Transcripts For CNBC Squawk Box 20140723

Microsoft this morning, the company beating on the. Top line, but missing on the bottom line. Microsoft telling investors it ames to get its nokia unit breaking even in two years. We will have more on that in just a couple of minutes. As for apple, revenues fell a bit short. Asia, a key part of the story, ceo tim cook told analysts the companys performance in china was honestly surprising and we will have more on the streets reaction to apple in just a kup couple minutes. In the meantime, im going to send it over to kayla. A lot of moving parts in that. We are watching a number of other stocks today. First up, video game publisher electronic arts. The company is hosting better than expected earnings and revenue egz. Results were helped by strong sales such as titan fall, original revenue and cost control. That stock after hours and yesterdays trade down by 0. 5 . Ju juniper, meanwhile, below expectations. The network gearmaker citing delays in Closing Sales deals at some north american commerce. Juniper shares premarket, down about 5. 3 . Software provider vm ware which has been in the news lately because of its majority owner emc getting targetsed by activists, that Company Getting betterthanexpected earnings. Revenue necessary line. The companys management point to go Strong Performance across the business and ta stock up slightly after that announcement. Broadkro m, chipmaker earnings beat the street. It is counting down its cellular base ban business and cutting 1 of its total workforce. Broad comes ceo told analysts they tested the company for a possible sale but decided to shut down the unit instead. Elsewhere, lower than anticipated revenues due to weak sales to telecom era space and defense customers. It is forecasting weaker Current Quarter sales. You can see that stock down after hours, 9 . Mixed results across the sector, joe. Let me just do some world markets. I want to get a sip of mine what have you got there . Nutrition and delicious herbalife shake this morning. Mm. Mmm. So delicious and so nutritious. Great product. 25 did we get on that whew how many slides . I dont remember. We kept going back to it every half an hour. 250 slides, werent there . We kept going back to it after half an hour expecting to get the smoking gun and the big reveal. I could see cramer going because it was basically like that old wendys commercial. Is there any beef here or is it all on vacation, it was hamburger helper. You dont even use beef. And you dont really need the beef. He needed the beef yesterday. Not only did the stock go up, but ackman said he spend 50 million for the investigation. So costs coming ow of the woodwork for this. Hes turning around looking. I think hes turning around looking at the stock price going up there. Wow, 66. So it came down when he was talking about what he was going to do on monday. And then it went up. I like their candy bars. Andrew is sitting back in his cheer which means he has some fully formed thoughts about this. Well, no. The major problem was that he came on the day before and told us this was going to be the presentation of his lifetime. Of his career, yes. And he never uses any hype in any sense. Was that a function of the fact that he thought if he didnt say that, nobody would build up the expect ages . Or herbalife that he has been going after for probably years. Maybe i understand why he was debt practice there was some stuff, but it was not great. But if you were the fcc you might actually look at it and go, oh, okay, not that its going to put the company out of business. Can you buy herbalife products with hong kong dollars, do you think . I remember. People dont remember the 400 slides on he delivered a lot of alpha on that. On or can you trade hes going to be mad. We love him. But can you trade in any of those jp pepny buttons for a do you have any of your buttons left . Im going to go on ebay right now. That one is going to do it. Lets check on the markets. We havent talked on the air about your potato. That sounds dirty, but your potato is something that you bought yes, from people who watched our coverage during sun valley, pioneers, the sun valley saloon. And i love them. And they love you there. Nobody gets a table there except for buffett and except for buffett, actually. The wait was out the door, hours long. So we were happy to even get a table. And you said your eyes were bigger than your what you ordered. Because your eyes are big in general, like i said. Which is frequently a problem for me. Berger and a baked potato. Finished half of it. Sorry to interrupt. If we can all put in together and get 47 jcpenney 2012 buttons, thats the year i believe this all happened for . 9. 99 on ebay. We can then take those buttons and trade those buttons for one milkshake or candy bar. Ill let you do that arbitrage. They do not have a kale shake there or a tofu type its all meat. You havent been to the pioneer . Ribs, its all good. And the Carbon Footprint is you go out there to line your arteries, basically. You do, to cause more methane from the farting cows. I just bring packets of herbalife. You do. Our producers, they had so much planned. Theres the dow jones up 14 points. Yesterday we ended up at 17,113. It was a pretty good session overall and it had all the dow components, six of them that reported yesterday. Well have a lot of obviously earnings coming up today. Are you doing the 11 again today . Four hours of tv again today . Yeah. Four hours . Four hours. Okay. Dont tell people because then they wont watch. Theyll be so tired no, they wont. Carlos slim, i can tell him right now, no way, 3 1 2 hours. But then you go home and watch in your pajamas. Meanwhile, you tweeted something, a picture of the moon. It did not look early on what you tweeted, like you were getting up so early. Thats the problem with camera phones. It was dark outside. It does get really dark, but were still close to that solstice. I saw the moon hanging right above sullivan avenue. And i thought what a great picture. Theres a lot of stuff happening between now and the opening bell. You know what i saw right now . Hes not wearing a jacket and he you know, he was talking to his coanchors and making jokes that only he thought was he thought they were funny. And i watched it. And it was kind of like outdoors . I felt like i was right at home. Asia squawk box is good. That or housewives of i dont know, somewhere. My first hit ever on cnbc is on asia squawk box, 2010. January. Look at the hang seng, up only 0. 1 . Saying theres nothing happening anywhere else. Here is the oil markets this morning. We are not dominated today by these two ghee your political i mean, things arent settled yet in gaza. I dont know whats going on in ukraine. You are seeing the euro lower, though. The euro did hit 1. 35. There was fear that in an already slow growth region, any further sanctions, anything more stringent coming out of europe could have some negative effect on the economy there. Gold, ever since taper tantrum, not a lot has happened in gold. And, you know, i got no satisfaction from kayla about ricky fowler coming on. As joe said, hes 25. How can you not know him . Hes 25. I must know every millennial. Hes awesome. Is he the next tiger . He might as well be. Is he better . Better right now. He was only two off rory mcilroy. When you play four days, two strokes, he could probably find 20 times where if it had gone way or the other i wish he was going to be on. But i think hes down at middlist. Anyway should we talk about israel . Yes. Bloomberg is going over there. The u. N. Secretary general says there is no time to lose in reaching a ceasefire. Meantime, air carriers n United States and europe halted flights to tel aviv yesterday saying they wanted to ensure passenger safety as turmoil in the region intensifies. But Michael Bloomberg says that is a mistake. In a statement yesterday he said he was flying to tel aviv on an israeli carrier. Fwloomburg argues the flight restrictions is a made, that it underser underserves whats happening. It strongly urging martin to change course and allow flights to tel aviv. Andrew, good morning. Those words by bloomberg very welcomed here by the israeli government. They are very angry at the American Airlines beginning that 24hour ban on flights here. That led to a domino effect. Will a dozen European Airlines stopped their flights. That emphasizes how easy it is to isolate israel. Its a killer by the israeli tourist season. So the Israeli Ministry immediately said when the ban was announced, youre rewarding terror. And the Prime Minister appealing to the faa to overturn that ban. It may be overturned soon. Since the Israeli Ground invasion, the number of rockets that have been fired from gaza into israel has been dropped by more than a half and theyre using more short range rockets because of the pressure theyre under. So it actually, if anything, ae alleviate the pressure. But, of course, you cant ignore what happens yesterday, which was that one of their rockets fell within a mile of bangorian airport and that clearly spooked the airlines who are already nervous enough after the shooting down of the malaysian planes. That was a react that hit the israelis hard. It emphasizes their isolation and its a victory for hamas. This is who have had several victories, actually, over israel certainly perceived victories in the fighting. The tunnels, israel says theyre going to keep fighting until they destroy those tunnels. Now they emphasize israel needs to continue fightling and until they put that threat. The u. S. Secretary general is here trying to get israel and hamas closer together in what they would have said for a ceasefire. What appears to be cooking is a shorter term humanitarian ceasefire, socalled, a cease in the fighting without 48 hours and then the gist that hoped to build on that to end the fighting. But the two sides, israel and hamas, are so far apart that it seems unlikely theres going to be any quick solution and the only thing that really is likely at this moment is more fighting, deeper penetration by the israeli army into gaza and heavy fighting. Two more israeli soldier res killed overnight. So it is a toll on israel with more than 650 dead. Its enormous. Martin, thank you for that report. We should note, were going to have the ceo of delta on. Delta was one of flights that had a flight airborne and rereportr rerouted that flight to paris. Youve got commercial flights going in and out, it almost seemed like it happened without really looking to see, like martin just said, there are fewer rockets sitting now, now that theyve stopped them, and evaluate was probably more dangerous last week or two weeks ago than when it is now. But when you have one hitting a mile from the airport, its that was yesterday, too, wasnt it . Yes. So the damage was a mile from the airport. I mean, on the nightly news, kate snow was standing in the rubble and you could see the airport in the distance. And you cant need a at 33,000 feet if the plane is a mile from the airport. Thats 2,000 feet or very close. And youre coming in slow. Lets talk about microsoft and apple. Apple posted a smaller than expected 6 rise in revenue for the quarter. That was the good news on the profit side it was a different story. Joining us route it now. Dan earnst. Lets talk about apple fist. I was most spliced about ipad sales which i had no idea that was showing down. Ipad sales start to slow in the First Quarter. Tablet sales overall fell 3 in the First Quarter on the idc numbers. So the segment did phenomenally. It overtook laptops pretty quickly, but its just the productivity tools, education tools arent really there yet to make it a widespread, you know. As a business analyst, i love it, i use it all the time, but i can see the wider spread usage is going to be constrained. Cook talked about those two issues with the neon he specifically tim, on the phone call, was talking about the business segment. This announced that deal with ibm. How much does that really help . I think the ibm thing will take time. One of the things they talked about on the call was they were very pleased as you can see microsoft finally bring office on to the ipad. Which as you said, its a twoyear wait. So i would say most of the comments area around tablets and ipad, i think, are very current backwards looking. I think were still going to see growth there, but its going to be hard to see. And i think when we see that, well be able to judge by the tenyear track record and say you have to have four new categories. Longterm, the tablet overtakes the laptop, cannibalizes the laptop business. Correct. At a lower margin. That remains to be seen. I think that overall, probably cheaper to produce a tablet than it is a notebook. Am has been in the notebook business a lot longer. One more apple thing and then well talk microsoft. When you think about the next generation phone, which is really the only thing anybody cares about in terms of how this stock looks right now. People are looking at a 4. 7 inch screen and a 5. 5 inch screen. And what that portends. And for the tablet business. Because once you start buying 557 inch screens, that in my mind people that used to have a phone and a tablet decide im going to carry one thing around. I dont think thats true. I think for productivity, an education application, i dont think you can use a big phone. But youre right, investors are more focused on the next phone. Screen size knot a structural barrier. People for two years, say its on a bigger screen. Then make a bigger screen if it matters. Thats not a structural issue. Much more important fox nrt five, ten years to apple is not whether they can make a bigger iphone because thats ed easy. Its what is this new application and thats going to be more important to the earnings and stock than the phone will over time. So now apple and i about bm is trying to corner up with microso microsoft. Im just wondering who you think gets there first given that you have apple and ibm in one corner and microsoft, which has a long way to go in the other. Either way, its terrible for blackberry. So well slow that out there. But i think microsoft has done a fantastic job in productivity now as what they call their core focus. They did a fantastic job in transactioning to the cloud. Commercial clouds revenues up 47 . But they have a lot of work to do. The stocks up 47 over the last year. Apple is up 60 . But we can clearly see theres new categories coming, theres new products come with apple, with microsoft buying nokia. Theres a lot of execution risk in how they handle that. Id be very surprised if we see them in that business five, ten years from now. This will ultimately end up looking like a mistake. Let me give you two comparative numbers, apple versus microsoft. Apple just did 37 billion in he revenues, thats 47. 5 billion in operating costs. Microsoft had 22 billion in revenues and 9. 5 billion in operating costs. So apple almost doubled the revenues, half the operating costs. The Hardware Company and a Software Company so that kind of gives you wbl in terms of the work that microsoft has ahead of it . Are you arguing that microsoft is undervalued . No. Clearly, they were weighing out the foundation for cloud. It wasnt like a secret and were seeing early success. But im just saying from here, the next leg for microsoft, the execution risks around nokia and the layoffs is going to be harder than it has been. What do you make of the nokia piece of it . Thats correct. And i think that ultimately, that will prove to be a mistake. I understand they want to be in mobile. And from microsoft to be in mobile in scale, it seems like its understanding the media. Its easier to use the office ipad on this than it is on my windows 8 laptop. We have to run. Target prices on microsoft and apple before you go. Were looking over a 12day, tomonth period for 1110 on apple, which is about 15, 16 times. So a market multiple for and quickly on microsoft . I think its probably fairley valued at this level. Were going to leave it there. Thank you. Thank you. Okay. This says i was born in 1988. That was rory mcilroy. But you, if you started dating ricky fouler, it would be right . Yeah. Thats not normal. No, no, no. I was just reading something about he started, played in the tournament when he was 4 1 2, did not win. But then he started playing more and more tournaments, and he finally won one at 7. Thats when he got a coach. So between 4 1 2 and 7, finally one won in seven. Coming up, another twist in the food scandal in china. Shanghai xlis detaining five. Heem in an investigation. Theres been reports that old and rotten mate was supplied to the chains and then they cooked them up and sold them. Whirlpool fell short of earnings estimates. Due to what it kals customer inventory transitions. This is in china, too. It was in the china market. Squawk box will be right back. In new york state, were changing the way we do business, with startup ny. Weve created tax free zones throughout the state. And startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. Thanks to startup ny, businesses can operate tax free for 10 years. No property tax. No business tax. And no sales tax. Which means more growth for your business, and more jobs. Its not just business as usual. See how new york can help your business grow, at startup. Ny. Gov welcome back to squawk box on this wednesday morning. Five people are being held in shanghai related to a fast food scare in china. Eunice yoon joins us now with more from beijing. Good morning, eunice. Good morning, kayla. Mcdonalds ceo don thompson said on an Earnings Conference Call that he and the company felt deceived after hearing about the Chinese State report which allegedly showed food safety violations at one of its suppliers. There are a lot of people who feel that way now. The regulators and the authorities have said they have detained five people in conjunction with this case, including the chief of the shanghai unit as well as the inspector. The regulators said they believe the food violations were organized by the company and not in isolated incidents as was suggested by osis management back in the United States. Now, so far, the authorities have said that theyve seized 1,000 tons of suspected Meat Products from the factory. Theyve also taken 100 tons from osis various customers. This Company Supplies mcdonalds as well as yum brands, which supplies kfc, but many others, burger king, ikea, subway, and those companies have issued statements trying to distance themselves from this company. Overall in terms of public opinion, we are starting to see it morph. Initially we saw universal outrage. Now were seeing more people coming out in defense of the u. S. Fast food giant, saying the problem really isnt with the u. S. Companies, but with the Chinese Workers who a lot of people are talking about that dont have the discipline to adhere to tougher regulatory standards. Guys. Okay. Thank you for that, eunice. We will be talking soon, well see her in 24 hours. Coming up, the s p posting another record high yesterday, investor choosing to focus on inflation data rather than g geopoliticge geopolitical tensions in ukraine and gaza. But first, a hot dog for breakfast. Thats the question. Why not . I think everybody should do it. Today is National Hot Dog day. A number of restaurants marking the occasion with special fuels. Go eat yourself a hot dog for breakfast. Be back in a moment. What would happen. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. Now get the unmistakable thrill. And the incredible rush. Of the mercedesbenz youve always wanted. [ tires screech ] 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 july 31st. Share your summer moments in your mercedesbenz with us. But hurry, offers end july 31st. 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. But ive managed. I got to be pretty good at managing my symptoms, except that managing my symptoms was all i was doing. When i finally told my doctor, he said my crohns was not under control. He said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohns disease. And that in clinical studies, the majority of patients on humira saw significant symptom relief. And many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. If youre still just managing your symptoms, ask your gastroenterologist about humira. With humira, remission is possible. Good morning. Welcome back to squawk box here on cnbc. Im trying to be the brad pitt of im not brad pitt. Im joe kernen along with Andrew Ross Sorkin and kayla tousche. Becky will be back tomorrow. In the news making headlines, pum ma, not the shoe company, but the biotechnology company, the shares announcing its experimental cancer drug met its main goal in a late stage trial that says a potential treatment for breast cancer. That stock has really been on a role. Pby, that used to be pitny b bowes, i think. Pbyi, im sorry, pep boys was pby. 4 billion, is that what you said . No, just under 2 billion. But it looks like that was before the move. Yeah, that was before the move. 220 . That is unbelievable. So its going to go up from 60 its going to triple so its immediately going to go up, as you said, to 6 billion. Thats amazing. Steve, should we tell you about thieves . What did they steal . They reportedly got into a thousand stubhub accounts. A law official officials and officials of the company says they bought tickets through the resa resaler. Arrests are expected in that state. It sprawls across international border. I love a great ticket scalping story. Which is worse, a thief getting into your stbhub account or buying fake tickets on craig s craigsli craigslist. Stubhub is verified. But apparently sometimes things slip through on stub hub i thought. No . I havent you havent had that experience, okay. I had one touchy touch and go experience on stubhub a couple of years ago. They did refund the money, but it was a process. Your honor. I think to have verified tickets, i might be willing to have my user information verified, but thats just me. Futures right now, the s p would up by less than 2 points, the dow would open up less than 18 and the nasdaq would open just less than 5. But all of those indices would be in the green despite markets overnight being relatively mixed. We are seeing green arrows across the board there. The ftse up 0. 3 . The france cac is up 0. 5 . The dax up less than 1 . The ftse in italy up 0. 25 . In asia, were seeing the nikkei down by about 15 points. The hang seng is up very sharply, nearly 200 points in the shanghai index is up 3 points. We are seeing some mixed trades, some traders early in the morning were worried about the negative production numbers out of china. But it seems that those concerns have been relieved for the most part. Taking a look at the Energy Complex right now, wti is up barely. Brent up about the same. Nasdaq up, as well. So were not seeing too much move in the Energy Market this morning. Take a look at the tenyear treasury. Prices are down slightly, but still the yield is below 2. 355 . We want to get a look at the dollar, as well. Were seeing moves across currencies as we await to see whether european leaders will put any stricter sanctions in place. Right now, the euro below the dollar. Traders say if it goes below 1. 34, you could see a bigger pullback in that index right there. Finally, take a look at gold. Gold is at 1308. Its barely bunched today. We want to give you a look at that. Gold has been one place that investors have been looking amid the volatility that, joe, things at this point could be receding into the relatively recent past. Yeah. Were going to talk about that with earnings season in full swing. Investors looking at a lot of geopolitical issues. Quieting down at least a little bit. William blair looking at the firms macro allocation fund. You have a spread on in the u. S. Yes. So youre flat. We are flat the u. S. And its at a point where you think its acceptable to some type of correction. Why . Well, the big issue in the u. S. , for us, is that over the course of the last year, 18 months, its been viewed as the only source of growth and stability in the world. And funds have flowed into the u. S. Theyve pushed Prices Higher to the point where theyre fundamentally expensive. There is a degree of vulnerability there. The position we have on within the u. S. Is more of a defensive position than any great big valuebased position. We do have the long value, we do have the short growth that provides a hedge if there is some type of disturbance. But you think stocks are cheap. Youre long russia. I know. Do you take umbrage with that, soshg yrkin . No, we dont. We can take umbrage, but long russia, putin consolidates his grip, you know, and gets through this period where a plane was shot out of the air, he does well. Yes. I mean, you have nothing to say to this man . I dont think. The other ones, youre looking uk, italy and spain and we like them a lot. The opportunities that exist are basically where others seem to have feared to tread. And then thats where we really tried to take opportunities, tried to step in and understand them a little better. Theyre consistent with fundamentals. Were an asset allocator. We do it fundamentally. Those markets tend to be relatively cheap now and weve stepped in. In the case of russia, you might have opinions about what is happening in the ukraine. Thats fine. But our job is to have opinions on what asset prices will do in russia. And we think it will settle down a little bit right now. It got a little over the edge there, mistakes made. But it will probably aeltsettlen for a little bit. Youre log volatility now because thats a approach where you think volatility is really cheap right now. We are, but were doing it cautiously. The best way to think about trading volatility is to imagine a mountain out there with the snow coming down. And the snow slowly comes down in the mountain and it feels very, very serene. Up until the instance that the avalanche occurs, the problem is you dont know when the avalanche is going to occur. So im unwilling to predict there will be volatility in the next month or the next three months or Something Like that. But we are building a long volatility position in our focus. We still havent had much, even though the fed is getting out. So thats actually adding to the low volatility now, in your view . Yeah, it is. Youve got to look at a situation where Central Banks are basically providing a back stop sign stop production. Its almost like the greenspan again for investors. And you dont want to jump in front of that Freight Train. It is a Freight Train at this point that provides stability to the marketplace. So ill dip my toes in, but im not going to jump in full bore. Did either of you see grahams stuff yesterday, the yellen crash is going to make all no, no. Hes going to get up another 10 from here before he oh, before yeah, bullish, but bearish. Thats a good way to be all the time. I like that. The mother of all crashes. And he believes its going to be worse than 2008. Jeremy and i often think theyre similar on a lot of these things. In a low volatility environment where Central Banks around the world, not just janet yell b are throwing liquidity around the world, he end up with a lot of bad resource allocations. We dont know how that pops. You know, youre right. You dont know how it pops. Is it gradual . Is it were ready for housing, arent we . That cant get us again, can i . If you think it cant, it can. Thats the first rule. No, i doubt it will be housing. Youve got autos, youve got leverage loans. Student loans. Youve got companies that cant that are, you know auto loans . Did you see that piece over the weekend . Yes. Does that bother you . Whats interesting is that if you look at private credit in the u. S. , it is now gone back above where it was in 2008. But its not private. That will never be the bubble because the government will continue to pay for it. Yes. 13 . Well, the government will continue to pay for it. And theyre not the borrower here. They might continue to underwrite it as a back stop, which ends up going to the taxpayer. We end up paying for it either way whether its the student who pays for it or you pay for it indirectly. But it comes ultimately out of your ability to be a consumer in society. Therefore, thats a bad thing. From a growth perspective. So yeah, its a great risk for the marketplace. I dont think its housing, necessarily, but i see it in a lot of the other lending activities. But its often hard to put a finger on exactly what is the bubble thats emerging or what would be the case absent that. Brian, thank you. Thank you very much. Appreciate it. You know, theres some other guy thats supposed to be on. I dont know what happened. So you got to be your own mucky muck. You go back and tell them you want a raise or something. As long as were doing asset allocation. How much are you allocating right now . Were at about a billion. Thats a lot of money. Dont be nervous. Thats a lot of money. When we come back, the s. E. C. For money market funds the. We have details right after the break. Later, fewer americans are playing golf. Still, ricky fowler homes to change that trend. Hes going to join us live with his pitch coming up at 8 40 eastern time. You do not want to miss it. Were back in a moment. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . [ male announcer ] whether youre new to medicare or not, you may know it only covers about 80 of your part b medical expenses. Its up to you to pay the difference. So think about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they help cover some of what medicare doesnt pay and could really save you in outofpocket medical costs. Call now. With a Medicare Supplement plan, youll be able to stay with your doctor. Oh, you know, i love that guy. Mmhmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. And there are no networks. You do your pushups today . Prepare to be amazed. [ male announcer ] dont wait. Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. Welcome back to squawk box. Take a look at u. S. Equity futures. Right now, we look like the dow would open about 16 points higher, nasdaq would open higher, as well, a little over 4 points and the s p 500 up about 1. 5 points. We will tell but a story that will be busy this morning on wall street. The s. E. C. Poised to adopt reforms for money market funds. Regulators are looking at adopting rules to float share price. Some say moving from the current stable 1 per share Net Asset Value to a floating value would help prevent investors from getting spooked by the prospect of funds breaking the buck. There has been a lot of attention over the past couple of years, or a lack of attention on the risks involved in the money market world. This may help that. This has been something that the s. E. C. Has been looking at since the financial crisis. It was supposed to be done under schapiro several years ago. It was top of mind for Mary Joe White when she joined. Its interesting to see. And joe will not forget, but that thursday at aig or wednesday when remember when the buck was broken . I do. I do. There are a lot of people that said if we had just prevented that on a 250, you know, sbic, couldnt do anything else. So here we are, five years later, six years later. Six commercial paper, it would have fixed everything. Instead, here we are. There have been a lot of critics of this that its being written. So well work through the fine print later. But when we come back, well get a preview of facebooks quarterly results, social network expecting to hit the tape with its numbers after the bell this afternoon. When squawk box comes right back. [ male announcer ] people all over the world know us, but they dont yet know were a family. Were right where you need us. At the next job, next adventure or at the next exit helping you explore super destinations and do everything under the sun. 12 brands. More hotels than anyone else in the world. So wherever you want to be, whatever you want to do, chances are were already there. Save up to 25 and earn bonus points when you book at wyndhamrewards. Com. Who dont have electricity 400 million peopleoints and i just figured that its time i do something about it. What were doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. I think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when its needed by the consumer. A smarter Energy System is made with the ibm cloud. The ibm cloud is the cloud for business. Welcome back. Face intook set to release Second Quarter results. Joining me is the managing director, jason, good morning. Good morning. Giver us your take aways of what you want to see this afternoon when facebook reports. Water top of mind for you . Sure him we are looking at 50 Revenue Growth about two points above the street. We think it will be a Strong Quarter. Overall usage of facebook was basically in line with the First Quarter with minutes in the u. S. Up 42 . Basically 42 more usage than a yearling, which was about the same as First Quarter up 43 . Discussions with agencies who help Larger Companies buy facebook suggest pricing is up 5 quartertoquarter. If you factor in new clients, we are looking effectively for revenue per hour to be up 14 . You combine those two as well as some additional growth from small growth from instagram and then International Growth and we think you are going to have a very Strong Quarter. Its interesting to think about this company two years ago literally having goen from zero to 60 in terms of the percentage of its revenue that mobile makes up, when we talk about Revenue Growth and minutes spent, jason, it seems the street is expecting the bulk of that to come from mobile, how much hinges on mobile and what we could see . Mobile usage was up according to industry sources about 55 to 56 in the quarter. This is again in the u. S. , First Quarter was about 60. So possibly was a little bit slow. Still the bulk of the growth, i think whats important here, really, its the same theme from the past few quarters, their pricing on mobile is basically the same as desktop. Its not the same as other Internet Companies mobile if they lower price per user that i have do you know good job of bridging the data gap between mobile and desktop. So they learn about you on your desktop and they use that data, so when you go on your possibly phone, its a seamless experience for advertisers. You know, weve heard numerous advertisers say, you know, hey, facebook is getting more restrictive. We cant buy a unit for a day anymore. We have to buy a minimum of a week. It suggests strong Pricing Power as theyre offering something more unique to advertisers. Weve also heard advertisers try few things sump as direct response advertisers experimenting with some of the brand products, brand advertisers experimenting with some of the kind of dr and paper collect. So it really does feel like facebook is hitting on several cylinders. There are several things that could come the back half of the year as well. Final thoughts, quickly the bulk of that growth, that usage, coming on the core facebook product from an earnings perspective, im wondering at what point sling shot, instagram, acculus, when does it fire on all corridors . Not the quarter . We think will you have minor contributions by instagram. There are paid ads. Its not material yet. I think it will be a while before there is revenue there. Occulus is more an r d longterm pipeline. The back issue would be instagram and these video ads they talked about. We believe theyre going to try to charge a lot of money on a per unit basis and its really convincing large advertisers they should spend big tickets to buy video ads on facebook. Thats probably more of a Fourth Quarter catalyst for the stock. Fourth quarter, i know i am seeing instagram ads in my feed. For now, jason, we appreciate it. Tanks so much. Thank you. Okay. When we come back, one of the fork feds says the u. S. Unit of Deutsche Bank is suffering from ongoing Financial Reporting problems. Plus, earnings central, dow chemical set to report quarterly reports. We will talk to ceo andrew liverus when squawk box returns in just a moment. Good morning him welcome back to squawk box, im andrew ross sore kin along with joe kernan. You have an allie. We will talk about allies in just a second. Becky quick wont be here, our guest host Carly Fiorina a former chairman and she is chair of the American Conservative Union foundation. You guys are already against everything you stand for . Pretty much. The futures, take a look. We got some green arrows across the board, things are looking up for the day, at least for the moment. They were looking a little better before. Dallas opposite higher. S p largely half a point. The nasdaq up as well. The ten year, you are looking at that 2. 46 is the football of boat. Shares of apple are lower. Not quite as much as they were in yesterdays after hours sessions, Apple Earnings came up short as apple sold fewer ipads than an a lists expected. I want to talk to you about that in a bit. Also, we are watching shares of microsoft. The Company Reported quarterly profit up vague cents per share, 2 cents short of revenue. We should tell you microsoft results were impacted by expenses to incorporate nokias handset business, which is looking more and more like a mistake at least in one mans view. Stocks, maybe its not a mistake, i dont know. Listen to the stock before i listen to you. Listen to the smashing before you listen to me or listen to the spark before you listen to bill ackman at this point. Secretary of state john kerry has arrived if israel to try to brokary ceasefire between israel and a hamas as the faa imposes a temporary band, the carrier has meetings scheduled today with the israel Prime Minister benjamin netanyahu, hes also going to be talking to hamas or more, more than 600 people have died during the fighting in the gaza strip and secretary kerry isnt the only one american traveling to israel. Air carriers in the United States halted flights to tel aviv saying they wanted to insure passenger safety as the region intensified, Michael Bloomberg says thats a big mistake. In a statement yesterday, he said he was flying on israel carrier el al. Hamas has an undeserved victory and should be lifted immediately. We are going to talk more about that topic with the ceo of Delta Airlines Richard Anderson at 8 00 eastern who actually had a flight delta did airborne and they reversed course and ended up land. Why didnt they fly mayor bloomberg . I would argue that flying el al was probably the Safest Airline to fly on. I understand that. He normally has his own. He doesnt fly commercial. Internationally. Maybe international. Do you think this is a flight, hes trying to send a miami . He definitely doesnt want to send that other page very often. He flies under the radar two guys on a jet. Anyway. We have carly here. Carly, were glad to have you especially on such a big week for tech earnings. We have been debating am, microsoft. Im wondering, do you see shares . Are you doing the guest or read sfk. Well do that in one second. I didnt even see this in the run down. Hes in a prickly mood this morning. Look at the run down, did i miss that, sorry . In corporate news, meanwhile, we want to tell you the fed is blafrting Deutsche Bank, wall street journal is blasting the zwrern lender suffers from the ongoing Financial Reporting problems. The fed says the firm has been aware of the issues for years but has not fixed its auditing and oversight and actually several years ago Stifel Nicolaus was accused of masking losses and basically pumping up its strength during the financial crisis to appear stronger than it actually was. You have to imagine at that point, andrew the fed would have had some issues with that, would have asked Deutsche Bank to strengthen some of its controls so the would appear to be a normal course checkin. People have been speculating Stifel Nicolaus if terms of its controls the last five or six years. Can we be honest about this . That is the one firm few had to be worried about a firm, i would have worried because you always heard they had more exposure than anybody else. Your zero henge. Like i finally mentioned. They have serious questions about Deutsche Bank. Really . In there they think their derivative exposure is sort of, you know, so nerve well be right backing we should all be they love to write about cnbc ratings and things, they have no thing that determines ratings. Its mostly volatility or trading, but ive warmed to them a little. Im willing to say their flame on the air. The guy took brad pitts name, tyler, for the one foes who he is. Hes like this shadowy figure. A group of people, a russian guy banned from the security industries. My uber driver in san diego, i asked him what he did for his day job. Thats good. Maybe we should stop mentioning them. They do channel good stuff that comes through. I dont and now, look, now we see we have andrew liverus with carly. He can speak with the person that was a ceo, dow chemical out with Second Quarter earnings just moments ago a profit of 74 cents a share, up 2 above revenue above expectations, i guess i was looking at seas, what was it, andrew . Is that right are you above there as well . Yes. Good morning. We are above postgoal stills of revenues. We have a 3 top line growth year on year as well as the growth year on year, joe. You are involved, trying to get out of the low margin commodities business, its been a, its like turning, i wouldnt say a, the love boat around in a bathtub, but its been a long process, where are you . Are you in the sixth, seventh inning now with that, andrew . If you are using baseball versus my australian cricket, ill take your 7th inning, for the overtime, joe. We are very, this was a Strong Quarter for us. Its still a World Economy thats very spotty. Have you to have targeted growth. Weve got productivity across the enterprise. These are a fantastic set of ivent greated businesses that now are very downstream focused, very value ad to the consumer packaging, housing, auto, all the things that are growing, especially here in the u. S. We also have low cost positions and we have plentiful Growth Catalysts today and tomorrow with our big projects, the u. S. Cal gas projects and the u. S. Coast and the saudi project which is a 20 billion project which is 70 construction complete with 50,000 contractors on that site. Those are all profit streams coming just around the corner. So the transformation, i will use 7th inning. Maybe we can almost call them 8th inning, joe. Andrew, we have two andrews. Its been a long road and i mean youve had kind of an interesting five years under your tenure. Youd have to admit, remember the dividend the low, wlafls the low during the financial crisis . Was it 4 or 5. 5. 86, i dont remember exactly. 5. 86andahalf. Now you are being, you are breaking out. I think are you close to an all time high arent you, finally, at this point . Yeah, its been very close to an all time high. Then these last two years, in particular, id say the recovery has slowed since 09 by the way, most of us should dismiss the pre08 as a recovery. We are living in post08, 09 period, we had a head fake the growth might return, it dvenl frankly, we had world event after world event as you with el foe. As a consequence, we are a large, gloeshlgs integrated companies, we had to readjust our operating template and ted shed the ever increasing commoditizing businesses, look at the details, we announce another billion dollars of divestments of corporate assets we no longer think we need to improve our return on capital. Our return on capital is up 150 basis points year on year. If you dont focus in on costs, capital and cash, in this economy, you wont grow par gins, for the whats your innovation agenda. You go to the do both. Thats a very hard act to pull off in a slow growth world. I would tell you that its been a five year program that has been several, our stock is as you say fear an all time high. You can see you continuing this drum beat in these next several years as we bring on these projects. You hear spotty here, spotty around the world. Were in the spotty 2 . Were supposed to be 3 . Were supposed to mail that in. I was guaranteed 3 gdp, what happened . Congratulation on a great quarter, its carly fiorifa. Talk to me a little more about what you mean by slow growth. Is that 1 globally and thats the future . Do you see that all across the go eb . Are there still areas where you expect a little better growth or we ought to just get used to one or 021andahalf percent growth in perpetuity . Carly, great to have you as the guest host with those two incredibly talented journalists there. The growth economy that we used to have pre08 as i indicated. This 5 economy i think thats very much in the past. If we got a 3, 3. 5 economy, we will all be very haech. We dont tend to have that. We have the very uneven global economy. Therefore, you have to go where growth is. Where is that growth . If you go to china, right now only one of chinas growth pill ars are growing, thats the manager policy and infrastructure spend. If you expose to that positively like we are, you can actually grow if china. If you look at the export economy, local consumption, other aspects of the economy, such as their programs to actually reduce, if you like, lack of proficiency and productivity, thats very slow in carolina. I think theyll get there eventually. The United States, i mean, thats the economy that i into tell best about. Its still 1. 5, 2. 5 , there you got to target. I think housing, automotive, the beginnings of the consumer, i think there is growth in those parts of the economy. Can i go around the world, to keep it short, you got to really be on the ground knowing where growth is, then be flexible enough to adjust your resources to that growth. Andrew, you know the last time we saw each at was in davo, swrksz you were on the air, literally within moments after you got off the air, we learned the third point, he was pushing for a number of changes. Where are you in dhoefs with dan loeb . Well, as you quite rightly remember, andrew, in particular, remembers, we had been, obviously, where the world before that. They had chosen to release it. We had been the subject of a couple of their letters that never actually directed any of it to under the circumstances, a letter to us. But what they had been talking to us about is different ways to release value and there were completely aligned. Weve had online dialogues with third point as we do with all knowledgeable investors. In the main, those dialogues have been going very constructively. Id like to tell you the alignment on releasing value in this sort of an economy is very strong. Of course, they made a suggestion around splitup. Look, warren buffet i think said it very well on one of the previous programs i reported that he told me, run the company for those investors who are staying, not for those investors who are leaving. I think that balance, how to actually get release value this moment versus release value five years from now is what carly and others have been ceo will remember and, frankly, we are the best thing, there are no sacred cows here, were investing chlorine. We have been if chlorine 117 years. Corporate assets i just mentioned those. So we are definitely in the same mindset as every investor, including third point. I dont want to go too far in the weeds. There is one thing dan loeb suggested. I wanted to raise with you. Its the pricing on material, apparently, i do not know enough about the details. You sell certain materials tern internally from one unit to another. A0parent intly that is unusual do. You plan to do that . Well the word integrated, the germans have a word for it, too, its called vervoun in thats of interest to you. There are two things on this planet, ourselves and our german exceptors, we literally have thousands and thousands of product screens if you like chemicals that feed each others unit. We run over 900 factories globally. Mr. Of those factories sit on the same site. We take a waste stream, instead of burning it or treating it, we use it as a feed stock for another production unit. We have thousands of those, there is no markets for those product streams. What we do, we assign economic comforts. We run this according to economic add principals, it means you carry the cost and capital of the upstream that feeds you, so you create a market proxy, weve explained that to third point and everyone else who asked us the question. Its complicated. Its not an easy business to run because of that, you run it as one company. Within each of the unit, you got to put the targets in place such that you maximize value, economic valueadd principles and return on capital is the way we do that. What do you make of this guy so far down in your down under . Andrew. Tony abbott the Prime Minister of australia is very business other thanned. Hes, obviously, built around this notion of open markets and open economy, which hes the leader of the liberal party. Is someone confused . I water runs the oats owe its like winter and summer, does liberal money probusiness . Is he confused . Its like baseball confused nine innings with cricket with two innings, viva la difference. You got to go. Hes the leader of the party. He got rid of carbon tax, was that good if your view . Absolutely, totally. He put that in place. A big polluter. Look, liberal party means right wing in australia, just so you know. For the way oh, that is like water, does water really go that opposite way in the toilet . Do you know . I dont know if i believe. It does. You have never been down there, clearly. I heard that winter is summer and summer is winter. I havent confirmed that. Do you know, sork kin . I have been down there. Is the globe cooling down there . Maybe thats why they got rid of the corn. We appreciate it. Good to see. You thats a pretty good quarter. All right. Well see you again soon. When we return, Conflicting Court rulings, we will talk about what it means for the future of the law when we return. M coming up, the debate of obamacare and its future. Plus, ever cores roger altman, why he says despite the pessimistic mood the American Economy is experiencing a profound comeback. Stick with squawk box. Well be right back. Inside and. Welcome back to squawk box. Two federal courts split on the Obama Health Care subsidies if 38 states yesterday. A senior fellow, guys, can you what do you make of these split decisions and what do they actually mean before we get into the debate about it . Well, the first thing they mean steady as she goes. This doesnt change anything for people getting premium subsidies through these exchanges, whether state based or federal. The courts are arguing about whether some language in the affordable caring a means one thing or the other. The act says that once these state exchanges are set up, they can provide premium subsidies, that is subsidies to people buying insurance through the exchanges to help them pay for it. But it uses the word state exchanges, some states decided not to set up those exchanges and the law provides for the federal government to come in and set them up. So the d. C. Circuit court says, wait a second, if its a federal law, they cant faye subsidies, the Fourth Circuit court agreed on a unanimous decision that said, in fact, whether theyre state or federal, they can pay the subsidies, thats the intent of the law. Py personal view. I think that of the prevailing Legal Community is its the Fourth Circuit courts ruling that will ultimately prevail. Whether its a state exchange or federal exchange, the intent of the law is for premium subsidies to be paid for either one. Scott gottlieb, take the other side. Well, its not so clear that was the intent of the law. The people who crafted this law wanted to use the lure of the subsidy to go along to set up the state exchanges, they might ultimately prevail on that court. They might give deference on that point. Theyre appealing this ruling. There is two other cases, one in oklahoma, one if indiana, that might be decided against the administration, this might end up in the Supreme Court a year from now. Its not that clear that they didnt want to use the coercion of the subsidies, in the lure of the subsidies to get them to go along. I think the administration is how many governors choose not to set up their state exchanges here. By the way, i agree with what scott just said, i think the law was written to incentivize states to set up. I think thats a better way for this to work. That said, they clearly wanted to have a fail safe in there in case states decided not to about three dozen, it turned out, did. Again, my strong view, here i disagree with scott, it is clearly the intent of the law for the subsidies to be paid through either the state or the federal its a real shame it was so well written and so well thought off with bipartisan support and Everything Else and that ran through with special deals then without even knowing whats in it according to pelosi, i cant believe there is problems with it now. I guess the president should just be allowed to pick and choose every single part of the law, things we are going to enforce and things we are not. Can you run a country like this, bernstein . Joe, i got a better idea, you should go down to australia and flush some toilets. The whole law might get flushed down the toilet. It doesnt matter. The way, that way. Legislative language is sometimes definitely messy. You are right. This is an example of that. The Administration Issue water called a 28 j letter three weeks ago basically saying they would ignore this ruling. They felt the outcome stop the presses from ignoring something. Remember, this was a split decision. Its not, theyre not the only ones. So it was nasty republican judges, too, theyre trying to throw out the bipartisan past law. By the way, thats an interesting comment. Because the full d. C. Circuit now has democratic leaning. Gentleman, thank you for the debate. We appreciate it. Thanks a lot. You see the dow components. We appreciate it. Im Andrew Ross Sorkin. We got to go with quarterly results, right at this moment, phil lebeau, hes got those numbers. Andrew, it looks like boeing has beaten the street. Officially they will report 242 versus the street. You strip out the items and special charges, there are three in here. One of which the street knew about. It comes out at 224 per share. We will not get into all the math here. Essentially, you got to charge for the tanker program. 224 is the number we expect wall street to come with. Revenue in line with guidance 22. 05 billion for the quarter. Better performance on the special airline business. You got deliveries of 181 acre, including 30 787s margins for the corridor and the special side of the business will be over 12 once you strip out the special purges related to the tanker program. Heres something that will get a lot of attention, increasing guidance by 75 cents. It was 715. The 735 per share going up to 790. 810 per share for boeing. The guidance estimate was 7 investigation for the full year. Boeing is raising their guidance above that estimate. Boeing beaten the street 224 per share versus the street estimate of 201. Guys back to you. 75 cents for the year. They will do the next few quarters with the same outperformance. Not entirely, joe, that 75 factors in some of the benefits you see in this Current Quarter. Thats what i meant you got 23 in the Current Quarter, right . How many quarters left . Well, you got two more quarters left. I understand what you are saying. I think about 20 cents, if you had to factor it all toke, 75, 55 are going to be in the Current Quarters. A lot of times when the company raises, phil, they raise to where zbooins guidance is, this is raising well above 82 guidance was. Current guidance is 766 per share for the full year him now theyre going up 7 fent to 8 1230ur8 year. The dow jones is still about the same. Okay. You will stick around, arent, you, phil . Or we are going to talk to you ability delta later. We will talk about delta. We are looking forward to hearing from Richard Anderson, you have him coming up in the next half hour. He was the xm guy, too . We will talk about what is going on the israel. I think, phil, its a 1. 04, ail though it was a 340 million Profit Sharing expense. There was a gap number the Company Reported. Renews up 9 . 9. 27 billion. That is a little bit passenger ref no. They got some other stuff that they get revenue from, phil . Thats going to be the bulk of it. Joe. There is a little ref few from other sources. Looking for 10. 6. I dont know what the full yep, 10. 62 is the full revenue number. 10. 62 versus 10. 65 as far as an still. Delta is also moving up a little. All right. Thats one of the best for an airlines out there. It is. A lot of people. Even when gordon was on, he loves his continental and likes jeff spizek. He talked about him. These guys figured out a par gin. Didnt they buy a refinery . They did. They bought some old planes that are still. That wasnt profitable at all. The plane thing . The First Quarter that it looks to be profitable. He thinks about all kind of different ways of running. All their planes are operating better tanev else. Between them and where united is in terms of strict operating par gin in there the northwest merger went better, or easier. They were mump quicker tanev else. Or at least long fluff ago we are not still talking about it. Those are notoriously, you know as a manager. Integrations are difficult. I would also say deltas Customer Service is better. That pays off over time. Your choices. If you could fly right now on any domestic special airline, where would you ply . Well, frankly, united would be the bottom of the pile. Delta would be at the top. I think american does a good job. Person does an increasingly good job. Theyre still like continental. They just painted old planes to make them look like few planes, once you get pence. You need to refurbish them. Its not the age of the plane, really, like so many things, its the mileage. You would know. Im telling you. Its not the age, its the pileage. If they have a hysterical safety video. Even though that shouldnt really matter for a company. The fact that theyre not taking themselves too seriously i think is something that consumers really like. Its a lighter, friendly attitude. All of that stuff matters, actually, customers have a lot of choices and Examiner Service matters. One of the reasons that you do have to credit anderson for this is ten years ago, delta was an absolute mess him you remember they had the mackenzie guy, what was his name is . He was just awful trying to fly and i always said, mackenzie doesnt, normally, i dont know about mackenzie, a consultant is a guy that comes from out of town and doesnt have a job and tells you everything to do, right . Well, mackenzie is a great consultant, obviously. I dont know if they make strategic consultant, operating and theorizing are different things. Exactly. As we all know. Cheryl green stein, is that who it was . United. I thought he was delta. All i know mullen, recall mullen . Yes, yes, leo mullen. Yes. There has been a lot of debate over the health of the economy after weak gdp numbers, our next op ed saying the economy isnt as bad as people think, joining us now, roger altman, former treasury secretary and chairman and founder of ever core part first. Usually, you are like jet setting somewhere to either help an inversion or hurt an inversion, im not sure which side you are on, on that, roger. I think there will be a lot of inkreventive mergers because the outlook for any legislation to little them or block them, at leefrt this year is probably zero. Was it as tra zenica . So far you have been on the defense, though. Is the firm taking a petition on inversions . No. You work on the other side, wouldnt you . We work with the other side. With shire on the add b transactio transaction. You are a clinton, basically a republican, at this point you probably think that we need to do the underlying cause of the problem or do you want to just have something that says, for the, you are not allowed to do it anymore. We will stay competitive. Im taking my ball and going home him which way would you do it . There are those that argue there will be no corporate space left to do the big thing the corporate reform, unless we do something to prevent it right now. We feed Corporate Tax reform in this country. We feed it badly and the inversion trend is a big example of why we need it. The Corporate Tax rate in the United States is too high. Its too high by a lot. We ought to do Corporate Tax reform tomorrow. Unfortunately, that itself not likely to happen, historically, tax reform, even if its just Business Tax Reform takes a long time. So i dont think were going to see that as soon as wed all like to see it. Roger, should we leave it to light a fire under their rears to get them to do something or should we change it and then were back to where there is no urgency to do tax reform . What is your heart of hearts should we do . Well, i think right approach here is Corporate Tax reform and to the degree that inversions accelerate the time tax, reform, its a perverse benefit. Right. I dont think its the healthiest thing for corporations to be redomicileing themselves outside the United States. As i said in that time piece, i think the outlook for the United States is better tan people give it credit for, both if terms of the economy and the social health of the country. I do think we will see more of these for the time being. Roger, good morning, its Carly Fiorina. How are you . Im well. Its so frustrating when there is bipartisan support for Corporate Tax reform, there is bipartisan support for tax simplification. I agree it wont happen for political reasons, its damaging politically. I want to pick up on your competent that the economy is better than we think and ask you a question. In my judgment, we sort of have the tale of two economies right now. We have big businesses and equity holders doing very well in this country. And yet we have pain street entrepreneurs who are really struggling. We have the Community Banking infrastructure that is under tremendous strain, which has a big impact on main street business. We also have historic low Labor Participation rates, particularly among women, but also among young people and men. And so few dont have a job and your main street isnt looking as prosperous as it once did, you dont feel real good about the economy and, yet, Big Companies in the sparkt are at record highs. So, how do you react to that . Well, first of all, i do think the actual growth economy wide is going to get to the approximately 3 rate joe referred to if terms of not having seen it yet. Lets keep in mind that if im right about that thats a big step up from the 1. 9 we saw in the past five years point football 1. You are right we have a tale of two cities or two economies. In the sense that the way we got out of the post2008 disaster was to primarily hyperaggressive monetary policy. The only choice that the Federal Reserve had was in effect to explicitly target home values and equity values in terms of restoring Household Wealth and enabling the economy to move forward. If you owned a home or financial assets, youve done well. If you didnt, for example, the average walmart customer, you are struggleing and thats the great policy challenge this country faces. Thats right. Because we have too high a percentage of persons who are under income pressure. We have 54 of American Families earn 60,000 a year of income or less and twothird of those are at 40,000 or less. Thats both a social problem in terms of fairness, its too high a share of the population that doesnt have purchasing power. Were going to have to address that. All right. Thank you. I concur completely. Its one of the reasons i have said on many occasions, frankly, it is the policies of the fed and this administration that have worsened income equality to exactly your point. We could dewitt that. We dont have time. They stated a long time. If they get to 3. If you actually give them the credit for it. You can argue test worth it. 3 would solve a lot of problems. 4 i think you are seeing a lot of anecdotal problems strengthened. Its been a while. Been busy. Anyway, i want to see you again soon. You had the right beat. You had to write the peesz and do these inversions. Coming up, we will talk business the consumer and c demand with Carly Fiorina. We have those green arrows. We are back in a moment. Coming up, other nations leading Corporate Executives speak about the global economy. The ceo of kpng joins with us their latest survey on water keeping ceos on their toes. Squawk box will be right back. Coming up, what is keeping the postpowerful Business Leaders up at night when it comes to the economy and Business Conditions . The results from kpfg coming up next when squawk box comes back. A world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. A few study out showing ceos are generally optimistic over the u. S. Economy, what are the top issues keeping them up at night. We turn to the global chairman and u. S. Cramer and ceo of kpmg releasing the findings of that study right here on this show, thank you for coming over. Well, thanks for having me back again, andrew. Everybody is opt mick, what are people nervous about . You always want to start with the negative. We know what the good fuse is, tell us what the bad fuse is. The good news i think there is a level of optimism i think sometimes people dont appreciate. That is the head lean, ceos are generally optimistic. I think its a balanced optimistic. I think when you look at their views around prospects for growth over the next three years, that was one of the things that was unique about the studies we just did. A lot are focused on the next six months, three years, where do you see the economy over the next three years . That optimism i think is a cautious optimism. If you were to track the results of this thing, you have done it before. This is the first time. But you have done a number of things for this long term. Shorter term. Let me ask you the shorter term studies then. In terms of their predictive accuracy, i find that oftentimes and carly can speak to this, when you are in the corner office, you feel great. When the market is up, you feel great. Your house is in order. Everything is great. Its not always predictive of what happens later. Well. Sometimes backwards looking. Listen, carly knows as the ceo. Ceos are paid to be of the optimistic. In doubt about. That that optimism is important. The more optimistic they are feeling, they are investing, doing those things, they are hiring. One of the things in the75 of the ceos we talked to said its a positive sign. Are Spec Industries more optimistic than others . It was interesting, two of the most heavily regulated industries the health care and services concerned about regulation were two of the more optimistic industries if terms of their prospects over the next three years, which is kind of an interesting and somewhat surprising finding. Oh, maybe. Those are services that wont go. People will always feed a health care, albeit, in different forms and people will always need some sort of banking service, regardless of where they get it from . Youd be surprised the United Health care and hmos will be excited in the future when they cover another 50 million people. Its also true, though, as i understand it, your asked indicated while ceos have adapted perhaps well to a lower growth situation and they gain confidence in their ability to manage effectively through that, and their optimism is notable. Theyre also worried about government regulation and the unpredictability of Government Action and i could arc that you the Financial Services and the Health Care Industries at least know whats hit them now. Theyve had a couple years to deal with doddfrank. Theyve had a couple years to deal with obowl care. Theyve kind of sort of figured it out. Other industries are looking there saying i dont know water coming down the pike. I think thats exactly right, carly. One of the really interesting findings, i think in the study is this whole question about the relevancy of your products. Its certainly a challenging environment. While theyre optimistic. They think theyre prospects for growth. There is not an easy environment to capture that growth. There was a 72 of the ceos that we talked to are really worried about over the next three years whether their products remain relevant. Thats what i have circled here. Its a little troublesome that ceos dont have more conviction about the products. I dont think its about conviction. I think its about, we talked about this on this show, you and i have talked about this. The time frames for companies to respond are getting shorter and shorter. You can blow it and miss a cycle and you are done, although, you may not know it for a while. I think thats what the survey is questioning. Its a combination of disruptive technologys moving quickly. The whole Global Nature of anybodys business, i dont care what size organization you are and the rec latory environment, all of which are converging to make this cycle. Unzblern more complicated. And high, very low degrees of freedom for making takes. Of the internet. Fatal. With amazon. How quickly do prices go to, do margins go. Oto zero. To zero, because of the internet. Speaking of amazon, one of the interesting comments we had from the health care ceo was theyre looking at amazons experience to try and anticipate how their customers want to be served. So all these ceos are worried about how to get clothes closer to, how to get sticky with your examiner. You have Health Care Providers looking at an amazon and saying, whats the Customer Experience that people expect when they go on amazon and is that what theyre going to expect when they come on our health care site as well and i think you see an aufrl lot of sharing and borrowing of good practices if terms of what the customer wants across industry lines. A quick prediction on acquisitions, we seem to be in the middle of a mini mna bubble. I dont know if its a bubble, a burst at least. No, we are seeing a lot more activity, certainly if our business at kpng. We are much busier than we were a year ago supporting our clients from an acquisition standpoint t. Finding in the study over the next three years, the percentage of ceos who expect acquisitions will play a larger part in their Growth Strategy goes from 32 to 45 or so percent. So more ceos are viewing 66s as a way to spur innovation. Can you acquire some of those technologies that you may not have to time to develop organically on your own and i think acquisitions will become a bigger part. Its totally logical in a low growth environment to acquire and consolidate. We have to thank you. We have a little breaking news happening, kayla. We do, john, thanks. Viewers can see across the bottom of the screen, who ukrainian jets have been shot down by rebel forces in the eastern part of ukraine. Thats according to countrys defense ministry. We will have a report from jim maceda in moscow. In the week leading up to the down of mh 17, there were other cargo jets shut down as some of these rebels have been targeting ukrainian jets in that airspace previously before this situation. So we are seeing its amazing theyre still shooting t. Separatists. It leaves little question about how much capability they have and what they have acquired up to this point to continue this activity. We took a look at futures. You have seen them come off their highs, we will continue to monitor as we go ahead new headlines out of ukraine today. There is a beeping going going on from a commercial plane, isnt there . There is a way to tell what is commercial or not. If you are sophisticated. You are supposed to be able to do that. No one is flying over there anymore, anyway him if you see jet, its probably a fighter jet at this point. If are you a separatist. You can hope. One would think. All right, when we come back, a big hour of squawk box still to come, richard ander son the chairman of concur technologies and pga golfer Rickie Fowler him all that on squawk box returns. Im all that on squawk box returns. M all that on squawk box returns. All that on squawk box returns. All that on squawk box returns. , all that on squawk box returns. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. 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. White chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. Welcome back to cnbc. I am joe kerr fan. Along with Andrew Ross Sorkin. We are here with Carly Fiorina. Elections are coming up . Yes, elections are coming up is there water your, 50, 66, 1st . Well, im certainly working hard to make sure they do in a voter of ways including a new superpac. It will be a tough fight as it always is. There is a developing geopolitical story. Two Ukrainian Military jets have been reportedly shot down by rebel forces in the eastern part of the country according to countrys defense ministry. We will have a report from nbcs man in the area, jim maceda. He is in moscow. We will check in with him in a couple minutes. Thanks, joe, boeings earnings topping expectations. They are raising the full year view above current consensus. That is leading the stock up nearly 2 in premarket train trading. Pepsi profits also beating the street. Revenues better tan expected. Volumes edging up in its stacks and beverages, the shares are up 2 . Microsoft is beating on the top line, missing on the bottom lean, telling investors, it aims to get its losses to break even within two years. We will get Carly Fiorinas take. We had a robust conversation during the break. Fear a 52week high up at 219 right now. We are watching Apple Earnings boating the street. Refer knews a bit short. Iphone sales rose about 13 . That matched analysts estimates, ipad sales were slowing. That was a key part of what an a lists had been working on there. Asia, ceo tim cook told an a lists the companys performance if china was quote honestly surprising, well see, tow, okay, they have that deal with china mobile, they were looking to get a better foot hold in aciasm cook says he was surprised by that. Maybe they were underestimating that growth. It might be a 15year high. It might be. At least a tenyear high in microsoft. I think this report indicates that rumors of apples demise have been greatly exaggerated. Apple is doing just fine. Okay. Lets turn to Carly Fiorinas favorite airlines, delta reporting earnings are beating the street by a pen fi. Delta stock has been a high flyer. Vastly outperforming the airline industry, hes probably the best airline running in the country. Richard anderson, ceo of delta, lots to talk about this morning. I also want to talk about the geopolitical situation and how you are thinking of those issues, there are so many things to talk about. Let talk earnings first and how you at the rest of the year playing out and perhaps how you see the economy in terms of your ability to film seats right now, richard . Outlook is bright. Woo ill theny should be growing at 3 to 4 when you three about the recovery in the United States after the kind of recession weve had, we still have strong corporate profits and unemployment numbers continue to improve, so our outlook is robust. We had a very strong Second Quarter. Our Third Quarter will be even better tan we expect for the full year. We top full year and pretax profit. Whats a load factor right now in an average delta flight . Were running about 87 . Its up 1. 5 year on year. If we could turn just from a second to the big news at the moment. You had a flight in the air literally in the air yesterday on its way to tel aviv, it changed direction to land in paris, what do you think of the decision by the faa to stop flights or u. S. Flights to tel aviv and then secondarily, mayor bloombergs decision to get on an el al flight last fight . I cant speak to either the faa or mayor bloomberg. We made our decision wholly independent of both of them. Gil west and our coo yesterday morning early and well before the faa made any pronouncements at all. We got to make the right decision for the flight attendants, customers and pilots on our flights. So we routinely at delta establish what we call delta for the fly zones so today, for instance, were flying to israeli. We will not allow a flight to be dispatched over iran, iraq, syria, ukraine, afghanistan or forth korea. We make shows decision and have an obligation to make shows decisions wholly independent of any geopolitical or regulatory mandate. How did those decisions get made, for example, few were to decide to fly to israel in the future to tel aviv, what would be the tiping point that would let you or be the determinant to do sump a thing . Well, we planned these things conservatively. But we will need concrete information from our government that lets us draw an independent conclusion and keeping with our much higher duty of care that its going to be safe for our passengers an our employees. Hey, richard, what about the viewers . Its like john kerry, you were for or against, remember, i guess the wall street journal messed it up, they said you were going to back track on being against it, right . In there well, our, you know, i cant speak again to what the wall street journal was operating, but our position has been consistent for two or three years, which is, if you look at what the exit bank does to our business, i dont understand why our government finances my stateowned enterprise competitors in Foreign Countries that really our governments, not airlines. The Airlines Gets subsidized by people. Boeing said it might have to lay off some people if jets. So youre doing it purely from you are not a, are you a tea party backer now, richard . You think its crony capitalism or do you think it helps your competitors . It definitely helps our stateowned subsidized competitors. Look, airbus and beau iraqi in a huge duopoly. There is only two huge manufacturers in the world for airplanes. You know the idea that governmentbacked financing from britain, france, the u. S. And germany is going to make a difference in that duopoly. You Just Announced what boeings stock price was. So on its face, if you look at the general accounting office, the exxon bank does not eiate jobs. Its about one issue, wide body financing to Stateowned Enterprises that have easy access to market rates. Richard, one of your other biggest expenses is energy. And a couple years ago, you bought your own refinery. If im correct, you just made another deal this week for five years of crude supply to that refinery. I know it has had spotty earnings, but does that mean you have a pretty bullish outlook on the price of crude for at least the next five years . What can we make of that . Well, the key thing to lookatdelta is what our all if price per gallon per fuel is. This quarter were at 2. 93 a gallon. Ever penney is ten bucks per quarter. Excluding delta is 3. 08. We have been doing that quarter if, quarter out. Now we will be supplying our refinery with a significant amount of domestic crude and, fafblg, we got a jones act vessel to be able to supply our refinery from the texas gulf coast to trainer, pennsylvania. And over the long term, if you look even in our head from and what we have done to jet cracks if pad one of the new york harbor, its been a significant upside to our earnings and there is even more upside as we begin to supply close to 100 of our refinery with crude at prices well below brent delivery. No plans of frack, though, at delta, at this point, richard . You are not doing fracking . Any plans to well, we dont, at one team we thought about whether we could buy an oil company. We to the the refinery was the better play because the Biggest Issue and the biggest expense is crack spreads. Yeah. What we have been able do is, we have been able to crack crack spreads. Richard, good morning, its Carly Fiorina. Congratulation on a great report around im a big fan of your airline and a particular big fan of your Customer Service and how much its improved over the last several years. Talk to us a little bit about how you have accomplished that, because i think Customer Service is such an important determinant of financial results. Its something that sometimes we dont spend if you have attention and time focused on. Will, sense i sit behind an hp computer, most of my waking hours, you know, its easy to talk to you about that. You know, and and i remember selling those computers to delta, too. Right. With hp is everywhere around delta. No, i mean, it, now its like ample different things. But i have to say, most importantly, is we serve our employees and the difference at delta is the people care about what theyre doing and we make huge investments in them. So we have the most generous Profit Sharing program of the fortune 500 companies, and our employees are, we serve them and they serve our customers. Now, below that, there is a million details that we are all in. The whole management team. We are intensely focused on every single detail of our operation and our Customer Service and we are not shy about making Big Investments for our customers. But, richard, when you think about the line item customer charges, united has gotten a lot of flack recently for stricter enforcement of carryon sizes. There is now talk of airbus doing research on a plane that has the equivalent of bicycle seats, basically, it sounds hysterical even to say it out loud. Im wondering how you rate the costs and investments of getting consumers to favor delta over other airlines, also wanting to manage the bottom line. How do you choose which costs to implement and sit on the sidelines for. We do rack and stack and measure basically everything at delta and we use examiner survey data quite effectively. And we use our employee feedback, it moves quite effectively to help us guide the right decisions. Were pretty liberal on spending, making the experience better forrer our customers. Worry not going to do bicycle seats. Worry not going to do bicycle seats and were relatively liberal about our carryon policies and, fachlg, were going to make a lot of investments in much, much larger overhead bins. Richard, do you still have that screaming, smelly, winy little brats over the age of two in first class even tow andrew might be if first class, do you let the little rugrats fly in the front of the plane and disturb the high paying examiners . Well, sense we all used to be twoyearold rugrats. Yes, i know that. People still do. Andrew thinks, do you have a ticket called steerage where the kids could be put down there with like the other dogs . Is there a little caron to put them in. No. Andrew . No, not at all. And you used to be a twoyearold. I know. I still am. Well, thats a big wide opening. Richard, you know my issue. My issue is if you will pay five, six, 7,000. Especially for an overnight flight in the front of the bus of your plane where you advertise that you should be able sleep or do work, because thats where the luxury product is, that actually sitting next to a screaming child there is a fog horn for eight hourms i am losing points for saying this. You are him. I know. Why cant these kids fly back with the poor people that dont deserve anything in coach. How do you think about that, richard, seriously . Well, heres, stop and think about what you have when you get on that airplane. So at delta, you can get a seat all by yourself on a window and in Business Class and we have great headsets. And we have about 150 movies all a lot of first run movies. So you can really isolate yourselves. Kids have a lot of gas, richard. F do the ear plucks are not going to fix the gas problem. What if they get sick . Upset stomach. Lets talk about that. Those were all your future view ertz. I am with you. Im trying to play devils advocate. I cant believe someone would be so antimother and antichild. To me im with my family all the time on the plane. You should roll out atlanta and sweetwater not just lga to atl. Thats my two cents. Hey, thats a pretty good idea. Ill tell tim bates to do that. I certainly like that. You wont notice the kids. Appreciate it. Thank you a lot. You guys were nice to have. By the way, thats an old delta plane behind you, right . That is the airport. Im in the new delta museum. This is the original Delta Air Lines hangar. That airplane was a gift by our ploy i dont see to our company over 30 years ago. All right. Thanks, richard. Well see you soon. When we come back, more markets with experts from Charles Schwab and jim paulsen of Wells Capital. Squawk box is back in two. Were right where you need us. At the next job, next adventure. We heard about this in the last 30 minutes, two Ukrainian Military jets shot down by rebel forces in the eastern part of the country. Nbcs jim maceda is in moscow and joins us now. How much do we know, jim . Reporter hi, joe, thats right. A spokesman for the Ukrainian Military has said that the two soyuz 25 fighter jets were shot down around 1 30 local time three hours ago. They were shot down in the donetsk region, which, of course, is the general area where the mh 17 flight came do you know. Now a ministry of defence spokesman said there may have been two pilots aboard even plane, but so far, for the details have been released regarding the stated status or whereabouts of those potentially four pilots. Now, this of course, is not new t. War in the east of ukraine is ongoing. In the week or two before the Malaysia Airline crash, rebels had taken out at leefrt two similar jets, two soyuz 25s and 26s, those are the military cargo planes. It appears the military interceptions regarding the mh 17 shoot down. They believe initially they had taken down a military plane. Obviously, later, they found out as the world found out instead it was a passenger jet with 2 fact on board. Back to you. Thank you, nbcs man in moscow, jim maceda. You remember, people were urging putin to end this now based on what happened. If he has direct control over the rebels and i dont know whether he does or not. It doesnt seem like its been like anything has changed even after, you know, the tragedy of the commercial airliner. Well, there have been no consequence to putin. Putins gotten done what he wanted to get done. So far with the downing of the civilian aircraft, there have been no consequences. Why should he exercise control . There is a piece on the break, biden supposedly looked into, standing next to him. Wow, i looked in your eyes, you have no soul whatsoever, do you . He said, for the, i dont, you ens me. It was great on the flyers. Coming up, give you the heebiegeebis. I dont mean spending Company Money but i really dont ever have expenses, but i did once when i went to davos. We use a company i am told concur, which will help with that process the ceo will be here to talk about it. He joins us from just a bit. Theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if frustration and paperwork decrease. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Reward card withu a new volkswagen turturbo. Ged so why are we so obsessed with turbo . Because theres nothing more exhilarating than a powerful ride. And you can get that in places you might not expect. Like the passat. And also in the funtodrive jetta. In fact, volkswagen has sold more turbos than any other brand over the last ten years. That is a lot of turbo. Vo hurry in and you can get a 1,000 turbocharged reward card when you lease a new 2014 passat s for 219 a month. E financial noise financial noise financial noise financial noise welcome back. Economic data along with earnings, helping to push the s p to another record high, joining us is liz ann saunders, chief financial strategist at Charles Schwab. Jim paulsen is chief strategist at Wells Capital management. He is quite troubled by the feds position on inflation. Guys, good morning to both of you. Liz anne, well start with you. You seem to be fairly cautious in your notes today, basically saying you think the next 10 move is down instead of up and the correction is kro esser that we may think. What do you think that . Its not that im in the correction camp. I would rather see the next move to be on the down side than the upside. I am concerned about sentiment. There is no faction of investors that is hog wild here, which is why you are seeing the dips preventing us having the corrective phase, which i think would be healthy. My fear, tow, is that we may be headed into a meltup that is defined, which is why if i had my druthers, id see it go through a corrective phase. Jim, how does the meltup keep hang. We have earnings like we did from so many consumer facing companies that showed anything but an ill proffering picture. Demand, consumer spending. There were a lot of issues from Companies Like mcdonalds reporting yesterday, mixed fixture from tech. Its not like we got anything that was gang busters out of the tech sector yesterday, yet, we are seeing record s ps at highs, how does it keep chugging . Thats kind of been the modus operandi. Earnings have been okay, never great. Okay. What we have now is basically solid economic growth. Not fantastic but solid. I think water developed and to liz annes point, is its a sense of goldilocks developing in the sense that growth is maybe around 3 , not, you know, solid. But its not creating any Interest Rate or real inflation pressures and if you put those two soeth, solid Growth Without Interest Rate pressures, thats kind of nervanna. Thats where i agree with liz anne, there is a chance this thing can melt off. I, too, think its time to get a little more cautious, diversified, if you will, in anticipation that we find out that inflation is lurking a little bit, at least enough to scare investors in that perhaps we have a more turbulent second half. Liz anne, lets say inflation is lurking, lets say the second half is more turbulentch how much car, how often fixed physical should investors be holding right now . One of my themes has been we have the possibly of an inflation scare in an inflation where an actual inflation problem is a low likelihood event. I love the question of how much cash should investors hold. There is never enough time for me to answer it properly. Which it depends on who the investor is. There is no one cookie cutter answer, you can be an extremely aggressive investor, your tolerance for risks, your willing to ride through things, i think there are certain things like as jim said diverse identification. I think it comes more important in this kind of environment, whether you are the type of person to use options or loss points to protect you. Statuss like that are appropriate a opposed to trying to make a full scale decision and timing correcting phase here. We got to run, would either of you touch the russell 2,000 . Quickancer . Not yet. No, i wouldnt either. Not yet. Thats definitive. Tanks, guys. We appreciate it. Coming up, the ceo of concur, if you do your expenses, plus, we will talk golf with pro Rickie Fowler coming up. Coming off a very Strong Performance at the british open. We will join us in a couple of minutes. First, take a look at u. S. Equity futures. Dow looks to open at 8. 5 points higher. Well be back in a moment. Lets look at stocks in the news, boeing reporting a quarterly profit of 2. 24 a share. Boeing is also raising its full year forecast. Pepsico reported Second Quarter earnings, 9 cents above estimates. Revenue slightly above consensus, the beverage peaker increasing the full year. The company has been battling fellson peltz is calling for pepsi to separate the stacks and beverage business, you should be happier. Also, but sotive surgical intui beat wall street estimates in the latest quarter by a wide margin. The company saw a 9 increase, using systems from a year earlier. Joe. You have the wording. Intuitive i saw a look of fear. It was not intuitive in this case. No, you know, we know each other well. All right. One more airline stories, watching this situation in gaza, airline luff tan za says it will cancel through thursday if israel, okay, this has been an issue for a lot of these Airlines Starting with delta, who have been can selling flights into and out of that airport in tel aviv given escalating conflict, pair bloomberg says he will fly there. Others saying they will fly there. We will see how this situation develops. You want to get more on this and airline news from our phil lebeau in chicago standing by. As you mentioned, luhthansa has band flights through thursday in tel aviv. You are going through tomorrow. Thats about 24 hour more flights. Its not just from one location in university. Its a number into tel aviv. You combine that along with the four flights from the three u. S. Airlines that fly into tel aviv. Will you not see those lifted any time soon. Will you see a number of airlines from around the world that have decided that at least for the time being, they do not feel that it is safe at this point to fly into tel aviv. Obviously, el al and there are some other airlines that disagree. They say they will continue their service. You saw pair bloombergs xernths he was on the el al flight last night t. Bottom line is this, guys, as long as the faa maintains the ban on u. S. Carriers into over the, that has wide ranging implications. It wage impacts the u. S. Airlines the world takes its queue from the faa. As long as that is in place. Will you see other airlines say, we will oldled o hold off on fl as well. We appreciate that. Anything cloudrelated has been hot. And, in fact, when yellin or i saw somebody else talking about the highest flyers, they tend to throw cloud in not necessarily with the social networking and the biotech, thats one where anything cloudrelated has done very well steve sing ceo of concur joins us now and kramer, steve, you are on kramers watchlist at one of the super momentum stocks. I think he said that as recently, he thinks it will be a great quarter starting now and he throws you in with these other names like work day, service now an sales force. Com. Its a pretty big company. Good morning. Yeah, you know, we have a Great Company and we have been, you know, building our business for about 21 years now. The last 14 or so, we had about 25 and so its a fantastic business, a fantastic opportunity and, obviously, very appreciative of jims views on us. And the way, you know the story. So youve got an employee, russ, our ski instructor. At beaver creek, russ reiner, have you seen him skate, steve . Hes great. He was if colorado. Hes unreal. Anyway. Hes fantastic. After you emailed me, i talked to him about it. I didnt realize he was such a fantastic skier. What a fine young man. He says, i have a real job. I work for concur. Yeah, i heard of concur, there have been differ fames. I come back here, all of our expenses here. I use it every day. I had for the idea. Steve, i love it. I have to say, i love it. I used to not love it to be honest arc couple years ago, once the whole Software Platform has been transformed literally over the past three or four years now. He does use it every day. I wasnt aware you could go down to 22 cents and actually turn that in as an expense. I have never expensed anything that small. Twiefr cents you deteriorate, right . I do appreciate the fact that you guys love it. You know, look, ill tell you, you should definitely be using concur on the possibly device, it really takes the expense process and makes it ridiculously simple him few use one of our product expense here, for every item that worry not automatically filing for you already, can you literally take a picture of a receipt and say you are leaving a restaurant. You take a picture. It automatically cap cures it. Digitizes it. Itemizes it. Puts it into your expense report. We know it well. Hold on, this is now self information i need to know. We use concur. We have the industrial version of the enterprise version for nbc universal. Can i use expense it with that, too . Absolutely. Download expense it from either the Google Play Store or the itunes store and it will integrate into the corporation version. There you go, you solved your tax receipts. Got a picture. Can you willens the software to different companies, is it safe to assume as Companies Hire more people, more people will be using this software, they will need more expensive. Is that the trajectory it follows . You know, we actually price on it per transaction basis, we obviously make an incremental fee from that customer. In fact, its being, travel and expenses are really a good lead indicator for what we see in the economic climate. Back if 2008 and 2009, pacific, i remember back in october, we saw at the beginnings of the dropoff if travel spend and, fact, be i the end of december, we saw a 40 drop if travel transactions, obviously, thats a prelude to what we saw happen in the economic environment. So its really interesting to watch that. Are you saying do them in big lump reports, right . Hold on, why is expensive defendant than actual concur app . It seems that more functionality and the expensive peets than the regular old app. No, the concur expense app is the full featured. Expensive is an application that really is specifically focused on being able to take a picture of a receipt and have it automatically uploaded and integrated with a concur product. Steve, ill call you. I have a lot to do here. Thanks for coming. Russ said he joined your company at 60. Now its at 95. He didnt wage say that it was because of him. Hes responsible. He certainly implied that. He needs a week off if march coming up. So well give you the, if thats okay. He needs to come back out. We appreciate you coming on today. Cramer is a big fan, thank you, we appreciate it. Its my pleasure, thank you so much. I think we have overdue expense reports. Thats a reminder. This expense thing seems awesome. Thats interesting. All right. Before we go to break, we want to get a look at futures this hour. Of course, we started the morning up very sharply, nowic reftively tempered, still all 33 inindices, heres the den year, take a look at that 2. 46 . That yield has held roughly still throughout the morning. We get more on the markets with jim cramer in a couple minutes when squawk box is right back. Up next, joes golf game could use a little brush up. So we thought we could get one of the best in the game to give him a few pointers. Rickie fowler joins us after the break to talk about life on the links. Its in the hole. Squawk box is back after a quick break. E financial noise financial noise financial noise financial noise welcome back to squawk box him making headlines, Dicks Sporting Goods is reportedly cutting more than 400 jobs in the gofrl division. The layoffs come as fewer americans hit the links and golf merchandise declines as a result. Those are startling statistics and in combination with the Us Golf Association are revealing fewer and fewer americans are playing golf because the reason year, it takes fourandahalf, five hours, its too time consuming if you have young kids, one pro golfer is launching a new initiative to get golfers back on the greens, joining us is Rickie Fowler. You need no introduction. And knowing and watching you, watching your career, second behind kaymer who, what was in his coffee that week . I dont know. Then you get behind mcilroy those first couple of days, if i were you, you can think of two strokes in that british open that you could have so easily gotten if a puck fell or something, you just missed, rick years on the last two. You are on a roll. Yeah, its been a great summer so far the majors have been good to me the preparation has been on point. And like you said, its been right there in perfect position t. U. S. Open the open this past week. Like you said, there is something in kaymers coffee, rory got off to a great start, had a great finish that distanced himself from the field and gave him a round a little too late on sunday, still two Great Finishes there followed with the tie for fifth for the masters. Im pleased with the way the majors have been going for me, born in 1988. You need broad shoulders. You know how much golf is riding on the Rickie Fowlers and the Dustin Johnsons and the young guns right now because of ba we just talked about the declining popularity in the sport. Ratings on tv dont help when a guy wins a tournament on a friday like kaymer did. You know, you made it pretty interesting on that last day at the british open, but, you know, we need a lot of excitement to get golf back to the level of when tiger was winning all the majors. Yeah, i mean, golf can be exciting. It is tough when guys go out and play very well and distance themselves like kaymer did in the u. S. Open. I remember back when i was a kid, you know, every day after school, wed go show up at the local course, you know, go pay the junior fee or ninehole fee, go play nine holes, whether its daylight savings time or not. That was the amount of time we had. Go get our nine holes in. That was my way of getting a little practice in for the day. So in a similar position, with, you know, Business People and with a busy lifestyle, obviously, you know, they dont get a whole lot of time throughout the week, maybe sneak in nine holes here or there raids their amount of golf they play throughout the year. So thats the idea, nine holes, it is tough to do 18 if you have young kids or a time constraint. I found, ricky, can i shoot my age and finally play 9 holes, so, you know, i dont know if it will ever happen with 18. You think this is going to help if we, if the golf tries to promote, just playing 9 holes . Sometimes you are left out in the middle of the course, youd go out and come back if in . Right . I would say most of the courses in the u. S. , you know the 9th hole is coming back. Most of the courses offer the 9hole rate. So it gives you the option to go out and, you know, 9 holes, gow lay in a good amount of time, it will take you two hours. Maybe you find a day when the course is wide opened. Its just you and a buddy. You can whip around pretty quickly. Its a way to keep it quick, fun and to, you know, keep up with the golf and see if you can get that handicap down a bit. Ricky, if young people arent playing golf, theyre certainly not investing in stock. Thats our bread and butter. Thats a trend we have been watching. You have 14 million or so if career winnings, what are you investing in . Do you buy stocks . Do have you someone managing your money . What do do you with it . I do have a financial adviser. So im starting to learn more and more as i go on, but they are taking good care of me. Ricky, i understand you i understand theyre fighting over you. They probably are. You probably get some advice, do you know boone . You went to oklahoma city, i bet you know him, have you met him at some point . Zblits really cool to be able to call mr. Pickens a good friend. I get to go stay with him and spend time with him during the football season. I usually sit with him in the swuchlt hes usually back to the cowboy practice am, which is a fundraiser at osu we have every september. To have a guy like that that has helped out the golf program and a academics side, oklahoma city, its special. To calm him a friend, its even better. Will you calm him a friend when he sits here and guest hosts, hes a good guy to listen to about the markets as well . I am being told by another good friend of the show, that you have, in fact, won a major. Because jimmy dunn tells me you won the pro major at seminole. He says you got the monkey off your back already in terms of winning a major . Yeah, if that counts and then especially with the medal effort peb guests, too, but i got the sell fol pro member three times in a row. So thats three major there is for me. Tiger was important to the game and is important, obviously, as is phil him tigers got another major win in there do you think, ricky, or will those young nerves you have, will that help you eclipse him . Well, tekers nerves may be getti tigers nerves may be getting older, i dont count him out for sure. Hes been the greatest player out, obviously, hes going to find a way. Hes still tiger woods. Its going to be fun to, you know, watch him come back fbl obviously, he had a lot of time off this year, get healthy t. Game needs him. You know, hes definitely been missed and, hopefully with key get him back into form. Its more fun to compete against guys when theyre at their best. I bet you are not afraid of tiger, though, are you . I relish the challenge. Id like to go against him on a sunday down the stretch. Im afraid of everything. Im afraid of myself. Im afraid of the flop shots. Im afraid of the short putts. I dont know how you guys do it. We appreciate what you are doing for golf. Just with the 9hole thing in, rekindling a lot of excitement among the younger demo. Rick, id like to see you up here sometime. I will take you out. Good to see you. Yeah, thanks for having me. Definitely, the usga and american e american express, thank you for the them for partnering up with me on the par 9. Rickie, you have been if bunkers where they got wood things here, you get up against it, you got to play backwards. Thats a tour course, obviously, not for him. See you later. Thanks, rickie. In that live shot, he looks a little like leo in wolf of wall street. I didnt see that. Is you didnt see that . Against it on principle, obviously. Make a movie about that guy, he wasnt even on wall street. He walked into a trap. On long island city. He walked into it. Long island. Can i say he looked like Leonardo Dicaprio in general. He needs to put on some weight. Did you see him in those shots . Oh, we have more on the New York Stock Exchange when we come back. Squawk box central here on cnbc. Profit from it. And making something stronger. Will mean making it lighter. One day, factories will work with the cloud. One day. Is today. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Reward card withu a new volkswagen turturbo. Ged so why are we so obsessed with turbo . Because theres nothing more exhilarating than a powerful ride. And you can get that in places you might not expect. Like the passat. And also in the funtodrive jetta. In fact, volkswagen has sold more turbos than any other brand over the last ten years. That is a lot of turbo. Vo hurry in and you can get a 1,000 turbocharged reward card when you lease a new 2014 passat s for 219 a month. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were going public [cheering] the fastest inhome wifi for your entire family. We want to get down to the New York Stock Exchange, jim is there. We have dow, boeing, delta, mortgage applications. What are you watching . Well, look, actually im watching your show because i thought delta, they equipped themselves well. I love the question that joe asked about the oil company. The truth is that delta is trying to take control of the largest cost. Oil is 50 of the companies expenses now. They will be better because they adjusted the cost structure. Steve singh, a good story, and you captured a lot of companies doing well and not many doing poorly. I thought richard would laugh, looking at fracking companies, jim, and he looked into the camera, well, we thought he did not consider that a frivolous question. No, because new corp. s in the business, they are a Big Steel Company and have interest in wells. You look at this country, the surplus of natural gas and developing surplus of oil, companies have to integrate. I love what andrew livers did, but they have a big natural gas bill, and they are doing this too. These are Companies Looking at what the great wealth we have in the country, and they are capitalizing it on it against other guys acting like we have a fossil fuel shortage. Did you see wolf of wall street . Yes, it was a sad movie. It is sad, but that guy has people coming up to him asking for autographs. Thats tough. That should not be. I mean, you remember that. It was the worst it was the bucket shop, pure and simple preying on poor women and children. You prayed they would be closed. You did. Wrecking every. The sopranos were a risk, these guys just stole from old people. It was a blue chip. Whats wrong with wolves of hollywood or washington . Why wall street . I agree with that. See you tomorrow. Tomorrow, ford and gm report earnings, and hear from gms cfo, chuck stevens, on the latest forecast, and, plus, the ceos of eli lily and caterpillar. Squawk box is right here on cnbc, profit from it. Developers are all about speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical and hows the performance of the cloud. And i tell them, if you can make gamers happy, you can make anybody happy. Speed is made with the ibm cloud. The ibm cloud is the cloud for business. But they dont yet know were a family. Were right where you need us. At the next job, next adventure or at the next exit helping you explore super destinations and do everything under the sun. 12 brands. More hotels than anyone else in the world. So wherever you want to be, whatever you want to do, chances are were already there. Save up to 25 and earn bonus points when you book at wyndhamrewards. Com. Save up to 25 and earn bonus points in a 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. Back to the guest host this morning. We have not talked enough we talked about computers with microsoft and apple, but when you look at whats happening in the valley right now, where do you put google in all this . Well, i think google is doing a really good job. I think they are defining the technology space, and i think they are a hugely ambitious company. I think there is some froth in the valley around all of these mobile apps. I agree with you, actually, i think microsoft, i think, the nokia acquisition, and, in fact, i said it on this the day it was announced. I think it will be very difficult. . Right. Do you think it goes the way of google . Send out the hardware . If i had to bet, probably. I think their ability to be a leading hands set provider at this stage in the industry is, frankly, pretty low. Theres interesting ip there. What about apple, 164 billion in cash, wagner on the board to do deals. Any guesses on what they might be . Look, apples doing a great job. As i said earlier, rumors of the demise was exaggerated. The slow down in sales are predictable as screens get bigger and the ipad cant do everything that a laptop can do, so i dont think theyll feel pressure to spend the cash. Theyll spend it only when they want to, and only on the right thing. Your prediction on any m a deal in the valley in terms of big hardware tech in . Dont think were there. Im going to cry. Theres a lot of m a activity going on. Yes, there is. What did tim say . Mention he saw something or no. Thank you. My pleasure. Great to be with you. Appreciate it. Make sure you join us tomorrow, and squawk on the street is next. Good wednesday morning, welcome to squawk on the street, im Carl Quintanilla with david faber, and we roll on this morning with pepsi, boeing, delta on the back of microsoft, futures do not look bad, 10year yield in the new range, a slight bump in mortgage applications, but its a light day for data. Europe with a slight gain despite the flight ban to telaviv and two reports that ukrainian fire jets have been shot down. Wein