quantitative easing as well. how will the central bank respond? it's wednesday, may 1st. apple's a dow component. >> yes, it is. our daily check-in with dow components. >> "squawk box" begins right now. ♪ don't ask for help you're all alone pressure ♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc live from the nasdaq market site in times square. i'm becky quick. we are kicking off the new trading month today. let's get a quick check on how we closed out april. the dow, the nasdaq, the s&p 500 all solidly higher last month. check it out nasdaq was the biggest gainer up by almost 5% that's the standout across the board. u.s. equity futures at this hour this morning after yesterday,

you did see the dow and s&p closing higher, the nasdaq down by 66 points on the disappointing news out of alphabet the night before. there are green arrows across the board. right now the nasdaq is the big winner, up by about 61 points. dow futures up by 85 smaller gain on a percentage basis of course. the s&p 500 indicated up 10 points above fair value. major asian and european markets are close today for the may day or labor day holiday with the exception of london's ftse which is open, down by under 2 points right now for the ftse also treasury yields, if you want to take a look at what's been happening in the united states markets are hovering back at 2.5%, barely for the 10-year note crude oil prices, take a look and you'll see now that crude oil, wti, down by about .75 percentage points. a decline of 50 cents to 63.41 top corporate story, apple the shares are surging second quarter profit and revenue fell, but still beat

forecasts. iphone sales dropped 17% you'd think that might be bad news but service revenue rose 16%. apple's third quarter outlook coming in above estimates. and the company plans to spend $75 billion to buy back more shares company reported revenue of $5.1 billion for the wearables home and accessories business which includes the apple watch and airpods. on the earnings call, ceo cook said apple's wearables business is now the size of a 400200 company. a lot of people looked a the watch, i wear the watch, didn't think it was a success or never broke out or what was their next great invention? i would actually put the watch up there. >> i can't believe that. i can't believe it was a 400200 company but i think the ear pods may be a part of it. >> huge component. >> even joe kernen has it.

>> i do, they fall out it's going to fall down a sewer or something fall between seats of the car. >> then you'll order a second pair. >> that's right. i think that's it. that's 78 dow points right there. >> and the size of the numbers with every one of these businesses, that's what's astonishing. you start looking through, it's easy to have your eyes glaze over with the big numbers. $75 billion share buy-back in itself is a big number over $11 billion just in the revenue coming in from services. these are numbers that when you sit down and really try and break down, it's a little staggering just the scope of what this company is doing. >> tim cook's the biggest bargain in ceo land. good to see the top 100. it's nothing compared to a mead gra or andy sorkin or something like that. did you see that still a nice number but nowherer in i think the two oracle guys were one and one, one and two or something. >> we'll be having conversation - >> oh, i know.

i'm kind of with you on some of the hedge fund stuff in terms of, they can make a billion dollars one year, if they suck the next year, they don't give any of it back. so i don't know if you cap performance fees because it's their company. >> or get call-backs. >> or call-backs maybe it should be five years. >> rolling. >> or maybe you just like the cap overall compensation that no one can make more -- maybe no one can make more than $100 million in a year or something like that. >> we'll discuss this later but some of these guys have what are called high watermarks. >> thank god. >> if you do fall below -- >> i understand but close it down and open another one. you know in the worst days of the commodities scams back in the old days, you could put on a bunch of positions, some long, some short, and get a -- the ones that worked out you took your percentage on, the ones that lost you didn't owe anything there's ways of gaming the system that is unfair.

anyway not saying hedge fun dozen that. one year you're up, the next year you're down i don't think you give it back. >> you don't give it back. sometimes you have to climb up the ladder again to get to the next place. >> these guys are making $2 billion in a year. >> dally made $2 billion in a year the one thing that could be a little misleading about some of those numbers is some of it is their own funds in their fund. >> no wonder he wanted to preempt a strike from the barbarians at the gate i didn't want it and i feel bad about it and i want everybody else to pay a lot of taxes, but i did make $2 million, thanks. >> at least they pay equitable taxes, carried interest. >> that too. it's decision day for the fed. this month's meeting comes with an added helping of political pressure yesterday president trump tweeted about the fed. china is adding great stimulus to its economy while at the same time keeping interest rates low. our federal reserve has incessantly lifted interest rates even though inflation is

very low and instituted a very big coes of quantitative tightening we have the potential to go up like a rocket if we did some lowering of rates like 1 point and some quantitative easing yes, we are doing very well at 3.2% gdp, but with our wonderfully low inflation, we could be setting major records and at the same time make our national debt start to look small. we will bring you full coverage of the fed decision and chairman jay powell's news conference that all starts today at 2:00 p.m. eastern turning now to china another round of high-level trade talks just wrapping up in beijing. we heard from treasury secretary mnuchin overnight. he tweeted, u.s. trade rep lighthizer and i just concluded productive meetings with china's vice premier we'll continue our talks in washington, d.c. next week in the meantime, president trump and democratic congressional leaders finding common ground. the two sides agreed to aim for

a $2 trillion infrastructure package. house speaker nancy pelosi and senate mind leader chuck schumer said the white house meeting was productive and they would return in three weeks to hear the president's ideas how to pay for the bill i'd guess that would be a much more contentious discussion. the republican lawmakers may be tougher to convince. gop leaders warned about deficit effects of a major new spending bill in the past the president and the republicans have said they would like to see public-private cooperation and a lot of this raised through the public, or through the private markets, not through public funds democrats have said they want to see more public spending on this that's where you're really going to get into trouble with this and where it's hit a snag every time. when we come back, a lot more on our conversation about ray call i don't, hedge fund manager. he sounded the alarm on income inequality and is a subject he knows well because he's at the top of a new rich list of the

highest earning hedge fund managers in the world. the other big earners, and we'll go through the list next here's a look at the biggest premarket winners and losers in the dow. carl, i appreciate the invite here. as my broker, what am i paying you to manage my money? it's racquetball time. (thumps) ugh! carl, does your firm offer a satisfaction guarantee? like schwab does. guarantee? (splash) carl, can you remind me what you've invested my money in? it's complicated. are you asking enough questions about the way your wealth is being managed? if not, talk to schwab. a modern approach to wealth management.

institutional investors magazine out with its annual hedge fund rich list the top earners, amanda kentrow, deputy editor of "institutional investors. we've been debating on the set about this pay and how much it is ray dalio, of course, at the top of the list. do you want to go through the top five ray at $2 billion. number two >> jim simons from renaissance technologies, $1.5 billion. >> a drop of half a billion dollars. a steep delta. after him? >> ken griffin from citadel. >> that's another steep dropoff in terms of the delta. and then you want to go to number four and five on the list >> four and five is a tie. david segal and tom overdeck

from two sigma. >> how much did they make? >> i believe it was around $520 million apiece. >> how did ray do $2 well? >> bigger fund. >> well, they've been bearish for a long time. they're a large global macro fund they obviously trade in a lot of large liquid markets around the world. we don't have a lot of granular detail on how they did but their bearishness definitely helped them. >> they didn't make the s&p with the main fund, did they? i don't think he beat the s&p with the main fund, up 14%, 15%? >> the pure alpha fund posted -- >> what did the s&p do >> i guess it did. >> last year on a relative basis, that's what i think was going on. >> right. >> now just so everybody's clear about the way these metrics are created, this isn't just a performance fee and management fee. this is not really just their salary >> exactly. >> it is that plus how much money they have invested of their own money in the funds. >> that's correct. >> that's correct, so a lot of

the reason that ray dalio made as much as he did in this case is because he was fully invested. >> exactly it goes to show the power of compound - >> the power of compounding and having your own money at stake i was thinking of something like bob iger, for example, who i imagine there's been a big debate with abigail disney, who's been talking about how his paycheck is insane, he makes $66 million -- >> the grand niece of walt disney she's never worked -- who cares what she says but her name's disney >> he made $66 million last year, but what i was going to say is in the past four months, given that i imagine he's a decent-sized shareholder of disney, he's made a lot of money because the company's valuation went up $20 billion. i'm trying to think about -- we've been talking about public policy questions about how do you think about this kind of pay? i wonder whether we are describing their pay accurately in terms of --

>> fair point, when it's your own money that you have riding on it. >> separately we should say, about ray dalio, i thought it was fascinating, there's two other people from bridgewater on the list. >> right. >> so his two lieutenants made how much >> bob prince and greg jensen. they owns didn't make as much as dalio but a few hundred million. >> remember when milken -- that was the first guy i saw make $500 million i couldn't believe it. this was back in the heyday. but i couldn't believe it back then guys like tepper, dalio, billions. >> that was what i was going to say. a couple of people dropped off the list >> tepper. >> tepper is not on the list. >> david tepper is not on the list. >> dan loeb. that was december? december hit this market hard. >> yes, it did about half the people who were on the list last year fell off this year. and several of those people were in pretty good shape going into the final quarter. and some of them fell off due to december alone.

>> like all the rest of us. >> right, exactly. >> the other piece of it is, these numbers actually, even though they seem huge, and i don't want to diminish their size, are lower than what they've been in previous years so when ray dalio was last on this list in 2011, he was paid $3.9 billion in that year. so what changed? >> well, one thing that we've observed about this list over the years is that a bad year in the equity markets often translates to lower earnings i won't say poorer earnings. much lower earnings on the rich list that is a function of the fact that managers get irritated when you say -- when you compare the performance of hedge funds to the s&p 500 because hedge funds encompass a lot of different strategies but long/short equity is still the biggest strategy by assets. >> why do managers get irritated by that? you're paying for a massive premium to get a better performance than you should be able to get if you're a completely passive investor.

why would you be irritated >> they would argue that if you're a multi-strat manager, you're trying to serve a different purpose -- >> than making money >> it's certainly a criticism that a lot of people raise. >> we're doing so much more. >> well, you know, there's some protection on the downside, supposedly what gets me, past performance is not necessarily a guarantee of future performance. some of these guys really do have some talent i would say the top 20% are really good. 80% of these guys that can make a lot of money and then the next, i don't know, the next year you see some of their calls and it's like, i knew that that was a bad investment which is scary like, you're buying gold with rates headed i can't remember what he was doing, like $1,900, gold was that's what gets me. and they don't give it back. acman's really good sometimes but other times he's as human as the rest of us. >> fair point, when they don't

like they performance, they close the fund and open a new one. >> how does that work specifically we were discussing this idea that in a bad year, they don't really lose. >> right, exactly. and that also comes down to the proportion of their own capital invested in the fund so for example, if you look at the list this year, steve cohen returned to the list for the first time in several years. >> $70 million. >> chris hone from tci was back on the list. they each made under 1% in their main funds last year >> do they - >> versus the 2% and 20%. >> right. >> do they want to be on the list the "forbes" list, certain people beg to be on it, our current president used to beg to be on it, other people never want to be on it because they didn't want the attention or quarrel with the numbers and i wonder, does the same thing happen with you? >> yes behind the scenes, that

telephone happens. steve taub, who's been compiling this list for 18 years, has run into each of those scenarios yeah, i would say that that's still the case >> can you tell us who does what >> we won't disclose publicly how they feel about it. >> thank you, appreciate it. >> you're one of the highest-paid morning business anchors based in the nasdaq that starts at 6:00 a.m i think we're like - >> like when i tell my daughter she's my favorite daughter, there's only one only one i can't do that with my sons anyway, thank you. >> thank you when we come back, a facelift for facebook. we're going to show you all the big changes announced at the company's developer conference, including a new feature that connects you to your secret crush. "squawk box" will be right back.

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it's just $4.95 per online u.s. equity trade. welcome back facebook's developer conference is under way and the company unveiled a major redesign for the social media's website and mobile apps. getting rid of the trademark blue bar for a clean white design stories and group posts will be stront and center. facebook messenger is getting a big encryption update. facebook dating is adding a new feature, including one that's called secret crush that connects a pair of users when both have secretly indicated that they have an interest in the other one. >> oh! >> yes, you can apparently have up to eight crushes.

facebook is using an algorithm to help users meet new friends. >> i don't know how i met anyone i'm lucky i got married, i guess. >> bookstores, bars. >> you'll say you have the crush on the other person, and they have to say they have a crush on you? >> independently >> independent, right. >> you have to be trends. >> then if something happens where you both have indicated this -- the creepy thing is you can have eight people you have crushes on and they're all your friends already. >> you don't need to be. you've got that other thing, whatever it is. >> you have to be friends with them. >> tinder? >> no, ashley -- >> oh, man, no. >> is that back on >> i don't know. >> gee >> you knew all about swiping. i thought that was from -- >> swipe or no swipe >> i thought that was dora the explorer. >> no. no, no barry diller describes the

swiping to me. >> one way is good, the other you're not interested? >> i think -- i'm not sure i think this way's good, that way's bad. throw somebody out or put them in your pile. >> you know about everything technology >> this one -- i never got into that whole app dating world. generationally - >> i've known you so long that i used to say, find a nice girl. remember get settled down yeah, i did, when you were a guest host. >> yeah, a long, long time ago i've been happily married for a long time. >> you've got kids and everything else. >> been over a decade, right >> yeah, 2007. >> we go way back. longer than many marriages a lot of the same dynamics, i think. stocks to watch, chipmaker amd reporting a slight beat on first quarter profit and revenues, second quarter guidance in line with street estimates. stock's up more than 50% this year and ceo lisa su is going to sit

down with claimer on "mad money" at 6:00 p.m. eastern we're watching the shares of mondlees, posting better than expected first quarter profit. mondelees. revenue missed just slightly organic revenue growing nearly 4% thanks to strong international sales of top brands such as oreos the ceo will be on "squawk on the street" in a first on cnbc interview at 10:00 a.m. eastern. dirk van deput i like that. like art vandelay. the architect. shares of wynn resorts are higher after gaming regulators in massachusetts allowed the company to keep its license for a new casino outside of boston which is set to open in june they were fined $35 million. ceo matt maddox criticized for the company's handling of sexual misconduct allegations against ousted founder steve wynn.

coming up, 6:25, a higher education merger two major textbook providers are joining forces the ceos will join us after a quick break. a couple of big names on the earnings calendar today, including cvs health, glaxosmithkline, and yum brands. i got a whole box of 14 of them. i was at a tennis match and there was one nearby and i saw it, oh my god. let's look at yesterday's s&p 500. >> you ate 14? >> no.

♪ ♪ it's more than a feeling welcome back you're watching "squawk box" live from the nasdaq market site in times square.

♪ till i see marianne walk away ♪ welcome back on today's wall street agenda, the adp employment report hits at 8:15 eastern time followed by manufacturing pmi and ism manufacturing. then the big focus turns to the fed. we're going to get the central bank's latest rate decision at 2:00 p.m. eastern. that will be followed by jay powell's news conference following president trump's calls yesterday for the fed to actually cut rates by 1% and ramp quantitative easing back up full comp of the fed's decision at 2:00 p.m. eastern time. in the meantime the u.s. equities futures at this hour look like they're up across the board. the dow has picked up ground it's now up by about 93 points s&p futures up by 10 nasdaq up by 61. a merger of equals, i guess, raising eyebrows in the publishing industry this morning. mcgraw hill and the education tech company sengage are

planning to merge in the second-largest provider of textbooks. followed by pearson, i believe michael hansen, ceo of sengage, and the ceo of mcgraw hill that's the old mcgraw hill, now s&p global, and the education division was an apollo unit? >> the way to look at it, mcgraw hill, there was always some education, that's the 130-year-old arm standard & poor's was bought in the '60s and that is what became a standalone company, what is you s&p global in 2010, 2011 so the history of mcgraw hill is in education solutions. >> sengage has been around for how long >> similarly, sengage, the name came into existence when it got bought from thompson so we were known as thompson learning the company had been around for

about 100 years as well. >> society is not paperless. there's still textbooks. about half of college curriculums are still physical textbooks? >> in terms of -- if you think about courses taken in the united states, there are about 100 million courses taken every year less than 20% are really digitally enabled at this point. you went to college, i went to college, when our parents went to college, the experience is still the same, which is frankly unacceptable given how much technology has moved on, yeah. >> so it's going to help to bring these two entities together in terms of competing in a very -- in an environment where margins are shrinking and -- i mean, this is a growth story? or is this a economies of scale story? >> it's body but ultimately you can't have a growth story without getting your bases and home base right there's a strong synergy case in the commonality of our higher

education textbook purpose we're also in the k-12 side. we also have a strong vocational presence what we call professional. and sengage has a strong library business when you put all these bases together, you're bringing your forces -- ultimately it gives opportunity to invest right back into the business. something we've not been able to do when you imagine the shrinking and downward pressure. >> you're going to be the ceo eventually, you're going to leave eventually >> eventually, post-transition phase. >> after transition. are we moving to all digital eventually will there be no textbooks at some point and this is part of the reason it's hard to continue to make money in textbooks >> i think whether somebody learns and likes to read something on a printed paper isn't really as relevant as when you are in the course, you want to be able to adapt the content to the individual lerner you might have a very different learning style from becky. and we have actually the technology to allow us to

basically take the content and make it so that you can learn better and more efficiently. >> as a student i can choose whether i want the original textbook or electronically >> absolutely, absolutely. >> can i have both >> you can have both in fact, now the big barrier has been affordability frankly, for most tunes, the solutions that are out there are simply not affordable, too expensive. so we made a huge drive in affordability and introduced a netflix-like model why don't you consume textbooks the way you consume next application? one simple price per semester, $120, no questions asked. >> that is profitable for you? or is this the same thing? netflix, all these companies that are trying to emulate it, if you're a broadcast company trying to emulate netflix, you're losing money. >> we're not trying to emulate, we're disrupting our own industry, that's the difference. >> every industry that's trying to disrupt itself is finding you're trading, what's the phrase, analog dollars for digital dimes. is that the case with you guys >> it is not because we are

actually capturing additional volume so there are a lot of students out there, of the 100 million experience, 80% of them are right now in print and there is huge opportunity for us to grow we're making up with volume but giving the students an affordable experience. >> what's the additional cost of putting together a digital book, for example, and some of the interactive components relative to a traditional book? >> it's significantly more expensive. because it's not only the book that's really the relevant part. the interactivity comes from the questions that you ask and the feedback that you're getting and the analytics underlying it. you have to invest -- both companies invest to the tune of $150 million a year into our digital platforms. together it allows us to do more of that. >> you're au also able to rid yourself hopefully, long-term, of the used book market? that's a huge component of this, capturing that piece, the used piece. >> yeah. it's very -- and it's similar to the music industry

remember the days, like in the early 2000s, everybody was stealing music online. napster. now nobody does that anybody, why? because it's affordable, they can do streaming service - >> people share their passwords with people for netflix. >> well, yes >> examples where there are way too many people sharing the passwords. >> the good thing is people like to share passwords, people don't like to share grades we have the grades but you don't want to know - >> it's time for some privacy component. >> exactly. >> eventually you're going to bring this public? mcgraw hill would be a good entity to come out - >> i think it's one of the possibilities. but what we have - >> you've got something you're going to be holding if this comes out? >> i would love to have the opportunity. it's something that's very much - >> i will also take care of him. i will tell you, first we've got to take care of our customers, the other students, that's what we're focusing on. >> i stopped learning. 10, 12 years ago, i think. i don't need any more.

i'm all full >> i don't believe you, you learn from becky. >> oh, sorry i'm full i'm full up to here with stuff, learning. >> that's how you stay young, you have to learn every day. >> really? there you go the problem. >> no, no. you're being - >> i am. >> you're being flip but - >> a little less willing to learn. old dog, new tricks, you've heard that, right? >> sure, sure. >> you keep telling yourself i'm still learning, it's nice, thank you. thank you, good luck. >> thank you. >> thank you. after the break, google parent alphabet announcing a board change following its worst day since 2010 we will tell you the details of that board change. it's significant later, the ipo parade. a warning for venture capitalists. some of them fearing an economic slowdown is it a sign or not? we'll debate that with bedrock

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welcome back to "squawk box. time for "executive edge."

we're watching shares of alpha bet, the stock coming off its worst day since 2010 the former ceo and executive changer rick schmidt is going to be leaving the board, will instead serve on alphabet's leadership, development, and compensation committee we'll remain a technical adviser to the company but eric, of course, had been with the company for a very long time he was considered the adult in the room. >> 2001? >> i think probably back then. i remember i got to know him when he was at novell. he was one of the old stalwarts of silicon valley. >> loaded after novell. >> you're right, it was the adult in the room. >> he was the adult in the room, that's scary also spent a lot of time in europe and dealing wit regulators in washington and elsewhere. elon musk's deal with the s.e.c. over his tweets has been approved by a federal judge. it deals with how tesla must

oversee musk's use of twitter expressing financial milestones and other events that musk can tweet about without prior approvalpy company lawyers s.e.c. commissioners signed off on the deal although robert jackson, who's been on our show, the lonedemocratic member of the s.e.c., said he opposed the deal, couldn't support a settlement in which musk didn't admit that he violated the agreementreached last year wit the s.e.c. worth note be robert jackson is leaving the s.e.c., stepping down but nonetheless making it a little bit more interesting, the musk drama. >> yeah. coming up, we'll break down apple's quarterly results. the stock jumping this morning we're going to talk declining smartphone sales the rise in wearables. and apple's big buyback. that's next.

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apple shares surging after second quarter profit and revenue both fell but the company still beat the forecasts. e-phone sales dropped 17%, however services revenue was up by 16% and was better than the street had anticipated apple's third quarteroutlook also coming in above estimates and the company says that it plans to spend $75 billion to buy back more shares walter picheck is managing director at btig walt, i'd ask you what the good, bad and ugly of this is but i don't know that there's bad and

probably not ugly. >> less ugly than people were looking for. a company that's in decline, the iphone business down 17% even services, 16% is good but a slowdown from last quarter i think it's a matter of the company positioning themselves to return to revenue growth next quarter and perhaps earnings freetds in 2020. >> you raised your price target and your earnings expectations based on what the company said yesterday? >> we did because china, i think they've made the right decisions there. they've cut price in order to drive unit growth. as a result the revenue decline wasn't as bad. and there was also a fear that would impact margins frankly margins stayed up fairly well, even in the product sector now what you have is the services business represents a third of the gross profit the company. >> right margins there are better. >> you've got this great tailwind even next quarter, the guidance for gross margins, which is effectively flat, there's

opportunity for upside there because services is lifting that gross margin when we fast forward to the end of 2020, that services business could be 40% of the gross profit the company. that's a pretty impressive changeover. >> your price target is $234 that is 12 months from now, that is year end? >> a year end price target on a forward earnings the market's been rallying it's not as attractive as it was a short while ago. six months ago, 25% discount to the market now at parity. now talking about a stock, can you maintain parity with the market if you're returning to top line growth and earnings growth next year >> what do you make of the hardware we were talking about the earbuds or earpods and the watch. how should we think about that it's just another product -- an incremental line to drive growth, it's also keeping within the ecosystem. obviously looking for services >> it's a huge business now. >> it as huge business but the

focus should be on services, just because they're - >> the profit, growth that's up there, there are a lot of things when you're in the ecosystem - >> what do you think tv service is going to be paid service >> i think it's going to an paid service. i think they want to money on this. i think this is about original content for them i don't think they're going to keep this within the apple tv. they're going to want to push this to as many locations as possible but i think the future for them is they have this huge checkbook to attract a lot of quality, original content and it's going to take time. but look, they have 900 million active users of iphones and what's netflix got, a couple hundred millions not that they need to necessarily be the next netflix, but they can take that approach, as opposed to what people want them to do, go out and buy studio they don't need to buy studio. they have time to build up a good, original content. >> and having that sort of user base is why they've already been able to attract the people they've attracted. i was reading a "hollywood reporter" interview with oprah

and she said that's why she's there, she wants the platform of a wider audience. >> and that initial launch was giving an advertisement to the talent who's out there here's what we can do. look at these high-quality people who have signed on with us and if you look at the subscription business, it grew by 30 million users on just this quarter alone, 120 over the past year. >> we were just talking about news and news plus during the commercial break do you think that product is going to be a success? >> i mean, news plus was a big contributor, i think, to the growth in subscriptions in this particular quarter it's certainly something that maybe drives ipad sales. look at ipad sales, up 20% it hasn't grown that fast since 2013 some of this -- >> do you think that's a function of the news, news plus, do you think that's a function of the new ipads they rolled out? >> i think partly news plus, as far as upgrades. but look, 50% of ipad sales are people who have never bought an ipad before. so, there's perhaps some substitution from laptops going to these ipads, which are coming in varying shapes.

>> by the way, is that a problem? because the ipad, i assume, is a much lower margin product relative to a laptop. >> macs have been successful and they were down 4% this quarter they're blaming that on some production constraints on the product, but you have to wonder if ipads are plus 20% and macs are negative 4.5%, what component of that substitution came into play during the quarter. >> the share buyback program has been pretty unbelievable i think the shares were shrunk by about 8%, and now they're talking about another $75 billion in stock that they're going to be buying back. how do you even get your head around that in terms of trying to figure out what the company means, what that means to shareholders >> i mean, what it means to shareholders is that as they struggle to get net income flat, or growth, that earnings repurchase makes the earnings growth look a lot better, so it turns effectively -- >> it actually is a lot better in terms of the percent of the company that you own as an individual shareholder, profits. >> absolutely. and if they're going to spend $25 billion a quarter, that buys back a lot of stock where you can buy in effectively 10% of

the float in a year's time. >> does that signal that they don't have better things to do with it, or does it signal that they are a cash machine that's kicking out so much cash >> they're still spending a ton of money on r&d. it hasn't been an inquisitive company. the largest acquisition in the past decade was beats, and i'm not sure that was a game-changer for the company. that will be a criticism, should they have bought netflix five or ten years ago and been in a different position than they are if they had bought netflix i just don't know what is out there for them to make an acquisition to achieve the goals that they want to right now. >> how does apple compare with other stocks in your universe? what are the stocks you kind of think about in a parallel sort of manner, and where do you come down on each of those? >> i focus mostly on the wireless business. and so, 5g is a major topic, right? so, a lot of investors are saying what is the way for us to invest in 5g it's difficult, right? it's very early stage. operators have to spend a lot of money. the vendors that are selling that equipment have been

commoditized in large part, so apple almost becomes a way to benefit from 5g. then it becomes timing i think a lot of investors have gotten too optimistic about the impact of 5g in 2019 or 2020, and the corollary to that is, it's not a big risk to apple, in our opinion, that if they don't have a 5g phone -- or ability to sell iphones or for this replacement cycle, which has now been extending for four years, to stop extending. so, i think that ends up being the issue we're looking at relative to other alternative investments. >> walter, thanks for coming in. >> you bet. >> good to see you. we're counting down to today's fed decision after an added dose of political pressure from president trump we'll tell you how markets could respond to today's announcement. and later, we'll be talking to the one analyst who wasn't surprised by yesterday's news that warren buffett is getting involved in the

occidental/anadarko deal we'll tell you about how he knew before the announcement came out. stay tuned to "squawk box" right here on cnbc ♪

markets kicking off a new month and it starts with the fed wrapping up a two-day meeting. we take a look at the expectations for investors. attacking ceo pay. senator bernie sanders targeting disney ceo bob iger's pay package. how will the wage war play into decision 2020? ♪ >> whatever it takes. >> whatever it takes. >> and the flight path to a deal >> you know where that plane is going? >> erie, pennsylvania. >> thank you >> story of how one analyst figured out a key move in a megadeal the second hour of "squawk box" begins right now ♪

>> announcer: live from the beating heart of business, new york, this is "squawk box. welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. today is the first trading day of may after a very strong market performance in april. the dow, the nasdaq, and the s&p 500 all solidly higher last month. the nasdaq was the big standout, though it gained nearly 5%. you can see the dow was up by 2.6%, the s&p up by 3.9% if you check out the u.s. equity futures at this hour, we're starting the first trading day of the month with a little bit of a bang. dow futures indicated up by about 73 points. most of that coming from apple, which when we looked earlier, apple gains alone were adding 77 points to the dow. so i haven't looked at the latest tick on apple, but again, most of those gains are from apple, which reported earnings last night that pleased the streets, especially when they started talking about their guidance for the current quarter. s&p 500 up by 8 1/2, the nasdaq up by 56 let's take a quick look at the

ten-year note this morning it's yielding -- oh, it fell underneath 2.5%. that's something that's happened just in the last half hour 2.496%, as we await that fed decision and then the fed meeting later today. okay, a couple big headlines for you this morning cvs health earnings just out the drugstore operator and pharmacy benefit manager earning $1.62 per share for the first quarter. that's 12 cents above estimates. revenue also beating street forecasts. cvs is also raising the midpoint of its full-year profit outlook. and you're looking at that stock up about 3.5% in the premarket today's economic calendar is a busy one the adp report on private sector unemployment out at 8:15 eastern time, a snapshot of april u.s. auto sales as some, though not all, of the automakers report. only ford and gm report on a quarterly basis. then the ism manufacturing indeteinde for april at 10:00. boeing had a tuesday bond

sale the money will help boeing deal at least $1 billion in costs related to the grounding of its 737 max jet. you mentioned apple? shares are up sharply this morning. second-quarter profit and revenue did fall, but it was above forecasts. iphone sales dropped 17% above estimates. and the company plans to spend $75 billion to buy back more shares now, the company reported revenue of $5.1 billion for wearables, home and accessory business, which included the apple watch and airpods. on the earnings call, ceo tim cook said apple's wearable goods is now the size of a fortune 200 company. and becky, relating to some of our conversations, i've got people saying it's my fault that my airpods, or whatever they are, fall out. either -- >> you have defective ear canals >> either i'm wearing them wrong or there's hair in my ear.

>> no, i can attest that -- >> i said, no, we watched this very carefully. >> we had this conversation. go ahead, turn to the side. >> there's nothing there's nothing. i've got a thing that -- well, what did i find out? there are big sweat, a specific type of sweat -- >> so gross. >> -- in your canal, andrew. really active ones very active ones. >> well, they look nasty people are eating breakfast right now. >> this is not -- do you know what that sound is right now, andrew >> it's a turtle. >> no, it's not a turtle. >> i know. i'm not going to go -- >> there may be only one turtle making the sound, but there are two turtles engaged in a carnal -- >> interesting. >> turtle -- >> in case we haven't turned you off from your breakfast yet, stay with us >> your hair and -- >> and slime and -- >> turtle action >> but honestly, there are little attachments, i think, right, andrew, that they have to keep those -- >> yeah, we'll get you >> because they are dainty -- they're small. and sometimes i feel it start,

you know, and i'm somewhere where if it falls -- >> have you had it -- >> i do, but everybody has different sides. >> i just put mine in. >> mine go in initially, but then i can slowly feel it dislodging [ laughter ] >> taunting him. >> you know what i need? you know how -- this is molded to my ear -- >> well, there's the upgrade system maybe eventually you'll be able to mold them to your freakish ears. >> you send away for it and it comes in and it's perfect. that would help me. >> apple, are you listening? in the meantime, the federal reserve's going to be wrapping up its two-day meeting later this afternoon steve liesman is covering today's main event, and he joins us right now from washington, d.c. and steve, obviously, you have to be there, because this meeting comes with a press conference afterwards. that's pretty important. >> yes, it does. becky, the fed faces a series of economic and political challenges, set to release its statement today as powell readies for that press conference on one level, the data's rebounding market fears of a first-quarter

recession have turned out to be overwrought, and unemployment is low and gdp's bounced back that has 58% of respondents to the cnbc survey looking for a rate hike next year. 56% say the fed will be on hold in 2019. only a third think the fed will cut rates in 2020. "action economics" writes "the challenge for the fed over the coming months may be to manage expectations of no rate hike if growth and inflation surprise to the up side. while data has rebounded, inflation has not. the preferred inflation indicator at 1.6% year over year, below the 2% goal, and it's been falling since december that has the fed funds futures market predicting rate cuts. and deutsche bank writing "should fed officials emphasize the weakness in core inflation and the potential for slippage in inflation expectations, then it leads to the adoption of monetary policy frawz. then there's president trump,

who upped his calls for the fed to cut interest rates, now adding that the fed should follow china and stimulate the economy. the president said the u.s. economy has the potential to go up like a rocket if the fed cuts rates. the president's statement on the monetary policy now seems to be a regular accompaniment to the fed's statement and the press conference, becky. >> what's the question that you kind of are kicking around, maybe without stealing your thunder or taking too much what is going to be the question that people are trying to get out of jay powell if he does take this conference today >> you know, my thinking is -- like, the head, the neck-aching report i just gave, sometimes i think i need to ask the chairman if he's thinking about raising rates because the economy is strong you had that strong first-quarter growth number, and it looks like the second quarter's going to be pretty good and then i wonder if i should ask if he should cut rates because of inflation the fed is really in a position right now where it may be

something about how do you begin to think about inflation, given that the way the fed has been thinking about inflation, has not really worked out all that well. >> you know, donald trump saying -- the president saying he wants to see rates cut by 1%, and he'd like to see additional quantitative easing. when i heard that, i kind of said, "what? but is that part of his game to just come up with outrageous things and reset the rules of the game, almost, so that anything the fed does has to look at that as being one of the end goals? and of course, we're not going to do that, but maybe it moderates their behavior in other areas? >> right so, maybe it's the president, who thinks of every single thing he does as some kind of negotiation, so he calls for qe and china-style stimulation and thinks at least that keeps the fed from returning to what i was talking about earlier, which is this idea of a potential rate hikes. you know, all i can say, becky, is when i could tell, the president -- >> that's one way of putting it.

steve, thank you very much stick around we're going to talk a lot more about the fed, the markets and the future of interest rates joining us now is david all bright, president and cio of newfly ask management. what do you think? we're not sure which direction the fed's going to go. are they thinking of tightening or easing -- >> our base case is the fed stays on hold you could either buy risk assets, which have performed extremely well, going back to december, whether it's high yield up 8.5%, bank loans up 5.5%, emerging markets up over 6%, investment-grade corporates up over 5%, and the segment of the market that everybody hated, the ddds, the most sensitive to being downgraded, have returned anywhere from 6% to 7%. >> you think that's what the market wants to hear, basically

that the fed's out of the game, they're not going to do anything >> i want to do what the president wants to do and buy risk assets. i think the market is ready for the fed to remain on hold, unless something materially changes. >> and what do you think the president's trying to do with those comments >> obviously, if it doesn't happen, if the economy turns down, he has somebody to blame, right? and if they do follow him, which i think would be highly unlikely, you'd have a huge rally in risk assets the equity market, you'd do very well leverage finance would do very, very well. emerging markets would do very well. >> what happens if the fed stands pat what happens to the market because you do make the point that equities have come off a long way from where we were in december, when the fed first started changing its tune. >> right i think risk assets continue to grind tighter. in fixed income, i would say it's more of a coupon clip a lot of valuations are pretty full, high yield we're getting back to one and five-year tights on a spread basis and highs in dollar price. in the investment-grade corporate market, you're up near

five-year tights as well so it's more relative value within sector and then making valuation calls between sectors. >> why in the heck is the ten-year below 2.5% today? >> 10 trillion of negative rates around the world you have mario draghi, who i call the driver of our yield curve bus. obviously, he's thinking about buying back other securities you look at, you know, rates on the ten-year in other countries, germany at three basis points. you have spain and portugal at 105 and 115, italy with $100 billion too much debt, yielding the same as our security so a lot of questions. but negative rates caused the technical imbalance we saw in the inverted yield curve -- >> you had me going on what would happen if the fed did what the president wanted we can't do that what'd you say again >> i also want the giants to win the super bowl and roed sox to win the world series. >> refinancing goes up -- did you say anything bad

>> i think that scenario would be fantastic. >> but would it have -- >> repercussions >> why can't we do it? >> first of all, it's not going to happen. >> i heard that part but then you said what would happen i'm like, wow, that sounds -- >> it does sound very, very good, but -- obviously, i think, what do you call it, the global environment has to normalize we have to have stability in europe you have five dysfunctional countries in europe which, you know, are obviously a concern. >> you know, we went against the grain in december from the rest of the world, and look what happened so, i mean, why can't we just -- if you can't beat them, join them i'm not -- i'm just sort of playing devil's advocate it does sound crazy -- >> what are the repercussions? >> qe sounds crazy right now, i admit. but then again, if we are just dead wrong that inflation always comes back, if there's something really different this time, which is a horrible thing to say -- >> i think our largest export partner is exporting deflation, china, so --

>> exporting deflation so maybe it's let the good times roll i don't know. >> i say keep risk on here -- >> do you ever stay parties past when you should and nothing bad happens? >> no. >> something bad happens. >> usually something bad happens. >> you regret it every time, right? >> how about give me "one more for the road"? i'm driving. give me one more. >> david, thank you for coming in. >> thank you very much. >> and steve, we're going to be watching you. >> oh, yeah, i'll be here. >> next 24 hours. >> i was just going to add to what joe was saying, which is this idea of under 2.5% on the ten-year it might be a message that the fed is too tight here, that maybe, given the negative interest rates around the world, given the trajectory of inflation, market is certainly not concerned about inflation. dave's investors are not asking for very much in the way of inflation compensation, which suggests, who knows, maybe on a longer-run rate, there is some room for the fed to move. >> wow. >> and there's a lot of -- i mean, to get to 2.49, that's the

biggest market in the world, isn't it, steve? the bond market -- >> yeah. you've got to have a lot of fat people on one side of the boat in order to tilt it that way. >> the muni market looks awfully attractive, especially taking away the salt deductions you've had record inflows since 1992, most we've seen, $30 billion year to date we like that market. >> david, thank you. coming up, do you remember the movie "wall street"? this is the first thing i thought of, honestly, yesterday. bud fox riding around -- remember on the elevator, where he's listening and he's trying to -- doesn't want them to see who he is. then he's on the -- >> motorcycle? >> -- the motorbike, spying on people should be illegal, looking at tail numbers we found out which stock was a takeover target. here it is. >> do you know where that plane is going >> erie, pennsylvania. >> thank you. >> just roll the dice and play a little monopoly. the letter you land on, erie, pennsylvania >> jesus christ, buying the

jail >> three decades later, analysts are still trying to find information used in unconventional -- hopefully not dressing up as the cleaning crew and going through the actual, you know, drawers of the -- >> this is totally legit. >> the technology has advanced a bit. we're going to talk to an analyst who figured out a key move in a mega deal following the flight path. the other thing we thought of yesterday was the monsanto jet at the gd serial headquarters. that happened 25 years ago anywhere, "squawk" returns in a moment ♪ you should be mad they gave this guy a promotion.

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♪ welcome back to "squawk box. the futures right now because of apple, at least, the dow is up 76 points. apple's up 10 or 11. now it's up 88, actually, the actual future change of 76, but with a fair value of minus 12, we're up almost 90 points on the dow. the nasdaq, you would expect with apple, up 60 points great move last month -- >> dow up with apple, too. >> yeah, that's what i said. and you know, 5% last month on the nasdaq and then to new highs. then the s&p -- are we at -- let me just check that. >> i think it was up 4% for the month, but also at new highs.

>> closing in on 3,000 2,945. not quite. about another 50 points to go. another late twist in the mueller investigation. eamon javers has the latest developments. >> reporter: good morning, becky. a dramatic rift coming into public view between the special counsel on the one hand and the attorney general on the other. the "washington post" breaking this story late last night what the "washington post" reported is that robert mueller, the special counsel, wrote a letter to bill barr, the attorney general, after barr issued that four-page summary document explaining the fundamental conclusions of the special counsel's report what mueller was frustrated about, he said, was that that document did not fullycapture the context and the substance of what the mueller report said and mueller was apparently concerned that there was public misperception now about what he had ultimately found about the president's conduct. here's what the "washington post" says that letter from mueller said to attorney general

bill barr. remember, this is after that summary was released mueller wrote, "there is now public confusion about critical aspects of the results of our investigation. this threatens to undermine a central purpose for which the department appointed the special counsel, to assure full public confidence in the outcome of the investigations." now, the department of justice says that the day after that, there was a phone call between mueller and barr, and they say that phone call was perhaps more cordial than the tone of the letter the day before. here's their statement from last night. the department of justice writing "in a cordial and professional conversation, the special counsel emphasized that nothing in the attorney general's march 24th letter was inaccurate or misleading, but he expressed frustration over the lack of context and the resulting media coverage regarding the special counsel's obstruction analysis." the dispute here was that mueller wanted barr to put out some summary documents that mueller had written. he wanted those out as quickly as possible.

he thought they could be done, according to the with. "washington post" without significant redactions barr disagreed with that, saying he wanted his letter to stand and ultimately to proceed with releasing as much of the full report as possible in due course time so a divide between the two men on the day before bill barr is set to testify up on capitol hill who are, i think you could say, were skeptical of him before, who are now in outright frustration with the attorney general as of last night here's the statement from nancy pelosi, saying "attorney general barr misled the public and owes the american people answers. it's time for the department of justice to release the full report and all underlying documents, and finally allow mueller to testify americans deserve the facts. barr must stop standing in the way. all of that setting up a dramatic hearing on capitol hill later today, becky. >> we will hear from both. that's good, eventually. mueller -- >> you'd have to assume, yeah. >> the other thing was, you know, it was not about

collusion, it was about obstruction that mueller was talking about there. and the only thing i can say, that was before the full report came out and then when the full report did come out, the democrats had a full -- you know, i know all ten instances of possibl obstruction, so that didn't come out when barr summarized it, and maybe that's what mueller was talking about. but it certainly was highlighted in subsequent days by democrats so i'm fully aware of the argument that maybe it did rise to obstruction i got it i'm wondering -- i'm still wondering with mueller, when did he know there was no collusion that's what i'd like to know >> the political significance of this is that this story drops right as the democrats are in this delicate balance of deciding -- >> right. >> -- do they want to proceed with impeachment or hold off nancy pelosi and some of the leadership want to hold off. a lot of the rank and file democrats want to move forward -- >> this is before the report came out so he didn't like the spin on the summary. but then many people got to judge for themselves -- >> many weeks later. >> right but you got to see what -- i

mean, they got a full airing what was in there on the obstruction side of things, i think. i don't know. >> we'll get a full airing today, that's for sure. >> coming up when we return, the ipo rush uber now in the middle of its roadshow, but should the ride-sharing giant be compared to amazon, or ou ishldt be compared to lyft, which is already on the public highway? that discussion right after the break.

apple behind the numbers

global growth, a shift to services, iphone headwinds how should investors prepare for the first trade? welcome back, everybody. uber's road show headed to boston and san francisco, as ceo dara cash area shani shows to investors. he may be leaning in comparison to amazon to drum up faith in uber's path to profitable. jeff lewis is founder and managing partner of venture capital firm bedrock, an investor in lyft also, mike isaac, tech reporter at "the new york times." and welcome to both of you i guess i want to start looking at this first, jeff, just from the perspective as an investor you may be invested in a rival competitor, but i think the fortunes of the two companies will probably fair the same, if one is able to maintain profitability, it's probably going to be something where both of them can. and you guys can also act as

anchors around each other's necks. so what do you think in terms of the path to profitability, both for uber and for lyft? >> absolutely. well, i think when you think about these very capital intensive businesses, it's about driving economies of scale on the core business that drives the bulk of the revenue. both companies need to drive increasing economies of scale on the core ride-sharing business -- >> if that's the case, uber's doing a better job. >> i would perhaps disagree. i think a lot of things they're doing don't drive economies of scale in the ride-sharing business it's not clear that uber eats is driving economies of scale on the core rides business. it's not clear that a lot of the global exploits they've pursued are driving economies of scale contrast it versus lyft, which is focused on growing market share in the united states, getting more riders per hour into cars. i think the jury's out i think lyft's doing a phenomenal job by being more focused. >> who has just the number of drivers? they have more drivers, but how

does it break down >> i don't know the exact breakdown. obviously, uber's scale is much bigger than lyft but that said, the reason amazon was able to drive such strong economies of scale is almost everything they expanded into, particularly amazon prime, was driven toward selling more rescscus on the core business they're not focused on putting more human beings into cars, so tlth i disagree with him, i respect him as a journalist. >> mike, lay out your analogy. >> i totally take your point, geoff. and i think a lot of the analogy that they're going to try to make work for them is essentially the idea that, hey, amazon lost a lot of money for a long period of time as a public company, and you've got to let us do the same and i kind of look at it similar to how snap was comparing itself to facebook, rather than twitter when it was going public they just want the benefits of

like a semi-plausible comparison, but there's a good amount of problems in that direct analogy i also think that they're, like, trying to say, hey, we might have something like an amazon web services, an aws, up our sleeve that may happen at some point. eventually, you just have to give us the room to build out that platform over time. >> what do you think that platform would be, mike? >> yeah, so, i think to geoff's point about driving things back to the core business -- something that they've been -- uber has been hinting at for a long time is this idea of, like, memberships, and maybe transportation as a subscription or something that you can sort of recurring, you know, do over time so, to the idea that it's more like amazon, maybe like a prime-level thing, where if you pay a monthly or a weekly or some sort of fee, that that gives you access to a whole suite of services inside of uber, and that sort of like drives things back to their core business -- >> super skeptical about --

>> is there a scale? because that requires a scale piece to it. and to some degree, requires that, actually, there's less usage, right you want people to effectively overpay and not actually use the service. and amazon found -- remember, initially for a lot of prime subscribers, actually, it was costing amazon money initially until people started spending even more and more and more. the question is, can you replicate that but this requires actually paying people by the hour as opposed to a physical product. >> absolutely subscaled. i think one tell all in this is bezos never talked about amazon prime until it was launched. the fact that uber is aggressively pitching a membership-type, subscription thing this early on i think says a lot about its ultimate viability, which i think is many, many, many years off from it being potentially viable. >> mike, let's get your analysis, just in terms of what has to happen for either of these companies to get to profitability. can either one be profitable as

long as they are still locked in this stiff competition >> i mean, it's a good question that i don't actually have the answer to yet, which is funny. you know, someone was asking me the other day, have these companies built the greatest, you know, ride-sharing and transportation empires in history, or have they built the most efficient capital burn machines that wall street and silicon valley have ever seen? and you know, we keep hearing about these points where the ride subsidy wars are going to end at some point, and we haven't really gotten there, particularly because more entrants keep coming into the market and for uber, that's a big problem, because they're all overseas and they start fighting wars on a whole bunch of fronts. so, there's this far-off day where maybe they have to stop burning as much cash to keep winning folks over, but i just, i don't see that quite in the near future, at least. >> geoff, you've got to have a different perspective as an investor i guess in some ways, this is a big game of musical chairs and you just want to make sure you're in one of the seats when

the music ends and the money stops? >> i think that's partially right. you really have to delineate my partner at bedrock says there's a great delineation between capital intense of businesses and capital-efficient businesses and what we're seeing now is the first wave of technology ipos with businesses that are really capital-intensive. you've got uber, you've got lyft now soon we're going to have postmates, doordash coming out these are all capital-intensive businesses versus the prior way -- facebook, google, snapchat, capital-efficient. now, with capital-efficient businesses, they're easier to disintermediate. >> somebody can always yump in and be a competitor, but with the capital-intensive business, you have to have the war chest before -- >> exactly so long term i think you have to spend a tremendous amount of money. it's very dilutive you have to raise a lot of capital. but ultimately, if you're in one of those seats at the end of the day, it's a very durable business, harder to

disintermediate. >> thank you for your time today. >> thank you. >> thanks for having me. coming up on "squawk," a lot more this morning. the story of how one analyst figured out a key move in a takeover triangle between cintanar and chevron. you've got to hear this. "squawk box" returns in a moment internet that puts you in charge.

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still to come on "squawk box," tracking a deal, literally. one analyst tells us how he came to a conclusion that berkshire hathaway was going to help occidental petroleum in its bid for anadarko petroleum he knew before anybody else. plus, attacking ceo pay. senator bernie sanders ripping disney ceo bob iger over his pay package. we'll debate how a wage war will play out in the race for the white house in 2020. and more breaking news on the jobs front we'll have the adp employment report at 8:15 a.m. eastern time "squawk box" returns in just a moment

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should you need it. so you can explore all the amazing things ahead. talk to your advisor about brighthouse smartcare. brighthouse financial. build for what's ahead℠ glethz down to dom chu now with some of the morning's movers hey, dom. >> good morning to you, joe. we're going to start off this move with cvs health the shares are up about 5% to 6%, roughly about 100,000 shares of premarket volume after the health care retailer and pharmacy benefits manager posted better-than-expected profits, sales, and sales growth at existing store locations it also boosted its full-year profit forecast. cvs was helped along by higher

volumes and brand-name drugs, which countered some of the higher rates of dispensing for generic drugs. those shares have been a big laggard so far this year, turning around today another gainer in the premarket, shares of estee lauder up roughly 5% the cosmetics and skin care company also came in better-than-expected profits, better-than-expected sales, strength in its asia-pacific region as well as high-end product lines, like it's face creams really helped the cause there. shares are higher about 4% now and we'll end on shares of molson coors, which are down around 3% or so on very thin premarket volume the beer giant posted profits and sales that both fell below analyst consensus estimates. it was hurt by lower sales volumes in north america but helped along by a better sales mix in european markets. molson coors also said that its miller lite continues to hold market share in the u.s. and coors light is showing improvement, but those shares down right now in the premarket. back to you guys.

>> thank you, dom, for that. it's now time to bring you one of these remarkable stories. this is just so fantastic. it may have caught some by surprise that warren buffett would pledge $10 billion in occidental if its bid for anadarko is successful, but one person knew about all of this in advance, and they were not an insider. don bilson uses unconventional ways to get an edge on investments, and in this case, it was unusual flight activity occidental's corporate jet flew from houston to orlando, where -- >> omaha -- oh, orlando, yeah. >> and then where anadarko's shareholder meeting was held just one day later, then occidental's jet flew from houston to omaha, nebraska, tipping off don to what has now become major public news we were showing shots from the old movie "wall street" in this -- >> it was gordon gekko, not gordon hessen. >> but this is pretty much what happened. >> i'm wearing my fox hat today.

>> so, how did this happen do you track a lot of planes >> this is not a big part of my business, but we do have third-party access to flight data and after the deal was announced, after occi came in last wednesday, we had it in mind we would track where vicki was going. so, right after she's done here on wednesday, they fly down to tr, baltimore. we assume that's tro so that's handholding with shareholders but rather than coming to the right-hand and dodging all of them, they take a left-hand turn, across the atlantic to paris. we think we know what they're doing in paris we're going to leave that to reporters to confirm that's a big part of the story if you're watching out there and you're at the "journal" or somewhere, that's an important detail to lock down. >> why don't you speculate and help us with that? >> i suspect they were talking to totale about investment, maybe get rid of mozambiqszambia they will be picking up in the anadarko deal. so, that might be -- that

explains why they may be over in europe. >> are you doing tail numbers? what are you doing >> let's talk about how you're doing this. >> it's provided by a third party. we use a service but there are others out there we get a snapshot of all the jets in their coverage and where they're going on a day-to-day basis. >> historically, at least over the past decade, it felt like a lot of executives and corporate jets started to mask their tail numbers so that you actually couldn't track the plane, or at least you couldn't identify that the plane was with a specific corporation. how do you get these tail numbers today? >> you're going to have to ask the third party for that this data is very noisy. it has to be heavily caveated on how you use it but in this particular case, it looked pretty clear that this was occidental's jet making these stops. >> there are places where tail numbers aren't available because people aren't stupid i mean, even personally, certain golf courses that if they're -- you know, you don't -- people

want privacy and you can't get in there so you don't send anyone next to the runway taking -- do the third-party people do that >> maybe it's through the faa. maybe it's through some flight -- >> you would think that companies that don't want anyone to know -- and some are really good at not letting things out -- don't they somehow try to prevent this from happening? >> here's the catch. so, every tail number -- every plane does have to register the tail number, and -- >> you can google it and find out who owns it, too. >> you can actually always see it question is, people used to be, never masked -- when i say never masked the tail number, say it was a ge plane and you knew it was a ge plane, instead of some strange company name but yes, there are literally people who sit with telephoto lenses to look at the tail numbers and once you know the number and know whose plane it is -- >> isn't you disguise whether it's you that owns the plane >> i think there is, and the

irony is warren buffett owns that jet and got sniped out by the person who was talking to him was followed, basically. >> so if you used netjets, you wouldn't be able to track it. >> or if you fly commercial, it would be harder -- >> unless people saw you in the airport. >> they could see you. then that's not going to help either. >> when you issued your report, did you immediately hear back from the company or get feedback that, oh, my goodness, they're onto us? >> not at all. we wrote in monday, and we tried to not make too much out of it, because, honestly, occidental could have gone to mahan sunday and gotten rejected, and warren said, hey, i'm not going to participate. so, we toned it down, actually, but we went out there and said, why would they be in omaha there's only one reason, probably to arrange financing. and left it like that. reporters started calling us they probably started calling the company, and at that point, i think berkshire said we have to make a decision here. >> and on the merits of the deal, do you think it's a good one? it's expensive -- >> it's great for buffett.

>> i was going to say, expensive money for occidental, but it gives them both the money they need and berkshire's -- and buffett's stamp of approval on this deal. >> that's important. it's horribly expensive and i'm sure the occidental shareholders are not happy about, you know, basically paying 250 to 300 basis points above what they can borrow money for, so -- >> and you think they could have gotten money elsewhere >> sure. it's an a-rated credit. >> and do you think that chevron comes back >> i am agnostic. >> are you tracking their jets, too? >> we track chevron's as well. so, chevron, anadarko -- >> what's the point of having a jet if you're going to have people who can track it all the time >> they were all down in orlando last week -- >> where's chevron today that's what we need to know. >> well, i'll get back to you. >> don, thank you. >> i mean, if we're tracking all these things, how many times do you find that needle in the haystack, or is that not even an apt description? do you get more valuable

information? >> in hindsight, we've seen -- like the "wall street journal" reported that walmart was interested in buying humana a lot. they were there a lot. scientific was in boston during the flare-up so it happens in hindsight it's harder to see them beforehand. >> and it's hard to see those situations if it comes to fruition. >> that zoom, not going to work anymore, isn't that your -- >> what are you going to do when everybody just uses crisco telepresence and zoom? >> you're not that old yet monsanto was that's the same thing, that's how they figured it out that was always the rumor. >> thank you so very much. >> thank you. >> congrats. >> all right, see you on the bern i feel the bern a lot, but i've got lotion for it. anyway, coming up, bernie sanders taking aim at disney chief bob iger will trying to avenge ceo pay be

a successful strategy for democrats? biden's at 38% nobody else is close they're all going to be yapping, trying to close that gap anyway, is it a good strategy for dems charging into 2020? we'll get into that subject next stay tuned

senator bernie sanders taking a swing at disney ceo bob iger's salary in a tweet the other day. the senator said, "what would be

truly heroic is if disney used its profits from "avevlgers" to pay all of its workers a midd middle-class wage instead of paying its ceo $65.6 million, over 1,400 times as much as the average worker at disney makes while aiming at this is a strategy for democrats in 2020, joining us is former u.s. congressman joe crowley and dave brat as well congresspeople, good to see you gentlemen today. >> thank you, good morning >> and i want to start with this joke, because we go way back you go back with this show you know, aoc. we have you to thank for aoc it's not your fault, but she's here, and we see what moving to the left can do in the right context. we've got 20 candidates now sort of trying to get some attention, and it seems like joe biden has got a pretty big lead. is this sort of a, just a way of being heard, or are these

serious policy proposals from people like bernie sanders, do you think, joe >> i do think it's interesting i think that joe biden has said that the general election, the fight against donald trump is for the heart and soul of america. i think that's -- i'm paraphrasing to some degree. and i think what's also going on here, joe, is for the heart and soul of the democratic party in this primary itself. i do think it's interesting and ironic and i hope it's not been lost on you. i don't think that disney, or disney world or disney productions could have been produced anywhere in the world except the united states in the post world war ii era of the united states. the freedom that exists here, the free-market system that exists here -- it didn't happen in china it couldn't have happened in russia or in the eastern bloc of europe it really only happened here and spread from here so i do think it's interesting that we're talking about this today. but i will say this, sanders is right in the sense that what are we doing with that wealth

development? what is happening here 14 times the average wealth of the average worker being held by one individual you know, we go back to post world war ii again, and it"it's wonderful life," the mr. potter who gathers the wealth for the purposes of just gathering wealth, and then the george bailey, who's working to actually help people. >> i understand. and for a while, you had brat, like, nodding, which is -- i mean, that must be amazing to you that he was agreeing it was kind of interesting to see. i get that, joe, but are you proposing legislation to deal with this, or are you proposing market forces that somehow make things, i don't know, give more opportunity to other people so they can make more necessary why -- do we want to bring down iger or do we want to bring other people up with opportunity? and is it a zero-sum game? did iger take -- is that money that isn't in other people's

bank accounts because it's in bob iger's bank account? is that wealth creation? >> well, i do think there has to be a self-examination that goes on here. that comes with sunlight that comes with the boards themselves examining what their roles are. but i think it's important for elected officials to nudge them on i think that's what sanders is doing here. >> what do you think, dave >> yeah, joe's dancing a little bit. he's a good friend of mine and he's no socialist. so, bernie, this socialist secret is always, he'll talk about one wage and one price that has a little bit of common sense to it, but what they don't tell you is the socialist formula is to take over all prices, all wages and property rights as a state grows and grows and grows. and so, the history of civilization is the history of poverty, right every regime on earth was led top down by dictators and thugs for all of human history until you had the freedom revolution, free markets with adam smith, in 1776, and then our founders. and our founders -- and this is where joe and i agree and i was nodding -- our founders

absolutely made it clear that free markets can only exist with a moral people, under god. and there's nothing in socialist theory that grounds anything they do in god or first principles they cannot name their first principles you will never hear bernie name those first principles and so, i'm now the dean of the school of business at liberty university, and that's what we do on a daily basis. and that's what made this country great. and that's when joe's talking about that framework up in new york city, we do see a little decline of markets now because people are starting to talk down free markets and businessmen and businesswomen. and if you start talking down the system that made you great, deidra mccloskey's a double ph.d, kind of a chicago economist out there, everybody knows her, huge literature on this and if you start talking down capitalism, you will experience deterioration in growth. and we've fed the world. >> let me ask you -- >> global poverty against bernie has gone down tremendously over the last 100 years. >> joe, here's my question for you, and it's really a question

for the democratic party right now, which is, you have an economy that does seem to be firing on all cylinders. can the economy end this issue of capitalism and pay and all of these other pieces of it be the platform in large part because i think, even if you believe in all of these pieces of it, the transition cost to the economy is going to be real, right if bernie sanders either wins or even looks like he's about to win, don't you think that most ceos in america are going to say to themselves, you know what, pencils down, folks -- capital improvements, new hires. let's just stop, take a pause, because we don't know what is going to happen if he wins >> well, i do think, andrew, it's really a question of who is the economy working for? who's it working for is it working for everyone and i think that, you know, bernie has an audience there that thinks this economy is not

working for them. >> but you're not saying that's true, joe, because you see what's happening you've got 3% unemployment and you've got wages starting to go up and people are able to move between better -- they weren't before -- certainly a lot better than it was in the last eight years. >> it's as much about perception as it is about reality and how things are perceived i think the hegemony of the united states is being threatened by china. i think we're finding ourselves in a flux here, both internationally and domestically how we rate in the world today is based really by how people feel about that, how they feel about america as a world leader. and i think that's as much under threat right now internationally, domestically. and i say this within our own party itself -- there is a bit of a war going on here and i don't know how it's all going to settle out. i think this primary that we're into right now is going to have a lot to say about how that all pans out. >> that's going to be -- i mean, there's some strong-minded individuals that aren't named either bernie sanders or joe biden. i'm just wondering what this is

going to be like to watch. this is going to be bizarre. i mean, they're not going to just roll over, right? i mean, the strong -- there's some big egos that are in this race that aren't going to like being at 5%, and they're going to be saying wacky stuff they already are, right? >> yeah, andrew, yes -- >> no, this is joe talking, but you say andrew's going to be saying stuff what were you saying, dave >> no, my point -- the perception versus reality is important. i did a ph.d in economics. everybody needs to go back to economics 101. free markets have fed the chinese and indians 2.5 billion children of god. over the last 30 years, billions of children have come out of poverty because of free markets. there's still communists at the top politically, but that's what we've done so the perception versus reality is real. the democrats, unfortunately, are creating perception by calling half the country haters. that doesn't do anybody any good let's get back to a positive vision and grow the world. >> hey, joe, the election, it's

like 2020's almost we're at a bend i mean, get back in there, will you, and save us will you do that do you need a campaign manager get back in there! >> joe, i know how to call i got that i got that. >> call me thank you. vie of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪

keeping the streak alive markets up each month since the start of the year. will may follow that trend and see fresh record highs changes in store at the fed? as the central bank wraps up a two-day meeting, the wharton school's jeremy siegel tells us why he's backing controversial pick stephen moore for a key position. and countdown to jobs. adp's private sector payroll report is minutes away we'll bring you the numbers wall street will be watching. the final hour of "squawk box" begins right now ♪ working for a living, working working for a living ♪ ♪ working for a living, living and a working ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ good morning, and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin and again, the futures are

showing some gains on this -- is it the first day of may? >> it is may day, may day. >> and good april for the averages the nasdaq up 5 percentage points and the s&p up what, 2% >> 4%. >> 4%? and the dow up 2 but we're adding to the gains. this morning, 94 on the dow, 54 on the nasdaq. apple's strong the s&p up a little. and the ten-year's now at 2.498%. here are some of the stories investors are going to be talking about today. apple shares, as joe mentioned, popping in the premarket second-quarter profit and revenue fell, but the company still beat the street's expectations iphone sales dropped 17% however, services revenue was up by 16%, and that was better than expected apple's third-quarter outlook also came in above estimates, and the company plans to spend $75 billion to buy back more shares that stock this morning up by more than 5.33%. it is decision day for the

fed. the federal open market committee is slated to issue its latest monetary policy statement at 2:00 p.m. eastern time at the conclusion of a two-day meeting. wall street is not expecting a change in interest rates at this meeting, but investors, of course, are going to be scrutinizing fed chair jay powell's words at a news conference for any clues about future rate changes. will it be up? will it be down? nobody seems to know and wall street will be watching the april jobs report this morning, out in ten minutes' time economists are looking for an addition of 177,000 private-sector jobs last month okay, and a fresh round of high-level trade talks wrapping up in beijing overnight. ylan mui joins us with more this morning. good morning. >> good morning, andrew. the sentiment from both sides does appear to be pretty hopeful that a deal is within reach. u.s. trade representative robert lighthizer and treasury secretary steven mnuchin led the talks with china's vice premier. it started with a working dinner, then a full day of discussions. we're hearing both u.s. and

chinese officials describe the meeting in similar terms going into the talks, mnuchin said he hopes to make substantial progress china's foreign magistrate used the phrase substantive progress. and after the meeting, mnuchin tweeted that the discussion was productive any deal is likely to include china purchasing more u.s. goods, and the "financial times" is reporting that the administration is softening its position on forcing china to halt commercial cyber theft. but some of the final sticking points are -- what is the mechanism for enforcing a deal and when will u.s. tariffs get lifted those negotiations will continue next week when lu ha comes to washington on may 8th, and they are expected to last several days the hope is that that could pave the way for a meeting between president trump and president xi later this month, or perhaps even in june but as you know, administration officials are also warning that the u.s. could still walk away from this. back over to you. >> ylan, thank you very much let's bring in robert kimmitt, senior international counsel at

wilmerhale and a former deputy treasury sec under former george w. bush, and former ambassador to germany thank you for being with us today. >> thank you, becky. >> what do you think we've been trying to read the tea leaves here for a long time. what's your best guess about where we stand >> to make one general point, i've never seen a period where we have 360-degree trade negotiations, with china and japan, with europe, with mexico, canada, all going at the same time it's the most active trade agenda i've seen in decades. i think with china, the report was very accurate. progress was made in beijing i think progress will be made next week in washington, but ultimately, we know that this was going to be a deal that could only be reached at the presidential level i think that will happen in late may or early june in the united states. >> but that still means that it could go either direction. if this really comes down to the decision between two men and those two men have not really weighed in on what we have so far. >> i think they've given clear

indications through negotiators, but they have not come in. that's typical for dealmaking. you want to hold your cards close right to that very last point. but i think the consistency about the statement on the progress and productivity suggests to me it's moving the right direction. but let's be clear, this will be a deal, but we are engaged in what will be a decades-long competition with china. >> sure. >> not unlike what we went through with the soviet union in a political military context this will now be more economic-financial so, i think this is an important step but on a long, long path of competition between the u.s. and china. >> kind of setting the rules for a cold war, so to speak? >> i wouldn't go so far as to talk about cold war. having served in a hot war, i prefer no war. but what i would say is, china's been very clear -- made in china 2025, china 2050 they have made clear their aspiration to be the dominant

country in the world, certainly in economic and financial terms. look, we're pretty good at competing, but people have to play by the rules. and i think these trade negotiations help us set and reinforce the rules of the road, and the chinese have not been following those to this point. >> do you think it's a good thing or a bad thing that we are involved in so many trade negotiations at the same time? kind of a new paradigm. >> i think it's a good thing, and i think it could have been predicted. my own view is president trump won the election in 2016 -- >> because of this. >> -- because he was pitch perfect on trade in his message to the rust belt states. and he said, i'm going to move out on these, and he did right away -- renegotiation of the korean agreement, backing out of tpp, backing out of nafta, but quickly negotiated the mexico/canada agreement. and china, of course, he said was the top priority so, i think he's following through on a campaign pledge i think it's a tough time to work at the trade representative's office. bob lighthizer's an old friend going back to the reagan years

that is a tremendous pace of activity going on right now, but i think it's a good thing because we have, i think, a common set of rules against which we're trying to measure all these negotiations. >> well, maybe in some ways. i mean, it does seem that some progress they've made in some negotiations have probably helped them in some of their other negotiations, or some tough love that they've laid down has maybe benefited them as well. >> all trade negotiators watch what happens in other negotiations there's the mfn, most favorite nation clause, that you never give to somebody something you're not prepared to give to somebody else. so, you're right, we have to look at the precedent being set. but actually, i like the direction right now that it's more results-oriented than rhetoric-oriented, and we need results in the trade area. >> look, we think we've dealt with new nafta, with that new agreement. it's been signed off by the three countries, but it still has to get approval from the legislature. and right now, nancy pelosi is saying she's not going to bring that to the floor for a vote unless he gets some additional things that democrats want in that

that concerns me a little. how likely is it that this is going to get passed? >> very good question. i think it is now very much a political question remember, the democrats didn't love nafta, and i think the renegotiation turned out a better deal. there might be some concerns on the part of the democrats on labor standards in latin america, things of that sort. >> not getting as much as they wanted in the deal. >> right, but let's be particular and let's try to find a way to get that result, because i do think that a redefined nafta is going to be good for all workers, including in states -- it will be important for both democrats and republicans any year. >> because of the rules of origin changes that really do benefit the united states and -- >> well, rules of origin, domestic content -- >> nick content, how much has gone on -- >> right, is very important. but let me tell you, this isn't only the u.s. that goes through this the european high court just yesterday approved the canada/eu trade deal that was negotiated

about six years ago. and you may recall, it was held up for a year and a half because the walonians in belgian weren't happy with it. so, multilateral deals are really tough domestic politics play, not just in the u.s. but abroad. >> so, what's your best guess as to what we're going to get with this chinese trade deal, with something that comes out of it or doesn't you're saying late may, but do you think we'll really know the answer >> i think we will i think you're going to see better access to certain sectors in china i think you're going to see more purchases of u.s. products there's also importantly, and i think this is the final sticking point in the negotiation, going to be an enforcement mechanism on making sure that people live up to agreements that has been an sent in the past, and the chinese pushed very hard, but the u.s. said it won't go forward without that enforcement mechanism. >> unfortunately, one of the recent bits of news out of this is that enforcement mechanism is

going to be bilateral, not just unilateral, that we won't be the only ones that get to use it, that china will get to use it as well, and that u.s. companies are very concerned about that, being left to the whims of what they don't see as a fair trading partner. >> i think you only expect in a bilateral trade deal that there be symmetry on the enforcement side -- >> is this a thing we really want or not? >> i think we do want an enforcement mechanism, but the u.s. government has to make sure we not only enforce what the chinese do in the united states, but the chinese are fair in how they enforce it in china. >> i don't understand how that works in this mechanism, at least as it's been described to me 3. >> i don't know all the details on the mechanism, but what i know is the chinese in the past were very good at making pledges. they're really terrific on rhetoric but then when it came time to hold them to the agreement, they would start to meander, including on this whole question of using cyber against u.s. commercial interests there was a deal struck between xi and obama in 2015 on that

issue, and yet, it's gone nowhere. and so, i think we've got to have that enforcement mechanism. but you're right, it's like the investor dispute mechanism that you see in many disagreements. the u.s. has to be careful that things that it needs on its side are not used against its companies abroad. >> be careful what you wish for. robert, thank you very much. >> coming up, we have the economic data point of the morning. that's the adp private-sector payroll number for april it's coming again, already that was a short month or something. >> for you >> yeah, it was. it's just minutes. it's an early read on last month's hiring remember that big number we had for march, which kind of surprised everyone then we got that gdp number. the street's eager to see this we'll have it for you first when "squawk box" returns after a short break. dear tech, let's talk. you blaze trails... but you have the power to do so much more. let's not just develop apps,

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welcome back to "squawk box," everybody. we've been watching the futures this morning and on this first trading day of may, you're going to see that futures are indicated higher dow's up almost 100 points, s&p futures up bottom nine, the nasdaq up by 54. then, if you check things out on the treasury side, the

ten-year -- check this out -- falling below 2.5% on the yield this morning 2.498% okay, we are seconds away from the adp private payroll report want to get over to steve liesman -- >> wait, wait, wait, i gave it to you too soon -- >> he'll have the number in -- >> hold on, hold on, three, two, one! >> three, two, one, steven. >> 275,000 another blowout report from adp, saying that payrolls in april -- private payrolls in april rose by 275,000 they're revised march up, 150,000. let's look at this because these are important numbers. private payroll's 275, and that's against an estimate on the street of 177,000. so, almost 100,000 more than that goods up pretty strong, 52,000 that's good for that good sector there. services, always doing the bulk of the work, up 223,000. and there's the nonfarm payroll estimate of 190,000. so, 85,000 more.

nonfarm payroll includes government, by the way that's the bottom of your screen there. that includes government so just the private sector, according to adp, estimated to have added 275,000 jobs. let's look by business size. 77,000 for small businesses under 50 employees, medium up 145,000. so a big number right there. and then by industry -- well, education, health services up 54,000 we always see that there, but leisure/hospitality is strong, 53,000 construction strong, 49,000. trade/transport, and manufacturing just a little bit. actually, manufacturing pretty good, doing 5,000 right there. so, guys, there's something for everybody on the street to consider here, something for economists to consider about their jobs forecast for friday we'll see if they end up increasing it. something for the fed forecasters to consider, whether or not the fed has to incorporate this something for the market to consider about really just how strong the economy is and whether or not that slowdown that it was so sure about back

in december is going to happen at all now >> steve, stick around we want to bring in mark zandi into this conversation, chief economist at moody's analytics i'll go to you with the question that i think steve was getting at, which is how do you think we are viewing this economy, and what did we get so wrong and how did we get it so wrong before? >> especially you. >> i didn't say that that was joe >> yeah. was it joe >> it was me. >> figured it was joe. yeah, yeah >> wouldn't have you on as the expert, let me tell you that, mark, because we weren't supposed to have any jobs for the last two years according to you, there was no room for any more hiring no one was left. >> well, let me just qualify the increase right away. it overstates the case for a couple of technical reasons, job growth is very likely to come in much lower than the 275 it's probably going to come in pretty close to the consensus

estimate of somewhere between 175,000 and 200,000. and that would be consistent with slowing job growth. so, if you go back last year, job growth on average was 225,000 per month. so far this year, it's been about 180,000. so this would be very consistent with that. so, job growth is still strong, but it is definitively slowing, and it is consistent with a broad slowing in the economy the economy's growth rate has slowed meaningfully from last year's 2.9% growth rate. >> so, but just to put a finer point on this -- when the numbers come in, we shouldn't look at this as an indicator of what the numbers are going to be >> no. this number overstates the case. so, the adp number -- the adp estimate is an estimate based on the companies -- we get with over 20 million employees, so it's a very good estimate, but

it is affected by not only the adp number, but other economic data, and you look at the way this number is put together -- what i'm saying to you is that the 275 is overstating the case. job growth in all -- i don't know for sure, obviously i mean, the bls number goes up and down and all around. but my sense is that on friday we're going to get a jobs number that is pretty close to the consensus view, which is, i think as you pointed out, somewhere between 175,000 and 200,000. >> mark, i'm surprised to hear you expressing your own doubts on your own number, which is designed, or at least sort of sold as being something that does a good job. and i know a lot of people think it does a good job of predicting payroll, so i'm kind of surprised you're -- is there some particular technical aspect without spending three minutes to get into the weeds here, is there some reason to discount this month but i mean, you actually have done a pretty good job on some of these blowout numbers, not actually predicting the actual

bls number, but pointing the street to an upside surprise in the bls number. >> yeah, exactly and i want to continue that good record, steve, and that's why i'm qualifying this. and let me just say two things about the number first is, the adp number so, we take the adp number, plus other economic data and come up with an estimate with the bls number that's the methodology -- >> right, but mark, i'm going to cut you off. don't go in the weeds here tell me, is this number different from other numbers, or is this the same number? is there something quirky this month about it or not? >> yeah, there's something quirky about it this month, yeah it's the same methodology, the same number. we're not changing anything. we're doing exactly what we've always been doing, but there's some technical issues with the data that suggest that the number is not 275. >> all right, okay so, here's -- guys, i just want to make sure we get the big picture here the data has turned to be more -- it's been quite a bit

better the idea of a recession predicted by the market in december is not coming to pass even if you discount that 3.2% gdp report in the first quarter, the recent data -- >> correct. >> -- the march data has been stronger the jobs data has been stronger. >> yes. >> and honestly, joe's notion here that, not just you, mark, but almost the entire economics community has been on, which is that we're going to run out of workers, that job growth will slow back down towards trend, which is 100,000, has not come to pass. and there's a lot of reason to rethink, a, the outlook of the economy, b, the strength of the labor market and how long you can continue. >> wrong just totally wrong that's just incorrect. the outlook is on track. so, growth was very strong last year economists consistently -- including myself -- have said it's going to slow this year, and it is slowing. now, you know, month to month, quarter to quarter, you're going to get ups and downs and all arounds. >> that's right. >> and that's what we've been getting. by the way, big ups and downs

and all arounds, for lots of reasons, but the trend is for slower growth. and we are going to go back to trend. you know, we had this bet a couple, three months ago i still hold to the bet. when we're here a year from now, job trending will be closer to 100k, which is trend, than 200k. one way or the other, because we're running out of workers and we're up to full capacity, job growth is going to slow back to trend. so yes, knock has changed -- >> mark, the gadot of slower job growth never comes. >> it is coming. it is here we're -- it is happening so, job growth is slowing. >> all right, well, i'm changing my opinions here, and i changed them last year when it kept coming in strong i think there's something going on here -- >> well -- >> and i actually seem to -- i feel a bit better about your numbers than you feel about your own numbers. >> well, here, steve, look last year, it was no surprise that things got juiced up,

right? if you go out and borrow hundreds of billions of dollars, which is what the treasury did, and you cut everybody a check, it doesn't take a rocket scientist to figure out it's going to juice things up so that's what happened. >> that's fine, and that's a good explanation, mark, but the script was that that stimulus would wear off, and we are now talking about the fourth month to the year -- not the first month or the second month -- we're in the fourth month of the year, and it hasn't worn off. >> right. >> and the forecast that, you know -- >> no, it has. >> you and i put the rapid update together, mark, and we're still looking at, you know, 2.5%-plus forecast for the second quarter that said, we'll get our first actual tracking of the second quarter here today, i think it is, or tomorrow. but those numbers have been plus two. so i'm not seeing a whole lot of meaningful slowing here right now. >> okay. >> no, no, everybody's -- no, the forecast, expectations a year ago, is we would grow about 3% in 2018, and we would grow somewhere between 2% and 2.5% in 2019 those forecasts have not

changed, and we are on script. so, stay tuned the job growth is slowing. >> okay. >> economic growth is slowing. >> okay. >> mark, steve, want to thank you guys appreciate it. >> pleasure. all right, check out shares of cruise line operator royal caribbean. they are higher this morning after the company reported quarterly profit of $1.31 a share. that was 20 cents better than expected revenue also beat the street's forecast royal caribbean says it's seeing record bookings as measured by both rates and volumes the stock is up by 5%, and that comes even after they upgrade some of their guidance for the year they talk about their full-year outlook, now looking for $9.65 to $9.85 a share the street was already all the way up at $9.93 ahead of that. they did say they have had some issues -- higher fuel and currency charges with the stronger dollar, also an incident that they had in the grand bahamas shipyard, but they say the better-than-expected results from the first quarter are offsetting most of that. those two things that they

mentioned add up to about 50 cents a share in terms of earnings stock again indicated up by about 5% >> we're up triple digits on the dow. just, is the fed back in play? that's what scares me. you know what i mean >> they are, if they choose to be if they don't, if they -- >> but these numbers, the gdp and last month's jobs data -- we'll see. maybe adp's been wrong before. it is possible. >> you could make an argument why they should stay pat and do nothing. >> inflation. >> the inflation you could make the argument for the other side. >> the market should love this -- >> jay powell's been trying hard not to give any reasons that -- >> they're certainly not cutting. >> no, not adding to qe either. >> the president wants to -- >> that guy, that weightlifter from guggenheim went from a cut back to a hike >> lost me. anyway, coming up, the fed wraps up its latest two-day meeting as the central bank in desperate need of some

outside-the-box thinking and does that mean controversial economist stephen moore is the man to deliver it? professor jeremy siegel from upenn's wharton school says yes. he's going to join us after the break to tell us whfl. and we'll talk -- he's been so rkod on staying bullish in the we'll talk about that, too we're coming right back.

welcome back to "squawk box. when we return, president trump wants economist stephen moore on the fed board of governors he's been criticized about past writing, but what about his economic theories? do those stand up to scrutiny? and could the fed benefit from them we'll discuss it when we return. what's a target date fund? 529 plan? a 10-k? what's an etf? an ipo? 401(k)? where do i start? empower yourself with the free tools and resources on investor.gov.

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if you want the biggest selling point for me, it's i helped put the economic agenda together, we've got the best economy in 20 years, we've got the best job market in 50 years. i mean, that's a pretty good qualification. >> that was steve moore yesterday, the economist from the heritage foundation. with us on set in what turned out to be now a controversial choice president trump has said he wants to nominate more to the fed reserve board of governors the newscast newscast sa"wall ss it's raising concerns from those who say moore's writings about the fed and ideas about the central bank are finding support with one wide voice. jeremy siegel writes in the "journal" that he doesn't always agree with moore but thinks he would help solve the federal

reserve's group think problem. joining us nowsiegel anyone that didn't read "1984" or hasn't googled "group think" recently should google it again, jeremy, because it's not a good way to operate >> no. >> it's where everywhere -- and i'm not going to make an analogy to anything that goes on that we currently talk about -- but when everyone just defers to the 97% consensus and doesn't try to think of anything themselves, they just defer to experts and it becomes almost more of a religion than anything else, and you think the fed suffers from that right now >> well, to some extent. as i pointed out in my article, over the last 15 years, over 100 votes have been taken. there's been one dissent, one lone dissent by fed governors against policy of the chairman in 15 years. now, you know, we look over 15

years, i mean, a lot of mistakes were made. you would think there would be some more lively discussion and someone would have dissented i was particularly, you know, surprised, as many of us were, how hawkish the december meeting was. had moore been on the board, he would have dissented if i were on the board, i would have dissented i thought that they were not looking at the signals in the marketplace. they should have said, hey, we're not going to raise two or three times in 2019. by the way, they admitted it, they made a pivot just a couple weeks later. but why did we need the market to fall 20% during that period so, i think in that case, moore was right. a dissent was needed and i would like a little bit more split votes you know, the fed doesn't -- it's not like the supreme court, where we get 5-4 decisions it's like 12-0, 12-0, 12-0

and my feeling is i would like to see a little bit more lively discussion there >> and not necessarily a perma dove or a perma hawk or whatever. >> no. >> but just someone who might be willing to go against the grain of the other members of the fed when, you know, without, i guess, falling in line with the group thing. >> yeah, and you know, it doesn't mean that the person that is out of the box is right. >> right. >> he or she has to present -- i mean, they're smart people on the fed. they'll shoot him down if they don't think he has the data to back it up but i think you sharpen your own mind when you have someone out there giving a different viewpoint. you have to make your own arguments better. >> professor, for critics of moore, they would say that he hasn't -- that when it comes to the data, he has been wrong. in fact, yesterday when he was on the program and we were talking about deflation, he referenced commodities as being

this indicator of deflation. and in fact, if you look at when he was making those comments, there still wasn't even deflation within the commodities market so, the reason i ask this is, there are economists out there that say, look, maybe nice guy, interesting commentator, but on economics, i'm not sure -- >> i didn't understand your question you can't tell we're in a different -- you can't tell we're in a deflationary environment right now? >> i'm not sure he commands the same respect that other economists do -- >> do you not think we're in a deflationary environment -- >> yes, no -- >> professor. >> let's say the following there was commodity deflation in december when that meeting was held the crb index it my research bureau index, was going down financial markets were going the stock market was -- there were a lot of signals out there. honestly, it looked like the fed was tone-deaf to those signals i mean, i saw that the news conference that powell had afterwards, the dow went down 700 points during the news

conference and they say, isn't he recognizing what's going on there? we can't have two or three hikes in 2019. >> jeremy, we're trying to figure out why there's negative interest rates, though we were just talking about china exporting deflation. you really don't think we're in a disinflationary environment right now, andy? you don't think that's -- >> do you think prices are going down >> i think we're in a disinflationary environment -- >> well, that's different than saying that it's deflationary. >> well, people conflate the two terms. but professor, what i was going to ask you was, you've been a market watcher for a long time and for you not to want to go back to normalizing interest rates in december must have been a change in thinking for you, too, because i don't know anyone who didn't think that we needed to build up some dry powder for the next downturn, and it felt like we were well below normal on interest rates. so, if you were smart enough to see this -- >> i don't think we're well below. >> that's what i mean, because -- >> we're really in a different world. >> yeah, right, because of inflation. >> we're in a world of much

lower interest rates we're in a world -- >> i can't imagine an argument against that because of inflation >> look it, had the fed known that the ten-year bond was going to be below 2.40% in march, would they have raised the funds rate, which they did, to 2.40 in december. >> no. why is it? what accounts for it, though >> why is the interest rate so low? >> yes. >> there's a lot of reasons why interest -- well, first of all, we have very low inflation growth is slowing, and we've had faster growth. this quarter looks like 2% we have a lot of risk aversion we have a -- after the financial crisis, a lot of desire for liquidity, something i pointed out as the treasuries are the go-to asset whenever there is a risk in the market, which makes them good hedges in other words, we are in a world that we've got to get used to a much lower interest rate. our star is zero, which is the

after-inflation, short-term federal reserve rate we're not going back up to 2% or 3% that we had in the 1980s and 1990s. just a different world and i think we have to recognize that >> if i was going to criticize moore, i would have criticized him for being way too hawkish two years ago. that would have been -- i mean that was -- >> too hawkish two years ago >> but now the disinflationary -- he's right about deflation. he's right about disinflation. that was a silly -- >> he was wrong after the financial crisis. >> right, for -- certain things like that, not the deflation. >> let me point out that very well-known economists that circulated and publish a full-page letter in "wall street journal" and "the new york times," blasting bernanke for quantitative easing -- >> right. >> -- and that it was going to cause hyper inflation. they were wrong. he was wrong he admits he was wrong

there. >> that's true. >> so, it's not just out of -- you know, oh, my goodness, how could he have done that? a lot of economists were wrong they wanted me to sign i said, no, i didn't see any inflation out there. i refused to sign that letter. they came to me. but it was not just him. and to change gears and now say, hey, december is not a time to raise it, i don't think these are inconsistent positions. >> but not -- but underestimating technology or global work -- you know, the movement of goods and services around the globe underestimating that and its effect on inflation is one of the biggest stories that everybody's been wrong on, i think, over the past five ears it counts for these crazy interest rates, it seems and negative rates still, ten years after the financial crisis in europe. how is that possible negative rates japan. 20 years of no inflation. >> yes. >> although i've got to say, the reason there's been so much

controversy surrounding stephen moore is less about some of these economic thoughts and more of the other things that he's written -- >> but that's not something we're going to talk about here necessarily -- >> well, no -- >> you can. >> those are real issues. >> it's going to be coming down on the senate confirmation -- >> jeremy siegel is a wharton professor. we're talking about whether he'd be good on the fed or not. if you want to talk about women issues, that's fine. >> no, but i think those issues are real issues. professor, do you have a view whether or not those should be considered >> well, i'm not going to defend steve moore. he's certainly apologized for them you can, you know, buy them or not buy him on those issues. i'm concentrating on his economic -- >> you've got susan collins, jodi ernst, lindsey graham he can only lose three, then he'd need pence, and it's already at three so it's looking unlikely this is going to go forward. >> i know it is looking very -- >> still stands, though, that you think there should be some economic diversity on the fed. >> yeah. my feeling is that, you know, let's have one person there that

has that other point of view i think it will sharpen everyone around the table and you know, that's not a bad thing at all i mean, he is an economist -- >> should we sell all our stocks yet, jeremy, or hold on? >> oh, no! >> keep them. >> make the trend your friend. hey, look what's going on, yeah. by the way, the fed might lower five basis points on the interest on reserves today may lower it five basis points. >> oh, yeah? >> it's been creeping up. >> huh. >> that's a little change that people aren't talking about. >> interesting all right. well, we'll see you again and we'll just talk about the stock market next time, as we like to with you, professor. all right, see you later. >> thank you. coming up when we return, your biggest stock movers this morning. plus, the case for investing in apple. as iphones become less important to the tech giant, do investors siill have a chance to see some we're going to talk to an apple shareholder, get his thoughts next stay tuned

welcome back to "squawk box," everybody. we've been watching the futures, and this morning we have seen green arrows across the board. dow futures indicated up almost 100 points s&p futures up almost 10 and the nasdaq up by about 57. >> okay. under an hour until the opening bell on wall street. we want to get over to dom chu with the morning's biggest stock movers dom? >> focus today this time around, andrew, we'll start with the shares of take-two interactive, up almost 2%

the video game publisher got upgraded to an outperform from a prior market perform by analysts over at cowen. the price target goes to $113 from $103. they like the console use, xbox or playstation over the next 18 months they say take-two is the best way to play it they cited outstanding performance over the summer launch and new console launches expected late next year. disney up fractionally, up around 21,000 shares of premarket vacuum analysts at barclays raised their target price on the media company to $150 per share from a puryear $130, keeping the overweight rating. shares for disney have run up 20% just since march 25th, currently around $137. so just a price target raise there. and of course, the cadre, we'll call them, of analysts out there in force with their ratings reiterations or revisions or target price changes with regard to apple's stock

jefferies and wells fargo kept their neutral ratings on the stock while upping their target prices shares, remember, already above previous targets morgan stanley and piper jaffray upped their target prices as well kept their buy equivalent ratings. pretty sure all of the analysts will weigh in soon here, but keep an eye on all of the analyst actions, commentary on the heels of apple's earnings last night back to you. >> yeah, basically trying to keep up with what the company's already telling them they're doing. >> right, exactly right. remember, these guys all have their notes out there. i should note, i just checked this morning, it's about 49% of analysts that are tracked by faxset that already have a buy raiting on the stock as well something to keep in mind. >> thank you, dom chu. let's talk about the latest earnings report. joining us is tech investor and apple shareholder jason ware, a partner and chief investment officer at albion financial. jason, this was a strong quarter, not just on line-by-line issue with this, but also, of course, the guidance they gave what do you think as a shareholder? >> yeah, it was a strong quarter and it wasn't just the beat on

the print, which was, you know, a low bar going into the quarter. it was the comprehensive nature of the beat. and if you look at it from profit and revenue in the segments of revenue and services beat, services margin beat and then the nice capital returns program. and then, of course, the guidance as you mentioned was just kind of the chef's kiss to the corner, and i think it's gotten investors excited again about apple. the stock's been doing fine, so i don't think there's been a lack of excitement it's certainly rallied this year, but i think the quarter was certainly better than feared. >> concerns about china kind of out of the way at this point or not? >> you know, the jury's still out there. certainly, things are getting better in the guidance that they gave or the warning they gave on china earlier this year in january seems to be perhaps, you know, them making things look worse than it actually is. and apple does that. tim cook's a great operator, is great at setting expectations, then beating those so it seems that china for now is improving that's definitely a five-year story or more for apple. so to say that we know what's happening there over the next

few years i don't think would be honest, but it does seem to be improving. >> what'd you think about the call >> the tone on the call was good i mean, it seems like everything at the company is going quite well i mean, certainly, yes, there's been a decline in iphone revenue, but that's to be expected, kind of on the back of what was a strong upgrade cycle. and now we're looking out for the next iteration of iphone, and maybe that's 5g next year, where we kind of reaccelerate the device growth. but until now -- or i guess until then, i should say, what we're looking for is services, and services is looking good, and tim cook is bullish. >> by the way, you think that 5g timeline makes sense because i would still make the argument that despite the plans from verizon and at&t, it's not clear they're going to have enough coverage, even in a year from now. >> yeah, you know, that's a really good point. i think the bogey would be late 2020 so you know, we're looking 18 months down the road maybe it's 2021. the timing is uncertain, but i think if you look at the bigger picture as a longer-term

investor, whether it hits in 12 months or 24 months, that's probably the next push on iphone but i also want to be clear that, you know, when we look at apple, we're looking at it as a device business, not just just iphones. the accessories and wearables are becoming important it is a growing quickly and it is a nice representation of the broader apple strategy which is multiple consumer touch point with their product lineup, that's something to watch. >> jason, we talked about how analysts on the street chasing what the company says yesterday. and their earnings and expectations that were below yesterday. as an owner, what do you do? how much do you own or trace or trying to buy more here? >> we have a fairly good position, we have been long-term investors of apple for many years for our clients. i don't think we are looking to

add. we are still bullish on the stock, there is something to be said for the idea of the stock rewrites higher and the more of the service being the overall story. we have been talking about services on your network over the next couple of years now and how important it is for the long-term. if we can get as reading up to 2021 area in the next couple of years and earnings growth is steady we are bullish on the position we have. we are not looking to add to that today, we are looking at the premarket it is up 5% or 6%. does not mean we'll add to it down the road. for now, we are comfortable with our state. >> jason, thanks a lot let's get down to the new york stock exchange. jim cramer is joining us now even with the shrinking share count because of buy backs, i think we'll hit a trillion or

come darn close today. a trillion dollar market cap a lot of people gave up on the stock because they view it as a hand set company and see what happens the last 18 months it is becoming much more of a subscription stock you see what kind of management is most? once you get into the system, that person spends, spends, people are looking at the company at a service stream. by 2020, we'll see a subscription growth of 500 million people you can't look at it the way hp -- i like it. >> i can't imagine trying to do what you do. you stay flexible at times but i would say you kept people in apple since almost the entire way up >> thank you since my kids asked for two different ipods.

>> you were there. it is in the face of a lot of -- twitter is such -- >> i hate tim cook, too, what has he done except for creating multiple hundreds of stocks. >> twitter is very hard, my only friend is elon musk now. >> i love watching that. good lord. so adp discussion, now i think it is going to be a bad number on friday because adp was so good i don't know, i didn't really understand >> i will tell you, it is kind of crazy, why can't the president speak his mind it is obvious the last rate hike was bad. when i was a great, great guest, what he said was basically, whoop, they made a mistake, i would like diversity on the

board. i found him spectacular. >> yeah. >> spectacular booking, great guest. >> and it has been difficult to figure out what's happening in terms of, took a day of reckoning to realize that rates this low could be normal i think everybody had to come around because we were used to it for 30 years of the 6% or 7% or 8%. we got to make the round trip to those for it to be normal again. you can't get too tight. >> listen to the apple call. the rest of the world is shooting against us. i wish the president talks about how much the rest of the world is shooting against us that's everybody saying we are going to take toit to the united states and it is working >> we talked about tuesday yesterday. i see this update that he was not impressed yesterday and i

guess he has not really throw in the towel on ge. >> no. >> what do you think finally happens there? >> i think if the stock broke down, i think he would like to revise it. he still got long-term concerns that we are not putting away larry culp is not trying to change his mind. price and veterans are going to do it and not just price >> okay, and then we won't hear so many analysts in the past and then all of a sudden we don't hear from them anymore we'll see when they get to a position thanks jim >> i saw it and i feel your pain at times anyway, we'll see you in a couple of minutes, don't miss something, jim's exclusive interview with amd's ceo, lisa

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a couple of stocks this morning. the drugstore operator and benefit manager earning $1.62 of share. revenue is beating forecast. check that out, the stock is up 4.8% boeing sold $3.5 million on bonds on tuesday boeing shares this morning up by $1.31 cents. >> let's check a final check on the markets. it did open higher dow by 80 points higher and nasdaq is 52 points higher s&p 500 about 7 points a lot going on throughout the day and tomorrow we'll see a lot from steve liesman and what the fed is going to do.

they have a 10-year note at 2.5 and the job report do we really believe -- i don't know what to do with the adp jobs, right? >> the guys put it together saying it is a contrary indicator. >> we are so wrong we'll see all tomorrow, make sure you join us tomorrow, "squawk on the street" begins right now. good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer and david faber is back at the stock exchange. fed decision is at 2:00. a lot of markets around the world is close for midday. our road map begins with the apple rally, iphone sales falter but services grown surprises tim cook