Transcripts For CNBC Squawk Box 20140618

The house subcommittee on oversight and investments. Chairman tim murphy will join us on a preview of that hearing. Watching for this one, amazon for the past week, touting this mystery launch today featuring an announcement by the ceo jeff besozs. The scuttlebutt is it includes this famous 3d screen. We think we know what a 3d screen would be, but youre not wearing the glasses. Who knows what it is. Were going to talk about the prospects for amazon. We will talk with mark mahaney at 6 50 eastern time. The screen is so small. We have two tvs that are supposed to be 3d. We even have the glasses. Does it work . If you wear the glasses. We had two movie nights in our house where we all wore the glasses. We had friends over. We tried to do the whole thing and watched avatar. You had enough glasses . We bought extra glasses. What is the bottom line . It was like why are we doing this . We all looked goofy. And thats a 50 incher, probably . Yeah, about. So what do you look at in 3d on this little i dont know. I dont get it. And thats really the hook. That or technology. You can even order books. Which you can do now. I defer to you on whether this is going to i do not know. You follow amazon, you follow the technology. I dont think youre excited. Well see how it all plays out. Correct. Barons has found out its not a good idea to question jeff bay zoes over the years. So we have to defer to him. We know what hes doing to anyone who has questioned him. Hes laughing at them all the way to the bank. Im glad they had that ready. In global news today, the militants, they are sunni now have attacked iraqs Largest Oil Refinery with mortars. Ayman will join us from the ground with the latest. Good morning, ayman. Good morning. It was an early dawn raid on this oil refinery, iraqs largest oil taking some hits from ayman. Well talk for a few seconds and talk about some stocks while we try to get ayman back. Did you read the oped by mr. Cheney . What paper . In your favorite paper pup did not see this . The New York Times . No. Im not being sarcastic. This was i wanted to im being sarcastic. Maybe ive switched. I wanted to ask ayman about this, to the extent we were going to play the blame game in iraq. Here it is, dick cheney, the collapsing obama doctrine. I read this thinking that i needed to be prepared this morning. This is a piece that effectively goes to the litany of things the president has said did you read the sean penn piece . I was more interested in the no. I saw that actually on mine. But its at this point i thi think i think president obama is in an okay position. If you were to say that we gave back iraq after all that sacrifice, you would think that it would really be a tough place for the president to be. But hes not going to take some flack because its something that the way its viewed at this point it is never going to be fixed and hes not going to be blamed for it. Im not saying theyre right or wrong, but they are immediately going to blame so to read that from cheney, i think the anchor said Something Like and we know this anchor. But the anchor said Something Like the only analogy is when someone puts out a fire when theyre the arsonist, you dont think its that great. She got kudoses in the huffington post. Cheney, no one is going to read that and say things arent going well for him Foreign Policy wise. By the way, weve had these scandals for a week. This va fwixed . Do you know . I dont know. Thats not on the front page. That will return. The media got tired of it and people are still waiting 120 days to get an appointment. Things are not going that great right now. And whether you blame him for iraq or syria or iran or russia or china backing into the column here. Can you point the one thing going well this time in Foreign Policy . One opinion hillary couldnt. In recent i asked them to play just the two of us. For when we go in and out. I told you, i warned you that i was going to pick on your paper again today and ill tell you what it was in reference to. The lead stories about benghazi. I thought there was a companywide ban on the word benghazi. You saw benghazi in the New York Times about as much as you saw Tiananmen Square in the chinese media. That is so untrue. The New York Times has not mentioned benghazi maybe im exaggerating. But in this context, it will make hillary look better, it will make obama look better because they caught the guy. Oh, come on. But they spelled it wrong. No, maybe thats right. Hold on, hold on, front page of the wawall street journal. Im glad we got this guy. I am. Is he the guy that was watching the video and got mad first . Which talking points are you going to give me on this . Who is he . Is it the video or is it the terrorist i didnt do my daily let me just call valerie right now. We dont need valerie because we have har wicwick. Even the straight shot to its not fair. No. I watched soccer yesterday. Spent 95 minutes of my life. You know what the score was, mexico, brazil. Yeah. 00. I watched 90 but you were one of the 16 Million People who watched ghana and yeah, i did. But i actually watched russia korea, which was a 11. You must be starved for sports content. Is there a duke soccer team . There we go. I will tell you that the mexican goalie was unbelievable. Was he on fire . The mexican goalie was on fire. Stopped him right there. He was amazing. He was amazing. And he kicked it once and right at him again. And brazil, they score all the time. Its kind of cool. Im into it. Im into it now. You know what else . Nbc does . Yeah. I will tell you i was at a Banking Institution yesterday that normally keeps us on. Of all the tvs up on the walls, usually and we were not. Was it bnp paribas . No. It was a u. S. Bank. In the meantime, weerp going to get with our first john harwood. To get the results of the nbc wall street journal poll. He should not be mad. Ri starved for content, john . I was totally into that u. S. ghana game. Now im all about portugal this weekend. Yeah, yeah, what do they call it . The group of death. If we beat portugal, i think were guaranteed to be out. We have this guy, christiano republican naldo. We ha we have injuries on our side. You didnt watch mexico brazil yesterday . No. You would have . Yeah. I didnt grow up with soccer. I dont know if you did. It was around, but it wasnt big. And to see the u. S. Sort of mature as a competitor in this thing is really, really fun to watch. It is. Its good and otherwise were stuck with the nationals in the reds. And i didnt even first place, baby. What place . Were in first place. Were behind. Were like two or three games behind. 500. Maybe thats why. Its an ugly poll for obama so that will make you happy, joe. Quid pro quo, i get it. 41 job approval, not good. I think thats his base. Theres no way he goes below that. There are 41 of the people in this country that he could theres nothing that he could it couldnt get any worse than it is right now and he still gets 41 . Thats like the well, yeah, thats sort of the high 30s, low first 40s is f where president s when theyre in big trouble bottom out. You could in theory go lower with a catastrophic scandal or something, but yeah, this is hes getting the lower bounds here and the result as peter was saying yesterday, some of the Foreign Policy issues that you were talking about. People are drawing the conclusion that events are controlling this president rather than the president controlling events, which obviously president s dont control the world, but the accumulation of things, iraq, syria, problems for russia and the ukraine, all of those things are making people feel as if the United States is weak at the moment. That the country is on the wrong track and this is its worrisome for democrats, although the only good news for democrats in this poll, they still lead in the question of who do you want to control congress because the republic ewe talking of the Republican Party is so bad. They dont go to midterms, on so always always lead, they always control, anyway. The question is how big of a trading range is it going to be . So hes a really good years gets to make ten seat in the house. The real question is going to be are republicans able to retake the senate . They certainly have nuch targets, but whether they can bridge those targets home yeah, it is about i think its three weeks a month ago in politico, they had identified what the narrative was going to be, the talking points for Foreign Policy. And they came up with dont do stupid and they used the s word but it can be replaced with stuff. So dont do stupid stuff. And reading it at the time, it was a reasonable thing to say. When youre too out there in the world sort of trying to take care of americans interests, we see what happens. So when you dont do things, youll get the benefit of the doubt for most of the time by not doing stupid stuff. But i think they might not be saying that right now. Like that narrative or that explanation of a month ago rings more hollow at this point. Because by doing absolutely nothing and pulling in and then the rest of the world dictates the outcome of a lot of things where we do have an interest in and we seem to be watching it happen and responding to it after it happens at this point. Yes. Although i think the administration is still trying to apply that doctrine to the situation because theres no and air strikes and guarantee that anything they do is going to solve this. We would on yesterday with jack jacobs, saying you need to keep a strong lid on to control this. The one thing we did decide to be proactive on was abdomen attempt with get mow to bring this guy back. You had a plurality of people saying not a good idea. There were some policy things that were good for the president. You had a majority agreeing with his armies about carbon emiss n emissions and the private rule. But its like number 16 in terms of what people worry about. Yes, yes. And on the va, which you mentioned before, 61 say the problem with the bureaucracy, its not obamas fault. But again, its an accumulation of things that we talked about that are just weighing him down and making people feel hes walk so that you get a majority of people when youre asked, is this president capable of leading the country getting the job done . The majority now says no. Were you surprised . I thought the answer on the taliban prisoner exchange, only 44 say they shouldnt have made the exchange. 30 say they should have made the exchange and 25 had no opinion. Is that normal, the 25 had no opinion on that issue . Well, a lot of people have either no opinions or very shallow opinions on things. And when you get into a question of a wartime prisoner swap, i think many people justifiably, in fact, i would put myself in that category, as well, arent certain exactly how powerfully to take the admonition the president mentioned of we never leave anything else anybody behind, therefore, you make a lopsided swap versus looking at it and saying one guy who walked off his base for five, that really, really bad taliban fighters doesnt look right. So how you balance this i think people arent intuitively comfortable with that and im not, either. Hey, john, im sure youve been asked about hillary in the poll, but watching this play out, this was supposed to be a gentle way to sort of get some talking points up for the upcoming campaign. This is results on really poorly. And now that its sold too big to fail sold more than that in the first week, right . Did sorkin get an advance . No. And heads are going to roll at that place that gave out that advance. This has not been she lost ground with this. Well, i dont know if shes lost ground or not or if she has whether it matters in a lasting way. But two quick points about hillary. One, within the democratic party, exceptionally powerful. 75 of democratic voters give her very high marks on all the core attributes. But in a general election, its more of a mixed picture. Only 38 say that shes honest and straightforward. On the other hand, youve got a majorities saying shes experienced and ready to by president. Thats a powerful asset. John hardwood, thank you, sir. Appreciate et. When we come back, elon musks talks about getting to mars. Plus, how much would you pay for the worlds most faim famous stamp . Youre going to be surprised. Weve got the answer and it is remarkable. And it feels like your life revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. Its time for this mornings executive edge. Its does take two. Its just joe and myself this morning. It just takes two. Also, just joe and me, it could be myself, do you think in english . Yeah, english thats fun. Its a very anxiety producing it is. A lot of people go with i. Especially hollywood movie stars, they go with i all the time, even when you need a me. Sflu and me, you and i. They gave it to you and me, but you and i both decided to come you and i did. But not you and me. But the stars took the i. They always say that. Because your chances are better with i than you are with me. Forget about it. Yahoo becoming the latest giant to disclose the makeup of its workforce. 50 of yahoo s 12,000 workers are white. 39 are asian. Black and hispanic employees account for combined 6 of the workforce. Now, google first disclosed its de demographics last month. I dont know if this is a leanin thing. Is the disclosure a good thing, a bad thing . Is it necessary . How do you think about it . Normally i dont listen. And when we have this executive edge, sometimes i forget that were actually going to have to discuss things that each of us so z i dont know what you just said. But i know how a lot of times we have a lot going on and your reads are your reads and my reads is my reads. Ill tell you what happens. Dell me again the. Will you listen to me when i read . I will. Go ahead. So yahoo just disclosed the number the percentage of women at the firm, percentage of women at yahoo percentage of women in senior positions. Other races i got it. And this happened because google may be someone made the disclosure. Google was very disappointing. And there is a view in the valley that it is still a very male, very white group. And so the question is there are people who say what are these companies doing . Are they trying to disclose this stuff . And others say how are you going to change the valley until you disclose it. And its a new age company, a very pc company. Nbc is great for dericity to make sure its a great workforce. Sometimes i think they talk the talk and dont quite walk the walk. You think that they would because theyre so now and they seem to have it altogether. But is that a function now . Now youre getting where i think im going to read the next story because i dont know why that would be. I was going to mention Larry Summers name first just before i did it. And larry has a wrap on that because he yes. And that was a to this day, i think people never understood. And im not making that argument, by the way. He really wasnt able to hang on to it. Just to be clear kb the argument i was going to make was not about are you scrambling now . No, no, Larry Summers already moved in. Are there enough engineers for the women and how many women are we producing for the education . For a record 9. 5 million, do you know what a stamp collector is it a filitella, i think, isnt it . What . Be careful with that one. Lets look it up on google. But its ph. I said it was an f. The British Guiana magenta postage stamp from 1856 is the only one of its kind to still exist. It was bought by an anonymous telephone bidder. Philately. And someone who does it, what does it say that person is . A stoomp collect he. Youve never heard that word before . No. You dont know what a stamp collector is called . Stamp collector. I used to collect stamps myself and and you didnt know you were a philatela . It was at a southbys auction. Did you know notice whenever you look up a word on the dictionary, youre supposed to listen to how its said in the new age here. We dont speak that so i never know what to do. All right. Coming up, what kind of Economic Forecast will the fed give the markets today . Were going to have some predictions for you ahead. But if you were to do that in front of alex, you know what he would do now . Lths so annoying. And does he tell world new another smartphone . Jeff bezos thinks so. Were going to take a look at what investors expect from amazon in the next half hour. Here is a look add yesterdays winners losers. When you run a business, you cant settle for slow. Thats why i always choose the fastest intern. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. [ male announcer ] the mercedeis here. Ummer event now get the unmistakable thrill. And the incredible rush. Of the mercedesbenz youve always wanted. But you better get here fast. [ daughter ] yay, daddys here here you go, honey. Thank you. [ male announcer ]. Because a good thing like this. Phew [ male announcer ]. Wont last forever. See your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. But hurry, offers end soon. Share your summer moments in your mercedesbenz with us. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. Its the two of us here and theres four of us. Were not a poster child for diversity here, either. Were a lot worse than yahoo at this point. But two of us have suits and there are two without suits. So there is some diversification here. Good morning and welcome back to squawk box here on cnbc. Very sensitive. Youre going to have to get in touch with that side of things. It at least represents i will be proud. I would be, too. A few stocks this watch this morning include revenues. Among the catalyst, higher prescription sales of its cloud. Shares rising in extended hours wig time, up six points. The adobe guys, i think i just saw him go by on our screen. Its part of the disrupter this year. Ge reportedly considering the sale of its train signaling business in an attempt to make its 7 billion offer for the french companys Energy Business more appealing. Reports say a sweetened bid could come within days. We will see whether this makes it. In the dictionary now. I think he might be wrong. Its manhatn. Is the way they do it. You cant even do it. Its like youre going to hurt yourself. Manhattan. Here is the thing. He grew up in a household where my mother would read corduroy to me with you just said another one where. And somehow that missing button for me was you know, i was looking for that button. Every time you say todays top stories, great jumpsuit. Youve got to work on it, seriously. Its not helping. Think of it as an apost fee. Thats kind of where i different people have different i think dunnky. Todays top market story is the issue of inflation. Joining us now, drew mattes and dick cohey from ge melon. Ill tell you what occurred to me when i saw you guys sitting here. Because of whether its the gdp we had, or whether its because of europe, the withhold world seems like its gotten and rates have been under they have not been rising. And its going to be dovish again today. I think thats weird given that were seeing inflation. Well, we had a weak First Quarter not just in the u. S. , but in the global economy. I think we are at the inflexion point to better growth. The minor gdp is probably going to get revised down to minus two. What about europe with the central bank. Theyre doing it for a reason. But theyre inflation is falling and theyre fighting it. Their target is a little below 2 and theyre at a half a 1 . Thats a miss. Theyre worried about inflation. Theyre worried about inflation because its too low. How does this here is the problem thats going to face is be careful what you wish for. They were worried about inflation being too low. Theyre still easing. The market sees them as tightening. But the fed will use themselves as still easing. So theyre easing into inflation accelerating. Its the only time youve ever really seen this. Six months ago when i was talking about clients, i might have might as well have been wearing a tinfoil hat. Now Everyone Wants to talk with inflation pressure. Its going to come from wages, but its also about the fact we havent invested in compassion for a long time. If there is any sort of pick up in demand, theres not the capacity to meet it. In this piece, we had him on. He said that the fed is oblivious to what youre talking about right now. Do you expect the fed to be dovish today . I expect there will be talk of expectations. Every time the fed mentions a neutral lower funds rate, instead of mentioning their current forecast, they take 10 basis points off. The imf at 2016, everybody is dovish, right . Admitting that mefb totally wrong through the uk. You might look at that with a degree of skepticism. But i feel dovish. So issanette yellen in general. And if you think about the debate between economists, janet yellen almost always comes on the side of the dovish argument. For example, is the labor market tightening and potential for Wage Inflation . I believe so. Janet yellen is very skeptical. They thinks theres a lot of excess capacity. I believe also that if we have a pick up of Wage Inflation, it will be welcomed at the Obama Administration. It will be welcomed at the fed and it will be welcomed by the american people. The really bad inflation we had was 35 years ago. It was in 19830. If you are in favor of less inequality, the Obama Administration as opposed to an increase in minimum wage, they would be happy to see Wage Inflation picking up so that the average worker, the median worker gets more income. The average worker still gets to keep her job. The attitude you see out of the fed is that the 2 is a target. Its not a ceiling. So since weve run the road 2 for a while, whats so bad about running at 2. 5 for a while . Which is probably the most dangerous thing youre ever going to hear out of a federal and you think well hear that today . Theyre already hearing it. Whether identity comes out in a precise form today, i would not argue that. But the problem is, once you get from 2 to 2. 5 , making sure you can top at 257 is very difficult. You can look at my forecast and its got a match, right . But the forecasts dont match. Anybody talking about it really is looked at. The money supply, you can too look at it in Community College right now. Think about what we think. Inflation, were almost like germans. They believe it dpifts, i dont think so. You think it would be a sell by date in the first 90 years. From yellens point of view, thats good news because she wants a faster growth in the economy. Forget about mya. When i go to the barber now, they put a comb in here. Caution to the wind. Lild like to deny that ive shaved and that these are false. We have to i mean, youre not going to be able to see. Hes named after the dog. Im glad were really focused on Federal Reserve policy here. I mean, i think this really is the key issue. Joe is going to be sending you to his eyebrow waxer. This is how you know when youre getting old. Do you trim your ear hair, too . Its good to have a really professional skill. Shoulder here. Hideous. Ive seen it. Wow. Coming up, will consumers im speechless. Consumers drop their iphones and samsung devices for an amazon phone . Later, congressman tim murphy chairman of the House Oversight Investigation Committee talking to us first on cnbc before his gm recall hearing. Squawk box returns in just a moment. She keeps you on your toes. You wouldnt have it any other way. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. 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Big day today, we will fine out what the fed has to say. At 2 30, we will hear from janet yellen directly. Nasdaq will look up a little over 4. 5 points in the s p 500 up marginally close to a point higher, of course, all of this is probably going to change a lot today. Today for there are smart people watching the fed today to decide on to make a lot of decisions. Luckily, were in position to just dment on things. Im interested in what the fed does, right . My life is not depending on it. Im not sure but, you know, even like Warren Buffett is not particularly guys that are tepper or Something Like that. Yes. Coming up, jeff bezos laughing at the smartphone comp tegz. Competition. He doesnt come on the show. I dont know why. He came on once. Amazon about to jump into a major battle, but he laughs in the face of but seriously, can jeff bezos pull this one off . Thats next on southbound pb. Squawk box. Se. Squawk box. Squawk box. Han an hour. Squ announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening, they dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Well welcome back to squawk box. They will introduce the software that is best tan the kindle. Mark, what do you expect this to be . Everyone says 3d something. Joe has been trying to get me to explain to him. Maybe you can do a better job of why amazon can compete in this space. Let me tell you why, whether theyre successful depends on how good the product is and how its priced. Why is based on survey work. We find Kindle Device owners of amazon device owners tend to spend more about 30 more. This is another ways of getting an amazon shopping basket in front of more consumers. Secondly, they need to do it because mobile is becoming an increasingly more important can el. Third, there is probably a defensive almost to this. If you think the second is happening, mobiles are becoming an increasingly important can el, you want to have a presence so you are not boxed out by the phone makers, the phone providers, the apple, samsungs and gock hims that have their own ecommerce ambitions. John, can amazon compete with apple or google when it comes to the talent, man power, the engineers to build something truly competitive . Yes, it can. It doesnt take tens of thousands of engineers to get the right product. It takes the right engineers. Out in the market place, amazon doesnt have to compete with apple and amsung. Theyre in a different game. Amazon has economies of scale for hardware to keep their costs relatively if check. They have the kind him, kinle fire, the fire tvs as well. So thats not really the issue as much. What amazon needs. You cant hear that . What do you think that is . I dont know. Do you have an at t or Airplane Mode . I hope they can stop it. They cant listen to you. There you go. Turn off all my wireless. Are you not in Airplane Mode yet. What else do you got . There you go. I dont know whats going on. Maybe its everything is off. Everything is off. We love you, tow, maybe its mac. Anyway, but more importantly, so this is going to build on top of android, though, we believe . Yes. Amazon has fire os. What they really need for this to do is drive casual gameing music and video and then i think consumer Package Goods purchases. They are moving into groceries, other areas leak that. Something in your pocket always connected to amazon. I think the big question here on this announcement is, do they subsidize the hardware more or do they subsidize the data plan more . Do they get in with at t on this kind of toll free data plan service they announced at the beginning of the year . Mark, what is your take on that, what would you like to see them do . I think its almost certain, theyre going to price this at cost and hope to make money on incremental sales, gameing sales as john mentioned or product sales, media sales . The challenge with unleak every other device theyve come out with, they got to subsidize two things essentially the device and the plan. This is, i think you framed it right at the beginning, andrew, this will be the toughest hardware launch amazon has had. Theyve had prior ones into not competitive or barely competitive markets without the need for dual subsidies. This makes this more rigorous. We are concerned about it. We are both on the stock, it doesnt change the thesis, but there is a lot of how the product is introduced, huh it is priced and difference differenciates in terms of features. I use amazon like crazy on your phone. You never bought from amazon . Your wife does. So what we got happening this year in a unique way, we got the pipes companies, the carriers, both on the cable and wireless side. The platforms like apple samsung and google all fighting to get into each others places. Abs goes, pipes guys. More and more we will see who has the leverage. Amazon can do this with relatively low risk. Maybe thats the point im missing. I dont see it at all either. They dont need to sell that many to make it worthwhile. There is not a number. They need to get a few thousand, a couple million of the right customers to spend more with them to make it not a loss. Its not about the phone being better. Its about having more access to, what was in your pocket . In my pocket. Myfi. You are walking around, god, almighty. Can i hear you. It gives wireless service. What happens when you go through an airport . Do they send you on a list . Sample i have a routine, im taking stuff off. Our audio was going bonkers, you had this. Im a walk disaster area. Thats unbelievable. Thats what it was, whatever that was. When you go on squawk alley, do you remember to take it out . For some reason it doesnt interfere him there is so much wires going on at the stock exchange. Im watching you. Did you move back here . I did. You lived in jersey. Where in jersey . Your back yard, literally. I havent seen you. Its a very large back yard. We got to run, mark, thank you for playing along, we appreciate it. Of course, a reminder we have a big amazon do you meanry coming up on cnbc. David fabers amazon rising. Coming up. All right. Cool. Anyway, coming up coming up, the latest i think wapner lives there. Hold on. And it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. Welcome back to squawk box. Gm Ceo Mary Barra headed back to the hill. This time feisty facing an oversight subcommittee. Bi bill lavall gets behind the wheel. Plus a disruptor 50 member. The sec hour of squawk box begins right now. Good morning, welcome book to squawk box. This is cnbc. Im joe concern nan along with andrew ross sorkin. Becky is out today. We are here with bob nardelli. Its cool its the way its done a license plate. I was so stupid the first time i had to introduce him. You called it 120 hl 8. I didnt realize it was long time general electric. Alumnist. We are glad to have you. You are an important share. One of the three. Not sure its a pretty as face as becky. In the eyes of the beholder. Dont forecast that. Lets check the futures out. Where were indicated today is based on sort of what the feds will say. Up to six points. Not a whole lot happening. The ten year has been back to more reasonable levels in we are going to have a better economy about 2. 46 , still well below the highs for the 84. Nowhere near 3 . It can move quickly. Certainly not where it forecast, joe. 3. 15rks, 4. Years and years. I feel more dovish, maybe its the gdp based on europe. They got so devilish than where we were. A couple years ago. They did point out, hay the fed is still, they havent tapered the system. Theyre still putting. If there i think there is a by line saying uncertainty is trumping profitability. A recent survey by eernst and young showed while most of the companies were doing extremely well, i was in peoria with doug and they are doing well him you see all this profitability out there. The cfo council said a lot of uncertainty the geopolitical. I think its something we got to keep our eye on. One of these famed places is iraq. Minimum tants have attacked the countrys Largest Oil Refinery. Thats the one thing people say all the different financial markets, watch oil. Opinion gunfire mortars. Hopefully we have cleared up from iraq. Hopefully everything is good, now, eamon. Reporter ayman. Reporter in some of the cities not too far from the capital of baghdad, today another fighting has been focused on that oil refinery in the city 155 miles north of the capital. Officials said the refinery was shut down days ago. Some of the International Staff have been evacuated. Today isis fighters tried to overrun the members of the Iraqi National army. That led to a billow of smoebl smoke. Why that is important, it is the Largest Oil Refinery in the country. It would have tremendous implications on the flow of oil and gas inside the country. You will see long lines of gas at the gas stations, a shortage of electricity. That will make life harder beyond what theyre experiencing in terms of the daily violence. Right now, some of the sources close to isis say they are fighting to take control of the oil refinery, the embattled Prime Minister nuri maliki is trying to put forward a National Unity consensus, if you will. He is trying to address this issue politically. It does not seem to be resonating with the sunni residents. A lot of the people say they do not accept some of the efforts that the Prime Minister has been making. They say he has become an authoritarian ruler. And its a little too late. They are calling for him to step down and a few government to be reconstituted. But there is no indication that is going to be happening any time soon. Guys, back to you. Okay. Thank you for that report. We will be checking in with you throughout the morning and the rest of the day. List also bring you up to date with the Business World. Janet yellin and the fed in focus for investors today. The fed concluding its latest meeting with a policy statement. That will come up at 2 00 p. M. Eastern time. Everyone will watch that. More importantly, people will follow what will happen 30 minutes later, janet yellin is going to have her News Conference the fed is expected to cut into Bond Buying Program by 10 billion to 35 billion per month. Also, as we have been talking about all morning, we are scratching our heads over it. Amazon. Com is going to be hold akmedia event later today, which its expected to unveil its new smartphone. A lot of speculation the phone will have a 3d screen. The emphasis on possibly shopping and many of the phones features will be tied to the prime Membership Program built on the back oddly enough of android. So its going to be reskinned as an amazon product. You can design product based on buying things on the mobile, having a possibly device. You are seeing amazon built its own apple tv, right . If you were a prime . For 99 i believe can you go, i dont know if thats the right word, can you go out, buy it. I dont have it. Maybe i should, i dont. You can get music, if you are a prime subscriber, member, where you get your packages shipping for free, they are trying to endues you and do Everything Else. Is this is a race of who will control the content. Who will have the single port of entry to the consumer. Andrew, i think are you onto the point here. Its at a high cost. Its at a high cost. Again, there is a group out there, i think jeff is on to something here with amazon. You got at t backing this thing up, which is a very reputable provider. It would be like if walmart decided they needed to have a phone. Or all sorts of devices or, you know, that everyone is going to boy from one store. You know, sometimes you response to consumer demand. Sometimes you provide product that consumers dont know they want or need. Right. Kindle i understood because it was number there was no market. They created a market. This you know we use more than amazon and im telling you, this is, i see the us guy every day, im on ebay. Now, does ebay need a phone . As much as we are. I the cully see that, she is always worried about am i going to get it . Right. But, does ebay feed its own phone for people that need ebay all the time to be on the run, they need a possibly ebay phone . Its the same with amazon, isnt it . Wont jeff have more control over the products and the content that hes pushing out for those consumers . I dont look at a phone as something that i use to do that. I just. No, i think. Its to surf the web, use waves. Projections. Not from our standpoint. I am on this all the time. I buy stuff on this thing. It doesnt matter to me. Where do you put the credit card . Let me see your phone, do you slide it lou . There is no slide. Type it in. Well talk more about this. And i dont think he needs to sell that many for people that have to use it all the time. Gm Ceo Mary Barra takes the hot seat. Phil lebeau will talk about nardelli and the whole situation with him. Joe, it will be interesting to see when pare barra is testifying today whether or not we see as many fireworks when she was here 11 weeks ago. Keep in mind at that time there were a lot of questions regarding the ignition switch recall that we did not know about. We didnt know how far it went into the company, how many people would be disciplined. A lot of that has come out over the last couple of weeks. She will be testifying on the findings of gms internal investigation. Again this is a follow up to her initial testimony 11 weeks ago. Yesterday they released her prepared comments she will be making by members of the house committee. She said, i never want anyone associated with gm to forget what happened, talking about this ignition switch and i want this perm navently etched in our memories. They recalled faulty switches linked with 13 deaths and 54 accidents. Although that number is expected to rise. Former u. S. Attorney Anton Valukas will be talking on capitol hill. He said throughout the decade it took gm to recall the co bal, there was a lack ofkability, a lack of urgency and personnel charged with insuring the safety of the companys vehicles to understand how gms own kwars were designed. You take a look at shares of General Motors this year, keep in mind this company has now recalled more than 20 million vehicles world wide this year. Guys, you can see the stock has ticked up a bit in the last couple of days. Most believe we have already seen it bottom out t. Worst has been thrown out there. We will see if there is any bomb shells that come out of this testimony today. I dont think there will be. Everything is in this internal report. Unless somebody on capitol hill comes up with something, i dont think we will see quite the fireworks we saw 11 weeks ago. Stick around. You just heard phils report. Yeah, a couple things, joe, i think mary has done an excellent job in navigating very treacherous waters for her. She has been able distance herself from the issue, having been there for 30some years ago, point one. Point two, she openly says, well take full responsibility. Andrew, for the issue. Obviously, you know, this thing went from 200 million to 2 billion reserve. I think they will have to do everything they will have to do to financially satisfy those victims and families affected. I think the big challenge, joe, is going to be can delphi crank up fast enough. If they let the recall crank on the liability and exposure for those 2 million cars is still out there. I havent heard anything how they are ramping up the ability to get these things fixed and get it behind them. I think mary wants to throw as much money as this as they can, get it behind them. I havent seen a negative impact on the brand by auto sales. Are you surprised by that . I am surprised. Bob, to answer your questions, they are were raing up production of the replacement ignition switches and cylinder lock that goes with those ignition switches. Yes. As they ramp it up, they are bringing more and more switches to dealerships, getting the repairs up there. Its a drop in the bucket compared to 2. 6 million. As you well know, twothirds of these recalled vehicles will be repaired. A lot of people chloe off the announce s, they say, whatever, i came across somebody this weekend driving cobalt. We happened to be in the same parking lot. I said something, they said, really, this car has been repoed . There are a lot of people unaware this is going on. Im not only surprised in the Auto Industry my Retail Experience and others, when you broadcast a recall, its amazing the consumers that tevend to ig for it. They dont want the distraction, they dont want to be brick it to the dealership. Phil, are you right about that. I am encouraged on what you said. I think the faster she can get these repaired, those people that come in you reduce your liability exposure. Someone could be driving a car. They could get killed with this thing still . Yes. Now, what happens, now its announced, this is actually interesting. What is your legal it sounds significant at this point. I appreciate that. Im saying, if a car owner doesnt go in to fix the problem and they have problem, whose problem is it . Again, im not the lawyer. Cons would say if they try, if they call the dealer and said i want to get it repaired and they said well we dont have the new ignition to repair it. Thats one category. If they just ignore the publicity and warning on this, it may be a different category is there what itself the total we are talking about, puntive and Everything Else . It will be well beyond that, the 2 billion is just the charges they have taken so far related to all recall expenses in terms of what the punitive damages are the compensation for victims. Most are saying that will be well over 1. 5 and 2. 5 range. Thats a guess. They wont do a buyout strategy where they take every case to court . They cant. They dont want that. You think they have an independent council . He will go out. Whats it going to take and set him these and get them behind them. Thanks. We have much more. Coming up, at 7 30 eastern, tim murphy, congressman, will talk to us ahead of these hearings. Ahead of todays hearing. Coming up, the markets have a fed decision and janet yellins fuse conference today. Will the dow continue its march to 17,000. Will the bulls bring the s p to the next level . Hopefully, we have some answers when we return. Welcome back to squawk box. Day two of the fed meeting on insight how that meeting will go. The situation in iraq we soul talk about. How all this will affect markets. We are joined by the head of u. S. Equity and quantitative strategy at bank of america, Merrill Lynch research. I am very happy. We practiced. We worked on it we nailed it. Thank you. Its very nice. So just help us rue what you expect to see at 2 00 this afternoon and what you think would surprise the market at this point. Oh, you mean in terms of fed speaking . Yeah. We are expecting the fed continues to taper as planned. I think from a game teary perspective, its hard to imagine that they tighten too early or change their course at this point because we havent seen growth materialize. The trillion dollar experiment we have seen from the feds, i would argue they are more inclined to be extra dovish rather than go the other way. Everybody can become extra dovish in the past week first half. What happens here . I think he was right, that they will stay the course, but i do share some of the concerns that drew and dick had earlier. I think there is evidence. The place picked up. I am optimistic about the growth outlook. I think we will present it for the rest of the quarter. Next year it will be very strong. Partially its math. The First Quarter will be oneandahalf or two down. The way we measure gdp is on an annualized basis. I do think the underlying activity in the United States is growing as we speak. I keep bringing him up. He said, they dont see it. I see it. They do not see the. The average person doesnt see it. The fed. What if the average person does see it and the fed doesnt . I dont think thats quite right. I think both the average person and the fed, they want to see stronger evidence. I think you talked about cfos. Ceos arent seeing enough evidence to act aggressively. They dont share your optimism if reading some of the material, people think we will be 3, 4 first half gdp. The uncertainty out there the geopolitical things are causing them to stash cash. Of course, they are being criticized for that. Its not so long ago, i can remember chrysler going through that financial melt down, we would burnaby billion dollars a month trying to stay in front of this thing. So theyre very conservative. I think thats very right. Ceos consider the hiring picked up a lot. Still its relatively modest. Thats why the average person didnt see it. The fed is concerned about getting wages up, getting employment picture much better. They are willing, i think, to take a risk that they will be a little too easy too long to get if employment picture in better shape. How does iraq explain that . Its another wild card. I think the best way to hedge against iraq is to boy energy stocks. It sounds simplistic. If you think about it, geopolitical stocks in 2013 the syria issue, energy out performs the s p 500 by 7 percentage points. The markets generally does okay coming out of, you know, geopolitical strikes. So, for example, if you look at all of the past oil shocks we had the market sold off 2 the day of or week of. What are you supposed to boy them . Lets say the perfect, i guess, timing is everything. But maybe you boy the mark the day the news comes out. After the markets reacted. The market generally rallies back over the ascent 12 months better tan what you lost in that. Yeah, exactly. The stocks have not been if favor lately, have they . Utilities have sold off over the last month or some they did phenomenally well in the First Quarter arguably because of weather and the bid for yield. Going back to companies courting cash. One thing weve noticed is that there is a slight change taking place in the comp sector. In the companies are actually getting more aggressive on planned capex. In fact, one of the things that we have been engaging, using to gauge corporate sentiment is how Many Companies are go aheading above versus below expected capex . Twotoone companies are actually go aheading above. Two companies for every one company thats bearish, two companies are saying we will spend more than you thought we were spending. What i have seen talking to the earnst and young survey, all are looking at three to four major acquisition i acquisitions for cash, one they feed it. Two they need to boy growth, three they are looking at an enversion protect basis. I think they are projecting. This is fantastic. You are ahead of u. S. Equities . Thats right. You sound surprised by this. Ill take this. We will have you back. You got it. Thumbs up on council. Will you come back. Thats great. Thank you. Thank you. We hope to see you again very soon. Thank you. Coming up, congressman tim murphy chairman of the House Oversight investigation subcommittee talks to us first on cnbc ahead of todays gm, and later squawk box is taking flight with wheelsup. How theyre disrupting the private airline industry. More squawk in just a moment. Nice. Wrench . What . Aflac so this is who you brought to help us out . Oh yeah, hes the best. He doesnt look like hes seen a tool in his life. Oh, he doesnt know anything about tools. Aflacacacacacacac but when i broke my arm, he lent a hand. He paid my claim in just four days. Four days . Wow find out how fast aflac can pay you at aflac. Com. Better. The numbers are impressive. Over 400,000 new private sector jobs. Making new york state number two in the nation in new private sector job creation. With 10 Regional Development strategies to fit your business needs. And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. Were up for that. Coming up, gm Ceo Mary Barra in the hot seat. Tim murphy, Oversight Committee will talk to us first on cnbc before this mornings recall hearing. More squawk box in just a moment. Chocolate is very individual. White chocolate lovers dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their preferred chocolate. We needed the scalable Cloud Solution allowing them to see all 800 products and select what they are looking for. Now there is endless opportunity to indulge. Islamist led militants invadeing iraqs Biggest Oil Refinery north of baghdad. Take a look at oil prices, they have been steadily going higher for the past two, three weeks Michelle Cabrera russ so joins us from iraq. Reporter hey, the refinery in iraq, the largest in iraq, is having a Ripple Effect on products like gasoline. Fe at the same time, there is the battle front where kirkuk is right in the center. Its about a twohour drive west of here, they have insurgents on a lot of sides. We had a chance to sit down with the governor of kirkuk. He lived in the area for decades. He was a neurosurgeon, a very young resident at George Washington university when Ronald Reagan and james reagan were shot. He was a Junior Member of the team that attended james brady. He is a neurosurgeon. Now hes in kirkuk in the center of this tough spot on the map. I spoke with him first that the army abandoned his city. Heres what he said. The iraqi army we few we had a lot of deficiencies. It was a checkpoint area. It was not army in a sense where you have discipline, training, commitme commitment. He gave us an analysis. He says a lot of people say this is about extremists. Unfortunately, not anymore, he says. Sectarianism is getting deeper and doerp. The differences between shiites and sunnis. Its not just differences, its very deep hatred, actually. And i cant any longer believe people, say, that itself not true. Its a group of fanatics and all that its not. Reporter and then i saved this last fight for you, joe concern nan, because he brought up the article written by joe biden along with the head of the council and former relation bay way back, the one we bring up about whether or not iraq should have been split up into three different places. He thinks its a good idea. Everybody accused by the United States for that matter of trying to split iraq into three parts. Probably that was a very in my opinion we said it was a very good article. Maybe thats the only way you could keep the article. Reporter he says thats the only way to keep the country together, because it it would be a federalism, where there wasnt a strong Central Government but very strong three regional governments. He said that would actually keep iraq together as an entity. Guys, back to you. Unfortunately, michelle, we did, you know, i was just watching what was happening after enyears, whatever its been, where we have been involved there we returned to where we feed a guy like Saddam Hussein, you need aty rannical horrific guy that uses gas on his own people, you almost prefer him because the country cant seem to put all of its different secretaries together and run effectively. It made sense, let the kurds have Self Government and the shia and the soviet union fis, but, you know we tried to do it a different way the evidence is its much harder to get that to stick tan we would have ever thought. Hes fairly optimistic that there is a system that could work that would keep the country together. He calls it a strong federalism. Its just you got to really remove a lot of power from bag. Take it away from the Central Government and give a lot mover autonomy to the three different groups. That, he believes, would work. Okay. All right. We will talk to Richard Engel actually at 8 00. Check all this around again, michelle, anyway, thank you. Its good to see you. You look good, international chief international correspondent. Fedex is doing well today. The numbers were good. 246. It was 10 cents above expectations in this fiscal Fourth Quarter result if revenue. 11. 8 billion, they have 11. 8 million here. Not our people. Im looking at this. What do have you there . Dow jones . Are you going to out them. No, im not going to out them. Think about the profit margins, it says here, they made 730 million on 11. 8 million in revenue. Those are solid profit margins. 11. 8 million, obviously, you dont get what im saying here . I get what you are saying. 850 to 9 billion. 876 was the estimate t. Company says it assumes for the net fuel impact and if it assumes continued moderate economic growth, it sees 8. 50 to 9. If that revenue number, analysts ought to be able to get a lot closer. Thats better than people thought. That last quarter the quarter before . You see the results where the stock moves around. Overall, fred is a phenomenal ceo and delivers and delivers. This would go against your more pessimistic view of what veos are feeling right now. Maybe there is an uptick. I think it was a bad First Quarter. Again, i hate to use that excuse of the weather. Fred talked about that came out of a pretty bad december relative to deliveries. I think hes got costs, thats up over a point. We all thought he was going to be better given the second quarter. Right. We all talked about bouncing back, right . So here we are. So i think that revenue number is an example of that. Joe, i dont know if thats sustainable or a part of the First Quarter recovery. Okay. Good. Thanks. General motors Ceo Mary Barra is back on capitol hill before the House Oversight and investigation subcommittee. All this on the companys recall of millions of vehicles him congressman tim murphy joins us now with a preview and every time we have another hearing, congressman, we have more information. What was the last three months and everything we know what do we need to find out today to move the ball down the field down . Do you think . Well, the report claims there was a culture there of competence and sloppiness in the company. After firing employees putting in the report. A lot of americans have had Financial Issues with cars being damaged, told that things are okay for a long period of time. We found out they werent. Several people are dead. Lots of people are injured. Im not sure its enough to say take our word for it. We will put these recommendations in place, after changing less than. 001 i dont know the safety for american drivers. We were talking earlier, still these cars are still out on the road. Do we feed to continue to tell people its been recalled . They ned to get this fixed . It seems like we are still if a position to prevent some bad things from happening. If we do all that we can to do that . Sure, not only General Motors, others are putting recalls because they are fearful mistakes have been made, they are looking at maybe the government is going to put the spotlight on them as it should be. Anybody who drives a General Motors car wants you to take very seriously those recall notices, especially with the switches and understand that this link that gm knew about but said it didnt foe about for a decade the link between this, shutting off an airbag is a very, very serious problem. Are you satisfied whatever systems have been put if place within these Automobile Companies to find these things and alert people are in place the way they should be currently . Well, thats a series of questions we are going to ask miss barra, to make sure they change the whole culture. Thats the crux of this. This isnt that one or two people made a mistake one day and a slipup occurred. There is a culture within General Motors that made this pervasive, despite lots of warning signs from the outside. How is she going ochange that . That will be a key issue. I think the tone at the top that she is setting is going to help that. Now, you are trying to overcome years of as shes talked about either bureaucracy or lack aattention to it. I think if the tone is right at the top, it will penetrate as somebody who run big companies, is there an argument to say these are too big to manage, too siloed. Structured in a way where you at the top cant physical out ma is going on, together about five below, two below. Again, i grew up under feat jack welch. He was a great mentor and role model. That just didnt happen. I mean, you dont allow yourself to be insulated from those things. You are always working two to three levels down you are micromanaged. Nothing as significant as this. It seems to be with Companies Like General Motors, its expensive to do this. There is always going to be the attitude, well, lets try to make sure that we dont overdo our efforts. Are will the existing book laws on the books enough to force companies to make the hard decision here . Are they already there or are they just not enforced . Or do we feed new laws about them . Thats one of the questions we need to ask. Are they clear enough in terms of the tread act to push gm to make emissions and clarify that. Understand this, you cant legislate common sense and mandate a sense of morality. If that is missing from a corporation regardless of the strength in the law. People are going to make mistakes. That will come with all due response to jack welsh. Hes also said, you cant take care of it by putting a plaque on the wall saying this is our mission, our mandate. It has to be constant monitoring of several supervisors. I dont know if 15 employees is enough. We have to find out how far to go if an change that to return the safety to american vehicles. Cramer murphy, thank you. We will be watching. Appreciate your time. Coming up next, cnbcs 50 member startup. Pure storage the company is making waves among data storage companies. We will talk flash, cloud and ram all coming up next as we head to a break. A look at the futures as we walk into that break t. Dow opens up close to ten points higher. We will be back in just a moment. Ravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. The numbers are impressive. Over 400,000 new private sector jobs. Making new york state number two in the nation in new private sector job creation. With 10 Regional Development strategies to fit your business needs. And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. Times square there, the cnbc disruptor list is out. We are digging into the startups threatenning the status quo, up federal government, pure storage, be every the start of the ceo joins us, we have a look at that company. Julia. Andrew, the cloud is crowded, about 20 of the 522 companies tom nated are involved in some aspect of the cloud. Pure storage aims to revolutionize how companies store all the data they check, whether through Cloud Based Services or own secure private cloud the pure storage uses flash technology, which it says is faster, saving time backing up data and uses less power tan traditional ard drives. It is also more cost efficient. The Company Raised nearly half a billion to take on emc the leader in the corporate Data Storage Industry and its gaining ground, drewing examiners from linkedin to nevada Brewing Company growing revenues 700 last 84. Thank you, julia. Stick around, staying on set, the ceo of pure storage, thank you for being here. Aunt a year ago, we were discussing the up front costs to flash storage, which is beckally the theme of how your business works relative to everybody elses is much higher. Correct . Typically, its about four times more than what a examiner would spend for a traditional dick mechanical solutions. Pure storage is secret sauce. We fixed out how to get the cost of purchasing in line. For a business, it doesnt cost any more to get on board with this flash technology, fact, you can save money because of savings in power and space. But that comes afterwards. That comes afterwards, if you want to disrupt this market, can you take price off the market and compete headtohead with vendors on emc on discbased solutions. The other question, tow, becomes flash, everyone request do flash if they want to, correct . What is it about your tech following thats different . Flash got starred on the consumer side, it was in the big consumer data sets. Google instant search, when you type and see the webs entire catalogue at your finger tips. It wasnt available to businesses because they didnt have, they den generate the kind of cash necessary to spends up for the flash and it wasnt packaged if factors that they could snap into their data center. Thats what pure did. We fixed out how to drive the cost of flash down to where it was right in line with mechanic am spinning discs and we fixed out how to drive combat i object so we could plug into the data center without changing anything upstream. When you are trying to convert these Companies Used to having giant servers, they feel comfortable and secure with, how do you address security concerns . Its interesting, you say giant servers, the Storage Systems are really large, think double subzero refrigerators, half a ton of machinery you have as to move in and out every four years. Flash is so much denser. It comes like a microwave. It consumes a tenth of the power. It turns out it is more secure in technology. We encrypt 100 of our customers data, all of the data is encrypted. It was a gained access. Is there something proprietary, though, about what you are doing the reason i say it, i know emc and other companies are saying, we do flash, too. You were the only game if town. Now everybody wants to do what you are doing. We talk about three classic stages here the first three years it was denial. There is for the way this tech following will catch on. Then it was quiet accept sans, emc went out and bought two other Flash Storage Companies to prepare their products. I think we have now reached the point of embrace, the leaders are coming directly at us now. Their products are still too years behind we believe in technology. Theyre now leading with them and not a mechanical disc. That signals this change is going to ab sell rate. Thats good to some degree, baaed to the other degree in terms of your business, emc has your relationships with all of these companies, it kams comes, how do you break in ahead of them when they are at least suggesting they have a product better tan yours. It is the case that weve got to get customers to try the product. If they dont actually try our product, if they look at the marking carts that describe the benefits, we got a tough go. ens we get our product into a customers data center. They try it, experience it. They can see the profound difference that twoyear Technology Lead afrs. Two years is a long time. Technology distinction is what . Tech following distinction comes down to things like economics. We are actually more Cost Effective in the competition. We are substantially more robust. We have been hardening the production if four years compared to the competition. We are offering greater scale. What is supposed to happen to your company . Are you supposed to be bought by one of the big guys . What is the end goal ear . If we wanted to sell the business, we had numerous opportunities. I believe they are still available. We sent them out to disrupt this market. We think customers are getting more for their money than they are getting. The best way is by a long independent. Does that mean we can expect an ipo sometimes soon . We had Public Market investors the business valued at over 3 billion for a raise earlier this year. We are running the company like a Public Company with public shareholders. So its only a matter of time until we ipo. We want to ipo when we feel the Market Conditions are right. We want to build this longterm independent company. So we want to be in a position to do. Yes, scott, look, as the foreman chairman of home depot, i am intreeked by flash. It was a manual, when you had these discs you had to reuse them a. Lot of labor involved. I think the next followon for you is going to be as a ceo, you can correct data him then you got to get somehow to analyze that in an efficient manner to be able to use that data. I think thats probably the next big disruptor. Are you trying to Layer Services on top . We think there is a lot of opportunity for partners to do that. The data, you cant get it. There is no performance way to get there. The disc, mechanic am systems are so much slower. All this value is locked up we could unleash by putting flash storage into the data center. A nice thing for you. Scott, thank you for being here. Congratulations on being in disruptor 50. I hope to see you next year. Lane to come back. Coming up, some stocks to look at, including probably fedex. Later, wheelsup founder and ceo of Textron Aviation formerly known as cessna. You have been on a says fa jet, right . Beautiful jets i am told. Joining us to discuss property, aviation and tear latest deal. Squawk box will be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Lets take a look at a couple of stocks to watch. I told you we mentioned fedex. Now almost 6. Thats a 4 move, reporting 1. For example, earnings were well above 11. 8 billion then the outlook for next year was straddled where analysts are. They said 850 to 9. Shares of lazy boy short of estimates. The company ceo blaming weather and cautioning that investors that the Furniture Industry is typically weak seasonally during the summer. We are watching the shares of blackberry, according to dow jones the company will announce a deal with amazon giving it access to amazons app store for all of its possibly devices, does that help blackberry . It could, a little bit. Coming up, wheelsup is flying high. That company made more deals tan any other aviation company, both will be here today to talk another about another deal theyve got going on. We will talk about the fast paced business of private aviation in a bit. A price squeeze online. Do you foe about this . This was a serious thing. But it doesnt pine the panic is over for margarita lovers this summer. The ceo talking big price swings. Kid hey dad, who was that man . Dad hes our broker. He helps look after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at charles schwab. Are the largest targets in the world, for every hacker, crook and nuisance in the world. But systems policed by hps Cyber Security team are constantly monitored for threats. Outside and in. Thats why hp reports and helps neutralize more intrusions than anyone. In the world. If Hp Security Solutions can help keep the Worlds Largest organizations safe, they can keep yours safe, too. Make it matter. The fed in focus. What you should be expecting this afternoon. The latest from baghdad, what it means from the parents from nbcs Richard Engel. Wheelsup and Textron Aviation strike another deal t. Ceos join us to talk about why flying aviation is flying high, the final hour of squawk box begins right now. Welcome back to squawk box here on cbc, first on Business World wide, im joe concern fan along with andy ross sorkin. Becky is off in studio. A pan who knows his way around the board room, bob nardelli founder of Consulting Company accelerate and forrer cramer and ceo of cries lion ler as well as home depot. Lets get the latest from iraq. Nbc news foreign correspondent. Richard engel joins us from the center of where things are happening, they happen to be baghdad, if this case, we spoke to earlier this week richard, now the latest is that infrastructure it seems to be like its a target now of isis and there is a big refinery. Do you know the latest on, do they got the whole refinery yet or most of it . Reporter it appears theyve gotten most of it. The video, first of all, its great to be with you guys. The infrastructure targets. I will start with those if general is what isis is focusing on right now. A few days ago, last week, they were charging towards baghdad, coming if from syria, moving through the west. They got about 50 miles or so 40 miles from the iraqi capital, stopped their assault. Now theyre looking at destroying all of the infrastructure or taking them over, in their territory in this area that it is held some they are fighting near the kirkuk oil fields. Totes are currently held by kurdish fighters. We have not heard the oil fields have been damaged. But thats where they are focusing. They are cutting off supply routes to baghdad. They are troying to attack the br egi oil refinery. Today they put out a video that appears they went pence and took over at least several of the buildings within the compound and we also foe that the staff the foreign experts and some of these iraqi experts who had been manning that facility have been evacuated for their safety. So even if they didnt take over, it seems like they made it nonfunctional. The president , the word is maybe airstrikes are on hold. He is somewhat hesitantt to use military power. It seems like the advance stopped into backed because of the shyite or the shias got the urging from the ayatollahs, you know, to form these pumilitias. The president s people are saying its because he wants a coherent strategy, just airstrikes hitting a couple columns isnt going to change what happened how the kurds feel about maliki. Its not going to change the way the sunnis feel about maliki. Who is right . Is it because we dont need the airstrikes or we need a more coherent strategy or is there such a thing . Reporter well, i think at this stage it seems unlikely the militants will charge in, take over baghdad, take over the u. S. Embassy. There could be bombs here. That seems quite likely they will export the violence from the territory that they hold and send it to baghdad. I think thats almost guaranteed, in fact. But the, finding the coherent strategy is probably more important tan launching a few drones and targeting a few militantsch because this country is the collapsing. Let me tell you an anecdote. Something we saw yesterday. We went to a recruiting station where these new shyite recruits are signing up to i dont know the iraqi army. As you can imagine in the Shiite Community there is a huge wave of patriotism right now. On tv. Theyve all seen on youtube and the internet clips sunni militants carrying out atrocities, executing civilians, tore cureing people, beheading people. When all of that is seen by the Shiite Community, it whips them into a frenzy, the religious leadership calls a general call to arms, a jihad, if you will, a shiite jihad against these sunnis him people are possiblizing. We went to this iraqi recruiting center. There were lots of young people there, very fired up. Very enthusiastic. Dancing, shouting, dancing with tear guns up in the air. Talking about how they will fight for shia faith. How they will fight for their ayatollahs. I was standing there watching them with their guns in the air doing this circular dance, they dance in a circle. Standing in front of the u. S. Military equipment do fated to them by the u. S. Government. Standing next to officers who have been in the army who were trained by u. S. Troops and i kept thinking, the u. S. Got involved here once, provided the equipment to the iraqi Armed Service, now that Armed Service is becoming more and more sectarian by the day. It looked like a shia defense force, perhaps more than a national army. So if the u. S. Intervenes now militarily. First, its going to be very hard to pick targets. These people dont move in columns, but then if you do intervene, are you picking a side in a sectarian war. And the United States, we kind of did that for ten years. Do we really want to do that again when it seems the government has just stopped the assault on baghdad or halted it . Richard, what is it like, just, daytoday in the streets right now of backed where you are . You talked yesterday. Horrible. Horrible. Horrible. Horrible. You worried me yesterday. It is corrupt. It is the worst. It is the most. Go ahead. Yeah. I this i its not just the car bomb. You can deal with the threat of car bombs, frankly speaking. There is a war going on and you understand that there is rec. Can you deal with the threat of sfieper fire or car bombs, things that are,that come with war. What is happening here, what you feel in bag these days is even more insidious. It is a system that is coming apart where militias are really the ones in charge. Theyre the ones who are patrolling the streets. You dont though who they r. You dont foe who they are answerable to. Everyone wants bribes. When every Single Person stops you and asks for bribes, you know the system is collapsing. I dont know if you can see a couple buildings behind me, theyre probably 500 yards away. Within i was walking over here the other day, 500 yard the first checkpoint we to, give us a bryant as we come around the streets, you want to film, give us a bribe. We want to film the recruit, give us a bribe. It is impossible to liver like this. Iraqis who i have known for years, both sunni and shiites say that they are starting to think, that life was better under Saddam Hussein because of the corruption, because of the persistent violence which again is somehow more tolerable than the petty corruption you feel all the time because you understand with a war with war comes violence, but to be shaken down all the time, constantly and if you can works, by the way, you are paying bribes are being demand for a country that has fallen on its knees. That drives people to incredible frustration. Richard, we got about maybe 40 seconds. But i remember when the russians were ifchingia, we were on the side of the tal taliban, they became our enemy, now iran, its impossible to keep things straight already and its a lot of the enemy of our men e enemy is our friend. I understand that works. Really, we will align with iran trying to solve this at this point. The journal has an editorial, our friends the mullahs, here we are again. Its hard to imagine. Well, its very semple to actually its not that complicated. There is really for the sides in this. Well, forget the kurds for a second. That i are starting their own thing, taking their own sides, a sunni fight, a shiite fight. If bealign with the shiites, we are aligning with iran and the maliki government and all the militias to fight against this sunni uprising. Thats what wed be doing. we want to do that, thats what we are getting into. It seems like maybe we are in that position. Anyway, thanks, once again, richard. The best in the whole business. Its great to have you on in giving us so much time. Appreciate it. Always a pleasure. Our next guest saw annual profits double last year with revenues jumping eye popping 69 compared to 2012. David harding, the chairman and ceo of the 25 billion Winton Capital Management and an advisory manager delivering alpha investor summit coming up next month. David, what weve seen recently, do you need to have the entire headquarters of the central bank bucked to find out how to play europe as a Hedge Fund Manager at this point . Well, i guess that would be very useful, but as you know, we pay no attention really to central bank policy, our people read the prices from the markets around the world and they subject them to the usual battery of tests that our program and scientists have designed and then they place a bet, one way or the other. Sometimes we get it right. Teams we get it wrong. Or we get it right plenty more often tan we get it wrong. So the computer, are telling you what to do. But the central bank is sort of, theyre definitely involved in what will eventually be the outcome of the economy. Who are the computers telling you will be the outcome . I think the federal banks, you know, in a way, they tried to steer the economy through managing expectations. There is a lot of that by bankers and hedge funds to try to second guess what theyre going to do next. That all feeds into the mark. You know the market is reasonably efficient. We dont try to second guess what the bankers are doing. We follow the markets and all that information thats being federally leaked into the market by the central bankers and the other hedge funds, i guess we pick up on that, maybe. I dont really mind why it is that we made money out of trends. Just that they occur and we are able to and have done for a very long time. So who are key trends you are seeing right now and give us some that we can count on lasting more than today. Well, as ive always said to your viewers, we have for the ability to forecast the future thats useful to them. Its only by investing in these trends over and over and over again, over years and years and years, that you end up coming up ahead. You know, with reat the moment in the same sort of stance we have been for a while, stig long on stocks, because they are trending up. Expectation they have been trending up as well. But were short the u. S. Dollar. We are short of gold. More interestingly, since im on the floor of the merck, we have been short on the meat and the cattle on the hocks the last year. Theyve had one of the best bull markets that i can ever remember. Wow, its hard to get any, you are right, useful information for, because you are looking just at trends and the way things are going quantitatively. You dont ascribe any reason for that, so we cant physical out any trends. I guess i just need to send you some money to invest on my behalf is all i can do, david, im not a qualified investor. I will get nardelli to lends me some. Thank you, appreciate your time today. Remember, drink alpha, that will be held on july 16th. For more information, go to delivering alpha. Com. There is a lot of people they seekal fast. They seek alpha. But they dont deliver alpha. There is only one place. We deliver alpha. Others seek it. There is a website about seeking it is there well, they can seek all they want. There are very few places deliver it. I want to talk about Richard Engel but in the meantime with le talk about the world of private aviation. Wheel up founder is here joined by scott earnst. They will discuss their latest partnership and talk Business Conditions in the sky. We are back with them in just a moment. Could save you fifteen percent or more on car insurance. Mmmhmmm. Everybody knows that. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. We have the founder of wheelsup, cessnas subsidiary of Textron Aviation. Kenny you started marquee jet. I want to be some day, i wish i could be a marquee jet card holder. Its too much money. You got to bring it down. Thats what you are trying to do. We created wheelsup for guys like you and an drew. Next contract. The beauty of this, scott, thanks for joining, the says fa i have been on at some. At says into cite algs. It was your favorite play in the world. Unbelievable. They fly high, fly fast. Gulf streams are beautiful t. Citation, you got the says fa. Right. Then you bought if your king airs for textron. These are the compact planes that he needs for wheels spup. This is like a marriage that you guys are like, is it just business . Are you together all the time, are you like best friends . No, listen. Its business. No, i dont mean that. Not that there is anything wrong with that, wheelsup, how much business are you getting from Textron Aviation at this point . Right now, denny has ten xls for model orders purchased. He has three delivered. Another one coming the month. For people that dont know the king sare a prop plane. Turboprop. Where if are you going, if are you a business person going citytocity within a state or adjoining states for an hour on par dee, what sit like ten grand . Its probably the entry level around 8,000. You do it for half of it. 39. 50 per hour. The great thing theyve done to support us and tear purchase of beachcraft, we will take 27 king airs between october and 15 months by the end of the year. We are almost 20 airplanes in. As scott said, we will have three xls, three delivered by june 30th. On top of that, obviously, you met thomas fleur with thomas and vista. Its an incredible top shelf top of the line business jet. Sure that, will take you anywhere in japan. So what we have here, we have 42 airplanes that well have by year end. As i promised our investors and you guys, we are approaching the 500 member mark, which will happen by june 30th. We will have 1,200 members by year end. If we are averaging 20 hours per member, you talk 24 hours per lift. We are lucky to have textron behind us. How many members do you need to make this work . This is a Huge Investment in terms of the aircraft. I will tell you right here, andrew the first 500, those are the tough ones. At marquee, we got 10,000 you fiocco people. I will tell you right here on the show five years from now, we will have more people flying privately for wheelsup than any country in the world. You did a marvelous job. You were on, i was sitting next to you. Have you done a great job, certainly scott donnelly, it was brilliant. A good friend, i have always been a big admirer of him. What both of you have done is amazing. It has come toke extremely well, two facilities within eight miles of each other, the product mix was an excellent play. You look at the, in tough Economic Times the Dollar Stores the walmarts do a little better. Its never going to be like this where peel wheels is up, there is never going to be, there is always going to be 1 percenters. But its almost the point now lets say guys from new york were going to hilton head or sea island. How many can go on the king air . A perfect trip. Eight guys, eight guys out. 8,000. A thousand bucks apiece each way. 2,000 for the round. 2,000 for if round, first class its more than that on delta or even if you buy late, its probably seven or 800. For each way. Its getting to the point where you dont need to be i remember in original wall street, buddy, you dont have enough money to buy jets, not some guy that earns 400 a year and flies first class. We put the program together for guys leak you. I cant afford it yet. You say you fly delta and not on jets, thats because you dont want somebody taking down your tail football and say far deli is on a private jet . I remember vividly getting ambushed by that. So you still are scarred from that. Still skard. I love you tell me you cant afford to buy it. Im aspiring. At some point i will be able to hand him this. 39. 50. I will tell you one thing thats amazing, i have gotten to foe scott really well the uptick they are seeing in the whom aircraft business and water happening out there on the street. To me its a leading indicator of water happening in the economy. I would say the oil and gas was always strong, you start. We look at all the different verticals. We are starting to see real estate is coming back. Construction is coming back. The medical field, so those type of individuals are back in the mark and theyve, their businesses are starting to feel real good. Instead of you talking about us, talk about, i pine, already Small Businesses where i know that private jets with ceos is a bad image. But there are times a guy doesnt really want to be in a commercial airport. If you need, if you got a Regional Business that is like in the midwest, lets say you do illinois, ohio, indiana and missouri or something, you need to vis eight lot of places, i mean, this is perfect for that. You do it and you dont feed to own the jet as a company, because a lot of these Small Companies arent going to be jet owners. They mentioned three or four locations in one day. Thats not opulence, thats not throwing your money around because you got it. Thats probably more Cost Effective for shareholders and business owners. You have to put money up front and is that 3950 is that all in . 3950 is all in. Yeah, you add et on top of that, federal excise tax the downstroke voke is very reasonable 15,750 to join the club, dues and that allows the members to fly when they need it. Is that a onetime the 72 one time . One time 15,750. 7250 annual. And the 15. We have a commercial break. The 15, use it or loesz it on an am basis . The 15 is the downstroke to get into the club to be able book. I got you. We take american express, visa. Orders. Are you financing these . How much is he like is his life in, i mean, how much is he on the hook for . Theyre actively securing finance. Its not from textron. I will tell you richard hand heard and his company at jeffreys has been absolutely unbelievable. Theyre eng fearing. They engineered a powerpoint. An idea with an order from beechcraft. They got the financing done. We did the equity, knocked on doors. We have 350 equity. We feed the company. We dont need another financial crisis. Dont you weak up at 3 00 a. M. . Listen, a year ago we had a powerpoint. Okay. Thats scary. Now we have 27 king airs, 10 xlss. Five on the way t. First 500. Dont be nervous, joe. 100 at the end of the year. We will have 10,000. Are you okay . There are no kids on the planes, so im okay. Thats right. I forgot about that. Thats why he needs. He hates that. Thank you, greats to see all of you guys. The fed in focus today as we get ready forbe the fomc Interest Rates. Another 10 become will get cut from the bond purchase program. When will raise start rising again . Later, we will talk about lime and glock. You might get hit in the wallet. Chipotle and others are hiking prices as costs rise. The ceo of limon e. R. A. Talks citrus prices and more in just a bit. Squawk returns in just a moment. Take a look at u. S. Futures this hour. Things turned positive. They were up before, dow is up 3. 5 point. We are back in a moment. Little inner welcome back to squawk box. Take a look at this, fedex shares are jumping after an upbeat earnings report, they were ten cents above estimates. Revenue beating consensus, conacura goods is taking a lit after preliminary Fourth Quarter earnings, conagra now says it expects to report a profit of 55 Cents Per Share, that compares to consense us estimates of 62 cents. The company cut its outlook due to a 7 food unit as well as weak profits for its private brands, then Adobe Systems earned 37 Cents Per Share for its second quarter. 7 cents above stills. It was helped by strong prescription growth for Creative Cloud and business Cloud Software suites. Finally, shares of tmobile u. S. Are on the rise t. Carrier is seeking to buy mobile spectrum as a precaution. This is interesting if you are playing the takeover game as a precaution in case of a takeover, in case the takeover by tmobile, of t emphmobile by sprint doesnt happen, the offer involves socalled low band spectrum. Thats what theyre trying to buy, which tmobile currently does not own. Lets talk about the fed. Will the fed move fast tore raise Interest Rates . A big meeting today in washington. Steve leishman is there. He joins us now. I have been thinking about it a lot. It feels like it more dovish. A dove is a much nicer thing to think about. When you think of the dove. Is there anyone that doesnt, i mean, peace, a dove, its white . Is it not a great thing . Then you think of the hawk, you think of war hawks. Right. And i mean its just easier to be dovish. Dont you feel more dovish . I fish a lot. I see those hawks fishing over the water, they pick up a prey fish. Pretty nice to me as well. Certainly the Inflation Numbers yesterday make i made the meeting today a whole lot more interesting. And i want to show you two measures of inflation, one is the cpi we got yesterday the other is the feds preferred inflation indicator, which is the pce. You see it runs below it. Its been tracking it, the big concern now is that it goes up again the next time around. Take a look at the feds own inflation forecast, which shows you that 155 is the number for 2015 and its already at onesixth already this year. So the fed pay have to move that up. The question is does that cause the Federal Reserve to move faster than otherwise thought . Heres what lou crandle at ricin said in his report this morning, evidence that the pce price index is convergeing to target a little faster tan anticipated might well factor into the feds thinking about the timing of the first rate hike. Then heres the feds own rate forecast. Which is 1 of 2015. Two and a quarter and 216 t. Long run for percent. Guys, that number came in. 2 hotter than expected. It was also broad based. There was a measure Steven Stanley follows. Its running at like a 14month high. Thats something to watch. The question is how yellin fin fesss it. Does she use it as what way to say, hey, we got what we wanted but not change the outlook for rates or does she somehow get around it . I think the fed would be treading on thin ice here if it hit on another metric and moved it further again like the unemployment. Andrew. Quickly, andrew, there have been hawks, we seen it in manhattan. In the bronx i see them all the time, joe. But we have found what you may actually be talking about, steve, as a fisherman, do you know what a manhattan is also phone as a positiony. Thats in menhaddon, not a manhattan, no. Man haddon. Man hadon. They call that. You know what they do, they cut the head off, let the blood drip down. The menhaden. Correct go, one of the ggreco i fisherman. We throw a net in, we throw 100 in the boat. Each time you feed a new piece of bait, you throw it in. When you have fed policies, do you have a net . The extreme analogy you were using sample in the bunker. I have seen an osprey or a fish hawk die than pick up a bunker this big, its an awesome sight and fly back to the nest with the bunker. Its a cool thing to see. Can a hawk peck up a small dog, steve, do you know . I do believe so. An interesting thing the difference between hawks, you tow, an eagle, once it gets its talons into the fish, sometimes they drown when they pick up too big a fish. Thats interesting, thats the dog that catches the butts. Exactly. They see those eagles in the water sometimes flopping along, unable to get the fetch out of its talons. I at the poor eagles flying in the winds turbins that dont work, they are killing all the bald eagles. Thats kind of a metaphor for uncle sam and all the renewable unintended consequences, like inflation. Right. Right. Where am i . Anyway, thank you, steve liesman. The feds are constantly meeting and talking. Its not always interesting, you get the Inflation Report the day before. I thought this was going to be a boring peteing. This is turning into an interesting one, does yellin actually end up saying, you know what, i have tolerance for inflation . Thats the big question. You dont agree, last week, two weeks ago, he says theyre oblivious to this, its happening. Its worth saying, neither teary of inflation over the past eight years has done particularly well t. Guys that said the Balance Sheet have blown up, they have been wrong. The guys that said high unemployment, the inflation has been higher than they would have expected, too, so we dont have a good operating inflation except for the one that says what people expect will happen is probably the best. So what the feds will want to avoid is a psychology taking hold. Steve, real quick, what itself your call . What does yellin do on Interest Rates . I think she holds the same the 10 billion taper. There is a symmetrical response. We have been running below 2 for a very good time, going a little above will be tolerable. I think she has to say that. I agree, i think it will be at that time us the quo, pet tricks. That will be devilish. Exactly. We should speak well of the hawks. I agree with you. Steve, thank you for tampl we will see you. We will see steve many times throughout the day. In the meantime, we will talk about limes. This ceoo of limonera will join us to talk citrus prices the shortage scare and whether or not you will be paying more for that margarita on the beach when squawk returns. Welcome back to squawk box, futures up a little wit waiting on fed watch, actually now the s p 500 is down a little bit. But you would call that flat, so we were talking off camera, andrew is back. We can go, we can talk a second. So what do you think . You think that they stayed dovish batesed on europe . I do, joe, i think theyll take a pass on it. See what happens. They dont want to move too quick. They dont want to be disruptive. I think there is still fragileness out there. That would be my call. I am completely and utterly ready to talk about limes. You are 37 degrees. 37yearsold. 37yearsold. You cant make it go. This is really something. What is really something . We are waiting for to you get back. We probably got to i am sitting right here, ready to go. Did you wash your hand . I did wash my hand. Wow. Is there lum inner ra. We sare everything. We do share everything. I try. I try to be a good sport. Limonera is seeing a rierka good morning to you, the president of and ceo. Anyone that wants park ritas, what are we in for here . We are looking at basically different situations between limes and lemons, most of the u. S. Limes come from mexico and following a couple hurricanes and some hot weather and cold weather, we saw some really extreme prices hit the lime market. You f you know, a normal 10pound might be 8 to 20 a box. It went up to more than doctor 100. It takes 90 days to create the next kroms. We seen those come back in full production. Where are we mou . Anywhere 10 to 15 a box. We are pretty much back to arm in am. As it relates to lemons. Our company is the largest lemon producer in the country. We dealt with extreme weather, really cold and freezes last november, december. That actually limited the amount of production somewhere between 10 and 20 in california. We seen prices spike anywhere from 20 to call it 35 . I think you will see that sustained until probably August September when prices of lemons should fall back down to what we call normal. Can we august about avocados . Id love to. Go ahead. This is a small, see this is a smaller season. Yes. So avocados tend to be alt fat bearing, which pines the tree will produce a big crop t. Next year a smaller crop. Here in california, we had a really big crop last year. Its fallen back to a smaller crop this year anecdotally, our Company Proud about 15 Million Pounds last year. This year were on track to produce around 7 Million Pounds. I think the impact on pricing will be higher this year. Its important a box of avocados will go for a year ago compared to today . Yes. So, for about a year ago, that box of avocados probably cost about 25 for a 25 pound box. This year, you are probably looking at somewhere around 30 to 35 a box. So when we hear Companies Like chipotle raising their prices because the costs are higher for them, when they come back down, assuming you think next year, the next season of limes, avocados, everything is going to come down again, do they change their prices again . I think they do it as gradually as they possibly can to get margin enhancement. Typically it doesnt. Theyre not coming back down again, right . It depends on what the competition does, typically when they get them up there, they try to leave them up there. In terms of your business competitively there is not more production, if you will, coming online with . Are we at a point people are saying, i got to jump in and start growing this stuff . Because it takes seven years to plant a tree and get to full bearing status of that tree t. Answer is. Today about 751st of all the avocados we consume in the United States comes from mexico. But there is increasing plantings going on in countries like peru and chile. So we have truly become a Global Industry with him revery dependent on the sources from these other countries. Bo are your biggest customers . Our biggest customers are walmart and sams club and on the food service side, sis core u. S. Foods. Beg retail and food service buyers. A tough question to ask hoonestly, among the consumers you deal with, who does the best job of kweegz you . Joe didnt laugh. Its okay. We move a tree am of product through costco, through walmart, through cisco. They all do a great job. Theyre all great examiners and are really very fair commerce. Right. Its a very die namic situation. So it literally changes daytoday. Okay. I got a smile out of nardelli on the squeezing. Thats as far as i got. Harold, thank you, so much. We will think of you this summer when were having our margaritas. I use that to buy forward in a good, not a good shelf life, avocados. What are you supposed to do, you sliegs it open, keep it going for another day or two, cover it in lemon . Can you pick them out . Am i good . Im okay. Because it can be right in the middle. I know. I think we should have asked him that. You dont want it too soft. Its rotten. If its too ripe. Do you make margaritas . Occasionally, yes. They get sticky. You have to encloo, its gross. Do you buy the lime juice in the bottle . Because i did it with an actual lime. It was much better. No, i buy it right out of the bottle. In the pargmargarita mix . In there not the mix t. Juice. Still to come, more from host bob nardelli the only one that laughs at my jokes. Meantime, its kramer time, we will head to the New York Stock Exchange and hear from the man, himself, the dow jones reporting opec may bring forward the next meeting if the iraq crisis disrupts exports. I imagine we will be talking more about that in joel. Lets get down to the New York Stock Exchange, jim cramer joins us now. We had a quantitative guy on, jimmy, no interest in the central bank. We have to listen today, dont you think . You have to just because, look, if she says something which basically amounts to an inversion of the yield curve, were going to be bad, taking this from my old friend, larry kudlow. Who can cause that . Its the fed. I also think that a lot of the inflation data points are so related to weather. Now, weather, again, talking about poultry, protein, limes, so many instances of whats going wrong, that i dont want the fed to react to onetime only inflation and instead focused on jobs, but you bet we ought to listen, you bet we do. The what can i take away from fedex . They have results at each quarter. You know, they can be really good and really bad it seems like, but when you see revenue up 8 , which weve been waiting for, and revenue up 12 , it says that those who are gloomy about the economy, youre going to have to deal with the numbers. I mean, its so hit or miss, i had a ceo on last night trying to figure out if the economy is good at all. They have divisions that have not done well. It is so hard. We know fedex is a wellrun company, and we know they have an an economyist at the top. This is irrefutable evidence that its better. Jim, joe was talking about the Mortgage Rate and applications being down. Does it fair well for the industry and supply to housing, right . Thats the great quandary. Ive been falling back on things like household formation. Ive been falling back on things like tuition and tuition debt. They are big issues. Trillions of dollars of student debt keeps people at home forever. To your point, its really mixed out there. Yeah, and mixed means fed could be on hold. We have to listen. One day, the fed says its mixed to strong, and were all scrambling. Lets stay tuned all day. Jim, we have to run, but real quick because bob said it earlier. Are you of the view that the market is out over its skis right now . Were too high . Generally . Well, if you listen to richard and you take out the Southern Oil Fields i dont think so, but its a possibility, youll have an oil shock, and were not ready for an oil shock. If you dont, i think what happens is all the different breakups and mergers keep the balls in the air as are the disresulters. Talk about the cloud, adobe, sales up three points. The disrupters, mergers, acquisitions, and just overall fedex thing with the transports, making it difficult to stay away from the market, and oil makes it difficult to be in the market. Thank you. See you in five and a half minutes or so. Coming up, founder of former ceo of chrysler and home depot. Stay tuned to squawk on the street today, bitlys ceo talking tech. I wonder if they do that in short segments . Thats at 11 50 a. M. Eastern time. Were back in a moment. Umana, we if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Lets close the gap between people and care. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. All right. Lets get back to our guest host. Do you see a disconnect between the overall economy and the stock market . Yes. Yeah, i do. If you saw a better economy, do you think youd have a different view of the stock market . I do. Again, you know, i guess im fundamentally, joe, a conservative guy. Youre cautious. Longer than that. I keep thinking its you know, use your term, out over their skis, i cant find on a consistent and sustainable performance across the sectors that would warrant that kind of performance, but, you know, ive been wrong now for a year and a half. A 30 year last year too. It was. It was a great year. Look, im happy about it, i just im concerned. You know, if i was running a company, id be cautious. So to fix the economy, like, in the next two years, you assign a lot of blame to president obama, i would imagine. I would say, we have to get the gdp going. How would you do it . Theres a number of ways. Corporate tax reform. Right. You think thats on the table . Its not on the table. I dont disagree with you. It should be. Look, we think about its a great story. We built the Empire State Building faster than we decided on the xl pipeline. Think about job creation. We talk about jobs, but you need gdp to pull jobs. You cant expect corporations to hire people. Does he understand this . Does the administration understand the private sector . Certainly raises a question about the focus, the crisis that we have in the country. You know, one of the things that i would put on the table now, joe, im a supporter of Energy Independence, and the industrys making great strides. Why not use our Energy Independence because we dont like hydrocarbons. We want renewable stuff. Right. I know. Renewable is not exportable. Oil, gas, we can export. Use it geopolitically. Creates exporting Climate Change when you do that. Well, you know, the winds blow this way. Look at the coal plants chinas building. I know. Playing devils advocate on this. Yeah. Thats part of the reason of not being more zealous. Its the uncertainty trumping profitability. Bob, thank you. Thank you. Thank you for laughing at my jokes. Thank you. Its nice. Ill take what i can get. Join us tomorrow. Squawk on the street starts right now. Good morning, and welcome to squawk on the street, scott walker with jim cramer, carls on assignment, david is off. We are here. We are here. We are not going anywhere. Lets get that straight right up front. Like the futures not going anywhere yet, but we know theres a fed meeting today. We are watching what the stocks are doing in premarket, implied open higher across the board. The tenyear yield, the note there, i