it's may 1, 2018 "squawk box" starts now. ♪ live from new york where business never sleeps, this is "squawk bo "squawk box. >> good morning. welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. april is in the books. the dow, the nasdaq, the s&p 500 are all finishing the month in the green, but just barely it is the first positive month for the major indices since january. u.s. equity futures at this hour look weaker. you can see that the dow is down by 30 points below fair value. the s&p futures down by 1. nasdaq down by 5 yesterday we saw gains in the morning, up by over 18 0 points after the bell rang. that all turned around later in the day. concerns about the telecom sector dragging things down

after that t mobile deal was announced with sprint. and also just higher oil prices. overnight in asia, lots of market closures because of public holidays. the nikkei closed slightly higher it was up by 40 points lots of market closures in europe, too. we will take a look at the ftse in london which is open for trading now. right now up by 28 points. then there are treasury yields the ten year below 3% yesterday. >> let's get straight to washington that's where the big news is the white house announcing exemptions and extensions for aluminum tariffs for key allies that was supposed to go into effect last night. kayla tausche has more >> that announcement came hours before a mid ninight deadline the president extend iing the

delay for a month. it grants all countries a temporary exemption set in march except south korea which set quotas as part of a new long-term trade deal the delay applies to the european union where two of its leaders asked last week for a permanent exemption while visiting the white house and also canada and mexico, which are seeking a nafta deal with the u.s. and talks on nafta resume later this week justin trudeau referenced his talks with the trump administration on this issue yesterday. >> on the issue of steel and aluminum tariffs, we feel it would hurt american jobs almost as much as canadian jobs that's something nobody wants. >> the order from the white house last night said brazil and argentina would see tariffs delayed to finalize alternative means to stop overcapacity brazil and argentina are said to

be close to steel quotas this does compound the uncertainty put towards the end of the month this delay expires at the time that the u.s. trade representative is expected to release details on tech tariffs on china talks this week by administration officials in beijing could determine whether we see those tariffs take hold >> thank you for that, kayla tausche. so much going on where you are also geopolitical news to tell people about in israel yesterday, prime minister benjamin netanyahu accused ire ran an of lying abo nuclear weapons program, claims iran obtained nuclear material netanyahu's remarks coming two weeks before president trump must decide whether to continue with the iran nuclear deal or restore penalties on one of the world's biggest oil producers.

that will be a big debate. >> joining us now to talk about this and much more is former u.s. senator judd gregg. thank you for being here >> thank you for having me on. >> where do you want to start? >> let's start with the segment earlier where they were talking about the taxes on the new princess from the united states. we should started there. i have daughters, when they were 7 years old, the first thing i told them was don't marry a prince, your taxes will be too high isn't that what you told your daughter >> don't kiss any frogs. >> i think the big issue is trade. it's not clear what's happening. it's sort of a chinese fire drill from our side. we're sending four people to china. two free traders, two are protectionists to use broad brush terms. i don't see a coherent policy being offered by the chinese if you want to go after the chinese, we should reengage on tpp. the whole purpose of tpp was to

isolate china. tpp nations have made it clear, they said we're moving on. we won't renegotiate this. >> we will reengage it tpp is bringing in some south american countries into the process. that's one way to isolate china. the other thing do is get the debt down. compa compared to the trade deficit, the interest data is also equally nteresting i don't see how they'll deal with china or with our allies like europe. especially with steel and aluminum >> kayla hinted earlier if these tariffs go through, if they're pushed on the chinese in particular, that china will look for other pain points, other ways to make us feel it.

it's interesting because people have talked about, oh, will they start selling our debt maybe the idea is they hold on to and wait to get paid more and more in interest rates as they go up. >> they'll have an opportunity to buy more. they're running it up at an astronomical rate. we'll have a trillion dollar deficit beginning next year. somebody will have to finance it for us we don't have it internally. we can't do it internally. the chinese will have a chance to buy debt. interest rates are going up. there's no question, there's inflationary pressures brought in part by the steel and lo aluminum tariffs >> when you left congress and the senate it was in part because you were frustrated that there didn't seem a bipartisan way on working across the aisle and finding common ground. it has not improved since you left >> deteriorated dramatically >> so what now what does that leave you thinking about what needs to get

done, how do we get to a point where we tackle entitlements >> we came close under simpson bowles, but that's history now >> seems like ancient history. >> but it was the right format to do it if the congress wants to get back to dealing with debt, they have to structure some sort of mechanism where they bring the parties together you can't do it in a partisan way. these issues are far too big things like medicare, social security, tax reform, it's hard to address them in a partisan way. people don't have confidence in the outcome. >> you have already done the tax piece on one side. >> you have only done it on the corporate side the individual tax policies under the tax reform are anemic. >> marco rubio came out yesterday saying that the corporate -- >> said overwhelmingly -- >> was too much. >> no, we have not seen it go into the workers pockets overwhelmingly, but it's may

>> he also made the argument that they went too far the corporate tax rate had become too low meaning that we then have to -- if you were to do it as a simps simpson-bowles thing, you have to take it from all sides. >> simpson-bowles took two three fourths from spending, one-fourth from revenues it was a bill i wrote with ron wyden. you can do that by eliminating more deductions and exemptions the tax law is movable i think what they don't corporate side is excellent. it's the right approach. it has not kicked in completely yet. the idea that it will immediately flow through to individuals is a bit optimistic. what will happen is that you will see a massive repatriation of money i guess apple today -- >> apple we'll hear after the

bell people are wondering if you will see a bigger buyback as a result >> a buyback is positive for individuals. >> 2.3% in the first quarter for gdp. that's like double the recent first quarters if we do end up averaging 3% for the year, you might not attribute it at all to the corporate tax. some of it is from that. >> a significant amount. my concern quite honestly is this trade action will dampen our rate of growth you're seeing significant inflation and pressure on a commodities side a lot of businesses which have to use steel and aluminum are seeing prices jump and spike you're seeing that in other commodities. plus the fed, because of these inflationary pressures will continue to raise rates. no question about that that is going to retard the rate of growth as we head -- >> we are supposed to put tariffs in yesterday got a month delay for the

important trading partners we'll see. i've seen the negotiating of jonathan swann who wrote trump has one strategy one trick pony say crazy stuff about things, you put it out there, then that sets up a negotiation, and by the end of it it's conventional stuff happening. then you get where you want to be that may again be where we are now. >> that's why i called it a chinese fire drill >> i don't know whether that's pc anymore >> it's totally confusing where they physically are in this exercise, other than trump is myopic about -- >> mexican standoff -- none of that works anymore none of those -- none of those -- leave out any nationality when you talk -- >> i'm sorry >> try to describe it. andrew -- >> yes >> i missed that >> i loved your column

but you wrote a column -- you wrote a column monday and tuesday or you wrote one today >> today is tuesday. >> who wrote this one? that was yesterday >> what are you talking about? >> did you see this one yesterday? >> did you see that? look at this quote you have to read this column >> this is not andrew who wrote this. >> it's not my column. >> i was confused. i thought you wrote one on monday and tuesday but he actually said this. we're destined to keep citing him and testing his ideas until society has he struggled to bring about and that increasing numbers of us now desire is finally realized >> written by jason barker, not andrew ross sorkin >> did you have any input in accepting that op-ed piece >> i had no input. no knowledge >> do you know anyone at the "new york times" -- he would be

200 years old, karl marx i put one other thing up for jason to see there you have it. 100 years of communism, 1 00 million dead judd, who still thinks -- it is interesting. the guy is talking about that workers will be displaced increasingly by all the stuff that capitalism is bringing us now. i'm not saying he made sense, but i can see how if you were open to that sort of thinking, that you would blame capitalism for a lot of the stuff happening now. if you kill 10 mi 00 million mo people -- >> you would think we would learn. but you have within some members of our society -- >> why you are laughing?

>> was a setup i didn't know he was preparing to do this. >> i didn't either >> your piece is on t-mobile >> i was proud of that. >> i saw it. i swear i saw it on twitter. and i thought it was -- it's tuesday. andrew -- i thought -- no. >> karl marx >> okay. happy birthday, karl there is -- this is a serious issue. the fact that we're seeing this lurch to the left. >> it is >> you look at mexico today, they're about to elect potentially electan extreme populist who is very far left. if he were to become the president of mexico, basically we're going to not be able to communicate with mexico. >> it's not like the united states some of them feel that way about our political elections. populism is on the rise everywhere people who feel like they have

not had a voice in a long time >> that's why people are voting for folks like bernie sanders. >> there's a reuters poll out today, millennials saying they're definitely voting for democrats, 9 points. and then talking to some people there, saying i'm seeing some things republicans are doing a lot of them don't like the social stuff, a lot of them don't like trump, but that doesn't mean you can count on millennials in november. >> what's happened in the democratic party, you see it in the senate now, they have essentially jumped the tracks. we have a party that has significant issues the president is fairly erratic. but the democratic party has basically moved away from a market economy approach towards our nation and our nation's economic health into an attitude of socialism does work >> if you do it right. >> if you look at that piece you read, 100 million people died,

you don't have to go that far, look at venezuela. >> don't you look at the election of trump as a sense of populism across the board. that's what this is about. >> populism on the right and on the left >> i'm not sure people are buying into either flavor of a socialist version or some kind of capitalistic version. i think they're buying into we don't like the current way it's being done we don't like the elites we're trying anything else >> i agree with that except in the republican populist move it's not about an ideological shift that takes us away from the basic form of governance, which we have had. in the democratic form of populism, you see elizabeth warren and bernie sanders take it on a much more approach of socialist government american politics it played

between the 40 yard lines, they're going way beyond the 40 yard lines >> did you see that piece in the "new york times" >> i try to read the "new york times" thoroughly. but i was so focused on t-mobile sprint yesterday >> you know who was going off on it james woods. >> that's where you saw it >> one of the places i saw it. >> i follow james on twitter >> he's great. >> love the guy. this was a piece >> it's not a piece in the newspaper. someone sends it in. you're a guest opop-ed, let's p this in there to show the different viewpoints it irritated me. >> i can tell. >> senator gregg, thank you for joining us >> thank you very much >> i love the set. >> they were laughing, i said i'm going to pretend i thought it was andrew's. now that april is in the books, is it time to sell in may and go

away we'll talk that strategy after the break and we expect results from pfizer and merck in the next half hour "squawk box" will be right back. nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.

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bp reporting its strongest quarterly profit since 2014 thanks to higher oil prices and rising production. cash flow was lower than expected bp's debt levels crept higher as liabilities related to the gulf oil spill continued to weigh on perform plans. the deep water horizon gulf oil spill was eight years ago. the stock is up by 1.25%. boeing is buying klx for about 3$3.2 billion in cash boeing is paying $63 a share the deal is contingent on klx spinning off its energy services business here's boeing's ceo. >> we're continuing to focus on a few primary areas, one is to grow the services business, where we can find strategic

acquisitions for organic investment in services is a top priority >> as you saw, it looks like boeing's stock was up slightly on this. klx shares down by 4%. akami q1 results beat forecasts. the aggressive drive towards cloud security drove growth. the stock is up by 4%. on the economic agenda, we get the ism manufacturing index and construction spending at 10:00 a.m. eastern time. automakers report april sales throughout the day and the fed begins its two-day meeting with the statement expected tomorrow at 2:00 p.m as for earnings, we'll hear from merck and pfizer at the bottom of the hour. after the close, we'll hear from apple. lots of people looking again this issue of repatriation, the issue of the iphone x. this will be a big day for apple. >> it is

the broader markets meanwhile, w they did manage overall to eke out some gains for the month of april after two down months. for chauthoughts on what to expt in the future, let's ask sarah ketter and john stoltzfus. i guess the nature of consolidations or pullbacks or whatever you want to call sideways trading is to make you think that maybe you don't want to buy makes it more difficult to buy watching in recent sessions, gains are hard to hold on to doesn't seem like there's enough positive news still around to -- we're up 35%, 40% since the

election, but you think this is the time to go for value stock >> the value premium hasn't been this large since the '90s. >> within the market itself value looks more attractive than growth >> without question. when interest rates rise as they have done, value outperforms growth we can prove that statistically. it's not that i made it up value does, on five-year periods going back to 1975, 71% of the time value beats growth. growth has been so much more fun to talk about at cocktail parties. but now that interest rates are rising, this is a chance for value to show its strength value is not tied. >> do you expect the lows to hold and do you think this year, next year, we gradually move ahead on the overall averages?

>> value will likely rotate into favor. as for markets, depends on liquidity. what drove it up europeans may be slow on tapering because their economies are quivering somewhat but in the u.s. f we continue with rate rises, if the ten-year continues to climb, it's likely that the fixed income alternative will look much more attractive >> well, in our opinion, we think you want to barbell growth and value. growth is brightly shining in terms of what technology can do for all ten sects over the s&p 500. the thought is in a highly competitive environment for companies, a myriad of industries across the globe, you need technology. but technology within these

sektd e sectors. that's likely to be a benefit. that said, tech for us, we think leadership remains in tech we think -- though right now -- >> which version of tech that's sort of a -- the f.a.n.g. consumer internet version or -- >> andrew, i think it's a rotation in tech, within tech that occurs. whether it's chips which are now out of favorer, you have had -- social media is beginning to be recognized that social media changed our society to such an extent, it's likely to find new ways to make profits by being less intrusive or more clear as to how they'll intrude into your privacy. getting people to sign off on that then you have all kinds of equipment that is for designing chips. you have all types of apply kegs related to telecommunications with 5g in the wings we think there's good opportunity to see the indexes

move higher this year. we think the market got overdone in the first few weeks every day was a celebration. right now what we're looking at is a period of consolidation you have tax reform creating liquidity for corporations, just at the same time that the fed is removing liquidity via normalization and providing benefits for mergers and acquisitions to reposition companies. we think it's still an exciting time >> instead of that communism piece, you should have written about mergers, like t-mobile and -- >> which he did. >> animal spirits. >> you did that was your -- okay. maybe it's buy in may, because it was sell in february. >> i want to say tech doesn't exclude value investing. one of the last times i was here i talked abo ed aboued about veo sooner did we talk about it that the stock was bought out at a

40% premium. csra is another one, a combination of two companies, went under the radar, so undervalued value stocks, they're languishing but great legacy tech businesses even for the value investor there is opportunity >> elements of picks and shovels within technology essentially. >> okay. thank you. >> picks and shovels coming up, we expect earnings from two dow components, merck and pfizer those are coming in a couple minutes. we'll bring you results and reaction from wall street. first the fed kicking off a two-day policy meeting today we'll talk rates, the economy and trade with the dallas fed president. richard fisher will be on "squawk box" when we return in a moment with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back, u.s. equity futures at this hour are around the flat line. now down 56, they worsened the nasdaq indicated down 14 1/2 or so. s&p indicated down four. >> china's hna group dropping its bid for former white house aide anthony scaramucci's sky bridge capital the price tag on that deal was reportedly between 200 and 2$250

million. hna may still strike a partnership with sky bridge, but the details are unknown. scaramucci plans to return to sky bridge as managing partner >> why not keep it that was his business. >> take it back, you're saying >> yeah. >> that's a real loss. he was receiving a huge tax benefit of going to the white house, selling, wouldn't have paid on it now there's all these questions on whether hna was trying to buy influence within the white house. who knows what is going on with hna and whether they can take money out of china >> what was he going to do when he was only in the white house for nine days? can't he go back, run his business and not sell it

>> that's what he is going to try to do. he was getting a huge valuation. >> there was a white house influence premium in the valuation? >> i'm not saying that. >> sort of >> it will be hard to get back to that. the scaramucci post, media empire >> he's out and about. >> he is out and about the fed gearing up to meet today but not expected to move on interest rates joining us now to talk about the fed's path and trump's trade policies, richard fisher, former dallas fed president, most importantly cnbc -- >> friend of yours >> friend of ours. cnbc contributor do you want to talk about the steel tariffs? >> it's a negotiating tactic it's a good thing this has been delayed. i'm a free trader. look at what happened to the price of aluminum and the effect it's having on russia. on steel, every president, whether democrat or republican

gives into the steel lobby we did it in the clinton administration when i was deputy tsr, we did section 301-c, 232, we did everything we can even though there are multiple more workers that use steel to make things. that's the way we work that's the way it's going to be. >> joe mentioned trump's negotiating tactic which has become clearer, which is beat the chest, scare people, and then take it back. >> remember ross perot's expression, gorilla dust that's the way he does it. >> the question is, does that -- it's been working actually thus far seemingly. >> look at north korea >> right >> give this president credit. >> at some point does the tactic -- if you know the tactic, does it become less effective? >> but do you really know? >> you don't really know the mexican negotiators i know are first rate the canadians are first rate these are professionals.

they have done this. they can do it themselves if they want. we're the big powerful market. we're the draw he has a lot of leverage here and an enormous influence worldwide. we have to give him credit we may not like his mannerisms, but he's gotten results. >> talk about interest rates if you were showing up at this meeting, what would you tell them this should be risk management mode at this meeting you don't do anything jay powell has the capacity to have a press conference after every meeting. that would help them snug things up >> you like the idea of being more transparent >> not more transparent, just having more opportunity. the risk management side of it is get as many rate increases in as you can before the business cycle turns. does that suggest you think we're about -- we're about ready for the cycle to turn? >> i wouldn't say that we're nine years into the cycle. we have fiscal support now we have the better regulatory environment for businesses >> i think there's a little --

everybody is saying there's a tailwind here. >> here. >> yes >> are there gathering storm clouds in europe >> the german numbers are week >> i keep reading that you're watching the dollar is the dollar up because of the rate increases or up because we're now starting to outperform our peers? >> i think we are outperforming our peers. >> europe was catching up. >> in europe, spain and portugal, they are not big propel lpr propellants in that economy, but germany is weak. even france's economy. >> that was something that was in our -- we would always mention, europe is recovering, blah, blah, blah global synchronous growth. >> imagine this, they had this incredible negative interest rate regime. they've been covering up a lot of people swimming without bathing suit in that european economy. when that tide goes out, you'll see some real weakness

>> weakness and some nudity? >> some naked swimmers out there. >> and they do i told you about that park in munich. >> which park? >> naked swimmers? >> naked sunbathers, mostly all men it was a bit unsettling. >> back to the economy here. >> unsettling for my kids. >> you're lecturing judd gregg about this >> can i ask about the fed there will be three new people on the board of governors, how does that change the dynamic you're in the room you know what it's like. >> there's a difference from jay powell from his two predecessors he came from the capital and credit market side he's not a ph.d. economist the last non-ph.d. economist was

paul volker. he understood the markets. from jay powell's first meeting he attended in june of 2012, he talked about the rangers of not having volatility in the marketplace, leading to bad asset allocation. i think he will be more -- >> it's interesting that you think he will pay less attention to the markets less spooked >> he knows through our policies, qe policies, cutting rates to zero, we pushed out the risk parameters. that was a deliberate effort, it worked >> you just compared him to paul volcker. >> he's shorter than paul volcker. >> volcker came in and saved things, but created havoc in the

markets. >> this is different we don't have jimmy carter in the white house, et cetera it's a different mode. right now it's not the 2% inflationary target, it's putting as many nuts in the tree as i can for when the winter comes. >> how does it work in the room? does everybody go around and say this is what i think >> you start out with the staff briefing you do the domestic economy. the international economy. markets. >> all by the staff? >> yeah. conglomeration of staff. >> you ask questions >> you start with the desk report first you instruct the new york fed desk as a committee what to do in the interim they give their report you have the other reports >> as they're reporting do you ask questions? >> sure. i did. >> then what happens >> then you have the go-around for the economy. the presidents go first. the governors go second with one exception. the second most powerful person -- >> are you reading a script? >> depends on the person i never did. matter of style.

the second to last to go is the head of the new york fed, john williams that's the vice chairman of the fomc a great selection. john is perfect for that job joe, you just have to find him an affordable house in manhattan. >> i've been thinking about jimmy carter lately. one of the most spiritual, moral, good men around >> naval academy graduate. >> you would want him as a spiritual adviser, but as president -- trump wouldn't want him as a spiritual adviser -- i don't know if a spiritual adviser and a guy like that -- when we talk about how -- do we elect a pope or some s.o.b. who gets everything he wants done for his country? i don't know >> put don trump out of the picture. look at lyndon johnson >> that's who i just thought of. >> bill clinton was ruthless in his own way. not the most moral fellow either >> he was a skilled politician >> he was.

>> richard, if you are headed to munich, the english garden >> thank you, joe. i think i'll pass. >> it says right here. >> i will leave my speedo back here >> leave it. you're playing into what i'm saying since the '60s, it's been fine it says right here, what better way to unwind from a busy die in the office than to take a midday snooze naked in the park >> all i can say is there are places that have never seen the sun, there's a reason for that you know the sun burn you would get? >> they're spread eagled we're on a bike. no one told us my kids were like 13 they're like what is happening >> not the american way. >> that was one of their favorite places. not the park >> i never understood that i get burned on my face, it's sensitive. you think of other sensitive areas. >> this is a great conversation. >> you realize clothes were a great invention. a really good invention. thank god.

>> nice to see you >> tgic, thank god for clothes. when we come back, a new read on confidence from small business owners. the data is next. and later results from america's largest auto dealer, autonation's ceo michael jackson will join us. and next monday on "squawk box," billionaire summit, three hours with warren buffett, and he'll be joined for an hour by charlie munger and also bill gates. that starts monday at 6:00 a.m. eastern time stay tuned, you are watching "squawk box" here on cnbc.

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it's time for the executive edge the results of the cnbc survey, monkey small business confidence index are in kate rogers has the details. that's a mouthful. >> optimism on main street is holding steady, that's according to our cnbc survey monkey small business confidence index, this month falling 1 point to 61. we've been tracking confidence in this poll for a full year small business centsment has

risen and held at this number. this falls in line with other national polling including the national businesses monthly read on optimism, which has held at a high rate since president trump was elected thanks to tax reform and deregulation the slight dip in confidence this month, you can thank tariffs and trade policy for that this has some small business owners concerned 28% say it will negatively impact their business. and president trump's approval rating 36 pf 36% approve of the job he's doing. 32% say they disapprove. >> kate, thank you very much folks, let's look at what we are getting with some of the earnings coming in pfizer out with earnings adjusted number of 77 cents a share. looking at revenue of 12. -- 77 cents a share versus the 74

estimate the street was expected when you check out revenue, talking about revenue of 12$12. billion. that's little below what the street was expecting giving some guidance for the full year. it looks like that guidance is in line with what was anticipated. looking for adjust ted earningsf $2.90 to $3. stroet street at 2.95 they anticipate revenue of 5 3.50 to 55.$55.50 billion i have to double check the numbers. 54.5 is the number so again right in the middle >> merck was 1.05. that's nickel ahead of expectations 10.1 billion was the estimate. the company said it had sales of 10 billion for the year. the company sees 416 to 428, and the estimate is 420.

so right in the middle they break out all the different remicade, vitorin, animal health, people who own thousands of shares probably know the expected numbers for each individual product there's no reason for us to go over those >> look at the stock's reaction. the instant reaction from merck, which beat on the bottom line by 5 cents, is to see that stock up by a half percentage point let's look at pfizer shares quickly. >> they were up a bit. >> just a little bit >> 64 cents. >> okay. co-founder of what's app is leaving the company. he's stepping down from the messaging app that facebook bought for 19 billion there 2014 it's the largest ever

acquisition. he said it's time to move on and do things outside of technology. reports say koum was also leaving facebook's board the "washington post" reports the commit comes after whatsapp's strategy and using personal data and weakening encrypti encryption >> they did the end to end encryption to begin with and facebook wanted to do and has tried to open up the platform so that whatsapp is much more integrated, including telephone numbers, contacts, and wanting to allow businesses to get on >> am i correct, isn't this the guy who did the #deletefacebook? >> i believe that was his partner. >> his partner did his partner left earlier his partner made an investment in signal.

>> quickly, let's look at the dow. after we just heard from pfizer and merck, two dow components beating expectations, it looks like the dow turned positive it was down by 40 points earlier. those two earnings reports are enough to give it a boost. pfizer was last was up by 1.75%. merck up by 0.5%. >> does this guy have to work? >> he does not have to work. >> how much are we talking about it >> said he didn't even want to work in technology >> $19 billion >> and how much did he own >> i don't know. i mean -- >> probably 5% anyways >> at least. >> so he's got a billion >> oh, he's a billionaire. >> let me get back to -- >> let's get a number to feel worse about yourself. >> let me get back to reading a teleprompter coming up, a look at -- no, i'm very happy to be here and do

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merck and pfizer just reporting. meg tirrell has been digging through the numbers. what jumps out at you?

>> it was a beat for both companies both for merck and pfizer merck raising its guidance for the full year. pfizer reaffirming helped a lot by foreign exchange a lot of these companies have been posting beats for merck, of course, the big drug everybody watch there is is keytruda that's its big amino therapy drug they had one in $6 billion in revenue versus expectations of $1.37 billion. this had the great lung cancer data everybody was reporting on a couple of weeks ago. pfizer, a beat in the quarter. though maybe a slight miss on the revenue number they reaffirmed their numbers. pfizer of course has tried to do two giant deals in the last maybe four years with a astrozenica. are they going to try to make a purchase of a company like a

bristol-myers. everybody will try to telegraph what that means. whether they'll give an idea of that is another question pretty good quarter for merck and pfizer. >> all right they're still dealing with all the typical things we'll talk more about that tough to navigate, isn't it? >> yeah. >> combining the big expenses for r&d with the endless -- every year it's a couple of important drugs. >> yeah. billions of dollars loss >> got to replace them anyway, meg. coming up when we return, america's largest auto dealership without a earnings. quk"ets.utonation with u "saw rurns in just a moment

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good morning washington in focus for investors. the fed kicking off a two-day meeting and the president postponing of tariffs for key u.s. allies. the latest from the beltway and what it means for your money is straight ahead under the hood at autonation ceo mike jackson joins us to talk about the state of the nation's economy plus amazon's twitch is growing by leaps and bounds. the company's cofounder joins us to discuss the business model as the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square

i'm andrew ross sorkin with joe kernen and becky quick look at u.s. futures at this hour right now the dow looks to open down about 12 points s&p 500 we'll call it marginally up right now as well got a couple of earnings coming out making headlines right about now. dow components merck and pfizer. mixed quarter for most drug makers beating on the bottom line but merck beating adjustment key step this morning in determining who will eventually take control of british broadcaster sky. here's what's happening. british competitor -- the competition regulator has given to the government. that allows the government to say whether fox could proceed with its bid officials are concerned fox's proposal would give the company too much focus in the britain news media that has been overhanging all of

this of course the parent company of this network making its own bid for sky. so we will watch this very carefully. >> going to be fun to watch. because comcast could go after everything disney is buying. they were very interested in that initially right? >> if the courts rule potentially for an -- in at&t's favor in at&t/time warner. >> that case has ended we should hear in a couple of weeks -- >> is this considered vertical not really if comcast went for all the things disney is buying, would that be considered there are some horizontal aspects to that. >> that would be complicated to buy all of it right now it's just sky. but it could be -- but the view is if we said -- then try to buy up the world then you could say, look google, facebook, amazon

let us i don't agree with that necessarily. and netflix almost has the same market as comcast. it must be about growth, obviously. >> what 40 times on netflix? >> must be yeah >> comcast is what 10, 11. >> yeah. fit policy -- no rate hike expected this time around. and there is no post-meeting news conference. nonetheless, a lot of people are going to be focused on what's taking place in d.c. also out of d.c., the white house, overnight, exemptions in this case many from allies our good friend has more, kayla

tausche. >> it came before the midnight deadline the white house has been telling lobbyists and executives for weeks they wouldn't finish the process to wrap up talks with allies before may 1st. the announcement last night buys 30 more days without steel and aluminum tariffs for canada and mexico and the countries of the european union the white house is in deal with brazil, argentina must be done shortly australia among the countries with the white house on the alternative means saying the exemption reflects the fair relationship we share with the united states and underpins the relationship between our nations. it slammed the temporary nature of the delay eu statement saying the u.s. decision prolongs the market uncertainty. the eu should be fully and

permanently exempted as they cannot be justified on the grounds of national security without a deal, the tariffs would go into effect right when the trade representative would finalize on china. that would be a one-two trade punch. we'll see what happens >> thank you regeneron. meg tirrell joins us now with details. $32 billion company he started how long ago >> 30 years. >> truly one of the success stories in biotech amazing. anyway, we wonder what's going on now whether you're going to get back to $500 a share what was the top market cap? it must have been worth -- >> about 50. >> at one point. anyway, go ahead, meg. >> well, i'll tell you about the news today then we'll talk about how rich he is

regeneron medicines that lowers levels of bad cholesterol. initial sales have disappointed wall street. a major reason for that, companies said insurers were denying coverage priced at $14,000 a year before discounts and rebates. the new price will be between $4500 and $8,000 a reduction as much of 70% that is in exchange for easier access on the formulary plan which covers about 25 million americans. it's based on a recommendation from the institute for clinical and economic review. the agreement also excludes the competing drug made by amgen the reduction comes in the form of a rebate and starting in july express scripts says it will pass that directly to patients to lower their out of pocket

costs at the pharmacy. >> let's bring in two of the players in this. i went back $13 ten years ago. then went to $543. based on -- what was your -- give me your three best products in the last ten years. >> well, i would say ilya is our number one product that makes a huge difference in macular-degeneration so these are -- it's a drug that can take people who can't read or can't drive and change their lives. >> it sounds like a niche. it's not a cure for alzheimer's. >> it's a $6 billion niche >> how does it work in terms of express scripts? how did that initially -- how does it initially work with express scripts and the -- >> it's a part b drug. it's really not in there >> not involved with that. some of your others are.

>> another big one is dupixent for dermatitis that's one that steve and express scripts and others are very much involved in. >> atopic dermatitis how big is this drug >> it's just getting started >> what's the -- what do you think the size is? >> i think this should be a huge drug because it's really not likely to be just for atopic dermatitis or bad eczema we are awaiting a decision with the fda on asthma. we're basically looking at it across the panoply this can change how people's reaction to the environment in an allergic way goes on. >> back to $300. is this a good entry point for me we actually can't do any investing. but does it look cheap to you? zbl >> it looks cheap to me. >> the news today is of your drug pralian these were expected to be huge

blockbusters most people said the reason they're not selling well is because there is a pricing problem from the beginning steve, maybe from express scripts' point of view, why did it make sense to have this deal with regeneron >> they came out with the odyssey trial that showed the drug could decrease heart attacks and strokes. but actually also decrease mortality. this drug can allow people to liver longer and better lives. so now with this new data, len went through what you referred to the izer process which is looking at the effectiveness of the product. then said i want to make this drug available we want to help hum because access is an issue at two points one is the price one is the ease to use it. he has done something about the price. we're doing something about the ease for the cardiologist to

write for the drug we believe he's innovated in the drug we've innovated in price and how we process these things. together we can save a lot of lives and truly do some great things the reason to exclude the amgen product is while both of them work in a similar manner, the data is really good for. r praluent it's appropriate to go with the one as long as we have a medical exception pathway for those who have to have the other starting july 1st, the patients are going to experience a lower price at the counter >> so the way you've structured this is to pay a bigger rebate on the drug back into the system rather than actually lowering the sticker price of the product. why does that make more sense? why can't you just lower the actual price of the drug >> so we wanted to strike a bargain. we wanted to say if we gave a fair price, we would get access.

so it would be easy for the doctors to get the prescription approved and patients could afford the copay. and to get access and affordability is something we had to bargain for if we just lowered the price, we'd have nothing to bargain with and we would have -- >> although, len, when you do that you're not looking for affordable for all patients. you're looking for affordability of patients who are insured. those uninsured will pay a higher rate. >> i can tell you like we will make our drug available on a needs basis. that really isn't the issue, becky. because the issue is when you do have insurance and you can't afford it. because people who have to have these high copays, you walk into the drugstore or you get your notice from express scripts and say, my god, $500 how do i afford that. we wanted both affordability and access and we have to have something to bargain with or many insurance companies,

maybe not enlightened like express scripts. but others might say thanks for the low price but we're still going to require a 30-page form for doctors to get the drug and have a massively high copay. so we needed a bargaining chip >> because the insurers and express scripts, do you deal with the bigger rebate. >> the trouble has been this and len talked about this. with high deductible health plans, too many times people actually experience the actual price of the drug. and so if you're in that high deductible phase, or you have a percent copay, you're having to experience what that real drug price is what's really innovative about this is the idea that we came up with where a big part of the rebate's coming back to the patient at the point of sale so their copay is going to be determined on what looks like a much lower price so this is actually a real innovation in the market place patient will pay a much lower

copay. it takes care of those who are in the high deductible phase the plan sponsor is still getting back some of the rebate dollars which they need to keep the total premium down it works for the patient and the plan sponsor this is really the first time it's ever been done at a drug-specific level. >> why haven't we been doing this more? this is something the trump administration has focused on to be implemented more. >> why isn't it just a model for everybody? >> we hope it will be. >> is it applicable to every -- i mean, could you do this across the board? or is there something specific about this particular situation? >> so today we can actually give the rebate at the point of sale for all drugs. the reality is most plan sponsors don't want to do that they get those rebate checks and use it to hold down the premiums for everyone and so what happens is if you give just the handful of patients that hit these high deductibles, everyone's premiums go up. what we've done is we really try to come up with a solution that helps that individual patient out but still keeps your total

health plan affordable >> but you're suggesting the plan doesn't like sharing with the consumer >> well, they do in the form of lowering the premium what happened is in the old days when you had flat copays, $20, $40, $50 this wasn't an issue when we changed to percent copays you owe 10%, 20%, 30% of the copay or you're in the high deductible phase, that's made this market distorted. this is really an innovative solution that helps bring you back to a normal market. >> we can't forget there has to be incentive left there has to be a return joe loves the constitution in the constitution, there's a reward system for people who make inventions. literally that says the government can grant them patents in order to promote useful arts and sciences we need to make sure the prices aren't so low there's no

incentive. >> i love the amendments too >> i'm sure you do we go right to the body. this is just article ii stuff. >> thank you i like them all. thanks, len. thanks, steve. coming up -- huh >> especially the 18th >> i like the 18th certainly do i better autonation ceo mike jackson on the company's latest quarter and the state of the nation's economy. we'll also ask him about -- >> and the 21st. >> that's my favorite. and a programming note monday on "squawk box," a billionaire summit and not just len numb b len, but others. warren buffett for three you are hoes joined by charlie munger and the grand daddy of them all -- they're close now, buffett and gates.

who's in the lead? >> i'm notur se. >> that's monday at 6:00 a.m we'll be right back. what is the power of pacific? it's life insurance and retirement solutions to help you reach your goals. it's having the confidence to create the future that's most meaningful to you. it's protection for generations of families, and 150 years of strength and stability. and when you're able to harness all of that, that's the power of pacific. ask a financial advisor about pacific life.

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welcome back, everybody. autonation out with under the circumstances first quarter report this morning. company comes in with earnings of $1.01 a share that's in line with expectations joining us now with mike jackson, he is autonation's ceo. great to see you this morning. thanks for joining us. >> becky, pleasure to be here. and $1.01 is our best quarter ever up 2%. onthe same store sales basis w improved gross profits by 3% driven primarily by our brand extensions where our one price and preowned resulted in an increase in gross profit of 9% our customer care business, customer pay was up 9% 5% overall in customer care. and our financial products, we

had a 10% improvement in gross profit now, there were head winds in the new vehicle business as far as gross margins but we knew that was coming. all of our brand extensions overcame that. and resulted in our best first quarter ever >> mike, that was going to be my question you took this change in the company, undertook a different way in the way you brand across. what you're doing in terms of prices with the used and new cars and the services you offer and that was because you knew it was going to get harder to make a profit with the new vehicles coming out from detroit. has any of that changed? i guess you're answering that right there saying this is exactly what you expected. >> absolutely not, becky we made the call early we made it first my usual style, took risk. i think we took a leadership position in the automotive retail industry. in the sense that no one has really followed us down this path so that means either you're

really leading or you're completely crazy i think our numbers are showing that we have this figured out. in that we're using our scale of autonation with a revenue overrun rate of $21 billion. branded coast to coast now we say, okay how do we create innovative products that we brand as autonation products and the embracement of our customers by both the experience we get with these products and the content of these products is proving to be a win/win customers love it and it's more profitable for the company >> mike, we've been turning to you to ask your opinion on what all this means for the economy for a long time. turns out we're not the only people folks, mike was recently named the chairman of the federal reserve bank of atlanta. so obviously they're looking to him for what he sees in the economy right now too. what can you tell us at this point? well, i think we have a most

unusual situation maybe in economic huft where you're in the ninth year of an economic recovery and all of a sudden you add fiscal stimulus. i'm all for the tax reform i think it needed to be done i'm all for the regulatory reform it desperately needed to be done i don't know about increasing deficit spending this late in an economic recovery. do we really need to do that how's that all going to work out? but the the economy overall is in good shape and growing at an appropriate rate if you look at the first quarter which is usually the weakest in the entire year. growth over 2% it's been awhile since we've had that overall i think it's good. and in the autoindustry, things are developing about as i expected retail sales year to date for the industry are about down 2% but fleet business is stronger, up 6%. but the most remarkable thing is the continued stampede to

truck-based vehicles with year to date sale passenger cars down 10%. and truck-based vehicles up 10%. absolute unbelievable. this is like the fourth, fifth year of this trend we're approaching 70% of the mix being truck based. you already have fiat chrysler announcing that they're almost moving completely away from cars that's now been followed by ford motor company that says they're fazing out all car-based vehicles except for the mustang. >> what do you think about all of that happening, mike? what do you think about all of that happening just as oil prices are picking up and prices at the pump are picking up too that's always been the determining factor beyond a certain point, americans don't buy those big trucks and suvs. are you worried at all >> i'm not worried at all. i think it's just a strategic shift that remains for the following reasons. one, consumers really love their

truck-based vehicles they love the high seating position and they don't want to give that up second, the fuel economy of suvs, minivans, and pickup trucks have been improved dramatically and significantly closed the gap with passenger cars so there's not that much of a difference and finally, while gasoline is approaching $3 a gallon as a national average, i think to shift people out of truck-based vehicles, the freakout number is $5 or $6 a gallon. and with a productive capacity of petroleum in the u.s., why there may be somewhat higher prices, i don't see us getting back to that >> it is always a pleasure to talk to you. >> this is pretty cool i'm looking at some of the other members of the automotive hall of fame. people like walter bentley and a bunch of benzs in here and a guy named avis

and a guy named jackson too. >> going to be inducted in july. >> that's pretty cool, joe most importantly, our founder wayne is already in. i very much regret that my great mentor has made me in a big part the executive i am today won't be with me to join in that ceremony, but i'm very honored and very proud and very grateful for all the colleagues i worked with over my decades, that we did a lot of exciting things. >> mike, thank you we're going to see you before then that's happening in july thanks for joining us today. >> thank you good to see you. okay, folks. when we come back, the fed kicking off a two-day meeting. the latest results from the survey those are ahead. and in the wake of the t-moblie and sprint deal. we'll see what's driving these megadeals. robert kinler will be joining

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fed sits for its two-day meeting. we tell you what to expect when we come back with exclusive reltofhenbfesueysus t cc d rv

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good morning welcome back to "squawk box" here on cnbc among the stories front aerocenter at this hour, earnings out from under armour they reported a break even quarter. that's compawith the revenue tog estimates on stronger international sales. the bar had been set low and they went over the hurdle there. stock up close to 3% this morning. nation's automakers set to report april car sales this morning. saying it would no longer issue monthly sales figures only on a quarterly basis. now, one of the day's most highly anticipated earnings reports coming out after today's close nap is apple apple is going to report quarterly numbers this afternoon with wall street expecting

earnings of $2.68 a share. a lot of people going to be looking for iphone x sales it is going to be a big afternoon. and the fed meeting kicks off the day. that mean the cnbc fed survey results are in steve leisman joins us -- >> you said that with such -- >> i know. i know. >> you know how long we've been doing this stuff a long time. you know why we launched it, right? we launched it because when the fed was doing qe, there was no way to look at expectations because the fed funds were zero. and then we -- >> what year was that? >> '08, uni'09, something like that then it's just maintained the usefulness in a lot of ways. as you will see, folks the outlook you see for fed rate hikes continues to push higher 89% saying no change coming at

this meeting 86% agreement this is with 37 respondents saying the second hike will come in june here's where it's interesting. the median says three rate hikes in 2018 and two in 2019. let me she you the distribution we began showing you last month here half of the folks say there's going to be three hikes. half of the respondents say there will be four there is debate in the market about that extra quarter point you go on and look at 2019 a enyou hae - and you have the same kind of debate the second choice among respondents is for three and even some for four we see the fed rate hike at 2.29%. i want to show you the terminal rate where does the fed stop in this cycle? and it has continued to push higher back in july of 2017, it was 2.6%

now you want to add 60 basis points up and up >> just under 3.25%. >> for those on the radio, i should have said that. $3.3 3.24% is the new terminal rate are you being sarcastic, becky >> yes it's such a relatively low number >> not only is a low, it's the bottom of the cycle for other times. it's where they would cut to but now they're thinking -- just very quickly, richard cla rrrida and michelle bowman. they are both seen as neutral for rates. we asked relative to current policy, what would these people add, the idea is they will be neutral to current policy. they're not seen significantly as being hawkish or dovish to the current consensus on the board. >> when you talk about the terminal federal reserve rate at

3.24% and when you showed where people are thinking it's going to be four rate hikes, then it comes down substantially is that because we run into a recession at that point? or that's when -- the timeline we stop asking people how far out they're anticipating >> even the fed itself overshoots in forecasts. there is some belief something i've been thinking a lot about. the kind of sky is falling folks are out there saying central banks are tightening i don't think it's synchronized that way if you think about the trajectory of things and do a forecast here, i think the fed's going to be well done. maybe before europe starting even hiking. >> but are they done because -- look we can't raise rates anymore because the economy's collapsing >> i don't think an economic collapse in this >> if you are predicting 3.25% as the terminal rate, you're kind of predicting -- >> that the economic expansion is over.

>> now the second longest in u.s. history assuming we're growing today. >> but what if it doesn't? what if it goes another nine years? >> nothing wrong with that they have to find the right -- >> you have to change the terminal rate. >> it could be >> that's the same thing i thought nap we think terminal rate in 2019 of 3.24% is the end of the economic expansion. >> i will say most of my surveys of economists see good growth through 2019, 2020 is where they start to wonder what happens >> is that just because they can't see out that far >> no, a lot of this is the central question about the tax cuts are the tax cuts a sugar high, an infusion of federal spending, deficit spending in 2019 and 2020 or are they fundamentally changing the dna of the -- >> or do we do anything with deficits how do we -- >> i think that's right. but if the tax cuts come along

and create a capital investment boom which create productivity, then you have a nexus for -- first of all, you still have a bunch of problems. you hear the big problem on the street is how do you find workers? if you increase productivity, you solve that problem then you enable to have growth at a higher level if it works. >> if you get to a certain level in the unemployment. >> you didn't ask any athletes about this this is not the all american survey >> no, no. >> because does the draft factor what'd you think of the draft? saquon barkley baker mayfield if you ask those guys about what they think the terminal -- >> no, but we could. that's a good idea, joe. for extending the sample of opinion in the survey. >> that's the all american survey. >> no, the all america survey --

>> it's not all american why is it so confusing then? what's saquon barkley think -- >> as far as i know, you're the only one that worries about this >> i understand what it is >> never mind. >> why is it -- for a decade we've been doing this. >> do you like what the giants or jets did? >> i think the giants should have drafted eight left tackles. that's what i think the giants should have done >> emphasize left. >> left tackles. >> because you're from the left. >> but that's the blindside of the quarterback. not the political sliding. >> i see except for poor eli. >> thanks, steve >> thank you when we come back, robert kinler is going to join us and later, washington in focus today. the fed beginning a two-day meeting. plus trade and tariff talk at the white house. we will have much more on the extension of steel and aluminum tariffs or a holdup of those things in a bit. also today on "squawk on the

street," wilbur ross and a first on cnbc interview. that's coming up at 10:00 a.m. eastern time "squawk box" returns after the break. you ok there, kurt? we're about to move. karate helps... relieve some of the house-buying... stress. at least you don't have to worry about homeowners insurance. call geico. geico... helps with... homeowners insurance? been doing it for years. i'm calling geico right now. good idea! get to know geico. and see how easy homeowners and renters insurance can be.

welcome back to "squawk box. want to talk mergers and acquisitions now mergers already up from last year but interesting our next guest says it's not volume pushing those numbers higher it's the size and scale of the deals. robert kinler here from us from morgan stanley let's talk t-moblie first. >> t-moblie first. not m&a generally. >> no. we've had a lot of people on the set that said 50/50. no better than 40. you think this thing has a real chance of happening. >> i think what you need to do is put this in context of everything going on. right? the only deal that may be a beneficiary is no one has any idea what's going on on the regulatory front is this deal. i'll actually explain why. who would have thought we'd be in a time where they'd be

challenging at&t/time warner it makes absolute no sense on the other hand, fox/disney, the administration comes out and says how great is this you know, $2.8 billion their synergy will create a lot of jobs. it's a very unusual time you take disney/fox. if there's ever a deal that should be challenged it's the number one box office studio with the number four. it's espn and 23 regional sports networks we hear nothing about it instead they're attacking at&t/time warner to put it in context with t-moblie, you heard all the arguments. >> you're advising t-moblie. >> did you see andrew's piece today? >> yes remember the -- in a way it's good that things evolve in the thinking of regulators an example, in the '90s, sprint tried to merge with mci. the regulators blocked it because they said how could you let these two -- the only two long distance carriers combine

and they made the argument there is no such thing as long distance look how silly that looks now. right? so you know the arguments here which are scale and all that but the -- what's been the holdup in the past on these deals is the fcc remember when comcast tried to buy time warner cable, it was the fcc. that's changed completely. you guys had on yesterday a guy former fcc person who said now is the time. so that was the biggest issue. so no one can predict how this is going to play out but if there was ever an administration where no one can predict in ig, th-- anything, ts it >> does that mean you're still not going to know what happens we've painted it as people wait to see what happens with this court decision then it's going to be game on and game off is that not the case if it's that unpredictable >> i think -- as you said before, you know, game on.

if that deal does not get blocked. because it brings comcast into the fore and all of that i don't think it has any implications for t-moblie/print. i'll give you another example of who would have ever thought broadcom/qualcomm? the government came out and said there's no antitrust with broadcom buying qualcomm here's the issue >> it's a national security issue. >> here's the issue. if you allow them to combine, the combined companies are going to spend less money on capex and that's going to favor the chinese semiconductor makers >> but that was a different theory but not one brought by the department of justice. the department of justice when they look at the antitrust issue, they don't look at nationalism issue. whether it's good for the country or not that's not part of the calculus though. >> your point is -- >> what do we know what they're looking at now they're looking at the fact time

warner owns cnn. i know what they're looking at now. we're just in a new world. >> i don't know if you can speak to this. part of the calculus about this deal now, look at this administration and who knows? so let's -- you know, not a trial but throw the ball and see what happens >> it was impossible with the old fcc commissioner it was impossible under the old administration now some things are in some ways rightly and predictably -- broadcom is going to have very far implications >> in what way >> first of all, you see how an xp deal is in trouble now. you remember where the activist said this stock would trade at 120 even without a deal. it's down to 105 mofcom in china made nxp just in retaliation for it being blocked. my whole point is if there was ever a time when you try something novel, this may well

be the time. >> try something novel but also get a breakup fee if you're can sh. >> there's no breakup fee in this instance. >> there's been atlot of deals without breakup fees what created t-moblie, we advised t-moblie at the time was at&t trying to buy them. that made no sense but t-moblie was actually having a huge breakup fee there's a lot of deals like that i wouldn't read anything into that. >> what's going to happen with sky? >> well, we're on the sky side on that. i think at least it looks like if you believe what disney said, that they may bid. >> what's the sky side, by the way? there's no side? >> we're advising sky. >> hearing what sky has said they've withdrawn their recommendation to go with the murdoch offer. because they're looking at all. >> well, there's a higher offer. >> they have to. >> what they're looking at now but this is all part of what happens. you read the proxy statement

where comcast had a higher offer on the table we'll see how the case works out. >> will you look at your pipe line right now what's it look like relative to a year ago >> it's somewhat higher. not dramatically higher. it was the first part of the year very large deals >> this is the pipeline -- is it again very large deals >> it is not as many but this year we're going to be the first year efr over $4 trillion which is extraordinary and i think it's going to be a lot more than that >> the expectation had been if there was this massive repatriation this year, you'll see m&a out the wazoo. >> irrelevant. >> you say irrelevant? >> it's irrelevant this already was more capital than anyone needed >> hold on, hold on, hold on for years people said i have

my -- i have all this money offshore i can only from a tax efficient way i can only buy foreign companies. i can't actually do things in the united states. you're saying that argument didn't hold water the whole time >> never held water. there are reasons you can argue of bringing the money back even repurchases of dividends. but saying there wasn't enough capital for deals, there's limitless capital. no one thinks apple needs money to do deals. nothing too with m&a >> what's the state of activism right now? >> it's actually changed some. it's become -- activism has become more global it's kind of here to stay. it's been around for a long time you saw very good earnings

before from cummins. i defended cummins twice against activism obviously carl icahn was doing it in the '80s was probably doing it in the '20s but it's not a new concept what's happened in the last year are activists are starting to lose it used to be if you put up a couple of directors, you couldn't lose. now adp, defeated perching >> i wouldn't call the png one -- i'd put that in the win category >> if it was three years ago, it would have been a blowout with trion winning. i think things are changing now. shareholders are getting more sophisticated. >> great to see you, sir >> good to see you when we come back, a check on what's been moving crude oil prices plus when amazon bought twitch

four years ago for $970 million, the common refrain on the street was who's going to watch people play video games look who's laughing now. some big analysts at this point are putting a big valuation on that platform. gene munster says it could be worth $20 billion by 2020. the coans mpy'cofounder joins us in just a bit. "squawk box" will be right back. . there's nothing small about it. are your hours small? what about your reputation, is that small? when you own your own thing, it's huge. your partnerships, even bigger. with dell small business technology advisors you'll get the one-on-one partnership you need to grow your business. because the only one who decides how big your business can be, is you. the dell vostro 15 laptop, with 7th gen intel® core™ processors.

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welcome back israel's prime minister benjamin netanyahu speaking out accusing iran of lying about its nuclear program. jackie de angeles joins us with what's at stake for oil prices >> good morning. kroo crude oil was tentative yesterday. as soon as he spoke, you could see prices shot up past $69 a barrel they made another run for $70. the reason the iran piece is so important is the reposition of sapgss on the country could reduce supply even further to the tune of about half a million baa i recalrrels a day. oil prices went down that was because supply was added to an already saturated global market. but with the u.s. stocks down about 20% since last year, the opec cut of about 1.8 million barrels a day in place and venezuela's production on the decline, a half a million

barrels of iranian oil would make a difference in this market especially since demand forecasts are now so robust. president trump is supposed to make a decision on this issue may 12th many think he will make some sort of change to the deal netanyahu's evidence that the iranians have been working on their nuclear program despite the deal in place for the purposes that are not peaceful only adds fire to the argument that trump should step in. if he did, you guys could expect oil prices to take another leg up >> okay. jackie, thank you for that pemeantime, when we come ba, we're going to talk wage growth. small business in the state of the economy. check out futures right now. we are looking down. ois.off about 11 pnt "squawk box" returns after the break.

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pharma in focus on the first trading day of may pfizer and merck beating the street straight ahead postponing steel and aluminum tariffs for certain allies hours before they were set to go in effect. the view of main street. new data on the state of small

business in america. we'll bring you the numbers as the final hour of "squawk box" begins right now ♪ live from new york where business never sleeps, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin been around the flat line for most of the session. been up and down now about 19 as seen on the dow. even though merck and pfizer both reported the bottom line was above expectations sales sort of in line. slightly weaker than expected. nasdaq down 4.5. treasury yields have been under -- have been well behaved.

now 2.955% let's take a look at a live shot of the white house. the trump administration announcing exemptions and extensions for aluminum steel tariffs for key u.s. allies. that announcement coming just hours before the midnight deadline for those tariffs to go into effect. the broad tariffs of 25% on steel and 10% on aluminum will not take effect for the eu today. instead they'll have an additional month to keep talking to the u.s. about a pact to avoid those tariffs. the commission responding this morning saying president trump's decision, they say, prolonged business uncertainty they repeated their call for a permanent exemption. canada and mexico were also given an extension until june 1st. let's get you caught up on quarterly reports this morning merck and pfizer, mixed quarter for both drug makers beating on the bottom line but missing on revenues merck earned $1.05, above

estimates. you're watching that stock up this morning pfizer coming in at 77 cents per share. that stock down about 61 cents this morning check out shares of under armour break even quarter analysts had been expecting a loss of 5 cents per share. a company that has struggled of late but this is a better than expected quarter you're seeing that stock go up about 30 cents this morning right now. apple -- yeah, apple's going to report second quarter earnings after the bell today. investors looking for details on how the company plans to use the big pile of cash there are also some question marks when it comes to the strength of iphone and that franchise. with us now, i.t. hardware analyst. what's your number just in terms of earnings? >> we're a little bit above the

street little below on iphones. little above on services the march quarter should be fine they haven't missed revenue or gross margin number in about 15 years. the real question is the june quarter outlook. >> the revenue number looks like it's a misprint, doesn't it? expecting $87 billion. >> that sounds a little high maybe that was last quarter. >> really? what are you expecting >> well, for the june quarter, we're looking for something around $50 billion the big question for the june quarter is above or below $50 billion, closer to $40 million -- >> $60 billion is the estimate, right? >> for the march quarter, yeah >> yeah. and where are you? >> yeah. we're just below that. $59 billion and change >> $260 billion for the year >> we're above that. the iphone is weak but you'll have this low tax rate and shares going down. the numbers --

>> where are you on services that is one piece that is probably going to actually surprise on the upside >> i think so. >> services being icloud and app store. but our evidence lab suggests based on credit card data once people start using apple services, they get very aggressive and their growth of transactions is over 20% a year. that's really driving the services growth. >> steven, yesterday the stock was up 2% in a down market and why do you think that is what expectations are people thinking is that going to be a stock buyback announcement or do you think that's more closely tied to the earnings and revenue numbers? >> it's really a tug of war between the fact iphone numbers are going to be weak project weakness in the june quarter. on the other hand you'll have good services growth and a big buyback. which will be done over three or four years some people are willing to look past the quarter to the buyback

then better news in september. >> let's talk about that though. which is that i live on these gossip sites about all of the next phones i love i love this stuff. what kind of price point do they need to come in with i mean, this thousand-dollar phone, the iphone x has clearly been a challenge there's now talk of a $550 phone. is that where the price point needs to be? >> there's a narrative on the street that the x is overpriced. i'm not sure that's true but clearly this is setting them up for the next ten years. there's a debate do they continue to price high so maybe the new plus comes in at $100 higher the current is where it is then there's talk of an l.e.d. based product. more like $700 to $800 i do think apple's weakness is in the middle part of the range right now. so this l.e.d. based product is a little more appropriately priced >> is there any other product

you hear, think about coming that we don't know about is there the home pod, the speaker, that doesn't sound -- seem to be making the waves people wanted it to. is there something on the horizon? >> i don't really think so for the next couple of years i think that's one of the problems is we're in a gap period where we all see augmented reality, virtual reality, driverless cars >> by the way, there was just a report saying that apple was working on a new virtual reality. >> tim's talked a lot of augmented reality. i think you'll see glasses from apple. within the next three years you'll see augmented reality glasses from apple >> what happened in mid-april was pretty scary for apple shareholders, right? that was not a sea change in terms of all of a sudden people realizing the iphone is not going to be here forever and to move this company to a trillion-dollar market cap

a lot of analysts came out and made some comments jim cramer started talking about the chances of getting to a criminal used to be 2-1 now 10-1 that didn't change your long-term viewpoint, what happened with the suppliers? that doesn't indicate a real problem. >> to me the report that came out in january was a line in the sand saying this is now a mature company. >> so it already happened? >> i think so. the supercycle is dead we talked about that in november i think you're seeing flat iphone demand going out into the future maybe slight growth. you're now dependent on wearables and services it's a big company doesn't get to a trillion-dollar market cap it might happen. amazon and google are getting closer to passing them but, you know, apple -- i wouldn't give up on apple by any means. >> our target price is $190. in the long run, i think there is upside. >> okay. we'll see. should be interesting. >> thank you

we have a lot still to come this morning on "squawk box. up next, the ceo of resorts world catskills is ringing the opening bell on the nasdaq he runs new york's biggest casino which officially opens its doors in a few days. he's going to join us on set to talk about las vegas-style gaming and job creation. that is next and later, a different type of gaming how much would you pay to watch other people play video games? we're going to talk to the co-founder of a platform that does just that amaz amazon's twitch. ay tuned you're watching "squawk box" on cnbc

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♪ welcome back, everybody. resorts world is betting on gaming in the catskills region of new york state. joining us now is ryan eller he's the president and ceo of resort world catskills they've got a $900 million casino and resort.

opening later this month thanks for being here. >> thank you >> this has been described as las vegas-style gambling what does that mean? >> what that means is it's an integrated resort. resorts world is a brand that has quite a bit of prestige internationally. doesn't have much exposure in the u.s. what that means is internationally it's a typical or example of an integrated resort which takes a best in class situation worldwide. >> restaurants, shopping, for example, the culinary experiences from hong kong and manhattan. best chefs there private gamiing salons we have european villas. one of which even has its own tasting room and wine cellar, for example. you combine that with other channels, things that appeal to more than just a typical casino customer early on in 2019 we have a family resort with an indoor

water park opening after that a golf course then later this year a second hotel. it's intended to attract more than just a typical regional casino customer. >> all the big las vegas casinos, wynn and everybody else have reported recently said o most of the growth is coming from macau why the catskills and how do you look at gaming in the u.s. in particular >> the catskills in particular, this is the fourth final and largest of new york state's largest casinos to open. it is also the closest to manhattan. manhattan and new york has an extraordinarily deep and diverse population and the asian population is a significant piece of that. but beyond that, beyond just the population we have here which resonates with that resort's world brand and in particular that las vegas-style gaming, it also offers us an opportunity for international travel and destination. that's where we think we have the opportunity not only in the proximity to new york but the

type of product it offers which is unique in the northeast to make the northeast a hospitality and gaming destination. >> you think people are going to fly in >> yes i know people will fly in. >> so they're going to fly into which airport? >> they'll fly into la guardia or jfk keep in mind, it is not specifically and only to visit that location. there is a symbiotic relationship of being proximate to new york and everything in the region that offers a great opportunity for tourism international travel >> why do you think atlantic city never worked? we saw things like the borgata and others that have come through and offered high end offerings as well. >> atlantic city is unique it worked for a very long time had a robust gaming industry and what actually turned atlantic city was a proliferation of gaming in jurisdictions. you saw pennsylvania casinos open and now you see new york

casinos. >> how are you -- >> well, we're the new entrant and we are actually tailoring our product to the market we're trying to address. and we happen to be closer to that market. so we have a competitive dynamic which is unique. suffice it to say, new york is a competitive gaming market. that's the reason the product and what we do and how we do it needs to be tailored to that opportunity. >> there's some science of life in atlantic city, aren't there i think revel is renamed and reopening. >> it is it's named the ocean club. but keep in mind that that is a great example of what i'm talking about. it is to actually create a relevant experience that will still resonate with the market you're trying to address and that investment and that experience needs to match the opportunity. >> atlantic city thinks they have another chance and they don't want to mess it up this time we'll see. it's tough >> ryan, thank you so much for

joining us today >> thank you coming up when we return, you're looking at right now a live shot of a gamer playing a video game on platform -- some analysts are looking at this and next week, becky's going to be live in omaha for "squawk box" billionaire summit with war re warren buffett and charlie munger and bill gates. that's on monday starting at 6:00 a.m. eastern time back in a moment (baby crying) (slow jazz music) ♪ fly me to the moon ♪ and let me play

(bell ring)

amazon is gaining advertising share quickly and additional momentum is likely to come from its streaming platform twitch twitch is leveraging the viralness of games like fortnite that garner nearly 30 million hours of viewing per week. joining us now is the co-founder of twitch which was acquired by amazon in 2014 do people now say, okay. i believe you. people are going to watch a spectator sport of video games you don't need to convince -- with me you still kind of need to convince me a little bit.

but you've got some real personalities that as they're playing, they do imitations and they're really good at what they do is that the hook, kevin? >> that's a big part of it as it turns out, people like watching other people play that have varying levels of skill or a strong personality that might appeal to you. it's not unlike watching someone play basketball or other ball sports it's really about connecting with the streamer. depending on what they love. in our case, much of that is around video games >> i guess i can identify with it but i used to be able to play asteroids where i could play for as long as i wanted. we could go through to the end and then start again or missile command i was pretty good at that too. and people would start gathering around and watching. and you sort of feel like tommy the pinball wizard i guess that's how i can identify that this actually works. how do you get good at fortnite?

>> how do you get good at fortnite you got a practice a lot like any other game asteroids, missile command, it takes a lot of practice. you could always get back into that game if you ever want to. it takes a lot of dedication to playing games a at high skill level. fortnite, a lot of folks watch other people play. whether that's on twitch or on a more driven on demand videos but it takes a lot of time to play for professional gamers that are competing on a global scale with players around the world, you're dedicating a lot of time to mastery, to practice with the team it takes a lot of dedication >> what does this look like a couple years out do you become the espn of e-sports and all of this and is there a rights sale that will take place when this is said and done >> oh, yeah. i mean, i think esports in general is continuing to grow.

i think it starts from the ground up. from the players, the coaches, the commentators that can build a career really just streaming on twitch. and thus practice as much as they possibly can. >> walk everybody through the economic model i'm not sure people completely understand it. >> yeah, sure. all right. basically people stream for free on twitch. it's free to watch free to use. we have almost 2 million people that broadcast every month about 27,000 of those are fully partnered. others are semipartnered they make money from advertising from subscriptions people pay $5 a month they're paying to support the streamer that's their entertainer of choice they want them to entertain them for as long as poable. they make money from what we call bits. merchandise. but the bulk of the revenue comes from advertising and subscriptions for now. we're adding more for them so they have choice they can design shows however

they want. they want to run ads, great. they don't want to run ads they can do both we want to give a wide selection there. but it's all about growing audience and appealing >> do you run this business autonomously inside of amazon? what's that experience like? >> yeah, we do i mean, we're a very different kind of company. we reach a very young audience 26 average age 26 they wage ftch for about 2 1/2 r a day. we're increasingly working with the prime video team and a lot of -- in the background we're part of aws we work with a lot of aws teams in terms of making the site stand up and sort of expanding and evolving the technology behind what we do. but we operate pretty autonomously, yeah >> is jeff a gamer bezos? >> is jeff a gamer i think he's -- i guess if you count flying spaceships into space, maybe that's a game no, i think he plays games here and there.

he's curious about what we do. he's always kind of asking us about interesting things that are happening and tossing over ideas as well. >> is there a complete overlap in people who watch other people play they play -- i guess if you watch someone who's really good at fortnite, you'd learn some tricks for yourself on how to get further along or strategies and things like that that's all part of it, i guess >> it is part of it. i mean, a lot of people watch other folks play to get a sense of what strategies they're deploying. how they play the game, how they practice but the best part of it is playing yourself >> and youpocker tournametur -- poker tournaments too. i need to pay attention. >> what'd you say? >> poker >> yeah. we're testing a bunch of stuff these days we've got nfl streams in partnership with prime video >> all right i want in. i'm convinced.

i want in. i'm convinced. kevin, thank you great idea you know, i wouldn't have believed it. >> thank you >> appreciate it, you coming on today. programming note oracle ceo mark hurd is also attending the collision conference he'll be on "squawk alley. all right, folks coming up, fresh data on the state of small business. plus the fed kicking off day one of its policy meeting. we're going to talk about that but first we have exclusive results from cnbc's fed survey steve, what do you got >> we're going to look at what's causing this yield curve to be flat and whether or not it means there's a recession coming and whether or not what's dri driving up interest rates. exclusive results from the cnbc fed survey coming up after the sckrod.brk. soti aun

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♪ good morning, everybody. welcome back to "squawk box" here on cnbc we have live from the nasdaq

market site in times square. i'm becky quick are joe kernen and andrew ross sorkin shares of tapestry are taking a big hit in premarket trading the company formerly known as coach did beat estimates on both the top and bottom lines but sales at kate spade business reported weakness. wooe we'll also get april autosales this morning april sales is predicted to be down 6% from the same month last year we should note that gm would not break out its numbers deciding to report only quarterly from now on plus the institute for supply management will be out with its april manufacturing index. it's expected to decrease slightly from march levels at the same time the government will be out with the march construction spending. that's expected to see a 0.5%

increase the fed kicking off a two-day policy meeting today steve leisman joining us now with more. >> we asked our experts about some of the issues out there and let's take a look at the results on the yield curve we asked is it a recession warning? 25% say yes. 67% say no some said it has to invert to see that what we're talking about here is the difference in the yield on the 2-year note versus the 10-year note >> which has gotten tight. >> 50 basis points but if you look back at the history of this, it doesn't signal a recession until it goes to zero or inverts that's the reason for this we asked why you have this inverted yield some said it's because the fed is hiking rates but inflation remains low. there are growth and recession concerns out there among some folks. and of course treasury supply. both the amount of it but also the particular way that we're financing the deficit right now

which is to have a lot of supply on the short end and not so much on the long end. the thinking is that will change over time. let's take a look at why people think rates are higher i was surprised by this. there's no -- this chart i'm sorry to say overstates the differences. on a scale of 1 to 5, there's not a whole lot of difference. all of them have a lot of support there. higher deficit and treasury supply the fed rate hikes and balance sheet reduction. the highest is higher inflation concern. which does make sense. the one thing a longer term bond investor cares about is being compensated with inflation that's what they most tend to think about when they decide what's the right price for lending the government money one last thing we want to look at here is this tug of war we asked about will trump tax rates trump higher interest rates? and most people think yes. will higher rates trump higher taxes, some say yes.

some say they will be offset or neutral. and 67% of our respondents said the tax cuts are going to be more beneficial to the economy and outweigh the drag from higher rates >> particularly when you joined us last hour and told us the terminal rate increase is seen only going to 3.24%. so you're not talking about 8% interest rates, 12% interest rates. if these are the same people, to which the market has that context embedded i mean, how many people are on the trading desk today that actually remember double digit interest rates or inflation? i think the number is few. >> i remember. but only from my parents' mortgage >> i've only financed down in fact, i have this weird

five-year mortgage that when it reset for the next five years, reset downward i pay less for the same note >> i locked in on 2.99% on a fixed year mortgage. >> so i think people freak out a little bit no one says it's right that they're definitely going to go to 3.25% and stop but at least the expectation right now -- you talk about inflation picking up. and yesterday with the spending numbers, we hit that 2% on the pce which is the fed's target rate but, you know, are we really talking about inflation being a huge problem if it got to 3% would it be time to jump off the ledge? i don't think so >> steve, thank you. we have some news just breaking on the state of small business in america. job growth declined in april while hourly earnings growth reached its highest point in more than two years. joining us now to take us inside the report is ceo of paychex good morning to you, sir

>> good morning, and roorew. >> the highlight for you this month? >> we still have moderate job growth we're down about 1% in the job growth number from last year the interesting piece to this is that wage growth, hourly earnings over the last year went down a little bit to about 2.7% after peaking at 2.9% during the summer it's interesting with this tight labor market and job growth that's slowing down with that low unemployment rate, that wages aren't coming up a little bit faster >> let me ask you about this i don't know if you saw this marco rubio we were talking about this earlier said there's no quos when you think about small business, does that make sense to you >> i think the tax reform, we've definitely seen at paychex the average paycheck has gone up just under 2% with the tax reform

i think there's definitely money getting back to the workers. we've seen a number of larger companies in particular giving it back through wage increases, bonuses, et cetera so that's i think very good for the growth of small businesses that we'll see some of those don't make a profit so they're not gaining from tax reform but those that do, they're going in >> what are you hearing on the world of interest rates and what that's going to do in terms of your expectation of where they're going to go and how it's hitting small business right now. >> small businesses borrow from either home equity or others they're not as impacted by the interest rate changes certainly as they go up more dramatically than they have been. i think you'll see some impact but generally small businesses

aren't too impacted by interest rates. unless they impact the consumer and they're spending into that small business i think the bigger impact on small business these days, you look at it is the hiring of individuals. so this labor market, we're finding while optimism is still very strong, the big issue is not taxes or interest rates. it's how do i find and hire and retain the best people >> hey, marty, what are they going to do that are you able to separate out from your wage gains what the effect of raising the minimum wage is that out of the data already? or is that a piece of the wage gains out there. >> no, that's definitely a piece of the wage gain that's out there. and you're seeing that with leisure and hospitality and other services right? those are the ones impacted the most by minimum wage gains you're seeing them stronger on the coast where more increases

have hit and you're seeing -- but what's interesting is why the wages are going up more, i see some of this as more part-time hiring. as more contingent workforce now. there's more automation. and it looks like businesses, small businesses included, are looking at contingent workers to keep the wage increase from going up en though there's a tight labor market certain jobs it's got to go up but generally it won't and hasn't >> looks like tennessee rose to the top state in terms of job growth arizona in top for hourly earnings growth. where is the weakness? is there weakness we should look for? >> well, the weakest, you know, continues to be the northeast. you know, i think this is where it's been difficult. there's that migration to the south. even though all regions are down, the south is still the strongest in small business job growth what you see there is i think there's more people to hire. you're seeing manufacturing come back by the way, that was the other interesting this month

manufacturing is up in jobs. and we're seeing that when you think about the south. boeing, auto industry, a lot of manufacturing has moved and is picking up in the south. tennessee is up. >> here's the rub i get which is this the administration has already claimed victory when it comes to the tax cuts they're already saying it's working. on the other hand you have a lot of people and sort of your remarks, it's too early to say the tax cuts are working because you just got the tax cuts people haven't had time to invest and the investment is what causes the wage gains. so which is it are the tax cuts already working or is it too early to say the tax cuts are working >> well, steve, i think it's a little bit of both one, that employees are seeing a little more in their paycheck. then if they're spending that it's working and will help small businesses or all businesses reinvest a little bit. certainly corporations are seeing the lower tax rate of businesses particularly larger businesses they are reinvesting

a company like paychex, we're reinvesting in our employees through wage changes and investment >> i say it's really nice that andrew is deferring to republican senators. second time today, in fact sort of channelling republican senators and their comments and everything it's just good to see that you're -- yeah, you're on all sides. you're on all sides of it. >> i thought it was fascinating to see marco rubio being critical -- >> he's done it before he's done it many, many times before. >> "the times" had a story today that was self- -- >> the carl marx one >> no. they had one about the tax cuts and said there was no evidence for it then later on they showed there is some evidence which is the spending by the s&p 500 and the s&p -- >> oh, capex spending. >> it showed a boost in capex spending now, there is a bit of it that's oil. it seems the extra there is based on the higher oil prices i will read it

but i just think it's too early. i understand why they're doing it were for political reasons. one of investment, productivity gains, and wage gains. it does not play out over months >> okay. thank you, steve thank you, marty in the meantime, when we come back, is a workplace revolution underway we're going to be joined right after the break to talk about it

♪ little bit of news for you this morning the cofounder of what thesapp leaving the company. jan koum stepping down largest ever acquisition for facebook he also told the company he won't stand for re-election to the board. that was a bit surprising. he said it's time to move on, take time to do things outside of technology. we looked it up this morning, net worth $9.1 billion >> yeah. that's a -- that's a -- >> you feel good about that. >> nine times over i quickly did the math >> "the washington post" now reporting his exit coming after clashing with facebook over what thesapp strategy and in particular, his attempt

to use personal data and weaken the encryption also follows an internal debate over whether to put ads in what thesapp. alo acton had tweeted in march, it is time. #deletefacebook after the cambridge analytica scandal had come to light. a comment on the page mark zuckerberg said he was thankful what he taught him about encryption and the ability to put power back into people's hands. acton, the partner, already invested in competitor signal. little bit of a skirmish going on there you have it. meantime, there is a revolution going on in workplaces across the country says our next guest. he also says people aren't just clamoring for higher paychecks but for meaning. joining us is fred kofman, author of a new book out "the

meaning revolution: the power of transcendent leadership. what do you mean by meaning, fred >> i mean in order to give your best you need to have a purpose that's higher than just yourself you don't get the best out of people when you promise to satisfy their basic needs nap is the beginning but not the end of their effort and their willingness to spend it. >> and this transformation, is this something you think's coming from employees? do you think it's coming from consumers? where do you see the pressure point? the shift? >> well, the shift is a question of supply and demand companies want to retain the best employees the employees have their basic needs covered so there's a competitive race to give them more and more benefits and material benefits will only get you so far after the material benefits, you start adding things like

self-actualization, self-transcendence that's why i call it a meaning in people's lives. >> you know, this gets complicated. joe, i don't know if you want to weigh in on this because we've had a debate about this meaning and purpose. blackrock earlier this year saying it wants to hold companies accountable to have a purpose and a way to improve society. and if they don't, that's a problem. i think we've talked about the idea that a lot of people would say the company -- the purpose of the company is to satisfy the customers. that this idea of a higher purpose -- >> because one man's higher purpose is another man's, you know, totally lly an -- opposi. use your imagine one man's chick-fil-a is another

man's starbucks is another man's -- you know, it's just -- if i was a shareholder and i happened to have, you know, beliefs very strongly held about something and then i see someone deciding how i should feel about something that i'm 180 degrees from, why do it? why not let a company just do what it's supposed to do earn a profit for shareholders, you know, treat its employees with dignity, give them a way to earn a living and retire why throw something -- what if you don't like big gulps 18 ounce cups. what if you don't like sugar what if you don't like guns? what if you don't like abortion? what if you don't like -- then we're all going to be tribalized in what stocks we can own in addition to being tribalized in everything else in our world >> yes, absolutely you are looking at this from the point of view from the investor. i am looking at it from the point of view from the potential employees. as an investor you want your

company to have the best talent. that's for sure. because that's how you're going to make more money the question is how do you attract that best talent and get that talent to stay working for you? you were just describing how disagreements between facebook and what tsapp have led to lossf certain atalent why do people leave companies? because they don't feel the company is satisfying their needs. an example of my life, as a manager i wanted my kids to read i said incentives work so i said you don't read i take away your devices. of course they read. then i realized i don't want them to read, i want them to want to read the only way they're going to learn and grow up and be good people is if they do things because they want to do them and the same thing happens with the employees. if you just pay them, you're going to get the minimum discretionary effort they'll just work for the pay. but you want them to put in hearts and souls, you haveto give something more. >> what do you think has driven

this shift this is out just this morning. this is the edelman trust barometer. it's been released with the milken institute in l.a. 84 -- they did a survey of 33,000 people. 64% of people say ceos should take the lead on change rather than waiting for government to impose it. this goes directly to this idea of meaning and purpose and getting involved in these social moves in a way we haven't before where was the tipping point in all of this or are we still in it >> i think we're still in it we haven't seen the end of this. it's going to grow bigger and bigger because as we improve our standard of living, people will be looking for higher goods, so to speak things that are more related to their identities and belonging to a company now it's like belonging to a tribe where what your tribe does is not about who you are and how

you feel about the world so if you start feeling this dissonance between your social position and the position of your company illustrated by your ceo, you're not going to last long in that company >> fair enough we're conversation there. congratulations on the book. it was great to talk to you this morning. >> thank you very much. >> thank you when we return, jim cramer standing by at the new york stock exchange ahead of what he's wchg.atin check out the futures now. coming right back. because, when you really, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.

down to the new york stock exchange jim cramer joins us now. do you have an upside scenario for apple and a downside what would each look like perspectively? >> apple upside would be something return of capital. if we could get, you know, 200 billion, i think there might be good news. the downside is dramatic decline in the number of units to the point where they take the numbers down to where the stock would be yielded giving you -- wow, a multiple of

10 or 11 it is remarkable how many companies have cut their numbers because of apple orders. this morning comecoe the north american company are two that didn't place enough orders broad come are saying don't touch that there's a lot of companies people are saying, look, apple will have a bad quarter. it's hard to imagine apple has a good quarter when the suppliers are having a bad quarter. >> it seems apple knows how to post a good quarter whether it's leading up to it they dot right things in terms of, you know, in terms of just setting it up for what they're going to say i mean. >> i agree with you. >> i would be shocked if it came out of the blue it was just way below what people were expecting. >> we would see -- we want to see the install base and what it's worth it keeps going up. service revenues keep going up

that is a consumer product story. that could be going out. i think warren buffett will panic on the number. i say not. a lot of other people may panic. i think warren won't i think by this time next week we'll say what was that? warren said it was okay. >> exactly thank you. >> thank you news in from the faa out with a new rule. fire inspections so additional engines by august following the explosion of the southwest plane that killed a passenger. the faa said unsafe conditions exist and require the immediate adoption of the new rule it mandates new regular inspections of fan blades for the engines in question. >> sounds like it's not a southwest issue. this is that plane in particular. >> you can't but look out the window and imagine that. and the size of the window is -- >> so small. >> small. >> right

that's really horrific anyway, inspect, inspect, inspect away please, as we head to break, there's a programming note don't miss a interview with wilbur ross. "squawk on the street" at 10:00 a.m. eastern "squawkbox" will be right back e. demand the best. demand a cfa charterholder. cfa institute. let's measure up.

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time with the month of may welcome back south carolina's bar scene may be in jeopardy thanks to a new legal ruling the state doesn't recognize bars so in order to serve alcohol, a business has to be classified as a restaurant or hotel. as a work around, many bars offer minimal food service options so they can still claim they're a restaurant but a new administrative court ruling found that a microwave doesn't count as a kitchen and warming up a hot dog doesn't mean preparing a meal hundreds of establishments that serve alcohol are doing so illegally. the ruling is to be appealed but news that will catch your attention this morning a final check of the markets today. we started out with the futures in negative territory. the dow down by about 40 points.

we heard from burke and pfizer we were positive briefly but the dow futures down by about dra25 points on the first day of may continue to watch apple as we get them after the bell today. that does it for us. make sure you join us tomorrow it's time for squa"squawk on the street." ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faver will talk to wilbur ross in the next hour. and the fed decision tomorrow as a two-day meeting begins today most european markets are closed for may day. dollar near a four month high. a road map begin