >> yes. >> is this your first time flying southwest? >> no. >> did you pay extra to get into the "a" group? >> no i didn't know about that. >> where's my seat? >> i was assigned a number. it is like peoples express. we're all going on. people are rushing to get a seat. there's only middle seats! >> yes. that's what happens. >> whose idea was this? >> i wish we had cameras with you. >> coming back was united. with all the flack united takes, i was like let me hug you. frnlgt >> if you do southwest, you have to pony up. >> pay up to you can pick your seat. >> not to mention how i felt about myself and how my daughter felt about me.

i was 43, 44 in the c group, she's like what did we do, dad? i don't know. we're not good people. not good people. >> i would have paid to see that. we're glad you're back. >> really, when she said okay, have at it, there's the seats. >> that's what they do. >> terrible. i have to have gary kelly on saying what are you thinking? i don't care if your fuel prices are hitched. i want a seat. >> you can pay for it. get on early. you never played musical chairs well, did you? >> no. >> when we come back, president trump tweeting a good government shutdown in september could help fix the mess in washington. kevin, meet your father.

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cobut we've got the gettion. tdigital tools to help. now with xfinity's my account, you can figure things out easily, so you won't even have to call us. change your wifi password to something you can actually remember, instantly. add that premium channel, and watch the show everyone's talking about, tonight. and the bill you need to pay? do it in seconds. because we should fit into your life, not the other way around. go to xfinity.com/myaccount ♪ welcome back to "squawk box." in political news, a tweet by

president trump and a government shutdown is getting some pick up this morning. eamon javers has more. we averted the most recent government shutdown, but what does this tell you about what's to come. >> we are pretty sure we averted this latest government shutdown. the white house on the defensive here over the past 24 hours. the president arguing in a couple of tweets that he had to give away a number of concessions. he's apparently responding to conservative angst, the democrats got a lot of wins in the bill. the president tweeting the reason for the plan negotiated between the republicans and democrats is because we need 60 votes in the senate. he said we either elect more republican senators in 2018 or change the rules now to 51%. there he's referring to the legislative filibuster which requires you have 60 votes in the senate. he said our country needs a good shutdown in december to fix this mess. not clear what means by a good

shutdown. mick mulvaney came to the white house briefing room yesterday to answer that question. he said a good shutdown is the one that fixes the process in washington, which he says is simply broken. but what is on mick mulvaney's mind and the president's mind is a perception out there that the democrats had won this negotiation and that president trump had lost it. that, he said, was simply untenable. here's what mick mulvaney said just yesterday. >> i think the president is frustrated with the fact that he negotiated in good faith with the democrats, they went out to try to spike the football and make him look bad. i get that frustration. it's a terrible posture for democrats to take. >> the white house responding to democrats claims that they did very well in these negotiations. he said he was concerned that made the president to look back.

so mick mulvaney went out to give details three times. we will have more on this bill this afternoon in washington, we'll see if there is conservative angst, whether cthy stay on board and vote for this deal and keep it going until september and then do it all over again. >> mm-hmm. >> all right. eamon, thank you very much. we will see what happens later this afternoon. there's a lot of pressure back and forth, but compromise is how you get something done. >> absolutely. >> that's what's frustrating. if the democrats did get some wins -- some things they wanted, it would be nice just to say, you know, i don't know -- it's politics. >> it's a win-win. that's what you want. >> in a better world, take your gains and say i'm glad we were able to negotiate. maybe it was thank you for

negotiations with us and letting us get a few things, instead of saying, mr. art of the deal, mr. negotiator. >> but it's not just the democrats. it's the republicans also. >> it wasn't a perception that the democrats did better, they were crowing they did better. >> i would like for everybody to be humble and not crow. >> good luck with that. >> but when the president wins, he crows relentlessly. he still is crowing. >> both sides want to say they won this negotiation. >> nobody looks good. >> they don't seem happy to take a win and let everybody walk away. >> that's the problem. it is a win-win if everybody can walk away and feel like the government didn't shut down. >> the level of anxiety and angst and outright hatred in some cases -- >> he's still talking about his election win. >> who are you as a leader --

>> every day. >> who is the leader of your party? will you hanging your head on schumer, maxine waters, bernie sanders or peres? which one are you proud of in the way they look -- >> he prefi prefer none of them act this way. given the level of criticism from one side to the other, i was trying to -- >> okay. i just wondered which one -- >> coming up, cloud services provider akamia beat the street, but guidance is weaker. ceo tom leighton joins us after the break. i don't miss much... definitely not the traffic. excuse me, doctor...

the genomic data came in. thank you. you can do that kind of analysis? yeah, watson. i can quickly analyze millions of clinical and scientific reports to help you tailor treatment options for the patient's genomic profile. you can do that? even way out here? yes. even way out here.

♪ welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. u.s. equity futures at this hour have been a bit lower for most of the session. apple is not helping, which is indicated lower after what was a solid report. always worry about something. and, you know, is it price not on valuation basis, but on the iphones. perrigo says they were searched by the u.s. department of ante trust division.

shares are off 2.5%. shares of etsy are down sharply after the company reported a revenue miss saying chad dickerson is stepping down and josh silver main will take over as ceo. no earnings per share in the first quarter. analysts expected earnings of a pen my per share. partially because i stopped mac macrometing my jeans. >> i could have bought some? i know you wear those. >> sorkin originals. yes. yes. my signature -- >> you have to put some mud on them. like that -- don't people put mud on? >> that's on jeans. >> a little bit more news. uber and google will be facing off in court today. the tech giants going head to

head after waymo sued uber. waymo accused uber of stealing intellectual property and infringing on patents. a lot going on there. 5:may teakamai second notec releasing results of the bell. beating on the top and bottom lines, but issuing weaker guidance for the second quarter. the stock was down by 13% in late trading. joining us is tom leighton, co-founder and ceo of akamai technologies. your quarter that we got through was a good one. the guidance is what the street was worried about. you said there was a reason that a brig user would be using you even less. what's going on? >> we did have a good quarter. the company is in good shape. performance and security

solutions account for 60% of revenue. growing at 18%. very healthy, very profitable. there's a little bit of a drag in the media business. media customers grew at 1% year over year. a bunch of slowdown there is around a few internet largest platform companies. that said, i think the longer-term outlook is very bright as more ott content comes online. we're in great position to benefit from that. >> is this a situation reflective on a slowdown in the industry or reflective of churn from big customers? is there somebody using someone else or is this slowdown in those companies? >> there's a few large platform companies that spend billions of dollars a year on infrastructure, they're doing more of the delivery themselves. that means we have had less business from them. that's put a damper on growth for now, with our media segment. >> what would make you think

that they wouldn't continue to do more themselves? or will you be relying less on big customers doing things in-house and relying more on small customers? >> it's the latter. the largest few handful of companies will always do a lot of the delivery themselves. >> i know you're dancing around saying a name, i'm thinking of somebody like a netflix. i'm just throwing out names. i guess you can't name names, but am i right in the arena? >> yeah. there's a couple companies like that. they're doing more themselves. that said a lot of the video out there, being watched, it's from the major broadcasters. we carry a lot of that content. it's much harder than people think to do broadcast quality of video over the internet. just recently at the national societiesiation of broadcasters convention we conhad prizes wit

video over the internet without the delay. we had better video quality without the day lay. >> how much competition are you facing from cloud providers? google obviously is trying to get into cloud pace in a big way. they have youtube and using that technology to do what you've done historically over the years. >> we're complimentary with the cloud providers. almost all of them are large customers of akamai. >> i wondered whether long term they can trir y to add the abilities you do to the stack. >> some have been doing that for a decade. those same companies use us for what we do. i think it's complimentary. if you want your site to be fast, apps to be fast and secure, those very companies use akamai. >> where do you land on net

neutrality now? >> i think you'll see the regulations be backed off. i think that's fine. am m akamai was not on one side. generally speaking we're not a big fan of heavy regulation. i'm not sure that's helpful. we have not really had a stake in the game. >> the reason i ask, netflix on one end. >> that's trekcorrect. >> that's one view, cable companies have another view. >> good reason to be down the middle. >> we deliver a lot of traffic for the content folks. the shifted you're saying now helps the carriers. for the biggest content folks, they're probably not happy. >> does it hurt the light littl

or big guys? >> i don't think it hurts the little guys. they'll be just fine. >> a lot of volatility in the stock, down 13% what is the message you would tell wall street. >> don't curse or any hand signals. we had a guy do that last week. we had a camera on him, he flipped us off. is that what you would say to wall street? >> no, i'd tell wall street i'm buying the stock. i think we have a great future. you need to look beyond, okay, is if 1% difference in the next quarter outlook? this is about the long haul. we're investing in the company and are in afternoon exciting place. >> $9 on a $64 -- you're good. you're straight, calm. >> all right. >> thank you. >> good to see you. coming up when we return,age early read on jobs. the unemployment payroll report will hit at 8:15 eastern time.

and bob worker will weigh in on the bill to fund the government. and a crash course in astro physics, that's the subject of a new book by neil degrasse tyson. stay tuned. you're watching cnbc. @ @

♪ welcome back to "squawk box." right now time for the executive edge. united airlines ceo oscar munoz on the hot seat on capitol hill yesterday. he apologized multiple times for the incident where a passenger was dragged from a plane. bill shuster said congress would take action if the airlines do not and he warned the airlines would not like the outcome. munoz said he made sure the incident would not be repeated. >> going forward, as much as possible we would prevent those actual events happening and reducing overbooking, making

sure crews get there on time and most importantly, once you're on board one of our aircraft you will not be removed and law enforcement will not be allowed other than for safety and security. i think we covered most of those issues, and we'll offer incentives and financial remuneration. >> shares of united are up 3% in the last week. >> that was rough. you can't drag a guy -- after boarding the southwest plane, i was bleeding a little. >> inside. >> no. just the mad rush. i had a bruise -- i wasn't bleeding. that's not true. >> 20 bucks gets you in the "a" group. it's cheap. >> i'm a karate man. i bruise on the inside. remember that? "trading places." >> that i do remember. >> i think it was. bond investor jeff gundlach out with a market warning after yesterday's close.

gundlach telling clients to -- i wish he would stay away from stocks. we'll see if he's right some day. gundlach expected gold also to move higher in the coming months. i think the market was supposed to go down 78,000 points in trump won, too. wasn't that part of his -- i don't know. maybe not. >> bit of news out of europe. brussels reportedly raised the brexit divorce bill, it now costs about 100 billion euros. eu leaders revised calculations and are demanding more money from the uk to leave the european union and cover up-front liabilities. britain's brexit minister, david davis, saying it's not for eu negotiators to decide how they split that bill and how it will work. >> just give them the bill and say here you go? >> i guess. isn't there a judge or a jury or something? something somewhere? >> based in brussels? >> think are the judge and jury. >> when we come back, an early read on jobs.

we'll get linkedin's monthly work force ro force report. stick around "squawk box" will be right back. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

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welcome back to "squawk box." linkedin is out with its monthly work force april, which was the strongest month for hiring since june of 2015. hiring across the u.s. was 16.7% higher this april compared to april of last year. seasonally adjusted hiring was 3.4% higher sequentially fuelled primarily by manufacturing, transportation, and software. want to bring in daniel roth the editor in chief to break down numbers. these are great numbers. >> another very strong, monthly report. this keeps happening every month. we're seeing massive year over year increases. biggest once since june of 2015. but if you look at these, if you dig into what's going on month over month it's definitely not as strong. only three industries are responsible for all of the growth over the last month. manufacturing, aerospace, and

autos, and software. software is the biggest. >> which i'm assuming means that everything else fell? >> everything else either flat or fell. like media, and entertainment was flat. retail was down 3.4%. >> right. >> telecom was down. so you still have some real big drops in some areas. >> so on the good news side. >> yeah. . >> the three dus stris that did excel. >> yep. >> what's the rationale for what happened there and then i want to talk about what's not working. >> yeah. for software, we thought maybe it was going to be because h-1b hiring. people saw there was a change. they were trying to make quick hires or trying to fill the h-1bs. our data doesn't show that's true. we're still trying to figure out what's going on in software. in manufacturing, if you look at where the manufacturing gains are happening they aren't happening in traditional manufacturing centers. and they're not happening -- they're not traditional manufacturing jobs. places like miami and denver, who are hiring for medical devices. >> hmm. >> san francisco, new york, saw

gains in manufacturing for things like semiconductors and pharma. so not traditionally you think east liverpool, ohio, that's not what's going on. >> i think from the political standpoint we want rust belt states to come back. my question is whether linkedin captures that constituency. >> right. last month we had the same question. dug into it a little bit more. basically have 138 million members in the u.s. we tracked this against the l.s. we're watching the numbers month over month -- the same every month and we think that we're capturing those changes that are happening and even though we're primarily white collar we're still seeing the same blue collar updates. they're telling us when people are changing their jobs. >> you know what was surprising though? we got a strong number from adp last month. it was offset when we got the labor report. >> yeah. >> that was a big disappointment. less than 100,000 in jobs

growth. now we're trying to figure out this month is it going to be that the jobs report from the government actually catches up, or is it going to be that everybody else says, okay, now maybe the jobs report was priept >> i mean i think that it is a question of where -- i think there are pockets of strength and it really depends on there's just different economies going on in this country. and some places, software is booming right now. you can't fill these software jobs fast enough. also different cities. seattle had a massive increase of hiring this month. but hartford, connecticut, massive drop in hiring. >> right. >> so it's not -- it is not spread out at all. >> you automatically think the retailers losing jobs and amazon picking things up. is it more complicated than that? >> it's hiring across every industry is seeing a boom in seattle. health care, education, there's massive skills gaps going on now. it's kind of -- you're consistently seeing a rich get richer with cities -- >> and companies that are doing well like an amazon, microsoft and a starbucks, maybe part of that boom, too? >> absolutely. and i think that they attract

talent. you know that there's great people there who work for amazon and starbucks and get paid well and other dus stris come in and you've got to support them with health care, and with education, so, there is a -- once you get a talent center in a city other talents come. >> is there any indication about cities that are excelling in part because they have a low tax base? we had a big story we did yesterday on kansas and what's going on there. >> yeah. >> with the tax base. obviously that's a very controversial situation. but, sort of -- sort of longer-term, and in the larger picture, because now there's obviously a question as to whether we're going to get, if we had tax structure, whether we get deductibility and what that's going to do to certain parts of the country? >> once again, so far that is not what you're seeing. you look at these cities that are having experience in high growth, san francisco, not a place you would consider to be a low tax area. >> right. >> seattle, portland, these are pretty heavily taxed places. and new york city.

higher taxes. not one that's growing as fast as those ones are but it seems to have to do more with where big tech is located. whereas other services you want to be in. that's where the growth is happening. >> okay, dan. great to see you, sir. checked out linkedin. >> lnkd.in/jobsreport. >> other stocks to watch today. bnp paribas reporting better than expected earnings. the stock is up by half a percentage point. novo nordisk raising its full year guidance. results getting a bump from sales of new diabetes and obesity drugs. and hugo boss shares under some pressure despite reporting better than expected earnings and revenue. the company is calling this a transitional year. stock off by 4%. >> coming up apple's quarterly revenue missing estimates on lighter than expected iphone sales. a closer look at the results next and later an early read on the april jobs report. we'll get adp.

the adp private payroll is at 8:15 a.m. eastern. "squawk box" will be right back. you think traffic's bad now, the future's going to be a nightmare! does nobody like the future? c'mon, the future. he obviously doesn't know intel is helping power autonomous cars and the 5g network they connect to. with this, won't happen in the future. thanks, jim. there's some napkins in the glovebox. okay, but why would i need a napkin? you could have just told me a bump was coming. we know the future. because we're building it.

biting into apple's earnings. shares slipping after iphone sales fall short but tim cook telling cnbc that investors should look beyond the numbers in china. his comments and the street reaction straight ahead. southern company beating on both the top and the bottom lines. the company's ceo tom fanning will join us to talk about results and the future of energy in america. plus a big meeting in washington today between mahmoud abbas and president trump. former senate majority leader and special envoy to the middle east george mitchell will join us to discuss. the second hour of "squawk box" begins right now.

live from the beating heart of business, new york city, this is "squawk box." good morning, welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick and joe kernen. take a look at the futures this hour. right now you're looking at red arrows pretty much across the board. dow looks like it would open down about 33 points. the nasdaq would open down as well about 16 points. s&p 500 off about 4 points. we're going to dig into some of those apple numbers and a couple other numbers that may be weighing on things. investors looking ahead to the latest interest rate decision and policy statement we're going to be getting from the fed. that will happen at 2:00 p.m. eastern time. the street not anticipating a rate hike this time around but looking for clues about what may happen in june. also we're about an hour away from the adp report that's going to come out with private sector employment. economists there looking for 175,000 new private sector jobs

for april. that's following a jump of 263,000 in mar and also some high profile earnings out this afternoon. here's what you've got to look for. the latest quarterly numbers are going to come out from facebook, tesla and kraft heinz all that after today's closing bell. >> the nasdaq closing at a record high. since the election it's actually up more than 17%. for a closer look at what's driving the nasdaq's run, dom chu is here. good morning. >> good morning, guys. as we talk about the move overall for the markets, it has been a really impressive run specifically for some of the bigger names within the nasdaq overall. if you take a look at the performance of the nasdaq 100 versus the nasdaq composite. the composite having far, far fewer -- or far more members the nasdaq 100 is the biggest 100 of the nasdaq composite that performance gap right there has been getting wider as the year has progressed. one of the reasons why is because the biggest companies in the index are doing a lot of the heavy lifting overall. and they're the ones who are really showing some of the biggest gains. if you take a look at the big

five. the five biggest members of the nasdaq 100. i've ranked these guys in terms of their year-to-date performance but it's pretty staggering when the worst performer is microsoft up 12% year-to-date. google is up 18%. amazon, 27%. apple 28%. facebook even more than that. so as we talk about the way that these things are setting up for the markets overall, a real concern for some investors is whether or not we do see the nasdaq 100 continue to really power some of those games. the mega cap of the mega cap stocks out there. >> all right, dom. thanks for coming in here. all the way. >> all the way here. >> all the way here. >> i like -- but i enjoy being with you guys. >> are you going to be on this beat all day? can i see this again? >> you are not going to see this again. >> exclusive. >> i'll probably be shifting my focus, because -- >> exclusive to "squawk box." >> it is exclusive to "squawk box." i'll be focusing on other things later on. >> did you get any sleep. >> i'm getting about seven to

nine hours. or i shouldn't say -- >> what? >> my baby is getting seven to nine hours a night. so little -- >> are you kidding me? >> no. little libby -- >> she's only eight weeks old and she's sleeping seven to nine hours? >> yeah, so i will say this. i'm told not to get used to it. >> yeah, don't. i'm sleeping like two hours at a time. >> when does the teething thing happen? >> you have cnbc on in the background? >> that happens -- >> no i'm kidding. >> i should have picked another channel, right? that was -- >> it was a real -- >> that was really dumb. >> error. >> i'm stimulated in the morning. so is my daughter >> we don't need to know about all this. >> you're watching "squawk box" in the morning. >> because they're watching "squawk box." >> don't need to know about your morning stimulation. have you changed a poopy diaper? >> i've changed a lot of poopy diapers. i've changed my share of non-poopy diapers. i didn't realize sometimes they don't have both of them in there. >> what? >> i don't think about these things as a dad. >> i wanted to get a little conversation going.

don't really regret it. but we're going to talk apple now. let's talk apple. >> she's beautiful, dom. >> thank you very much. >> safer space, go to apple. >> he's learning. >> i am learning. >> apple reporting earnings of $2.10 a share, eight cents ahead of estimates. revenue missing the mark on weaker iphone sales. apple's ceo tim cook telling cnbc that we're seeing a kind of delay in purchasing behavior that we think is a consequence of the number of rumors and reports about future products. people waiting for those. that is happening. that is happening. andrew's one of those people i think. >> you look at iphone outside of greater schaen. separately apple hiked its return program by $50 billion under pressure from shareholders to hand over more of its cash hoard which is at 257 billion. and now yield about 2%. joining us is steven milanovic and he covers apple at ubs.

i was going to look up to see how many twitter -- you on twitter >> no, i'm afraid we're not allowed to be on twitter. >> the reason i was looking it up, you've almost broken through to like mainstream fame. you're the most famous hardware analyst i think on wall street. aren't you? >> well, it's kind of you to say. i don't know. i'm the oldest, perhaps, let's put it that way. >> you've been ii ranked. >> i'm in the hall of fame. >> if we're going to listen to someone. this is the man who we should listen to. andrew thinks a longer battery is all apple needs -- >> no, no, no. i want a lot of things. >> i know but i think everything that the iphone does for me is basically already doing -- i said, you know, unless i can shave with it, i don't know what is the next thing that can really, i don't know, cause an explosion and i've got to have this upgrade? what would that be? >> battery life is the number one thing in the surveys that we look at. it's not the only thing, obviously.

>> is it enough? >> i think the next phone, of course, is going to have at least one model at the top of the line very much like the samsung model out today. if you're an apple customer you have not had that. >> always a fancy screen. >> give you better colors. >> diodes -- >> organic l.e.d. light emitting diode. better colors and all that kind of sfuch but you get a faster processor and perhaps wi-os charging. it's become a math exercise. the fact is that the base is so large now and so many people bought the iphone 6 in 2015 that have not upgraded, including i'm sure, a few of you. >> me, yeah. >> that you know, there's going to be pent-up demand. and so tim talked about the fact that there probably is a bit of a pause here with flat iphone units year over year as people wait for the new phone coming out in fall. >> so, we're talking about the iphone. and i figure i'll just focus on the iphone because at this point, is there anything else that's going to move the needle near-term other than iphone? >> well, interesting, they had

some strength last night in some other areas. i mean obviously services, continuing to do well. >> it's not a flying car or tv it's like -- some macintosh or something? >> the watch is doing surprisingly well. year over year. the air pods. you know, you can wear the little air pod like earrings if you can get them. those are very hot. but, perhaps the next big thing is augmented reality. which initially is going to be in the phone, and eventually could be separate devices like glasses, and you know, we think there could be basically a fight for the body for the wrist, for the ears, eventually for the face in terms of wearables. >> really? >> and cook talked about having a pipeline of products in the future. >> steve, question for you. i did my part this quarter because i bought a mac, the new powerbook with the touch bar thing. which is cool. cool enough. my question is, do you think they have to change their innovation calendar, their schedule? which is to say that they clearly made a concerted decision in this last phone, i'm talking about the 7, not to do something that was so

revolutionary, at least if it had a different sort of body part to look different, and sort of, i'm concerned/questioning whether you think every year or every two years they have to do something truly, not necessarily revolutionary, but has to feel and look different? >> some people wonder if they're going for sort of a two to even three-year cadence. i think it really depends on the technology. in the case of the oled they're dependent on samsung. they weren't comfortable a year ago that they had it at that point. so we had to wait another year for it. this is the big question about apple. is innovation dead post-steve jobs. >> is that innovation? is it truly about innovation at the company or is it about the fact that maybe the fact that the technology itself isn't iterating at the same rate? >> i think consumer technology is in a bit of a gap period where we all see things like autonomous driving, virtual reality, augmented reality and the technology is not there to do it yet. so i think it's going to be a

number of years before apple or really anybody else can introduce this really gee, whiz, technology and that's why i think apple's emphasizing still the iphone and improvements yet to come in the iphone to kind of bridge that gap. >> a lot of speculation that they're going to build an alexa or echo competitor as a sort of high end one with beats in it even using some kind of fancy speaker. have you followed the blogs? >> a little bit there. and you know, joe to the point we were talking about earlier, if you take the quote other products of apple which would be the watch, the air pods and the beats it's about $5 billion company. cook said it's a fortune 500 company at this point. i don't think you'll see apple do something exactly like alexa but they could build off apple tv and build things into that in terms of managing your home, and maybe giving that a little bit more voice capability -- >> $775 billion company and you're talking about a $5 billion company. >> that's right. i'm glad -- i haven't seen you for awhile but i'm glad we have this chance because you always ask me is apple going to be a trillion dollar market cap. >> it's got to be now. it's only 33% if they don't buy back stock. >> that's the point.

warren buffett who of course is now big in apple pointed out they're buying back 5% of the shares every year so the market cap is going down by that amount. it doesn't necessarily have to be -- >> if you're bullish on it it's got to get to a trillion. there's no reason to be bullish. right now, it's 775. i mean, to hit any of your targets, it would be a trillion dollar company. even if they do buy back stock. >> it would be close, yeah. we just raised our price target today to 165. so we're not quite there i think. >> -- i think is pretty close. >> is that right? >> i think it gets pretty close. maybe not there. but apple, and you still talking, it's not expensive, right? but it almost, when you raise your dividends to 2% you're not the growth stock you once were either so now it's more of a almost more of a blue chip. >> it's more of a steady eddie. that's a good thing. the p/e is up. you talk about 28% growth in the stock, the p/e is about three turns higher and i think that reflects people seeing this as a franchise value, more of an

annuity based as opposed to the up and down iphone cycle we've been accustomed to. >> -- where it stays at the same price for ten years. >> it's certainly possible. i don't think you're quite at that point. microsoft hit that period. then of course microsoft has come back, since. >> i know. and that's, you know, in the growth of a company, it's -- you know, 2 1/2 years ago everyone thought it would be at a trillion by now. took 2 1/2 years to sort of shake out some of the complacency or the -- everybody that liked it owned it already. how do you go up when everybody owns the stock. >> everybody may own it but they're also underweight this one. it's a real hard one to be overweight. >> what am i getting? a -- so i'm getting a longer battery and a clearer screen. >> yes. >> and it's organic, which helps everybody, right? no pesticides, the organic screen, made in a healthy way or something. >> i'm not so sure about that. >> organic screen. everything should be organic, andrew. i don't even know what it means, i just like it.

i'll pay more for it if it's organic. >> apple said 98% of their electricity now is from renewable sources so that should make you happy. >> real quickly we're going to be seeing warren buffett next week here. is there anything you would ask him about his apple holdings? >> well, you know, he's not big in tech. he always says i don't understand tech. but he's in ibm and now he's in apple. seemed he would use apple more as a consumer company than many analysts do. i think he admits he doesn't have a phone but talks to people and gets the sense they're very committed to it and it's going to be a leading brand for many years. >> steven, thank you. >> good to see you. >> when we come back, day two of the fed meeting. we'll find out what the markets are expecting this afternoon and where you can make money. and later southern company ceo tom fanning will join us to talk quarterly results and the president's energy policy. speaking of the president, he is meeting today with palestinian authority leader mahmoud abbas. we will talk middle east policy, north korea and much more with former senate majority leader george mitchell. stay tuned. you are watching "squawk box" on cnbc.

welcome back to "squawk box" this morning. another busy morning for corporate earnings. yum brands reporting quarterly profit of 65 cents per share, beating estimates by 5 cents. revenue coming in above

estimates with the same restaurant sales increasing at taco bell and kfc. however sales did decline at pizza hut. time warner earnings $1.66 per share, 22 cents above estimates. revenue exceeded analysts forecasts and the company says it remains on track to complete the merger with at&t by the end of the year. that's, of course, why that stock is where it is and the big question, of course, is whether it does close. let's talk markets right now as investors count down to the fomc statement later today. joining us right now is steven parker, and josh fineman, who is global chief economist at deutsche asset management. steven why don't we start with you and talk about earnings. because we're in the thick of things right now. what do you think of what you've seen so far? >> it's been a home run of a quarter for earnings. we're seeing the best earnings growth in the last six or seven years. and importantly, what you're seeing is it's not just a conseine rated story.

not just a margin story. they're beating on the top and bottom line and seeing companies guiding up. it's not the normal pattern of we're going to beat and lower the bar. they're guiding up. it's not just a u.s. story. we're seeing double digit earnings growth here. when you look across europe, japan, a lot of emerging markets. you're talking 20% to 30% earnings growth year over year. >> part of what we've heard from some of the companies, consumer goods and some others who have said, look, it's still a challenging environment out there. what does that tell you about the broader global economy? because we think the global economy's going up. why do you think we're hearing that from some of the companies? >> i think the consumer's been forced to carry a lot of the burden over the last couple of years as it relates to the economy. what we're actually seeing now is it's broadening out. it's not just a consumer story. we're hearing positive things from the manufacturing sector. we're seeing things from the more cyclical parts of the market. and i think that's good. we don't want an economy that's purely driven by the consumer and particularly driven by the u.s. consumer. we're also seeing really positive news from a lot of u.s. multinationals sighting strength out of places like europe and

emerging markets which i think is also positive. >> josh, does that fit with your view of the global economy? >> yeah, it does. cyclically the global economy has improved. compare where we were a year, year and a half ago, people worried about china stumbling, commodity prices collapsing, the global economy maybe going into recession and relative to that things are much better. there's still considerable structural challenges. trend growth around the world is still quite sluggish. we have demographic challenges. those things have not gone away and don't lend themselves to easy solutions. cyclically things are looking better. >> we have this fomc meeting coming up later today and we're not really expecting much of them in terms of a rate hike. maybe we get some commentary about what they do with the balance sheet but maybe the bigger question is how long do you think we're going to be at low rates like this? ben bernanke was here earlier this week and he thinks that the new normal -- >> lower. we're likely to see rates continue to move up. they're not going to move up today, obviously but i think if the economy cooperates, the fed

will be nudging rates higher. but emphasis on nudging. i don't think there's a sense of urgency and i don't think that rates do go back to, you know, where they were in the past cycle. >> we had another guest who said sometime in the next five years he expects that rates will be back at zero because we'll run into economic hard time, won't have picked rates up fast enough to have any room to go anywhere but back to zero. >> i fear that there's a greater risk of that. i don't see that right on the horizon. but i do think if we have a lower sort of mutual rate than yeah, if we don't raise rates as much, inevitably we're going to have a recession at some point. i don't see one on the horizon now but sometime in the future, there is a greater risk that we do go back to zero. >> steven, did you ever kind of put any of that into your decisions that the you're making in investing, the idea of low rates, we're going to be at lower rates, what does that mean beside the obvious that equity can be higher if rates are lower? >> i think it's factored in to where we're looking for opportunities? i think that a lot of investors have looked for equities as

potentially an alternative source of income to bond which i think is what drove a lot of the rally we saw in some of the bond proxies, you know, over the last couple of years. we've actually gone the other direction, i think that some of that perspective on low rates forever may have gotten some of those parts of the market a little overheated. a little overvalued. we've been looking for opportunity to take the other side and say where can we find some cyclical community because expectation around growth had gotten so low even if you're talking about a more thematic opportunity for the next 12 to 18 months that's where we're seeing opportunities instead of chasing after the income. >> you worked thematic into your -- because i was thinking about that again. >> i said that. i worked into my question -- >> you did? >> yeah. >> the thematic equity solutions? >> the head of thematic equity solutions, that's right. >> i got to know who came up with that, too. do you remember? >> we have marketing people who are much better than me. >> man oh, man whatever you're paying them it's not enough. because that is -- i don't

think, is your portfolio being managed thematically? >> no. but it makes sense. >> you? >> i don't know. >> yes. >> wouldn't you want it to be? >> a lot of clients nowadays they like the idea it's not about an overweight here or underweight there, it's give me, you know, three or four themes that can drive markets over the next kouj of years and then find the best way to implement that. >> preaching to the choir, dude. i'm -- i need your card? >> i've got one for you, joe. >> let's talk about the jobs number this friday. last month's number was a disappointment. >> it was. >> today we're going to be getting adp but adp didn't match up with what we got last month. what do you think? >> you have to average these things. january and february were very strong, march was softer. you know, averaging through, it still paints a picture and i think this will be confirmed again on friday with the labor market that has good momentum is running at a pace that is still above trend and it's still putting downward pressure on slack. and you know, we can quibble about maybe there's a little bit of room still to go. we're not quite at full employment but we're pretty darn close. so, you know, that's what's

keeping the fed in rate nudging up mode. >> josh, steven, thank you both. >> thank you. >> thanks. >> okay. coming up, the ceo of southern company is going to join us to talk about his quarterly results. utilities and how the president's policies are affecting business. tom fanning is our guest in just a bit. "squawk box" returns in a moment. mr. diaz.a very simple procedu, we're just going to make one small incision here, then we're gonna go in and remove your '67 corvette. my vette!? it's just a gall bladder! you don't have.. aflac! paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. more funny juice. but my papa gave me...that...car. what do you wish you had? aflac. ohh, i love doing that. health can change, but the life you love doesn't have to. keep your lifestyle healthy with- aflac!

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you can. >> oh. did that go out, speedo? talking about -- the suit i want you to wear if you come to my house, andrew, i was. it's a faber loves speedy suits. he does. one of those euro things -- >> because he's a speed swimming. professionally. he's really good. faber is like --

>> he wears one because he can wear one. we would not look -- the ceo of southern company tom fanning is our guest and then a big meeting for president trump today with mahmoud abbas. former senate majority leader george mitchell is going to discuss that with us. he knows a little bit about the middle east as we head to break take a look at u.s. equity futures. hey you've gotta see this. c'mon.

no. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing.

find your awesome with the xfinity x1 voice remote. good morning, everybody. welcome back to "squawk box" here on cnbc. we are live from the nasdaq marketsite in times square. among the stories that are front and center this morning, mortgage applications edged lower by 0.1% last week according to new figures from the mortgage bankers association. new purchase applications rose by more than 4% but that gain was negated by a drop in refinancing activity. the average 30-year mortgage rate was up by three basis points last week to 4.23%. we still don't know the identity of the company that's bidding

for straight path communications. but straight path says that it has concluded the bid is superior to the deal that was previously struck to be bought by at&t. the at&t deal is worth $95.63 a share in at&t stock. the competing bid also an all-stock offer is worth $135.96 air share. straight path is only saying that the second bidder is a multinational telecommunications company. there's a mystery for you. adp's april report on private sector employment is out in just about 45 minutes. it is expected to show that the u.s. economy added 175,000 new private sector jobs last month. coming after a surge of 263,000 jobs back in march. joe? >> yes. >> it's you. >> oh, okay. southern company reporting this morning beating estimates in both the top and the bottom lines. joining us now southern company chairman, president and ceo tom fanning. year over year, tom, oil price, i don't -- just off the top of my head, where are we in terms

of year over year -- there's a fly in here, where are we, anyway? did it help or hurt in terms of pricing? >> so, oil really has very little to do with us. natural gas is a much big player -- >> not the whole -- >> yeah. look. it continues to have a big impact on the whole nation's energy portfolio. up, as well. you know before i got this job we produced about 70% of our energy from coal. that number this year probably going to be down around 26%. natural gas way up. interestingly, boy, we've talked about this a number of shows, i think kind of renewables are going to be around 9% to 10% this year. be very interesting. >> that's -- and that's a high, isn't it? has it ever been that high before? >> oh, gosh yeah. look, we're about the size, from an energy production standpoint of the nation of australia. so for us to hit that kind of number, that's a big deal. >> and it -- it has nothing to do with -- with pricing then, that it costs more? it's just -- it's available,

it's there? or is it now competitive? >> well, you know, there's a number of things. the production -- you know, we've been particularly bullish on solar for so long. production efficiency of solar panels has gotten so much better. so pricing of the physical asset has gotten better. certainly tax policy, tax preference item has been so strong. you know, i don't think that's very smart in the long-term. but certainly in the near-term we've had tax policy that really helped it. >> so it's -- it's tax -- it's subsidies again. that's what makes it possible. >> well, of course. >> that isn't a good long-term answer. and it -- >> that's exactly right. we've said that, yeah. i've been saying that for years. >> and you've gone along with it -- >> my shareholders take advantage of it. >> you go along with it because if they're going to do it, how do you say no? i don't know if that's a -- you know -- >> well, you have to. you have to. but you know what? we've been working a lot, both in congress, and chatting with the administration on tax policy

changes going forward. i think -- i think there's enough chemicals in the sea where something good will crawl up on the beach here this year and i think they're going to do the right thing. >> couldn't something good be bad for renewables? >> yeah, but that's not the point. what we've got to do, and you know i've been saying this for years is build the right energy portfolio for america. that includes nuclear. it includes hydro carbons, coal, natural gas, energy efficiency. we've got to do it all. >> tom, part of the issue with that is, look, if you're going to get a tax reform bill, odds are it's going to be something that lasts for ten years because you're not going to be able to get a majority in the senate, the 60 votes you need to go through and make it more permanent. >> right. >> that, to me, is a little bit concerning because i've heard from guys like you before tell me that the most important thing, you don't care what the plan is, just make sure you tell me the rules of the road so i can invest for five, six, ten years down the road and beyond. >> yeah, becky, you know what, yeah i agree with that. we'd love to have something permanent. but even with a 10-year deal so

long as you would essentially adopt a notion of grandfathering, that for the changes of this period of time we at least have certainty, as long as they don't revise what they already put in place, i think we'll be okay. and like i say, i'm very kind of encouraged with the thinking that's out there and the progress they're trying to make. there's enough willingness on both sides of the aisle here to get something done, i think. >> what should we do with infrastructure that would help you? >> certainly, you know, when you look at all the challenges, if you look at kind of my role with the fed and everything else, all the challenges around the world, whether it's risk in the middle east, malaise in europe, lack of transparency in china our own issues here in the u.s., energy policy is one of the ways where america can play off and make american lives better, grow jobs, grow personal income. and i think what we can do is create space in the infrastructure bill to provide more resilience to the grid, and

to provide support to grow the nation's energy portfolio in a way that will give us this economy. the greatest opportunity to grow. >> what does that mean adding -- how do you add resilience to the grid? what do you need to do? buy machines to hook up to the power infrastructure or something? what do you need to do? lay new, i don't know, tell me. help me. >> yeah, yeah, yeah. so, improve the nation's interstate transmission system. build more transmission lines. add natural gas infrastructure to -- for these new finds of natural gas around the united states, they're not where the old one was. move the commodity to where the loads are. so that's important. >> can the private sector do that alone, tom? that seems, if i were in that business, i'd be doing that right now anyway. market forces would be doing it. but it needs help? >> hey, and joe, joe look at what we did in 2016. we bought the nation's largest ldt, local distribution company. we bought half of the southern natural gas pipeline and now joint venture with kinder

morguen. it's exactly what we're doing. i think natural gas infrastructure is a great growth play for the future. >> you mentioned your work at the fed. liesman said something last week he was proud of our cnbc survey because it was more accurate than the atlanta fed was on some metric. >> yeah, i saw that. >> go ahead. >> we just got out of our meetings recently, i know the fed is deliberating here. been a very interesting first quarter. january was lackluster. february was awful. now we got to account for the leap year and everything else. but right at the end of march, we've seen really sharp upturn and in fact if you look at our momentum numbers, that would be we measure the ten largest industrial segments in the southeast, nine of the ten showed positive year over year movement in march alone. before that, the numbers had been really lackluster. now, we're still not where we need to be but at least if we

can sustain a little bit of the progress we started to see in march maybe we'll be in a position to get the economic growth that we all think. >> hmm. all right. and in terms of what you've seen from the trump administration and executive orders, and deregulation, is it -- are they mostly -- has he done all he can at this point without legislation? or there's more to do that would benefit the energy industry? or the utility industry? >> hey, look, joe, there's always more to do. but i've got to give these guys an a-plus so far. you know, one of the things that i talked a lot about in past shows with you guys is this notion of federal overreach and the idea that we're seeing right now of restoring balance between what is the role of the federal government and the role of, for example, the states in setting energy policy. i think they're doing great there. and they're trying to release the guns from the engines of

commerce by taking out what i think is unnecessary regulations and really allowing business to be unleashed and do everything we can do. you know, putting too much federal overreach on the nation's economy is tantamount to putting gunk in the engines of commerce. and what we've got to do is clean the gunk out and allow business to move forward. and really to raise american aspirations as to what natural growth can be for this economy. >> gunk really is kind of just, it's a material that put together with like an oily substance that -- i mean, what is it exactly? is that -- >> it's a multimolecular substance that unfortunately is very sticky. >> the smell -- yeah. it's gross. do you think the administration is leaning towards or against the paris agreement? i've been reading that maybe now they're leaning about getting out of it next week. what do you think? >> look, you know, i don't want to guess about the government. i do know that carbon is on

important issue. >> carbon dioxide. yeah i know you got shareholders, take it easy. not calling you a denier. i wouldn't do that. but do you want -- >> no. >> should we stay in that thing? >> hey, joe, it remains an important worldwide issue. so what we have to do is create the solutions necessary to meet the issue. >> okay, okay. all right. i like that double-speak. anyway, tom, thank you. it's sort of the worldwide issue -- >> that may -- >> a spectacular piece that holman jenkins wrote today in "the wall street journal" -- >> have you met brett stevens -- >> i haven't met him. >> have you seen this? >> and it's worth reading -- >> you're losing subscribers because you hire guys that -- >> but -- >> you're losing subscribers. why did you hire him? >> because you want to have all sides of the story. >> you don't need flakes that deny science. >> you want all sides of the story -- >> did he believe in evolution, for god sakes? >> very complicated issue, and

people need to be out there to discuss it on all sides. >> i love brett stevens, i'd say he's almost worked his way over to being "new york times." >> oh -- >> he has. >> well he didn't like trump. >> oh, my gosh. anyway coming up the palestinian authority, president mahmoud abbas will meet with president trump today for the first time discussing a path forward in the long-running palestinian/israeli conflict as well as other issues in the middle east. former senate majority leader special envoy for the middle east peace under president obama george mitchell will join us right after the break. ictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance.

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when you have the right financial advisor, life can be brilliant. ameriprise let's[ whimpers ] dog. find ping-pong. find your awesome with the xfinity x1 voice remote. that's amazing! welcome back to "squawk box" everybody. the futures this morning have been under a little bit of pressure. this comes after another day of gains yesterday. but right now it looks like the dow futures are indicated down by about 25 points. s&p futures down by 3.5 and the nasdaq down by 13. >> special guest with us this morning, president trump's going to be hosting palestinian authority president mahmoud abbas at the white house today for a preview of those talks and what it all means george mitchell is here. former senate majority leader from the state of maine. also former u.s. special envoy for mideast peace for president trump and we should mention, author of a path to peace, a

brief history of israeli/palestinian negotiations, and a way forward in the middle east. senator mitchell thank you for joining us. >> thanks for having me. >> have you sent your book to the president? >> no, i haven't. >> he may need it today. >> i hope he's picked it up somewhere along the way in an airport. >> i set the table for us in terms of what you think is on offer and what can happen. >> well first i think they benefit from very low expectations. >> okay. >> nobody on either side really expects much to happen. and, that often can be the time when something does happen. both sides repeatedly expressed their desire to meet. but, they are hemmed in by divided societies. on both societies -- in both societies there are substantial groups of people who don't want a two-state solution, and therefore saying they're going to meet to get a two-state solution immediately engenders opposition. i think the core issue remains what it has been all along. deep mistrust between the two

peoples, and even more deep mistrust between the two leaders, prime minister netanyahu and president abbas. >> if we could send you to the meeting today, what would you do at that meeting? >> well, i would strongly encourage both sides to get back to the status where we were in september 2010 when i was there when they did meet. they met four times, unfortunately for a complicated series of conditions, too difficult to explain here, the meetings terminated after just four sessions between netanyahu and abbas. there was only one of them that was genuinely substantive. and if i were there i'd try to encourage them to get back into that set of meetings directly, and try to work this thing out in a way that i think is possible and beneficial to both sides. >> since that time, though, there have been more and more settlements that have been built. >> yes. >> and you're reaching near the point where there's no way you can have a two-state solution simply because the israelis

can't leave all those settlements there and can't pull them back. is that true? >> that's a huge difficulty but in the past abbas has negotiated directly while settlements were being constructed. and the argument i made to him that while the united states opposes settlement construction, they're still going on, and the way to stop them is to get into a discussion, get an agreement on a boundary, and then israel is going to build what they want in israeli territory and palestinians can build what they want in palestinian territory. that's the best way to get into the -- that's the wedge issue to get into the talks. and then you expand them to include all of the other issues. >> how likely do you think that these two leaders are, that they would be able to reach a deal, given the constituencies they have to answer to? >> based on what has happened and been said in the intervening in the last few years, not likely at this time. unfortunately. >> a couple of other -- we'll go around the globe for a second. the president recently said that he would be prepared to meet with kim jong-un under what he called the right circumstances.

is that appropriate? inappropriate? there's been a lot of questions about it. >> well, the right circumstances are conditional language. i think it's highly unlikely to occur. i think it was an unwise statement. it elevates the north korean leader, and he would like nothing better than a meeting with the president. if the conditions were right, but they're certainly not right now. >> we can send dennis rodman in the meantime. you didn't laugh at that. that's okay. vladimir putin. the president spoke with vladimir putin just yesterday. what do we have to do to either make that relationship right, or i don't even know what making that relationship right means at this moment. >> well, making it right in my judgment means identifying areas where we can cooperate. and there are many such areas. foremost among them syria. and try to get traction on them rather than spending our time disagreeing on the issues in which we inevitably will

disagree. in which we've disagreed for now for more than a half century. and i think president trump has seriously misread president putin in the past. whether he's now come to realize that putin is not this great leader that he once described, but, in fact, is a leader who's in a desperately difficult condition as his country experiences population decline, a contracting economy, a massive federal budget -- federal budget deficit, a decline in the standard of living for many of their people, i think that it is possible to do business with him in a clear-eyed way, in those areas in which we have a common interest, and syria surely is one of them. not in terms of the long-term result, but in terms of ending the fighting. >> senator, i remember when you were around and god it was a different -- it was a different time, wasn't it? in the senate. and i don't expect you to

necessarily say negative things about the last eight years. but in terms of the strike in syria, and in terms of some of the other foreign policies drawing a line and then actually doing something, if it's crossed, will you heartened by that and conversely were you disheartened by our status in the world, the way we kind of lost moral leadership over the past eight years? you think we've regained some and are you heartened by that or concerned? >> i disagreed with president obama's decision to draw a red line and not to make a strike. >> i thought you would. >> i think he should have done so and i think the strike by president trump was a proportional response to the use of chemical weapons. >> right. >> i think they should be discouraged. however we should not deceive ourselves to think that the single strike, largely ineffective over than sending a message, had any effect on the situation on the ground.

indeed less than 24 hours later syrian planes took off from that base. >> you can rebuild runways. it destroyed some planes. but, in saying that it didn't accomplish that much symbolically that way, i think you may underestimate how much it accomplished just in sending a message to anyone anywhere that, you know, maybe not that this guy is unstage, but this guy is ready to act in a decisive way, which you weren't going to see in the past eight years. i think everybody's on notice right now. and i think that's a positive -- a positive thing. >> it can be a positive. but you have to be careful, joe, not to measure american strength solely on the basis of willingness to drop bombs. that is the willingness to use force when necessary and appropriate is important. >> right. >> but what really -- what really draws support and admiration for america around the world are american ideals. freedom and opportunity here at home, the principles and values

that still lead people around the world to look up to us. those must be measured in the balance as well. >> but you've got to be ready to do something if you say you're going to do it, too. i understand it's nice flowery language and nice leadership, but if you don't do anything for eight years, and, you know, get out of control a lot of different places -- >> yes, joe but it is simply not true that he did nothing. in fact there was the use of military force. >> some of the negotiations that we did do were a little bit -- the iran deal. was that positive in your view? >> there may not have been enough military force to satisfy you but there was the use of military force and there were substantial agreements. the iran agreement which i know you disagree with. >> well, not me -- >> -- was substantial i think is quite significant that while president trump said in the campaign he would tear up that agreement on the first day of his presidency, he has not done so yet and i believe that unlikely that he will do so, because he's come to recognize the importance of that agreement. >> well we've already --

everything that they needed they've already gotten. there's nothing in it for us to tear it up at this point. we've already given away the store. they've already got the money. at this point we hope they -- they -- >> thank you. >> completely loses sight of the fact that the objective was to deny iran building a nuclear weapon. and that has occurred. >> they're on their way, senator, on their way -- >> they're not on their way. they're under the most intrusive inspection program that's ever existed. and now it's been certified by independent inspectors that they've reduced their stockpile by 98%. they've reduced their operating centrifuges by two-thirds, and they have disabled a principle reactor. >> can we get there with north korea? or is that an entirely different game because of the leader? >> that's entirely different. each circumstance is unique. it's a case of an unstable, insecure leader in a very dangerous situation. >> and what kind of leverage do

we have or not with china? vis-a-vis north korea? >> i think the president's efforts to establish good relationship with president xi makes sense but there are limits to what we can do with china for a fundamental reason that has largely been ignored in the discussion. and that is while our short-term interests in north korea coincide with china's. >> right. >> stability, don't rock the boat, don't do crazy things, long-term interests, our interests in china are the exact opposite. we would like to see a unified korea, under a democratic regime. >> so we've already said -- that we will say that that's not what we want. rex tillerson has already said we're fine with not reunifying the peninsula so that you can have this border between western civilization and your own -- your own forms -- >> well i think long-term we believe in democracy, and we think people of korea ought to have the same democracy that we have. i accept secretary tillerson's statement, and i think it's good to calm nerves now.

but china is wary of the collapse of this regime and a unified korea under a democratic -- >> senator it is always great to see you. >> thank you, andrew. thank you. >> see you soon. coming up when we return stocks to watch. check out, buy his book in the meantime. back in a moment. a used car,

one stock to watch this morning, delphi automotive reporting quarterly profit of $1.59 a share.

that was 13 cents better than expected. the auto parts supplier announcing plans to spin off its power train business into a separate company and the stock is up by 5.8%. >> am coulding up when we return we're going to talk apple reporting ernst of $2.10 a share eight cents ahead of estimates more on the company's results when we return. and later senator bob corker of the senate banking committee is going to join us. plus space talk with new york's planetarium director. his new book is out. he's going to join us in just a bit to help us make sense of the "squawk" universe. i sneeze...

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apple gets bruised. shares of tech giant slide after the iphone sales drop. exclusive comments from ceo tim cook straight ahead. breaking economic news. the adp employment report is just minutes away. we'll bring you the numbers and what they can tell us about this week's big payrolls release. plus neil degrasse tyson's new moon shot bringing astrophysics down to earth. he will join us on set as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york. this is "squawk box."

good morning and welcome back to "squawk box" here on cnbc live from the nasdaq marketsite in times square i'm joe kernen along with becky quick and andrew ross sorkin. the futures right now have been lower for most of the morning with some weakness in apple. but i think down 27 points on the dow, 14 on the nasdaq, the s&p indicated down about 4. the fed will wrap up its two-day policy meeting today. we'll be getting a rate decision at 2:00 p.m. eastern time. no rate hike is expected but investors will be looking for clues about future rate hikes. don't miss full coverage of the fed meeting, today on cnbc. 2:00 p.m. the senate has confirmed jay clayton to head the securities and exchange commission. clayton is a long time partner at sullivan cromwell where he worked on mergers and acquisitions and capital raising ep for thes. and the adp employment report is due out.

forecast is 175,000. >> and we referenced it the top stock to watch this morning affecting the averages, shares of apple. shares are lower but the stock is well off the lows of the session out on $1.50. revenue missed the mark on weaker iphone sales. lipton spoke to ceo tim cook. josh, good morning. >> iphone shipments did disappoint the street in q2 but ceo tim cook telling me in part that is due to expectations for new product. we are seeing what i would call a kind of delay in purchasing behavior that we think is a consequence largely of the number of rumors and reports about future products, cook saying. i also talked to the ceo about that ongoing legal fight with qualcomm. apple says qualcomm is charging excessive royalties, and for technologies it has nothing to do with. cook telling me qualcomm is trying to place a tax on the value of the entire phone. we think it makes no sense at all for somebody to be able to charge a tax on many innovations

that they had no contribution to. that is the debate. guys, back to you. thank you, josh for that. ed lee is here the managing editor the rico, also a cnbc contributor, also mike olson, research analyst at piper jaffray. >> we talk about these rumors because i hang out on blogs waiting for my moment to pounce. >> for the next phone. what is it going to have? should i wait? >> i've been waiting. i've been waiting. >> i know joe's waiting. >> i want a longer battery. that's what andrew told me. >> i do. >> we all do. >> but the question, to me there's a larger question which is in terms of how quickly apple or any of these companies has to now iterate. whether they can have a two-year time period or whether just given the number of rumors and gossip that and speculation that comes you're always going to have the situation. it's more acute this time but that's because of what it's looked like. >> or that there's a bigger

anticipation for this coming iphone 8 which is at the tenth anniversary. the point is it happens every year. there's always an anticipation. >> right. >> there's always going to be people holding back. why is he blaming it this time around. it's a little bit silly frankly. >> i would say that the way the phone has looked is the same for the last three years. >> right. and they're looking for a big refresh. so i think like car companies they will refresh a brand every three years, apple is doing it every two years or something like that. it might need to do it every year now just to keep up. i think that's your point. >> and samsung does for the most part. samsung does change the body of the phone. >> and they attract a lot of the sort of hard core fan boys frankly like in terms of the true gadget geeks they tend to like samsung for that reason. apple seems to be more of the every man type of phone. >> more consumers. >> yeah, exactly. >> mike, do you think there's a larger issue here or not? >> i don't. you know, there wasn't a flawless quarter but it was good enough. if you look at the issues that we saw it was all tied to iphone units. every other metric was either in

line or better. so when you look at the issue tied to strictly iphone it just suggests that awareness is rising for the new phone. i do think it's legit because the tenth anniversary phone we could see the first change in kind of form factor that we've really ever seen with the phone. if you hold an original iphone next to the current iphone you don't see much difference. but with this new iphone we may see the loss of the home button, edge-to-edge glass. all of those things are causing increased awareness and that's a good thing, probably, for september and december quarter iphone units. we had to lower our numbers for the near term. i think most investors will look through that. >> is the home button the little thing at the bottom? >> yeah. >> no more buttons, joe. >> you'll be fine, it's okay. one thing i did want to mention -- >> i'm scared. >> apple's services revenue. apple music, $7 billion in sales. right? time warner reported earnings this morning total for the quarter $7.7 billion. basically apple's service revenue is almost as big as all of time warner. this is sort of like ancillary

side business that apple's had for years, now a massive thing. >> then the question becomes how do you value that service business, mike? >> we've looked at that and basically, excuse me, we've used some of the parts analysis that suggests that if you throw around a 20-ish multiple on earnings for the services business, you end up which would be a reasonable comp, and then throw a lower multiple of kind of low double digits, multiple on the rest of the business you end up with a stock price right around in the mid 160s. i think the question is when will investors start to value that business. and at this point it's only, you know, in the teens as a percent of the overall business. it might not be for another 12, 18, 24, 36 months until investors give them credit for that as it grows to be more like 20%. >> what do you want to do with all this cash? quarter after a trillion

dollars. >> good question. yeah, it's a good question. they talked about last night they do think that the potential to repatriate the cash is there. at a, you know, more favorable tax rate. i think what it's going to result in is probably increased return of capital to shareholders. with some additional smaller technology acquisitions. i don't see them doing a big transformative acquisition. it's just not their style. >> it would be a moment of truth for them, right? to sort out what they could do in a big way? i mean they should go after something bigger. you know, lyft. that's something they should look closely at. other content opportunities. lionsgate is something they should look at. services revenue, that's the thing that's going to ultimately bolster -- >> why, lyft? what would you tell them to do with that? >> well it's growing area. it's something that they're looking at from a sort of autonomous car perspective. there's ride hailing, autonomous and they're going to merge at some point and i think having

one side of or both sides of that is pretty important. >> i think you're going to run into the problem of the stock is now attracting a different sort of investor. >> value investor. >> capital return. >> warren buffett's -- >> out of the con -- >> that's not why -- >> and if they're doing acquisitions like that you're going to drive those people away. >> longer-term i think it's going to be bigger value, better value, a stronger company as a result. >> mike you agree with that? >> well, i think -- i think potentially, i think when you look at the key question that i would have for tim cook it's what is the next path to innovation. and we really haven't seen what that's going to be and i think that question will become even more important after we get through the iphone launch and we get investors start to say okay, now what and so i think we're going to either need to see some sort of internally created path towards innovation, or some sort of acquisition but again i would be skriesed if they did a large, significant deal. >> okay. we're going to leave the conversation there. ed lee, mike owe son, thanks, guys. appreciate it. >> you glad about beats yet? or that was --

>> ruined it for you? >> i don't know. ed, what do you say about of the valuation of beats? >> i think they certainly overpaid. they ended up not really making the most use out of it. >> i know he's a subscriber but i never really -- >> because apple music looks like spotify. it's a commodity service. they haven't done anything with it -- >> except it may turn into a content company. apparently production deals and make tv shows and movies and films. >> it's kind of a weird -- that's a weird way to differentiate that service. >> i think i need one button. can't they have one? >> call tim and say hey joe needs the button. >> the only reminder of actually having a physical button. >> and it moves. >> the gossip sites by the way say there will be a button on the back because that's where you're going to have to put your fingerprint. >> that makes sense. would it do the same thing where you push in- >> i don't know how it's going to work. >> i don't know. >> tim cook if he is watching this is watching in horror right now.

>> believe what they're talking about what these blogs are saying. >> a few other earnings to tell you about today, humana reported an adjusted $2.75 a share. that was 25 cents, 10%. did that quickly because if it was $2.50, 10%, see how i did that. the beat came on the strength of member additions to its medicare advantage business. revenue, however, came in below forecast. and time warner, $1.66 a share during the first quarter tfs 21 cents above estimates. revenue exceeded analyst forecasts and the company says it remains on track to complete the merger with at&t by the end of the year. i like jeff. he made a lot of scratch last year. did you see that number? >> yeah. >> it was a nice number. like 70 million or something. wasn't it? >> i believe so. just announced, right? >> just announced. a couple people made a lot of money recently.

>> i know who you're talking about. someone who deserved it a hell of a lot more than jeff bucas. >> who are you think about? >> steve -- >> must be an internal. >> always. you can't even -- it's like that ad where, you know, what sit, master card? it's -- >> no i know what i was thinking about. i was thinking about -- >> why are you laughing? >> you're a contributor. you better get on board. >> i think steve burke is an amazing -- >> he deserves every cent. >> in this case this has nothing to do -- >> i was thinking two other people. the folks who run time inc. got a huge pay increase -- >> for not going through the sale. >> for not going through the sale. and then the chairman of mylan with the epipen situation got like $100 million this year. >> the incentives are a little out of whack. >> wow. >> not always. as i just pointed out. >> all right folks. when we come back, the number that blindsided the economists

last month. we're just a few minutes away from the adp report. we're going to bring you the data and the market reaction next. stick around. "squawk box" will be right back. hey. pass please. i'm here to fix the elevator. nothing's wrong with the elevator. right. but you want to fix it. right. so who sent you? new guy. what new guy? watson. my analysis of sensor and maintenance data indicates elevator 3 will malfunction in 2 days. there you go. you still need a pass.

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the adp employment report is just about to hit the tape. let's get to steve liesman, who is in washington and has the numbers. steve? >> 177,000. adp saying that nationally in april payrolls rose by 177,000. that's against a estimate of 175,000. so that's straight in there. they revised down march just a little bit. 8,000. that was a big miss for them relative to the bls. saying it was 255,000. so still a much stronger report than the government reported. i want to come back to that with mark zandi in a minute. goods sector up 12, services up 165,000. nonfarm payroll for friday includes private and government of 188,000. looking at growth by business

what you see here is small business added 61. medium 78,000. and large a little bit off the other two up by 38,000 by sector here. what you have is business services up by 82. education health 41,000. leisure hospitality back on track 35,000. manufacturing, still strong relatively up 11,000. construction a bit of giveback from those warmer months when it added 20,000, 30,000, now down 2,000. joining us is mark zandi chief economist at moody's analytics. they put it together for adp. mark, so by one metric your metric there was a slowing from 255 to 177. if i use the government report it went up from 90 up to 177. which is it? is the job market slowing? where's the right number here? >> neither. i think the job market is exactly where it's been. i mean, we created 2.5 million jobs last year.

we'll create something closer to 2 million this year. and the only reason is that labor markets are tight. they're getting tighter. businesses can't find qualified workers and technology is starting to play a role. if you look at retail employment which had been a big sort of job growth, that's slowing because the online guys are just killing the bricks and mortar guys so we're seeing less job growth there. fundamental job growth is still strong. month to month ups and downs you shouldn't read too much into them. >> you checked your numbers from last month and are sticking with 255. are you saying the bls has that off by almost what 200,000? >> you're going to drag me into the weeds. >> not into the weeds -- >> okay. the weather. it was weather. they got 93,000 last month because of the very bad weather during the survey week in the month of march. so bls, to be counted as employed you have to be on the payroll and you have to get paid during that survey week. >> okay. >> to be counted as employed in the adp you have to be on the

payroll. so the bls bar is a lot higher. when you have weird weather in that survey week. remember we had that really bizarre storm in the northeast you can have months where things are not exactly the same. >> now get at this other conundrum which is weak gdp numbers. 0.7% growth, and yet pretty strong jobs numbers. which is telling the right story? >> the job numbers. so, as i've been saying i think the gdp numbers have all kinds of measurement issues. a range of them. the most significant of them are in the first quarter, obviously. that's when you get this residual seasonality that you have been talking about quite a bit. but the bls number, the gdp numbers in general, even extracting from that are biased lower. we're not measuring a lot of economic activity in parts of the economy that are hard to measure like social media for example. and other parts of technology. so in my view, gdp growth has been consistently stronger than the 2% we've been measuring

since the expansion began. >> so the auto numbers came in yesterday. what was it 68 at an annual rate, less than most forecasters expected. does that make you worried about the consumer which was weak in the data in the first quarter, and at least the first measure we have of the consumer in the first month of the second quarter is met coming up weak as well? >> no. so, we were at 17.5 million new home -- new vehicle sales last year on top of about 17.5 million the year before. that's well above what you would expect in a normal economy. the automakers and auto finance companies were pulling forward sales with lots of discounting and very easy financing. easy -- very easy to get an auto loan. the auto finance guys are now starting to pull back a little bit because we've seen some increase in delinquency. but more importantly we're seeing declines much -- very significant weakness in used car prices. and that obviously creates a lot of risk for the auto finance guys. and also it means we're probably selling more used vehicles. of course we're focused on the new vehicle market.

now much more attractive to buy a used vehicle because it's just cheaper. those prices have declined. so it's nothing fundamental about the consumer. >> all right, mark. thanks for joining us this morning. mark andy from moody's analytics. andrew, i guess that's back to you. >> okay. steve great to see you. great interview. thank you for that. when we come back, just when you thought leg room couldn't get any tighter we're going to tell you about which airline is cutting space for economy travelers. joe will also tell you about his travels on southwest. and pay for the "a" group. coming up at 8:30 a.m. eastern time senator bob corker's going to join us live. we've got a lot to talk to him about. still ahead, "squawk box" goes out of this world. >> to infinity and beyond! >> neil degrasse tyson opens a portal to the cosmos in his new book and he's taking us along for the ride. the celebrity astrophysicist

lands here at 8:40 a.m. eastern time. stick around. you're watching "squawk box" on cnbc.

welcome back to "squawk box," everybody. shares of true yo are plunging this morning. the cloud communications company warning of lower than expected full year revenue.

the company's ceo says that uber is to blame for this. the ride sharing giant will reduce usage of twilio's communicationsselveses because they're doing more in-house. uber makes up about 12% of twilio's's revenue. 31% down today. >> and separately uber will be in court today. the company is going head-to-head with google after the tech giant's recent spinoff sued uber in an effort to stop its self-driving car research. the dispute kicked off in january when waymo which is the division of google that does the autonomous driving accused uber of stealing its trade secrets. and its intellectual property also infringing on its patents. okay. your next trip with american airlines might be a tad less spacious. the airline cutting leg room between seats in its economy class. company says it was ordering to add more seats on the new boeing 37 -- or 737 max jet liners. it has to shrink the distance

between some seats by about two inches. only some of the seats will be affected. but flyers with less leg room will pay the same price as other economy passengers on board. everyone's got to go to the seat guru. >> you've got to figure out where the bad seats are. >> the new plane expected to take to the skies later this year or pay for economy plus or whatever the american airlines version of that is. >> there's no room, you know, it feels like eight-minute abs, you're getting to the point you can't go any further on the leg room in that economy class. you cannot do it. it's bad. >> you remember -- >> and it leads to the air rage. >> right. >> you remember those images, was it easy jet or one of those airlines in europe that was contemplating having people stand? ryan air -- >> i think he was joking on it. he said that they were doing it kind of tongue in cheek. >> love it. i love when they show that. babies in first class. >> it is -- >> right on top of each other. >> it is stressful for everyone. and air traffic there is a

problem. >> yes. >> like get delayed and it's not weather. it's not maintenance. it's purely -- >> suggestion and we need a better -- >> you know what you did miss this week? rob wiesenthal came on here, helicopter service -- >> the blade thing. >> $195 which is basically the same price as a suburban would take you to jfk. >> yes. >> they'll fly you there. five minutes. >> to jfk. >> from here to jfk? >> it was amazing. that actually seemed like value. >> true. yeah. if you can -- yeah. traffic's bad but you can drive that. i don't know. >> okay. >> you don't like helicopters? >> no, i do. you don't. i've never thrown up in a helicopter. have you ever not thrown up? >> yes. yeah. when we come back -- >> you'd be a bad passenger on blade probably. >> probably. >> not popular. >> when we come back a budget showdown in washington and a series of tweets president trump says the government needs what he is calling a good shutdown in september. we'll talk to senator bob corker about that tweet storm plus talk

to him about tax reform and health care, too. that's next right here on "squawk box." what's her problem? apparently, i kept her up all night. she said the future freaks her out. how come no one likes me, jim? intel does! just think of everything intel's doing right now with artificial intelligence. and pretty soon ai is going to help executives like her see trends to stay ahead of her competition. no more sleepless nights. - we're going to be friends! - i'm sorry about this. don't be embarrassed of me, jim. i'm getting excited about this! we know the future. we're going to be friends! because we're building it.

♪

good morning. welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square. front and center with the adp report in the books there's one more economic report ahead this morning. institute for supply management is going to be out with its april nonmanufacturing index at 10:00 a.m. the monthly measure of the u.s. services economy is expected to register a slight improvement. other closely watched report is coming out at 10:30 a.m. eastern time the energy department's release of its weekly report on oil and gasoline inventories. crude has been under some pressure in recent weeks due to oversupply concerns. and wells fargo has received a notice called needs to improve grade in the latest ee value uses under the community investment act. of the 18 evaluations made public in today's release by regulators, wells is the only one that was rated needs to improve and it's just another

one of these examples of an institution that has been the gold star for the banking community, especially when it comes to community banking, even. to not get the grade, a little surprise. maybe we'll talk to wilf about that and others and maybe even warren buffett later this weekend. there will be a lot of questions i imagine about wells. >> hmm. let's get to politics now. budget bill that will fund the federal government until the fall could be voted on as early as today. joining us is senator bob corker, chairman of foreign relations committee. yiex that's important. member of the banking and budget subcommittees. i can't even imagine my first question. we'll ask you about the budget. i wake up in the morning and figure out where i am, senator and then something pops in my head always. something i'm either worried about or know is going to happen that day. >> yeah, yeah. >> i don't want to be you. because there must be a lot of stuff. and not much of it very good i would think with the current

state of affairs. was the budget you first thought about when you woke up this morning? honestly? >> i thought about how challenging it was going to be to be on this program. really. no, look, you know, joe, as you know the world was simple up until 1991 when it was us, and the soviet union. everybody understood where the others were, and the world was aligned around that. the world is far more complex today, and far more difficult. fortunately we do have, i think, a great national security team working on these things. and it's a privilege for me to be able to work with them and others to try to deal with these complexities. >> i was just trying to figure out because we talk about this meeting with abbas and whether we're at a point in time where both sides are deciding maybe now is fertile ground for something. i don't know. that might seem like a lot.

and then also on your plate you've got this budget, which the democrats are crowing about, and then i don't know, i just saw gary cohn say that there are going to be enough votes for an obamacare repeal when the latest i read was some of these moderate guys were that were supposed to be on board, they're off board again. so there's so many things going on. that's why i said you got to be multitasking at all times. >> you do. and that's what makes the job so interesting. and at the same time -- >> frustrating. >> really frustrating too. look, it's a privilege to be here. be able to talk with you and others about these issues as far as the budget goes the play ground bragging rights are not particularly interesting to me. we do need to pass bills, twelve appropriations bills each year. the way we're using the slush fund, joe, this oco fund is really inappropriate. you know, we passed a budget agreement years ago to lower spending on discretionary items

by 1.2 trillion but using this slush fund we've already spent $820 billion more than we were supposed to. and think about it the pentagon is like a big industrial operation so let's just say at ge in the middle of the year they said by the way we're going to lob 15 billion in for you guys to spend for the last six months of the year, spend it wisely, so, it's really a broken process. what we're doing when we get three or four staffers in the room to really make the deal what we're really doing is sending our young kids over the cliff as we spend more money than we should. so it is a broken process. this year it's behind us unfortunately. it's kind of the -- we watched this, it sort of gets rereeled every year. this is what happens. and americans are not being served well by this. >> you're going to vote against the omnibus bill, senator? >> i am, joe.

i mean i'm sorry. i'm one of a few guys left around here i think that cares about our fiscal issues. and i realize we're in a party time atmosphere here now but i'm sorry, i just -- i just -- i just cannot support it. so you know, throw tomatoes at me if you will. it has nothing to do with who won, who lost. i could care less about that. what i do care about is the long-term fiscal situation in our nation, and this bill doesn't appropriately deal with that. >> what do you do, then? because i think you took issue with calling something a good government shutdown, also, and you don't want to change any filibuster rules. so, it seems like you're not leaving anything, as a way to get to where we need to be. >> oh, absolutely. look, i think, you know, you know, giving the military a long run where they've got over the next five years knowledge of

where they're going to be, offsetting that with other spending reductions, which is the way this is supposed to work, absolutely. that is the path forward. and, joe, you cannot take 70% of our spending off the table. i mean -- >> right. >> you just cannot do that. i'm sorry. it's not only where all the money is. it's where all the growth and spending is. >> right. >> and if you've got, you know, a congress and a president that says, hey, we're not touching any of this, i'm sorry, this is not going to be part of our process, what you're really doing is saying we have no desire to solve our nation's fiscal issues. so look, i've been consistent on this, joe, it's not, you know, i'm not waking up today with this. it's just, you know, we're not going to deal with it. i'm not going to vote for things that i know are just an obfuscation of our responsibilities. and you know, that's the way it is. it's not something that's a new found place for me to be. >> so, we only got a minute

left. do you -- what do you think -- i mean you're not in the house, obviously but you hear things. is there no way -- they've got 22 against, and 20 undecided, so how does that mean -- how does gary cohn say they've got the votes? >> first of all, i've got a lot of faith in gary cohn. i'm glad he's at the white house. and you know, i -- most of us over here in the senate are i think sort of tuned out to what's happening in the house right now. if they pass something over, then we'll deal with it. but the daily machinations of, you know, moderates in, conservatives out, conservatives in, moderates out, i mean i don't even know what's in the bill over there. we totally turned the volume off until something comes over. when it does, if it does, then i think there's a group of responsible people over here that will try to reshape the bill in such a fashion that it deals with our nation's health care issues in an appropriate way. and i do think the pause, and i've shared with this our

president, the pause has been something that's been good. i think that, joe, this was never about health care reform. and i think people are figuring this out, this whole move in the front end of our congress was never about health care. it was all about tax reform. you and i have talked about this in the past, and so now at least people are looking at this as a serious policy that does affect americans. >> senator, you know, a lot of times you got to accept the good with the bad. and i know you've said a couple of times that you wish someone would take president trump's iphone away from him. i mean. >> yeah. >> aren't there sometimes, at least with me, some of his tweets it's like, it's like, oh, i'm so glad you said that. some of it is so cathartic. even the answer to hillary's drivel in the last couple of days, when he comes out and says oh, yeah so comey was not good for you, really? don't you say god i'm glad he's got an iphone when you can, you know, set things straight? and i don't know i think you've got to accept the good with the bad. just embrace it, senator. just embrace it.

>> let me ask you this, first of all, my staff provides adult supervision for me. they do not allow me to tweet, okay? i don't even know how to do it. >> i won't tweet either. >> oh, great. if i could say this. i had dinner with the president last tuesday night and you know, one-on-one. the relationship that we have with this white house and this outstanding cabinet is one that i cherish. i really do. and they are the most embracing administration i've ever dealt with. i tell my democratic friends, look, these guys, they want input. and it affects them. i do think that somehow, in spite of the incredible talent they have in this cabinet, and just a host of really talented people within the white house, that it isn't working yet for them. it's almost -- a lot of times in government you take two steps forward and one step back. it's just the way it is. so far it's been one step forward and two steps back. and i do think that niece little

interjections are harmful to him, which all of us, as a country, whether you're republican or democrat, should want him to succeed. i mean our nation, as you mention on the front end, has so many difficult issues to deal with. and, words matter. and they affect whether it's embracing erdogan, you know, when he wins. i mean those things matter. they affect our allies. they affect people out on the battleground. and i think he's -- he's realizing that. but, you know, again, i appreciate the relationship. i'm sorry, i respond in a direct way, too when people ask me questions, as well. >> instead of the sterilized, pc, pr, communication overload, you know, twelve people look at what you're allowed to say, i like it. do it. and there's going to be some things that maybe, you know, some people take issue with. but i don't know. you know, i can argue -- you

know i'm a sociopath. i could argue either side on any given day. >> i would say tweet out those direct, honest thing that help move policy ahead. and don't tweet out -- and that's why we get back to adult supervision. they don't even let me carry my passport when i travel and a little adult supervision helps. see you later, thanks a lot. >> bye. >> all right, senator. still leave my twitter feed on just in case i see something. maybe i just like to see it. >> you just want to be -- look you're a.d.d. you want to be entertained. >> and i like sticking it to people that deserve to get it stuck to. and i think he does that pretty well. >> yeah, yeah, yeah, those stickings come around. they come back around. maybe it's not good to do that. >> you can become the stickee instead of the sticker. >> that's right. >> thanks, senator. >> when we come back, we're going out of this world with starman neil degrasse tyson. his new book is a short cut to scientific literacy. he's going to join us right after this break. stick around, "squawk box" will

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♪ welcome back, everybody. the census bureau says that american workers spend about 25 minutes getting to work each day. that might sound luxurious to some people with longer journeys. but some good news for you.

long commute or short commute our next guest has you in mind when he wrote his new book that's meant to expand your universe while you are waiting for the bus. joining us right now is neil degrasse tyson. he is author of more than a dozen titles on space and science, including his newest, "astrophysics for people in a hurry." otherwise known as astrophysics for dummies. neil is also an astrophysicist at the american museum of natural history right here in new york city. thank you for joining us. zl thanks for having me. actually astrophysics for dummies was taken. it's real astrophysics. i didn't pull any punches on it. it's all there with mind blowing stuff on the universe. >> this is a crash course for people reading the headlines and maybe not understanding. >> precisely. you read the headlines or the headlines read you. they just go by you and there's words like exo planet. multiverse. dark matter. dark energy. and it's -- i want the book to empower people to put all that

together into one narrative. then come out conversational about astrophysics the next morning at the water cooler. >> i thought we could do our own crash course for people watching at home. >> okay. >> why don't you explain dark matter. and dark energy. what are these things? and what should we be thinking about? >> these are two profound areas of ignorance in modern astrophysics. and i have a whole chapter on each of them. just to get you, just to get you up to speed. so 85% of the gravity of the universe has no known origin. we cannot trace it to black holes, planets, pluto, stars, there's nothing out there. goofy. >> you finally got him to say something. >> yeah, yeah. >> you said pluto. >> yeah, fluteo. i get them mixed up. >> so there's no known source of that gravity. it's a mystery. yet it's operating in this

universe. >> something is there. >> dark energy. there's some mysterious pressure in the vacuum of space that is working against the wishes of gravity. that is accelerating the expansion of the universe. we have no idea what's causing that, either. in fact those two words are misleading. because they imply we even know enough to say one is matter and one is energy. and i just want to start a movement to call it fred and ethel or something and fred and just a word that gives no scientific indication of what it could be. because we don't -- we have no clue. and this is what -- this is what wakes us up in the morning, has us run to the office trying to figure this stuff out. >> now i can sound a little smarter. you mention the word exo planets. >> sure. >> there are these seven planets maybe could be -- >> recently. >> recently. >> see the headlines. and you want to make sense of it. we talk about it in the book. the -- there's a planetary system called trappist. the name of the star is

trappist. we my colleagues who do this found seven planets orbiting that star. three of which are in the goldilocks zone that place not too close, otherwise your water would vaporize and not too far away, your water would freeze. and so if you want to put your list of next places to visit, the day we ever have a capacity to go between the stars, you put that high on the list. >> let's talk about that but we had ted stanley robinson here and joe asked him the question, do you think it's possible we'll ever be able to travel outside the solar system. >> no. next question. >> he said the same thing. >> it's hard to -- >> so, so, if i put the on the fastest rocket we've ever launched anywhere. which had a very light payload and we're not that light, it would take you 70,000 years to reach the nearest stars. 70,000 years. so, space travel given our technology and our knowledge of the fabric of the space/time continuum, space travel is far,

far exceeds the capacity of human physiology. >> why would we think we've been fis itted then -- >> because we're not the mesh europe of what is smart in the universe. >> maybe we're -- so we could be wrong about approaching the speed of light and going over it? it's maybe possible to do that? >> no, no, surely you can do it if you open up a worm hole. you can easily beat a beam of light. and mathematically we can do it. but we have no capacity to do it technologically. so nobody is -- >> really smart aliens that would view us as no evidence of intelligent life on earth. they, they would have in principle would be able to open up worm holes and move around wherever they want. i'm thinking how would we use worm holes first and i came up with how you would do this. this happened once when i was in an airport. having to go from a big plane to a little plane so i thought i was clever and i tweeted i can't wait until we have worm holes so all gates can be adjacent to one

another. and someone treated back dr. tyson if we have worm holes you won't need airports. whoa! so aliens would presumably have this power. yes. yes. and so, can i say something about the the dark -- the dark energy go back for a second. >> dark energy -- >> dark energy in a trillion years if it does what we think it will do, it will take all galaxies of the night sky and accelerate them beyond our horizon. completely wiping clean all evidence that there was ever a beginning or an evolution of the universe. >> that's coming in a trillion years? >> trillions. in that order of magnitude. what, you want to be put it on your calendar? >> i can't be around for this. >> so if there's civilizations then and they look out to the universe, they will not know that there's an entire chapter ripped from the data they obtained in order to deduce the nature of the universe. i lose sleep today wondering if

there's another chapter that had been separated from us. unavailable to our data. here we are groping, trying to find and understand the data that will tell us how the universe works. maybe we never can and never will. because we're missing pieces that some previous civilization would have known about and didn't pass down. >> we have to go, but this is a business show. i'm curious, is jeff bezos or elon musk going to get to mars first? >> i love them both and i'm glad i have people like them working out there. i would put my money on elon musk, but not in the way you might think because he said i'm going to mars. no. somebody else is going to pay for his ship that goes to mars. if that happens at all it will be a government. who has the deep pockets and the longer time horizon that they can invest in what the return would be on that voyage. if you're a corporation and you have shareholders and you have a board and you say, elon says i want to go to mars, how much will it cost? trillion dollars.

okay. is it dangerous? yeah. people probably will die. what's the roi, nothing. it's a five minute meeting. there's no business model to do it first. you can do it second, third, fourth. or sell ships to the government. lockheed, boeing. >> trump wants to go to mars, because he's going earlier than we want to go. can we push the offer online? brian, i just had a quick question. brian? brian... legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday?! yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks.

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all right, let's get over to cnbc's one market studio in san francisco and jim cramer joins us now. apple, not too bad this morning for $150 stock down a little bit, jim. what do you think? >> well, i think that the analysts themselves are grading it way too hard. i think that when you've got a company that has 5% growth we can nitpick and find an area we don't like. i know china is very big, but the average selling prices went up, not talking about the fact that the revenue service stream doing very well. we can dwell on those things or admit that look, the stock has had a big run. perhaps it will churn a little bit here. i think the latter is probably the case. >> yeah. all right, jim, we'll -- you're going to be out there today, huh? >> yeah, tomorrow we have facebook. we have some great earnings this week and great ceos. >> great place. all right, jim, see you at the top of the hour.

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welcome back to "squawk box." one stock to watch, weight watchers reported loss of a penny a share. they raised the full year share as membership increase snoodz speaking of watching your weight, it doesn't help to just watch it. taco bell is taking on the classic, chicken nuggets. they're rolling out naked chicken strips served with nacho cheese. the new items will hit menus next week and will cost $1.99 for six of the nuggets. final check on the markets very quickly. take a look at the futures. things are a little bit lower this morning after gains once again yesterday for the markets. the dow futures are down 31 points. s&p futures off by four and the nasdaq off by 10 1/2. of course, this is is all building up to friday when we get that jobs report. adp number came in line with expectations today at 177,000.

so we'll see if that tells us anything about what to expect come this friday. tomorrow we'll get the weekly jobless claims. not off this month's report, but another look at what's happening in the jobs market. >> okay. sunny, finally, get some light in here. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street," i'm carl quintanilla with david faber at the new york stock exchange. jim cramer will have tim cook tonight on "mad money." it's a reaction to apple's earnings that's driving the day today. futures on the soft side. don't forgot a statement is headed at 2:00. macron and le pen will debate this aft