Transcripts For CNBC Squawk Box 20150331

It topped speeds of 200 miles per hour. Not sure where you would be driving 200 miles per hour. West side highway anyone . Robert will be joining us with the story in the next half hour. Joe mentioned that today is the last day of the First Quarter. We had a really big rally yesterday although volume was light but the dow and s p back in positive territory for the quarter and noticeably the s p is trying for the ninth straight quarterly gain. That will be the longest quarterly winning streak since the mid to late 1990s. Check out the futures and it doesnt look like theyre cooperating. Theyre down by triple digits. Its a decline of 103 points. S p is looking like its indicatinged to open down by 13 points and the nasdaq is down by 22. Its triple digit moves. Heres the other big stories were watching. Today is the deadline for the u. S. And five other nations to reach an agreement over the nuclear program. Theyre back underway in switzerland and look to be going down to the wire. Well have more on this story in a few minutes. On the economical lan der, three releases of note. The home price intex and chicago pmi and consumer confidence. Go daddy expected to price its ipo tonight. The company perhaps best known for its sexy super bowl ads is looking to sell 22 million class a shares between 17 and 19 each. In Corporate News ibm is investing 3 billion in an internet of things unit. The division will work to gather large amounts of Data Collected by smartphones and tablets. Connected vehicles and appliances. Theyll then use the data to help Companies Better manage their businesses. The tech giant is teaming up with Companies Like twitter and the owner of the Weather Channel and is that us . Yes it is us. We still own it right . Yeah. From one of the guys over there. We cant say us. Were not part of it. And vail resorts is buying the largest Mountain Resort in australia. The price tag only 136 million but the deal is notable because this is sails First International ai was situation. And shares of Tech Resources are underthere this morning. Look at that thing. Theres no r for you to role there. It sounds like a greek kid i went to Elementary School with. Greek to me. Denying their in merger talks. Shares rallied on a report of early stocks. Turn up the can you see how theyre so dark. Totally dim. Do you see how the other ones you can see the word. Were talking about the teleprompter. Should i wait for break for this . But who turns that down. This was bad too. Anyway controversy still brug over the new indiana state religious freedom law and today a similar bill is headed for a vote at the arkansas house. If passed the arkansas governor has promised to sign it. Meantime indiana governor mike pence is defending his states move. He penned in todays wall street journal and argues the law has been grossly misconstructed as a license to discriminate. The governor writes in part i believe in the golden rule that you should do unto others as you would have them do unto you. If i saw a restaurant couple refuse to serve a gay couple i wouldnt eat there. It says the states new lawkon tans no tan law contains no reference to Sexual Orientation and mirrors a law from 1993. What we talked about is the timing is so different. National attitudes toward gay and lesbians being able to marry has changed very drastically and rapidly. Not only that indiana recently allowed, i guess the state Supreme Court wouldnt disallow marriage and you see this all comes right after that. I think the difference is that indiana does not have an antidiscrimination law. You can read what he says you know people that are interpreting the law say theyre not really sure whether a flower shop or a wedding cake maker could discriminate. You know i guess it probably would allow them. If it would then theyre going to tweak it. So theyre working now with the legislation. If thats really not your intention. If your intention is just to protect people that want to have carriages because their religion doesnt allow them to drive. Fine protect that but make sure that youre protecting people being discriminated against. We will see a change. Tweak it because there is a difference between the federal law and this one. Theres enough of a difference to where this is the one that people are upset about. Right. It doesnt explicitly say these things. It is open to interpretation and a court could use that as a defense for why you would allow discrimination. Can you believe they would pass a law in which they intended to discriminate against. It doesnt matter if they intended to or not. Would it allow a certain Intolerant Group or business or whomever to discriminate . Because we dont need any discrimination anymore. We just dont. Is it zero tolerance for discrimination based on this so fix it and the journal goes to Great Lengths to set up this other argument that you know liberals give tolerance to everyone except for based on religion. So they have gone off on the other side. I think if you end up changing the language you can do both in this case. Lets get a check on the markets this morning. The dow is indicated down by triple digits. Decline of 105 points. S p futures down by just over 15. This comes after a big update for the markets. Dow yesterday was up 1. 5 . Gain of 263 points. S p up by one and a quarter percent. Nasdaq with a gain of 1. 15 . This morning in the early trading in europe you can see there looks like theres red arrows for the major indices. The dax down by half a percent. In asia overnight the markets there following our lead from the day before. At least the hang seng was up slightly. The nikkei closed down by and shanghai by 1 too. In terms of what has been happening in the oil patch, check it out, wti is down another 2. 4 . 47. 51 for wti. Mt. Bond market the ten year note at this point is yielding under 2 . 1. 954 and in currencies this morning the dollar is up against the euro which is back at 10738. Its down against the yen at 11999. Gold prices right now down by about 2. 81. It is the last trading day. Lets find out if theres some opportunities in the Second Quarter and beyond. Joining us is michael. What do you make of yesterday . Always hard to find cause and effect but they said the Health Care Mergers of which there were three got the animal spirits going and caused the big run up. Is that it . For sure. U. S. In the later stage in the market so you have more m and a activity and we think thats been great for returns. Particularly Health Care Sector. Had years markets have been much more maco effected relative to last year. Here in the u. S. And overseas. You had Central Bank Activity and here in the u. S. Those issues have been head winds. They have been interrupting the upward trajectory of the market and making returns lumpy for their First Quarter. Those issues have been tail winds and bolstering returns over there and supporting them. We think theres opportunities on both side of the pond here. Later stage in the u. S. And looking at m and a activity but when you look at europe you see a lot of good opportunities because of the programs theyre introducing. We just dont know at this point how much its about 50 50 how much of the Market Action is due to the fed. If the market is effected. How much of it justifies our valuations. Pu see the market have a lot of trepidation when theyre going to start the easing that would indicate some of the gains are because of what theyre doing. If people are stepping back from the market because the fed isnt going to be there anymore the market doesnt deserve to be where it is anyway. If you retain earnings power and the steep yield curve here in the u. S. Youll get it. What does that mean if you retain earnings power . If you continue to have descent industry. Theres a lot of xs. Theres a lot of xs. All my exs live in texas but these are right here. Yeah. Did you see the piece . Well have kevin on for two hours to talk about it. Scared me again although he is saying that for awhile. The fed needs to be more aggressive. That at 5. 5 you, in the past, that has been enough to cause some Wage Inflation and for the fed to say we dont like 1 inflation, we would rather get it up to 2, to try to in gender higher inflation is a little strange because it always comes back sooner or later when you get back down to 5 . I think tightening show is about to start here. Theyre getting people in their seats. Theyre, you know the lights are going on and off and tightening doesnt necessarily mean markets do badly. It really depends on where rates get to and how fast. What if theyre tightening at the same time were watching gdp swoon again and growth rates up less than 1 for the First Quarter potentially. Im not sure they ruled out any action. Well hope theyll be sensitive today at a here and approximate they see the dollar being too strong or if they see too many of these economic numbers be too low im not sure theyre going to be in a hurry. Theres pressure on them to act for sure and its coming but im not sure its going to come as soon as folks expect. Particularly if we get the weakening. You suggested earlier that people should be more invested in european stock and when i think about that i think am i also going to have to hedge against the dollar . Is this dollar move going to take away any of the returns i get over there . And hedging is so expensive for an individual. How do you measure the risk and offset . We think the euro probably moves a little lower. It obviously had a very large move already so hedging some of your International Exposure probably makes sense. There are vehicles to hedge now that you can use that are not that expensive. Hedging is a function of Interest Rate expense. Interest rate expense in europe. Pretty low. They actually theoretically could pay you to hedge. Right. So we think hedging is probably an important part of the International Exposure. You dont want to go overboard because you had a big move in currency already and if you hedge it all out and the euro strengthens which no one is expecting. But could happen. When nobody expects it thats exactly what happens. Thats when it does. We do think theres vehicles to hedge and a portion of your International Exposure should be hedged because as they were saying earlier so far if you werent hedged most of your overseas returns so far have been negated by the currency. It would be amazing if we did if were all wrong on inflation because were looking at the rest of the world and were so sure that its sort of going to be quite and the point hes making the fed is talk about raising rates so slowly if for all 2016 theres negative rates and then you get to break even on real rates in 2017. As thats happening and the Unemployment Rate continues to drop, youre its a witchs brew thats going to all of a sudden theres going to be inflation coming out of nowhere and were going to say holy cow we let the genie out of the bottle trying to in gender wage growth with people and here we are. When things heetd up too much too quickly. Potentially, yeah. I would say in the u. S. Were close to full employment. They want to dip below 5. The issue is you have close to full employment but i would say you have also fairly low enjoyment, you know you have a pretty high savings rate and spending is temperature spending is tepid. Most people rolel their eyes. They think youre crazy if youre still beating the inflation drum. I wonder if we have gotten to the point where were too complacent about it. You always have to be vigilant. Thats the worst thing for Financial Assets by far. Yeah theres a good piece of news about complacency and the good piece of news about complacency is if you want to hedge your bets against some Disruptive Force in the market whether its inflation or a current sy problem you can buy protection and when volatility is reflecting complacency and its relatively low you can buy cheap protection in case things go south. Thank you. What are you right here . Right here. Really . Walk across the street. Yeah. Nice. Welcome to the neighborhood. Thank you. All right. More on the developing situation with the iran negotiations. Joining us is david gordon. Good to have you here. Great to be here. Are you making any estimated guesses here about whether or not theyre actually going to get a deal done today when it comes to the negotiations going on with the five nations. Were going to get agreement to continue. Whether its going to be a deal or not, unclear. So it looks as approximate the pf plus 1 has blinked a bit in terms of what the deal quote unquote, is going to look like. The u. S. In particular wanted a deal that layed out a frame work in a fairly robust way. The iranians wanted more of a political document that said heres where were going and well work everything out by june. Looks as if were heading toward the ladder rather than the former. Thats going to be a political problem for president obama. Why is that happening . Well i think the main reason is that the iranians and the p 5 plus one have been unable to resolve the final issues that exist among them. Sounds like youre suggesting that the u. S. Is giving into the iranians. Am i reading too much into that . I think youre reading a little too much into it. I think what this is is that the u. S. And the other p5 plus one are in effect extending the deadline to june rather than declaring the talks a failure because there has been a lot of progress in the last few weeks. We have been at this since now 2013. Its starting to feel like a failure failure. Thats what those critical of the administration are going to say. Thats what the saudis are going to say. Thats what israel is going to say. Thats why this form of an extension is going to be a problem if thats where were going and thats what the signals appear to be early this morning. Sounds like Foreign Policy or diplomacy. How difficult has yemen made the sif wags in terms of seeing the jurors rain jurors uranians active in the middle east. Its going to mean its going to be much harder to get even minimal concurrence on this from saudi arabia. From the other gulf states and from israel who are going to say, look what youre seeing here in the face of a negotiation is not an iran moderating its behavior but an iran becoming more assert tif in the region. Again, thats the political problem here that president obama is going to face in trying to sell this deal. So im more pessimistic about the ability to resolve this by june as we go forward here because i dont think that why is the administration so insistent on trying to do this . I think that president obama made this an enormous priority. I think hes correct that could we get a good deal with iran that would be good for the United States. But he layed out a technical deal of what it would look like. If theres a vague and political statement that comes out at the end of the day without clear parameters on what that means its going to be hard for him to defend that as a good deal. David let me tell you what were hearing early on. It sounds like the iranians would like sanctions lifted immediately up front before anything else is promised. It sounds like theyre not interested in significant oversight of their future research and development and theyre saying no way on exporting their uranium they already have. Do those make up for a good deal . No theres no way in june that those three attributes can possibly remain in place and have a comprehensive settlement. Thats the definition. Those three issue where is they are now is the deaf mission of a bad deal not a good deal. What do we get from that . Do you know offhand . No thats the problem here is that without the export of the already enriched uranium and without a phased a phased pattern of iran does x, sanctions are lifted some what iran does y, more lifting of sanctions, that unless youre in that kind of world i dont think you can get to a comprehensive deal and thats why i think theres going to be a lot of skepticism if what it looks as if where were heading now is indeed where were heading over the next several hours. It almost looks like the europeans want a deal so badly to do business with iran and obama wants a deal to have it as his legacy issue of somehow getting some peace deal with iran that were almost ready to give it away. We think its going to happen anyway. I think its going to happen. It looks as if its going to happen today but i think that were now in a scenario of what i called march success, june failure. That i think if you unless the iranians move on the three issues that you raised you think you can get to a comprehensive settlement in june. Right now the question that members of congress and israel and saudi arabia are going to raise, if they wouldnt move in march, why do you believe that theyre likely to move in june. Thats the problem here for president obama. Were not even approach broaching the subject of trying to ask them to change their behavior in terms of sponsoring terrorism. Thats right. Were not even talking about that. So with those three things we cant monitor and we wont export any uranium and they want the sanctions immediately then i dont know what that leaves. What youre going to see today wont be an agreement that says that theres going to be an immediate lifting. That theres not going to be monitoring, that youre going to get much more of a political statement saying that both sides will seek to resolve any issues that remain between them between now and june but again the question is having set this march 31st deadline if you couldnt get here now why do you think theres a realistic chance of getting will by june and essentially these are the same issues that held up in agreement back in november. Well on that note david, good to have you on. Thank you very very much. Feeling more and more like a pointless exercise. Going to happen either way though. Yeah. Still to come this morning, under fire from the sec and now she is getting advice from a man who had his own high profile fight with regulators. Colorful words of wisdom from mark cuban next and later an early snapshot with all the head winds from Mike Thompson and former fed governor kevin warsh but first heres a look back at this date in history. 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Hes on at t commercials now. Where every. And twitter. Twitter. Hes a high energy guy. We see him a lot. Basketball. Take it down a little. You dont want to be overexposed. Id be somewhere flying in my i think hes got like a gulf stream 650 or something. Id be somewhere warm. Having said that i wish he would call in today and maybe talk a little bit more about this. Anyway when we come back this morning, mcdonalds new ceo has a menu test up his sleeve. Could breakfast for lunch boost the chains business . Also programming note for you, dont miss power lunch today. Ill be sitting down with warren buffet and larry van tuyl. This is part of the new York Auto Show this week. Well talk about the expansion into car sales and hear more from buffet about his part in the kraft heinz deal. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Why pause the moment . Ask your doctor about cialis for daily use. For a free 30tablet trial go to cialis. Com welcome back. Were in the chairs. The story in the paper that im excited about, mcdonalds testing breakfast past 10 30 in the morning in some markets in the United States. All in favor of it. I get so frustrated hen i pull in at 10 35 and they tell me i cant have an egg mcmuffin. Because they say eat lunch at 10 30 in the morning. I dont want a burger at 10 30 in the morning. Whats the point . Whether you can order fries before 10 30. I see. That never occurred to me. You have gone far deeper than i thought. Hash browns before 10 30. But there are plenty of times where, maybe youre on a different time zone or something. Traveling internationally and its like french fries for breakfast and well go in there and its like i dont know 10 30, i think its 11 00 for fries in some places and they say we dont have them and, in fact there was remember the Michael Douglas movie where he gets all he has the glasses on and he goes in and either cant get a burger and its before 11 00, thats horrible things have happened didnt want to bring that up but its not a mcdonalds but i remember the actor that played the guy behind the counter that Michael Douglas was talking to. They made him as annoying as he could possibly be. He was unhinged to start with and he had to break it to him. And he missed it by like a minute or something. I think it was too late. He couldnt get breakfast. I think it was like 11 01. Walking tall . What was that . Yeah, remember and always still put together. He had the dorky glasses on and everything. And also im going to let you go also germany you can order. Table service at mcdonalds. You order at a kiosk and someone will bring it to you. They do it in europe. It makes me crazy. While were on the subject of food, before we move up. Im sure it has nothing to do with mcdonalds. But this is a food story and gross story that caught my attention as you might have expected. Someone felt the need to add is it okay to eat moldy food. If you find moldy food in your refrigerator. I think it is. Dads think it is. Theyre like the vacuum cleaner of the refraj rayigeratorrefrigerator. I dont think mold not true. It can make you sick. Many think its okay to cut the mold away and eat the rest. You dont cut the mold off and eat the mold. You have to be really careful. If its blue mold you can eat it. If not get rid of it. Some molds can be toxic. You know what i say to that youre only one stomach virus away from your perfect weight. Girls say that. I dont know. I cant believe its a question. I do know that dads everywhere. You dont want to be wasteful. I guess you missed the piece on fecal transplants. What . They can cure certain diseases. The way 60 minutes all they wanted to do was keep saying polio. Theres a lot of different viruss. They just wanted to keep its so weird. But the idea that you can actually find a cure. But theres already ten it was about immuno therapeutics. But the way they sold it theres already ten compounds that have been approved that do this. They wanted to make it like they came across something so sensational. All they would have shown were babies for the 50s. It was a lame piece. They did that report like 20 years ago. Yeah but this supposedly this can cure some. It triggers your immune system. Well no not this. You may not have the right bacteria. What are they transplanting . You need the bacteria in somebody elses gut essentially . Yeah. Thats very different than what i thought. We wont discuss that. I would never try to figure that out. Knowing you as i do. But no, this is will you tell us on break . Because i cant imagine what you thought. Elon musk loves to tweet teases. Major new tesla product line not a car will be unveiled at our hawthorne Design Studio thursday 8 00 p. M. April 30th. That one tweet causing all kinds of speculation on social media. Had morning were asking whats your guest on the new product line. Could it be a vacuum cleaner . No. Coffee maker . No riding lawn mower. No. Maybe a bicycle. Something else. I think its something else. Something way cooler if hes going to tease it with a tweet like that. I hope so. Tweet us your guesses. Coming up if the analyst estimates are any indication we could be in for an earnings season that doesnt quite measure up. Were going to talk expectations and the biggest risk that were facing. That comes next and then later kevin warsh will have a lot to say about yellen and plus mark emmert and what about 12 billion in revenue for year. And a company jumping off the charts. Coming up squawk box will be right back. What if we finally had a backyard . Thatd be amazing. Hey, what if we took down this wall . What if this was my art studio . What if we were preapproved . Shut up. From finding, to financing. Howd you do that . Zillow. Talk about a gloomy earnings forecast. Analysts are slashing estimates by the wider margins since the financial crisis. Joining us now from s p capital iq is Mike Thompson. Hes crunching earnings numbers. What have you found so far . Its not looking pretty good here becky. Literally the dramatic fall off over the last few weeks have been stunning. Were looking at almost down 3 for the quarter. Most of that is energy. Is that quarter over quarter or year over year. Down almost 63 . Quarter year over year. Yeah. Im sorry. It sounds like theres a little bit of a delay and i apologize for that mike. When were looking at these declines is this something investors should look right through . Exforeign exchange when you exclude those items is this what should be okay . Is this the thing you think people should look through or the sort of thing people should stand up and start paying attention to. Its not just earnings. Its also revenues. You go from sequentially a 3 Revenue Growth quarter to now down 1. 5 Revenue Growth quarter. The only things that seems to be relationship evacuated is valuations which is a little disconcerting. Were showing on the screen right now the winners financials at the top by 11 . Whats driving that considering how flat the yield curve is or what we have been seeing with the yield curve . Well i guess perhaps its a little bit of an improvement with regards to expansion of commercial lending base. It will be interesting when the Companies Report and they get some expectation in reality commentary wise but it could also be the way guidance is. Im hoping theres a real big overage in conservatism here among companies and earnings because im hard pressed to see how you can get to positive Earnings Growth for this quarter. Were going to make less in terms of dollars than we made in the quarter. Why would expectations were not talking about expectations. Were talking about earnings per share growth and decline year over year for the quarter, right . Right. Okay. But it can be flat or negative. Yes. Very much so. The way that the numbers were looking now. Now, look joe, you know that we typically see 2 to 3 . They lower the bar 2 to 3 in front of earnings season. So even if you get the surprise factor historically of about 3 that puts you just above 0. So these are not good numbers. But the decline in injury is 63 . If you take that out, it looks a lot better. My question is do you make a broad statement about the entire market here because of that one sector about whether or not theres an overevaluation within the overall market and say put aside energy and it doesnt look so bad. Well so lets take out energy. Youre probably just about over 5 . Youre trading at over 17. 5 times next years earnings. You know thats really the challenge because youre valuations are so out of line with your historic norms in terms of Earnings Growth so thats why it goes beyond energy here. Although some of the Big Questions have to be how long might you think its going to last in terms of how long Energy Prices will remain low and how long you think the dollar is going to remain strong. Theres some people that say these trends are here to stay. That could spell trouble for the rest of the year . Okay. So but i think what the equity market is saying is something, you know a bit different, right . If they feel that in fact that u. S. Interest rates are going to go up faster than global rate which is is a pretty safe bet the tlar will probably continue to increase in strength. One of the interesting things is that theres a Strong Demand particularly from overseas investors for assets. Because as lackluster as this earnings season looks theres a pretty descent chance that the u. S. Recovery will actually predate, you know more globally inclined recovery. The u. S. Is still a pretty attractive investment environment. Its just that valuations look rich here. These relationships arent jiving but maybe theres something in the expectational views. All right. Okay. Great. Thanks. Heres the way it works. You guys heard of cdif. People get it in hospitals and it causes it can kill people and terrible diarrhea and abdominal pain. So if you have had it more than once its tough to do something about it. So you get a donor, a fecal donor. The matter is collected, purified mixed with a salin solution and transferred to the person with cdif. They get the good. Its overwhelms the good bacteria in a person and causing all kinds of problems. Better than the probiotics. They have been experimenting with it and it could be something that helps people with cdif which is horrific. Elderly people get it and you dont even die for what you were in for. You figure you have the antibodies and you need a blood transfusion from someone that survived it already. So glad we have you to explain these things. I wouldnt fecal transplant. There you go. All right. Coming up mclaren unveils the fourth model in its series. That story next. First as we head to break, check out the futures. After yesterdays big rally it looks like the dow would open by 110 points. Well discuss more when squawk box comes right back. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Friday night, buddy. You are gonna need a wingman. And with my cash back, you are money. Forget him. My Airline Miles will take your game worldwide. What im really looking for is i got two words for you rewards. Theres got to be better cards than this. [ male announcer ] theres a better way with creditcards. Com. Compare hundreds of cards from all the major banks to find the one thats right for you. Its simple. Search, compare, and apply at creditcards. Com. First rounds on me. In its biggest move yet, mcclaren is unveiling the first model in its Sports Series at the new York Auto Show today. Robert frank got a sneak peek and joins us now with more. Good morning. Well, it has a price tag of 180,000. We got a sneak peek with the mclaren ceo. Take a look. This is the lightest best performing of all the cars in that segment. Compared with the competition, i think it actually brings more to the second. Now when you look at the competition, lambo, ferrari, porsche. Ive heard this called the porsche kill per. Should those guys be scared . I would never use that term. In many ways were still the new boys. But were a company that grew out of motor sport. We use technology to produce the best cars in that segment. And this really does this really does. It brings performance from a segment higher into this part of the market. I think were going to surprise a few people. We tend to appeal to people who know about sports cars, who know about this segment. People who appreciate the fact that this is the only midengine rearwheel drive two seater in its class. Its the only one that uses a microcarbon design like in race cars. A lot of the other attributes you talk about, you can only gain with time. But i know our customers and they trust what were doing and trust we will demonstrate that as we move into the market. Really interesting story. Mclaren has only been making cars for four years at full scale. Theyre on course to outsell lamborghini in the next two cars. One dealer has already taken 80 orders for this car even though there havent even been pictures until today. So a lot of confidence. A lot of trust in this company. Well see whether they can you get it over 200 . Are there things to order it doesnt have . That model you saw there with the carbon fiber on the exterior is just over 200. Theyre going to unleash one under that. Its taking aim at the porsche 911. But thats a level in this amount of sports car you get that no one else is offering right now. How many dealers in the country . I think theyre up to 20 or 30. But they have partnerships. They partner with a lot of other theyll go with another dealership. Do they have mechanics and Service People there . They do. And thats been something that theyve been successful at. There are a lot of dealers. There are a lot here in the northeast. There are a lot in florida. So theyve had a good network so far. I love how you said entry level at 185,000. Theres also some nationalism here. Its the brits versus the italians again. Who can build the better race car. So theres a lot of pride. The brits say we can build cars as good as the italians. Really . Yes. Really . You never thought that before. And i asked him. I said the history of british cars, is the electrical system going to work. Do you have to drop the transmission to change the wiper blades. He assured me no. They are very cool. Good stuff, robert. Thank you. Cars break. You need service and oil. All right. When we come back this morning, kevin warsh. Stick around. Okay, listen up im reworkin the menu. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and Minerals Antioxidants and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. Id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a little help from my state farm agent, i plan to retire in 15 years. Wow. Youre totally blindsiding me here. Whose going to manage your accounts . This is a devastating blow i was not prepared for. Take charge of your retirement. Talk to a state farm agent today. Down to the wire. A developing story. The u. S. And five other nations racing to reach an agreement over Irans Nuclear program. The bulls battle to close q1 strong. The s p now on track for its longest quarterly win streak since the mid90s. And as the final four heads for indianapolis the ncaa president is in the headlines if ar whole different set of reasons. Well ask mark emmert about a new controversial religious freedom law in indiana and the backlash its created as the second hour of squawk box begins right now. Live from the beating heart of new york city, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick and michelle carusocabrera. Andrew is off today. Our guest for the next two hours is kevin warsh, distinguished hoover fellow. You are a divisioned fellow. You know . I dont know whether that means something, but your distinguished. Im just happy to be here. Were you 12 when you became a federal how did that or youre just not gray . Look at you. Youre a retired fed governor . You look good. Anyway futures two hours. Im ready. Feldstein. Can you talk you know you know stan, too, right . I know these guys. Theyre my good friends. Okay. Good. Futures arent pointing to a good start to the last day of the quarter. We had an awfully good day yesterday. Big rally. The s p moved back into positive territory for the quarter and therefore for the year. The s p is trying for its ninth straight quarterly gain. That would be its longest quarterly win streak since the mid to late 1990s. Have to do a map on this and figure out if we open at the levels we look like right now, will we still see gains for the quarter. In our headlines this hour check out the chart of the euro. Euros under some pressure once again. You can see this morning that its been trading. The dollars been trading about 1. 0742. It has been slumping in recent months and its headed for the worst quarterly performance in its history. Down about 11 . Well be getting fresh prices. Prices are expected to register at 4. 8 year over year increase in the nations largest markets. And ibm is investing in a new unit base odd then internet 07 things. It will center around the use of Realtime Data and numerous applications. Check this out. Cable vision reportedly planning to make an offer for the New York Daily News. The deal in the works values the troubled tabloid at 1. Thats too much. Thats what i thought. We use it every day for the jumble. We do. But you dont buy something that loses money every single year. Unless you have a plan for how to turn it around. Right. But people have tried. And people have failed. I dont know. Well see. You can get other jumbles, i bet. Jumbles online. Its been a tradition for nine years now. The deadline for the agreement with iran is fast approaching. Joining us now is Richard Haass the president on foreign relations. The world moves forward, richard. Thats the kind of thing that for me i guess now im in a position maybe i understand it better now. Its almost like cuba. You try for so long with sanctions, it doesnt work. The reality is some of these sanctions because of our European Partners are going to collapse anyway. So we might as well try to get something out of this. And we could snatch a victory from the jaws of defeat. Because sanctions are coming off. Is that paraphrasing it too much . I dont agree. Sorry. Tell me. Its not clear to be sanctions coming off depending on if things dont succeed. Its one thing if the negotiations break down and iran is seen as the problem. Then i think sanctions stay or get ratcheted up. If, however, were the one who is are seen as undermining the deal either by being unrealistic or Congress Goes off on its own right now, then we could find ourselves alone. We just heard today that theyll go forward if they get some three conditions. Number one, sanctions come off immediately. And number three, they wont export any uranium to be diluted. What do what are we getting at . The idea that sanctions would be, you know essentially taken away immediately is a deal we shouldnt take. Sanctions to a degree have to remain in place. Only gradually be taken off based on iranian capacity. If iran is going to insist on keeping enriched uranium, we have to make sure that is put into a physical form. That it then could not be weaponized. So it cant be used. We got to look at questions of duration over agreement. Weve got to look at questions of inspections. How intrusive are things going to be . How much of a right are we going to have to look at anything we think is suspicious . How do you know if its getting diluted if they wont let you in to see. Absolutely. It seems to me a lot of the questions are unlikely to be resolved today. One way to look at today, this is going to hold some time. But a lot of issues will be kicked down the road. The deadline will be the end of june. How should we be looking at this . You bring up the point is lot of this is a posturing game. In iran they need to save face. Here we need to make sure we are getting some tough some points that come across. You brought up the point that congress, if they get ahold of this and go the wrong way, it could blow the whole thing. As the American Public how can we feel confident this is a good deal particularly when theres so much face saving trying to take place . Its not a good deal. The question is whether its a good enough deal. You have to compare it to the alternatives. Neither of it is a wildly attractive option. But congress should get a say on this. Youve got several senators. Senator corker senator menendez and others who have said give us a chance to vote on it. Present the deal. This is what the constitution calls for. If i were the administration i would work with congress. I think the procedures they have set up are fair. And let the Congress Debate it. Thats why these guys get paid. So at this point, were not even talking about getting an agreement where they would agree at some point to stop sort of their adventures around the world. So thats not thats totally off the table . So they can continue to be a really bad actor so many different places. One, this does not deal with anything nonnuclear. It doesnt touch what theyre doing in iraq syria, or yemen. Iran as an imperial geopolitical threat to the region thats not what negotiations are about. The negotiations are significant but narrow simply about the nuclear question. And there it doesnt eliminate the problem. What it does at best is put a ceiling on it. And we say were going to park the iranian challenge under the ceil ceiling. Youre saying the only alternative when netanyahu was here and the left said he doesnt want anything because all he wants is war and other people said, no, there are things besides getting a crappy deal in war. There might be something in between that. You seem to think the same thing. They get two things. In principle you get a good agreement. O for in principle you get a good enough agreement or keep sanctions in place. This is we were just talking about it in the greenroom. There are so many things in life for problems to be solved. This is not one of them. This is at best a condition to be managed. If were lucky. If we get an agreement thats good enough we will put a ceiling on it that will box it in. At what point do we stop . You said the real deal would come in june. We started this in months. When do you say we cant get this done . I dont think you say that. What matters is not what you can negotiate. Its what a iran doing in its labs. If you cant get a formal deal so long theyre not crossing thresholds, you might say this is something we can live with. So it basically the criticism that it kicks the can down the road and theyre still if they were when it expires within a year they can have a bo thats going to happen. At minimum were talking a decade. Maybe in a decade. But the minute the agreement is lapses then theyre that close still. Its like theyre right up to the edge and it takes no time once thats one of the Big Questions. If iran decided tomorrow they wanted to have a Nuclear Weapon no matter what how much time would it be . And i think most people feel weve got to have at least a year. We had a year. We could detect them and act on it. I would move from israel if this deal goes through, wouldnt you . Maybe our concerns are different than israels. Its not as imminent a threat to us. But for israel this is not good. Right . Obviously not. And its not good for us. Iran actually gets a Nuclear Weapon, i dont think they will but if that were to happen it wouldnt stop there. When they say death to america every chance they get, thats also you have turkey egypt, saudi arabia, and anyone who thinks the middle east is bad today. Imagine that middle east. If you had five fingers on nuclear buttons. That is not a middle east in which Nuclear Weapons would not be used. If we hadnt gone in iraq and had this experience that were all dealing with now, would we be as reticent to handle this head on . Good question. I think what iraq did was attribute to wariness. Now we have more in the middle east than we know what to do with. You discuss the situation as five having Nuclear Weapons. During the cold war, the United States concept of mutual destruction. We had enough they had enough. Nobody would try it because we would kill each other. You dont think that would work in the middle east . There are some theorists who think it would. I do not. Five is a lot more complicated than two. The u. S. And soviet union had Mature Nuclear abilities. Imagine you had a middle east of multiple inventories that were not mature. There was pressure to go first. Yeah. Only the first guy wins. Imagine what kind of a hair trigger that would put the region on. Plus the u. S. And soviet union, things were elaborated through the arms control. Middle east, these are raw. Iran issrael egypt. This is not the prerequisites of a stable situation. All right. Richard haass, thank you. Happy. You know what . Im not as worried a man, oh man. Weve got to get through the next five years. Not 105. Thats a serious point. Weve got some immediate challenges. When the people in the administration say the greatest Foreign Policy challenge facing the United States is global warming, you say weve got near term problems. We should be so lucky to live until 2100. Thank you. Coming back this morning, is the stock market addicted to easing from the fed . Well ask kevin warsh after this. And later tony crescenzi. And mark emmert. And a company that is jumping off the charts. David steiner will join us. His stock is trading at alltime highs. Squawk box will be right back. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Welcome back, everybody. Plenty of speculation in the markets about when the fed will make its moves on Interest Rates. Our guest host this morning, kevin warsh. What do you think . Should they have moved already . Will they move soon . How should they go about doing this . So markets, they began this absolutely spoiled by the Federal Reserve. The fed has been spoiling Financial Markets since the depths of the financial crisis. The fed talks, markets move up. Thats been great. Now i will say markets are exhausted. Theyre exhausted that the fed has decided theres a new set of benchmarks. Theres a new framework. Before it was Forward Guidance. Now just kidding about Forward Guidance. Before it was once the Unemployment Rate is at 6. 5 were going to get going and raise rates. Now its 5. 5 or 5 . So markets are exhausted by all this. I will give the fed leeway on that. When the data changes, you have to change your opinion on some of these things and we knew at some point they would have to wean us off this Forward Guidance and it would become more opaque. They keep moving the goal posts. They should have never set them up to begin with. The economy never gets above 2 . So because of all the stuff going on, it never gets above 2 . So now were all the way down. Maybe it will be 4. 5 when they raise. I fear the markets have come to a conclusion that janet and her colleagues at the fed wont like which is after the taper tantrum, markets got uncomfortable and the fed said were not going to rush. Then we had the dollar tantrum. All of a sudden the Federal Reserve says dont worry. What we said last time isnt quite true again. So rkt mas think they have her number. And markets think theyre going to be able to control these things and let markets go up. This is a very dangerous development. What about the argument that inflation isnt moving fast enough, high enough . Which is absolutely within the feds mandate. So i dont buy it. So the truth is by inflation measures including the measures created and controlled by the Federal Reserve, inflation is around 1. 5 core. Were not supposed to look at Energy Prices when they go up or go down. Whats the difference to the economy if inflation were at 2 versus 1. 5 . Theres just little evidence to support that. Weve had this incredible supply shock from energy and Commodity Prices and core inflation has been stable. In fact, what weve seen in the last couple of months are wages that are starting to move up. At the first moment that people in the real economy are getting some benefit after seven or eight years of folks in the real economy getting nothing, nows the time were going to pull out the rug from under them . I dont think so. The reality is inflation is not a problem. Qe was designed in part to deal with deflationary issues. Qe was designed as an emergency policy in a state of emergency. We shouldnt use emergency policies when things are okay. It felt at that point too. Really just at youre in the at 2 . Youre at 1. 5 inflation. Are you really going to stoke the fire because youre a half a point below 2 . Its that important to get to 2 . Its an arbitrary number they just made up. If down the road we ever worry about inflation again, should row really be stoking it at 5. 5 unemployment . By the old days seven or eight years ago, we talked about being in the comfort zone. It was interpreted to be 1 to 2 . Thats where we are. If you want to do qe you need to do a better days than inflation needs to be up. 3 of 1 as we measure it. Our gauges arent even that good. Although those who are arguing for the fed to remain patient and still hold off for awhile cite things like whats happening around the globe with Central Banks now in this massive easing process. The dollar has gotten so strong so quickly that if the fed steps in, its going to potentially make things much worse for our exporters. That in itself could put us into some sort of a deep economic recession. Right. You know the irony of this. The Federal Reserve has been telling our counterparts around the world since 2010 do what weve been doing. Try qe. It would have been better if they were doing it at the same time we were doing it. It looks like a currency war. Now they have decided to do it and we should somehow be surprised that the dollar is strengthening and their currencies are all weakening when theyre following our prescription. The reality is we had an agreement going on around 30 years that the Federal Reserve doesnt talk about the dollar. At the treasury they dont talk about Interest Rates. I must say im a bit surprised. In the last couple of weeks the Federal Reserve has started to talk about the dollar. That tells me they must be more concerned and that tells me that theyre as concerned about what that means for earnings as you suggest. Again, what i i dont like are policies being changed based on whats happening on the ticker machine. They should be focused on three or four years out not weather the data from february is looking soft or strong. Weve been growing at 2 Economic Growth. We shouldnt be changing our sentiments based on the temperature outside the door. And the key question i always have for people that are worried about what the fed has done is whether weve already felt the negative effects of the misallocation of assets. When you price things you know when you decide where prices should be instead of letting them go where they should be youve got the misallocation of asset. Is this why weve only gotten 2 . Weve already felt the effects . Or is some big terrible thing looming. And all say inflation hasnt happened, there have been no negative consequences. Its a free lunch. Everything is great. They all say theyve already won. The krugmans and everyone if we stayed at zero. You ask the real economy if they won. People in the real economy to dont have Balance Sheets theyve been suffering under huge wedge pressures. The economys advancement hasnt changed in six years. What do we see . What do we mean by the misallocations of capital . What it means is we have not had actual investment and property equipment. What it means is corporate profits appear to have peaked and are going down. What it means is youre stuck in what the Federal Reserve now seems to believe is secular stagnation. They have all fallen into this trap somehow suggesting that the economy cant do more than this. What i would argue, joe, is we pursued these policies which are stagnating. The underlying economic results are poor. And too many in the secular stagnation crowd say it was inevitable. Jim grant always says you can make the fed can make things appear better but they cant really make things better. And none of the what youre talking about. None of the underlying equipment and investment the things that actually add to underlying Economic Growth. And people cant see what didnt happen. Thats the problem. Right . Its invisible to them. Its hard to argue against that. Whats not invisible, the front page of the Financial Times today says another great quarter for m a. Volumes up 20 . Its a terrific year. Again, you see investment thats either going to share buybacks or to Financial Engineering to try to find some top line investment. Or companies staying in business far longer than they should have been because they can roll over debt and keep rolling it over and never fail when they should have. Thats right. We have negative real Interest Rates. Weve done this twice in our history before. From 1974 to 1976 we had a persistent rates driving misallocation of capital. That didnt turn out well. In 2002 to 2004 we had negative rates for a persistent period. That didnt turn out well. Will it turn out well this time . None of us know. None of us can be all doom or all gloom about this. But this is an experiment to take with great modesty and care. Have you been surprised its lasted this long . Im not terriblysurprised that markets want to drink the koolaid. Were going into a crisis with great complacency and were seeing it again. So whats the order . Nuclear oblivion then this then global warming. So somethings going to get us one way or another. Although you dont see these risks in Financial Markets. I cant help but think its not part of this. We have to talk about that coming up. Coming up squawk heads to the farm. Why corn prices can swing wildly today. Stay tuned. Well be back. Eeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] theres nothing more romantic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . 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Com so, how do you feel about cash back . I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] welcome back to squawk box. Watch the grain markets today because were going to get key reports from the department of agriculture on quarterly grain stocks and spring plantings. Its going to be out at noon that data. Analysts are looking for corn acreage to shrink at the expense of soybeans. When we come back today, what is the bond market telling us about the state of the economy and the fed . Well ask pimcos tony crescenzi. Thats next here on squawk box. Financial noise financial noise financial noise welcome back to squawk box. Among our top stories, two federal agents were charged with stealing hundreds of thousands of dollars in bitcoins. A former dea agent and a former secret Service Agent who were members of an online Drug Task Force were charged in similar crimes. Authorities say the men were not working together. Today is the deadline for the United States and five other nations to reach a deadline. They look like theyre going to go down to the wire. Oil prices falling again today. Were taking a quick look at crude. Big selloff again yesterday. Remember we got above 50 for awhile because of all the contracts rolling forward. And theres a bit of a rebound now. Were back down at 47. And i cant even do a crocodile tear for that. Ive tried and i cant. I like it. I like 37. Were watching shares of Charter Communications this morning. Reuters are reporting that charter has agreed to acquire Bright House Networks for 10 billion. No confirmation from those companies. Bright house is the cable system owned by cy newhouse. And comcast cfe will be establishing a new company to focus on investing in and representing growthoriented companies. And he will be going to an advisory role at comcast. Comcast will have a 10year exclusive partnership as the sole outside investor. This isnt the first time theyve made big Strategic Investments like this. Past examples include the Company Investing in qvc, spectrum before selling its stakes. It made money in all of those. Hes also putting in some of his personal money. This company is going to have 1 1. 4 billion. 4 million of it will be his own. Hes going to help look for a new cfo. And then once one is found, he will still serve as an adviser. Great way to keep him here. Hes only 50 years old. Great way to keep him and still retain his talents in some way for the company. Let me say that hes only 50 years old. I can say that. Hes only 50. Ill say that again. Hes only 50 years old. I remember when that was old. Stocks surging after last weeks losses but will gains continue in the final trading session of the quarter . U. S. Equity futures up this hour suggest no. Right now they suggest the dow would open lower by about 114 points. And the s p lower by about 13. Joining us now with more on the markets tony crescenzi. Good to have you here. Thank you. Im looking at the article today and i always joke cnbc is an equity shop not a bond shop. We mostly talk equities. When we talk bonds, we talk government Interest Rates. But bonds have Corporate Bonds have had a huge great quarter. Heres what i dont understand. Why do you want to buy bonds when Interest Rates are so low . Well theyve been going lower still and that means price gains. Theres extra money theres a lot of liquidity abroad. We know from our 13 global offices and ill visit tokyo in a few weekings for a fourth time. They have lower Interest Rates. This is high yielding nation. There are negative Interest Rates in germany. More money flows into europe than flows out. Is few hundred billion going to go . To a negative yielding bund . They see higher yields and think thats attractive. Plus the dollar is rallying. Thats a gimme. I am suspicious. Ill bet these are covenant light, ill bet investors arent doing their homework again. Am i right . And this wasnt supposed to happen again, right . If im right. This is supposed to happen 20 or 30 years after the financial crisis where we had forgotten those lessons. But its seven or eight years later. Do we find . A spike in debt issuance, shareholder buybacks. What else do we not find . Taking proceeds and investing in property and equipment to help grow the economy. The other remarkable thing is we find that covenant loans are back and bigger than ever. Its as if were going back to 2007. Weve painted a glossy picture. Covenant light means theres a lot fewer guarantees about getting your money back when it comes to the bond for the novice viewer. When were talking about the misallocation of capital, all of these companies capx numbers lately havent been that great. The fed is operating in a system thats inherently unstable. We know theres a lot of debt. If you look at no no. Financial stability is better now, isnt it . Everybody tells us its better. A dollar the fed puts into the Financial System can turn into about eight. Thats not happening these days because bank lending isnt what it used to be. But it did have them for decades. All this money is still out there. They put all this money out there and people decide let me return these products back to the banks because they dont want as much as they used to. Pay off a 100,000 loan and it leaves a system for good. It destroys money. It vanishes from the system. Its not available to go in to spend. This is an inherently stable system. We dont have a Gold Standard where of course if we ran out of gold we could stop spending. But nations have a Central Banks to print money. And so this is its going to take a long time to let that air out. So indebtedness debt levels. Those will be with us for a long time. This is why in europe theyre betting on the ecb keeping its rate near zero to 2020. Stan fisher was making a speech the other day and suggests a lot of people also believe that the average investor doesnt understand that when they buy an etf thats loaded with bonds, the underlying assets in that etf are not very liquid. So they think the etf is very liquid. When they go to sell at a moment that we know will come some day, that etf is going to gap down in a painful way that they never understood because they dont understand the liquidity in the bond market. Banks are returning to three six three banking. This is the old days with rates. Banker takes in pays a deposit of 3 takes in 6 on a loan and is on the golf course at 3 00 p. M. Because they made 3 . Right. Its more traditional banking. Theyre not interested in trading markets. Sop liquidity, in other words, the bidder spreads out wider. The depth is shallower. This is the the key for an investor is to make sure youre getting paid for it. Theres a premium to harvest. For example, nonagency. The subprime mortgages believe it or not. There are investors who want them and there are banks and others who dont want them or cant keep them because of regulatory pressures. You want to harvest the gains or ensure you have added liquidity, of course. But have selfliquidating assets. Is it possible that the covenant lights are three times the level of 2007 . Yeah. So covenant lights are two and a half times by most recent data we have. Two and a half time this level they were back then. And the rate of change that is the investors willingness to take on these loans has never been higher. Janet gave a speech on friday and said her gradualist approach is not without risks. This is the central bank upside statement that weve come to expect. And i would say that we should feel better about these risks if our understanding of supervision had increased. These new ways of regulation, theyre important but theyre very i just tell you i wish the first two resorts look better than they do. So do you think theres been any transformation where the fed thinks another source of instability besides inflation and goods and services can be financialized. Where the fed can perceive and yellen mentioned it friday that there is a risk if rates stay too low, investors could take risks that they shouldnt. Do you think theres been any movement in that direction by the fed . So she and her colleagues put the emphasis on the risks of moving too quickly. I would say that needs to be matched symmetrically by the risks of being at zero rates and below for too long. There has not been that much attention by the leadership at the fed on that question. It strikes me that as a matter of prudence, as a matter of trying to inform markets so the signals are better that should be done. One other thing. Again in her remarks on friday she said that it was quite sobering to see that Market Expectations of fed funds, primary dealers surveys were more pessimistic about the economy than she is in their forecasts. I dont really understand that statement. Either sobered markets are reacting as they do because the fed has bludgeoned the federal markets into believing Interest Rates will stay negative for a long time. The truth is we are not getting much of a signal from Financial Markets whatsoever to define anything. You know andrew or mike amy . Of course. Colleagues in europe. Part of the european committee. The deadheadline screams pimco says the eurozone cannot survive. Well, we own european bonds. Euro cant survive, says pimco. Unless you become the United States of europe and seat all authority to the comments that are put in paper are inflammatory relative to what my colleague said. Were optimistic in the short run. It does have to change the way it does things. Of course, as michelle knows. Theres a lot they need to do. Wait a minute. They blew it up. Inflated it . Were invested in were very optimistic about the convertibles. Bank capital. Something we dont have in the United States. I got a little sick to my stomach watching assad tell charlie rose if did you see him say that . If it bleeds it leads. Coming from you that is a very weird statement to make. And the guy was i mean for the brutal dictator he is hes pretty smooth. He always has been. If it bleeds it leads. Kevin, i want to ask you later, the beaten down bond market. Going to come back with a vengeance. Thanks tony. Do you come back and visit Staten Island and remember your friends . I have a place in Staten Island. My familys there. You dont just go im on Newport Beach now. No. Im going to uncle marios around the block today to get some good pizza. Absolutely. And i was in that was a plug tony. And the gardens the brooklyn two days ago for one of the best pizzas in brooklyn. For a birthday party. Coming up the president of the ncaa making headlines not for this weekends final four matchups but for speaking out against an indiana law that some say could allow discrimination based on Sexual Orientation. Mark emmert will join us next to explain. Business you have to work hard, know your numbers, and stay focused. I was determined to create new york citys first selfserve frozen yogurt franchise. And now you have 42 locations. The more i put into my business the more i get out of it. Like 5x your rewards when you make select business purchases with your ink plus card from chase. And with ink, i choose how to redeem my points for things like cash or travel. Hows the froyo . Just peachy. Literally. Ink from chase. So you can. So whats going on today . News alert message email calendar update most of us admit to being overwhelmed by information at work. Thats why ibm created verse. It uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. It continuously learns how you work. And helps you prioritize the people and projects you need to focus on. Theres a new way to work and its made with ibm. Welcome back. Some of indianas largest employers including eli lilly and anthem sending messages to the governor about the law that opponents say could be used to justify discrimination based on Sexual Orientation or gender identity. Last night marriott ceo speaking out strongly against the law. Mary thompson joins us from indianapolis with his comments. Hey there, michelle. Before we get to that i want to show you the front page of the Indianapolis Star this morning. Fix this now. The concern locally this law is going to do lasting damage not only to indianas image but also its economy. As you mentioned, of course Arnie Sorenson joining the ranks of other ceos including local ceos here in indiana in denouncing the law. Sorenson called for indiana to fix it and put the madness behind us. The legislation in indiana and there are some bills being considered in other states is not just pure idiocy from a business perspective, and it is that. The notion that you can tell businesses somehow that they are free to discriminate against people based on who they are is madness. Sorensons speech coming as indiana governor mike pence vowed to keep the law as is. He said people dont understand it. He wrote, some expressed concern that indianas law would lead to discrimination but it only provides a mechanism to address claims. Not to deny services. The governor is digging in his heels and state legislators are looking at ways to clarify the laws intent. And Indianapolis City Council Passed a resolution last night saying that the city was a welcomed and opening city. Theyre doing that ahead of the ncaa tournament, basketball tournament this weekend. They also called for the legislature to fix this law. Thank you very much Mary Thompson in indiana. The controversy as we said in indiana spilling over into College Sports as the ncaa gets set for this weekends final four. Joining us now is mark emmert president of the ncaa. Mark, we said that you had some comments. So give em to us straight. What comments do you have about this law . Well, good morning, joe. First of all, wed much rather be talking about how badly yours and my brackets performed in basketball than where we are in this issue. This is an issue of extraordinary importance to all of us. Its an importance to the ncaa because were an employer here in this state. But more importantly its important to us because it strikes at the kor values of Higher Education is all about and what our 1,100 university and College Members believe. So this is a very very serious debate and discussion for us. So its not going to i guess its not possible if the legislature were to do something before the weekend. But if they dont, what happens . Well, first of all, the law doesnt go into effect until july. And until then, the reigning ordinances ordinances, Indianapolis City ordinance that does in fact provide all the appropriate protections for folks including based on Sexual Orientation. So nothings going to happen this weekend at the final four that we think is out of the ordinary. There will be people who want to view and express their opinions. Thats fine. Thats the american way. But between now and july when the law would come into effect then the members of the ncaa have to stop and say what relationship do we want with the state of indiana . We hold lots of events here. As i said its the home of our headquarters. We have to be able to conduct our affairs and run our championships in an environment that reflects our core values of in inclusion and diversity and make hard decisions. When things get rolling like they do like this thing you can see especially with social media and Everything Else how it happens, do you get the feeling that paying College Athletes is in a similar position . And im just wondering what the future looks like in your mind and what type of remedy you have for i know you saw jay in the wall street journal over the weekend. And were a long way, the ncaa from what he thinks the ncaa should do at this point. He basically said its a bloated kind of a government bureaucracy instead of a free market. And the Major Players that generate the 12 billion a year in revenue, none of them get paid. And somethings got to give somewhere. How do you remedy that . First of all, youve got to understand that what you see on television. The Football Games and basketball games you see on television, thats roughly about 3 of the student athletes who play College Sports. Theres 97 of the students out there who are having completely different experiences. Theres nearly a half a million student athletes right now playing inside the ncaa and those 1,100 schools and colleges. The notion that this is just a handful of teams playing for very large amounts of money is just a misperception of what the ncaa is all about. I dont agree that this is moving inevitably towards a pay nor play model and the conversion of athletes to be employees that some people are advocating for. I dont think thats what the public wants. Its certainly not what the University Members want. They want their student athletes to be students. Yeah, theyre dedicating too much time to the sport. We need to fix that. Yes, we can make sure were providing more resources to each of the students to be successful student athletes and provide them more assurances that theyre going to be able to retain their scholarship and finish their degree and get a real credible degree thats going to change their lives. Those are all things weve been advocating and were making headway there. But theres a big difference between that and stepping over the line and saying any 18yearold can put themselves on the marketplace as an employee, join a union, and become part of a university. Thats just so completely inconsistent with what Higher Education is about. I dont see that happening. Yeah. I wonder what finally does happen. Some people say you look at guys that are induced to leave after freshman year. What about owning their likeness or signing autographs. Nothing . Thatll never change . Yeah, i think youre going to see a lot of change in the coming months as we create a model that fits better the 21st century. But again, theres a huge difference between that and saying youre now a unionized employee working for a university. Right. Very different model. Enjoy the games. We will. Its a daunting task for you. Good luck moving it forward. Thank you. Its difficult. And we will be watching. Thanks, mark president of the ncaa. When we come back this morning, we have todays premarket movers. Stocks you should be watching. Stick around. Welcome back everybody. Comments crossing the tape from jed laker. Kevin warsh is our guest host today. I assume you agree with him. Yeah. Listen, these guys should not be looking at the Financial Markets to decide what to do. Nor should they look at data subject for revision coming from the bureau of commerce. They need to have a longer firm horizon. We talked about the ncaa in the last segment where one and done is the way. One and done is not sufficient for the Federal Reserve. Do you think well hear from more and more of the officials saying fed hikes should come sooner. Is that building a consensus we see it coming sooner . In a word no. The fed is dominated by a chairman. It was true in greenspans day, true in bernankes day. Yellen can take their views into effect or she can put them aside. Its called the yellen fed for a reason. All right. Kevin is our guest host. More from him in a moment. Dont move. Weve got a big hour coming up. First a score on the markets. Plus the ceo of Waste Management will join us with his read on the economy. E shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. Hello. I am here to offer sophisticated investing strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com its the final trading day of the First Quarter. But were looking ahead to the Second Quarter and the sectors and commodities you should be watching this spring. The countdown to jobs friday is on. Ahead of the big report, paychex. And off the charts. Notice waste minute getting close to an alltime high. The ceo gives us the look. Golf clap . Golf clap. As the third hour of squawk box begins right now. Live from the most business city in the world, new york city, this is squawk box. Welcome back to squawk box on cnbc first in business worldwide. Im joe kernen along with becky quick and michelle carusocabrera. Futures at this hour are going to give back not everything we got yesterday. Not quite half. Well see how it times out. Warsh has been scaring the heck out of people this morning. They were down before he got here. All right. Done nothing to help. It was iran and richard, i think. S p 500 down about 13 and the nasdaq indicated down about 20. All right. Among the corporate stories we are watching this morning, ibm is investing 3 billion in a unit based on the internet of things. It will center around the use of Realtime Data in numerous applications. Cable vision is reportedly planning to make an offer for the New York Daily News this week. Valued at 1. Joe . Overpriced. Godaddy expected to price its ipo tonight. Best known for its sexy super bowl ads looking to sell 22 million classa shares between 17 and 19 each. And some big news out from Parent Company comcast this morning. The cable operator is forming a new company with its cfo michael angel, a angelakis. To deal with the u. S. And international markets. Comcast is investing 4 billion in the new company. It will have a 10year exclusive partnership. Angelakis is sticking around to help identify a new cfo. And were heading into the final trading day of the quarter. The dow up. 9 . The nasdaq higher by stronger 4. 5 . Dominic chu joins us with what we should expect for the next quarter. Really . Okay, dom. Tell us what to expect for the next quarter. And i got a pen and a piece of paper here. Well talk to you in three months. Go ahead. Okay. Heres what were going to do. You pointed out the fact that markets are relatively flat. If you look at the overall picture, year to date, a quarter to date right now. We are at least moving to at least some degree higher over the past year. Now year to date like you said, were relatively flat. Down up nine points. S p up 11. So some nice moves higher. If you take a look at this quarter this year to date, the stocks that didnt. First of all, the ones that did work. The Health Care Sector was up about 8 . Best performing in the s p 500. So a real standout there. That momentum continues for health care stocks. Hospira getting bought out. So deals, empowering the s p 500 in terms the utility sector down 6 . And the worst performing within that sect ser a houston now, as we take a look towards what is going to happen in q2jeff lacquers comments you just pointed out said that maybe an Interest Rate hike is justified in the near future. The guy over at berini associates looked at sectors that fair well just before the three months before an Interest Rate hike. If you take a look at this. The s p 500, they found five instances with longer term bull markets just before an interest hike. Tech, materials, health care, industrial, and small cap stocks seem to out perform in the three months just before fed rate hike. And utility and telecom tend to be the underperformers during that time. Maybe as early as june. Maybe. Nobody knows if its really going to happen or not. These are the sect thaers could outperform and underperform in the next three months towards the summertime. Back over to you. You hung it on berini. Thats all right. Thats all right. Thats the way i would do it. Im just a guy. These guys are the experts. Thats the way i would do it. Cramer will tell us what he thinks. So if we really want to but i would do that too, dom. Definitely. Its either going to go up go down, or stay the same. Thats all im willing to say. Im going all in one one of those out jams. Nice call on villanova. What a couple of idiots we are. Just wait for our 20 and then ill lose that one. Youll be fine. All right. Thanks, dom. Looks like weve got deal news this morning. David faber joins us from the New York Stock Exchange. Rumors around and reuters reporting this morning that charter about to do a large deal in the cable industry. That is charter, of course one of the larger providers of cable in the country. Going to be buying Bright House Networks. Thats a newhouse controlled cable company. Delivers Service Largely in orlando and tampa. Has roughly about 2. 5 million subs or so. Chart ser going to buy the company. Theyre going to be issuing stock to get it done. You can see shares of charter are up on the reports. They were up previously on some of the reports. The newhouse family going to own about 30 of the combined company or of charter. This will dilute down the ownership stake of liberty to around 19 from what had been a 27 stake. The newhouse family also expected to get three board seats. Again, that is from people close to the situation. But there is no release out at this point. And well make charter clearly the number two Cable Provider in the company. Charter will have 7. 5 million subscribers. Also dont forget will own about a third of a new Company Called greatland which will be created, again, if comcast Time Warner Cable does go through. So a significant move for charter. Interestingly, as a result of the issuance of shares and not loading up more debt on the Balance Sheet, theyll be taking the leverage ratio down from what im told is about five times now to three and a half times. But most importantly over 10 billion in stock go into the newhouse going to buy bright house and giving the newhouses a significant position in charter as it continues to grow regardless of whether the Time Warner Cable or comcast deal occurs. Back to you. Thank you so much. Again, david faber. Well see you in a bit on squawk on the street. Yes, maam. Right now lets get back to the markets as we ramp up the quarter. We are joined by chief strategist at silver crest Asset Management that has nearly 18 billion in assets under management. Weve all been worried about whats happening with First Quarter economy. Things look like theyre dropping off drastically. There are a lot of people who say this is temporary. Its largely because of the weather and well see a quick bounceback. You dont agree with that. I hope its true. But there are some headwinds here. Strong dollar is having an impact on the trade balance. The difference between 2 and 3 gdp growth in the Fourth Quarter is basically due to the expanding trade balance. I think thats going to continue. The other thing is the impact of Lower Oil Price on u. S. Capex. Because they make up about 10 of it. Thats being felt up front. Even if you believe as lower Energy Prices will be good for the u. S. Economy, thats still the upfront impact is still there. And then so far at least, consumers have been saving rather than spending the money that theyve gotten at the gas pump. Although there is some hope well finally start to see good news from Lower Oil Prices. Thap will make its way back into the economy. You think thats happening right now maybe . I think it will but i think markets are going to want to see it happen. Theres we if we go back last year one of the reasons why markets didnt really respond negatively to the bad q1 gdp number was because we had already turned a corner. We were already getting a lot of good monthly data that showed that the worst had passed. Thats not true this time. Weve still got to see that those numbers come out. We are seeing good numbers when it comes to the jobs number. Jobs number yes. The jobs number gets people all the more concerned about what the fed might do. So ironically that one strong number that weve seen consistently over the past months kind of has put downward pressure on the market. Weve been talking to kevin warsh about when the fed may or may not raise rates. If they do continue to give these indications a rate hike is coming later this year is there a point the market accepts that and says this is good news. The economy is here to support it. I kind of look forward to a market that is less fixated on perpetual accommodation and easing. And gets to a more normal Interest Rate environment. I mean weve got to get over that hump at some point. And i think the sooner is better than later. Having said that you know it is going to be an accommodation. I mean people are used to people are used to these low rates. And there are a couple things to keep in mind. First of all, youve got easing in japan. Youve got easing in europe. Qe anywhere is going to put downward pressure on rates. Globally. Because its going to attract capital to the United States. We cant wait until downward pressure out of the feds control. Just lower Interest Rates because relatively speaking you make more money. So is that an argument for them to raise regardless or stay easy because you dont want to fight that trend . Look i think it should be data driven. In the sense that if you see a strong economy, they need to be responding to that. And they shouldnt be spooked by what the market is concerned about. They should be responding to that. If they do see an economy which has weakness that will continue into the year, then they should be adjusting that as well. The markets are basically just treading water for this First Quarter. The last quarter, last day of the term quarter today. And if you look at where the dow is, yesterday based on the close, we had a gain of 153 points for the quarter. Looks like well give back most of that this morning. At these levels does this make sense . Have the markets and the earnings of the companies caught up to the point that justifies these levels for the market . So earnings was a tricky thing to kind of understand at the end of the year. Theres a lot of disagreement among different analysts about what the Fourth Quarter earnings look like. Some there were a lot of chargeoffs at the end of the year. Some having to do with Interest Rates. Some with currency. And some of the analysts factored those in and said those are part of operating earnings. Others didnt. I think that the numbers that just came out about corporate earnings are indicative that there was a slowdown and there was a downward tick. It was mainly due to foreign earnings. The impact of a strong dollar. Their domestic earnings did decelerate, but they were still positive. You know i think these headwinds will continue to put downward pressure on earnings. What that means for the market is the market was never comfortable getting above 18 times for the pe ratio for the s p 500 last year. It kind of went between 17 and 18. I think that passing over that threshold, you know this is a market i dont kp ptexpect to see a lot of valuation upwards. Its got to be drin by earnings performance. That is both well its wobbly but its also very disparate. Treading water for the index but within that youve got winners and losers. Because youve got some sectors that saw significant earnings improvements. And you got some companies that did. And youve got others that have been big losers. So right now i think were moving away from a market where youre looking to valuation to bolster it and youre also just looking to ride the index. And youre looking toward a later stage bull market where its all about earnings performance and the earnings performance varies significantly between companies. Patrick, thanks for coming in today. Youre welcome. Coming up the race for the white house and the political gurus behind the campaigns. Guest host kevin warsh weighs in next. And then new data from paychex on the health of Small Businesses. Plus the ceo of Waste Management gives his read on the economy. His companys stock trading near alltime highs. Stick around. Heres to breaking more glass ceilings in golf and everywhere else. Kpmg. Continuing our commitment to the next generation of women leaders. Welcome back to squawk box. The futures now suggests well give some of our rally from yesterday back. The s p lower by 13 and the nasdaq indicated to open lower by roughly 21 points. The list for 2016 president ial hopefuls is beginning to grow. With that rumblings of whos going to run the campaigns behind the scene. Our guest hosts name has popped up. So lets to him on this now. Kevin warsh is from hoover institution. I didnt write that or prepare that. So what youre not running for president like everyone else are you . I dont know what that even was. Youre seen as an adviser to some of these president ial advisers. Have you stepped on officially with anyone in particular . Ive got no news to break on cnbc this morning on that. I guess the only thing id say is this is a campaign that looks like its going to be highly policyoriented. Both in the republican and democratic party. That strikes me as a good thing. We need a robust discussion about the conduct of economic policy. And as Richard Haass said the state of Foreign Policy. To the extent we spend the next 17 months debating policy that is good for the u. S. Economy. If you were asked to join a campaign, would you do it . I did ten years of hard time. Ive only been in the private sector about four years. Im happen my where i am. The other thing that most people argue about is whether the fed has really set rates. And because of the global economy, because of the environment everywhere else were not out of line where other Interest Rates are. There are some that say there cant be a dislocation if rates are basically where theyd be even if the fed wasnt involved. Where would now, i figure you could say the entire world central bankers have been at work. What does it mean if were at the same level when everybodys been doing the same thing. But it doesnt seem like an environment where rates would be four or five point higher if the fed werent involved. The difference in perspective between lets say the feds view and a view that Marty Feldstein had. Is a difference between should Monetary Policy be the most radical extraordinary Monetary Policy that actually befitted the financial crisis . Or should it still be very loose . The difference is not between some kind of hawkish restricted policy of funds at 5 . So theres a lot of drum about this. What are we talking about . How far out of line are they . Id say theyre quite a bit out of line in two respects. So called. Qe in the depths of the crisis and qe 2 and 3 and beyond. What we said our principles were at the time is we first cut rates to zero then grow the Balance Sheet. When it was time to exit we would shrink the Balance Sheet and raise rates. Weve changed. The fed has changed their exit parameters. Now they say theyre going to be tightening with one hand by raises rates just a little bit and staying very loose with the other hand. So this strikes me as quite inconsistent with the original ideas of what qe would be. Secondly, joe, i would say Interest Rates need to be set in Financial Markets. And Interest Rates are not set in Financial Markets when the Federal Reserve and the worlds other Central Banks are the buyer of first and last resort. Financial markets, the treasury market are telling us almost nothing about the state of the economy. Because Central Banks are influencing those prices with every word with every nuanced speech from every reserve bank president. We would be better off if markets were setting prices rather than taking their lead seven years into an economic recovery. Is it possible that the dislocation that youre talking about and the misallocation of assets is not that great because were not that far off from where rates would be anyway . Right. So the most important thing that all central bankers should have right now is humility. We have never run this experiment which we should all describe as radical. This experiment might work out well. But the idea that we somehow suggest that is riskless to stay at these sorts of rates seven years into a recovery strikes me as unnecessary and but you didnt predict that rates in europe would be under 1 . You didnt predict that there would be basis point yields over there. So here would be my only prediction. I believe that if the Federal Reserve had not engaged in qe the rest of the world wouldnt have done it either. This is a very parochial american view, but we made this sort of extraordinary policy seem normal. Mandatory. You could go further. You could say the United States even though china has come up were still the main engine of the global economy. If weve messed up here by misallocating, we could have caused some of the slowdown in the entire world. Partly if the fed caused the slowdown here we could be causing it globally from getting involved in the marketplace. Virtually all guilds have a view. What troubles me is that we do not call attention to ways in which the group think could be wrong. There is a theory from the 1920s that has been trotted out by our friend Larry Summers in recent years called secular stagnation. Now there are conferences around the world talking about it. Last thing to ask you, when people say the fed should be data dependent, should that include the stock market as data . Because i think theyre very dependent on what happens in the stock market. Thats a really scary idea. If the market were to throw another tantrum, they dont go in june. They would call that data dependent. They should not be using that for data were talking about, should they . They should not be financial price dependent. Do you think they have been in the past . I worry very much that they have been. And by the way, the current generation of central bankers learned that lesson from us in the depths of the crisis. We were then by necessity financially market dependent because were trying to get the markets to open again monday. But that is a very dangerous lesson in 2015. Thats the only way you could explain the taper tantrum, isnt it . The taper tantrum, the dollar tantrum. The Federal Reserve has their back nap is a lesson they will unlearn, but if they unlearn it late, it could be very expensive. Its almost like theyre thinking theres a put. Thats really bad. And systems dont clear when theres a put. So a final word is thats the whole point. If youre a corporate ceo and have a dollar of excess cash flow do you buy your shares back thinking the Central Banks are rooting for your share price to go higher or invest the the economy . We want them to do the second not the former. This mix of monetary policies are pushing in the other direction. Okay. Well have more with kevin in a bit. But when we come back Steve Leisman has a read from economists on the march payroll data. 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If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Why pause the moment . Ask your doctor about cialis for daily use. For a free 30tablet trial go to cialis. Com welcome back to squawk box. U. S. Futures indicated i would call it sharply lower at this point after a big day yaed. Dow down 116 down. Nasdaq down about 22. Dont necessarily know what the reason is. Yesterday the market supposedly went up because of the mergers in the health care group. We got a lot of other stuff to worry about though. Obviously geopolitically and fedwise. When we come back paychex releasing its Small Business jobs index. The ceo will join us first on cnbc next. And then Waste Management going off the charts. Ceo David Steiner gives us his read on the economy based on the trash indicator which we follow. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Welcome back to squawk box. Among the stocks were watching that will be on the move some point today, montpelier. He asked. Not you. You look french and act french. All i know is you just take every third letter and get rid of it. Thats how you say french. All right. Its being acquired by endurance specially holding for a share in cash and stock about 1. 8 billion. Of which 80 will probably be taxed if it is french. And then Johnson Controls is selling its Global Workplace Solutions Unit to cbre group for 1. 5 billion. Dr horton upgraded. And comedy centrals roast of Justin Bieber premiered last night. And among the celebrities taking a crack at the pop star, martha stewart. You need to settle down bring some balance into your life, find yourself the right gal but shell have to be someone on your level. Someone powerful and famous and rich. Someone you can smoke a joint with or indulge in the occasional threeway. Im talking about a player in the boardroom and a freak the the bedroom. So justin my final piece of advice is call me. Wow. That was out there. That was funny. Shes from cincinnati. A threeway is chili, spaghetti, and cheese. Why what are you thinking . Im a 15yearold inside. Why . Have you been no. Its a shame ive got to go. Its been a fun hour and a half on squawk box. Okay. The march jobs report. Just a few days away. Its a holiday for the markets but squawk box will be here. Steve leisman joins us now. Big Freddie Mercury fan. What a great segue nap segment now i have to talk about the jobs report. Is the market setting itself up for a data disappointment this friday . Ive put together what i call the best of the worst. The string of february misses out there. The top is Consumer Spending and it worse than it appears. You remember yesterday that came in at negative 0. 1 for february. Durable goods, massive miss and retail sales on the wrong side of the zero line. Economists i spoke with yesterday, however they acknowledged some additional downside risks. But mostly they stuck to their guns. Drew mattis said claims are below 200300,000. Fallen between the sample weeks of midfebruary and midmarch. And mark zandi tells me he thinks the slowdown is temporary and continue hiring. Heres the problem economists had. From the other side they have a record of having underestimated jobs three of the past four months including a massive miss of almost 200,000 in november and of course there was little weather effect from last years Winter Weather on job growth. The trouble with the report is this. If we win on jobs we lose economically. If jobs are strong amid this weak Economic Growth it means productivity has tanked and is really weak during the quarter. So well see if this march jobs report is the beginning of the spring bounceback or a continuation of our winter woes. Michelle . All right. Thanks very much steve. Lets talk more about the situation with the job market because paychex is releasing the results of its Small Business index for march. The ceo of paychex joins us now. Good morning, marty. Tell us the numbers so far. In march we saw a bit of a moderation. But when you take the quart e, weve seen the highest growth since 2014. What does that tell you about the economy and the regional differences as well . Yeah, strength is still in the central part. The regions are still seeing the best job growth. And again, in the from a region perspective, central but pacific is starting to pick up. Youre starting to see california. I think california added more jobs than texas for the first time in a few years now. And also from a major city perspective, detroit has moved up now into the top four. Dallas still leading, but detroit into the top four which is very interesting. I think some hightech and other jobs are coming into the detroit area now. Wow. That would be great news for detroit. Steve leisman was just there. I was just there. Thats a great story. Theyre talking good stuff about detroit there. When you do good restructuring, you can actually make progress in a city. Cf greece exactly. Marty, i was just wondering if you could tell us anything about job quality, job wages, tell us whether or not these these are good jobs being created. I think they are pretty good jobs. Were seeing manufacturing come back. Education and Health Services have still been strong. The wage is probably a little bit sadder story. Its still around 2 . It hasnt changed much on an annual wage increase. But and parttime is slipping up a little bit from a percentage standpoint of the jobs added. Not large, but some. So were going to watch that pretty close. But generally i think this is good news. You see the First Quarter, again, at our highest growth rate in jobs for Small Businesses, this is employers under 50 employees since we released the index last year. Do you want to take a shot at ad adp . Is your data better . I think our data is very strong. Almost 600,000 clients, i think we have a great number. We also have you on to talk about the fact your stocks at a 52week high. Wheres the growth coming from thats pushing the stock higher . You know we had great sales in the First Quarter. Thats kind of our selling season. Picked up about 20 of our sales for the year with january starts for payroll and other hr outsourcing. We had great sales. Best in about eight years. Double digit annualized Revenue Growth and new business sales. And youre seeing not only payroll and hr outsourcing very strong, but also our Affordable Care act products. Helping our clients deal with the requirements and be in compliance with the Affordable Care act. Excuse me for being cynical, but it sounds like youre helping Companies Deal with a lot more compliance and a lot more areas than they used to have to deal with. No not cynical at all. Thats what we do. More regulation is not always good for new business starts but its certainly good for outsourcing of business services. We provide everything from hr outsourcing, payroll, but all come license and regulatory. And its coming down. The other thing is this used to be a larger business thing. Now youre seeing businesses with 15 20 employees need hr support. That makes me sad, marty. Well it makes me sad on the sense for overall business. But its certainly good for paychex. Sure is. All right. Good to have you on. Marty mucci, thanks for being with us. Squawk box is going to be here friday for the jobs work. Join us friday 7 00 a. M. Im going to be here. Im going to be here. Joes going to be here. Im not. Youre on your own. Were testing the new 7 00 to 9 00 thing. Theyre playing music. Ill ask during the break. When we come back this morning, getting a read on the economic trash indicator from Waste Management. The company is cleaning up with the stock trading near an alltime high. Ceo David Steiner is the ceo in the spotlight right after this. And tomorrow a no holds barred edition of squawk box with investor sam zell. Squawk box will be back in a moment. Well, sir. After some serious consideration id like to put in my 15year notice. Youre quitting . Technically retiring, sir. With a littlm my state farm agent tre tire in 15 years. Wow youre totally blindsiding me here. Whos gonna manage your accounts . This is a devastating blow i was not prepared for. Well, im gonna finish packing my things. 15 years will really sneak up on you. Jennifer with do your exit interview and adam made you a cake. Red velvet. Oh, thank you. I made this. Take charge of your retirement. Talk to a state farm agent today. So, how do you feel about cash back . I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] take a look at shares of Waste Management. Stock outperforming the s p for the year. Ceo of Waste Management joins us now for more. Good morning, david. Were trying to figure out whats best for Waste Management. When Energy Prices are weak it makes recycling margins tougher. But when the economy is at 5. 5 unemployment and doing a little bit better cant you measure the amount of trash generated and that starts being a tailwind for Waste Management . Absolutely. When we look at our business we look across three verticals. Residential Business Commercial businesses. So Small Business. And then weve got manufacturing and industrial. So low Energy Prices obviously drive industrial production. Its good for us across the board. If youve got the consumer buying, the commercial businesses are doing better. Lower Energy Prices drive production. So our manufacturing and industrial does better. Then residential for us is really the rock that holds the whole company together. When did you sell we talked last time ive already forgotten. But you look like the greatest ceo in the world. You got out of it just in time. I feel bad for the people who bought it. What was that and when did you sell it . You know i always say that its better to be lucky than good. And we had a business that drives by Natural Gas Prices electricity prices. And were not utility experts, not Energy Experts on selling electricity. So we continue to provide waste to those Waste Energy Plants but sold to Energy Capital partners. They produce the electricity. Its been good for us. We can take those proceeds and put them back into our core business. Thats what were going to be doing this year. It might good for those guys longterm. They bought the plants themselves. That was a good deal though. You sold the plants for probably top dollar and you still provide all the waste to the plants. Now theyre your customers. And theyll do very well. Theyve got a great energy portfolio. Like you say, over the longterm i think theyll do just fine. Industrial where are the strongest parts of the country that youre seeing . You can probably even break it down to different parts of the country, cant you . I love it. You can do it with trash. When you look at low Energy Prices, its the chemical corridor that started to grow fabulously over the last two years. Thats their biggest feed stock. You see it very much along the gulf coast for beaumont texas, lake charles, louisiana. And even up into the reindustrialization of the midwest. Youre seeing quite a bit of production up there. Were seeing it mostly where low Energy Prices drive that industrial production. But its good for the economy all over the United States. If the market stays where it is, Energy Prices, will you see recycling, that business will you see that shrink . Will there be players going out of business . Yeah, you know, recycling for the first time in 50 years went back slightly two years ago. What youve got going on right now is youve got a lot lower demand for recyclable commodities throughout the world. When you look at it whether its metals like copper platinum gold, theyve come back. The same things happened with paper. My kids dont read a newspaper. So theres a lot less demand for newsprint. Theres a lot less demand for cardboard because of the slower economies in europe and china. And so that has affected recycling. You know, what we need to do is work with our customers to make sure that as prices come down, that were sharing that burden so we can continue to make money in recycling so we can invest in those assets. You had an acquisition recently too. So you still are buying stuff if you want to right . Whatd you reach close on . Basically what were doing is reshaping the portfolio. Were going back to doing things that revolve around our core of solid waste business. We just closed a transaction in the kansas city market area an area we didnt have business before this. It was a great deal for us. We paid a little bit eight times less than than ebita. That will drop that multiple more. So with the proceeds roughly 1. 7 billion or 1. 8 billion, were going to use it to buy assets. If we cant find the right price, well give it back to the shareholders at stock buyback. How much do low Interest Rates help you with that . Low Interest Rates help us again, in two different ways. One, we just refinanced a great portion of our portfolio. So our average weighted cost of debt is well below 5 . And then you know as we all know, the low Interest Rates help the general economy which for us, thats good for waste. Does that make you feel any better, kevin, that he bought a company instead of just doing a buyback and things like that . So theres good acquisitions and i wish i knew davids business better. There are good acquisitions that make the country stronger and provide better support for a community and there are acquisitions all about Financial Engineering. I like the looks of david. Im sure it was the form and not the latter. Absolutely right. You know we can go in and buy a business. Generally we can buy it at six to eight times ebita. So thats creating value for the shareholders. Wayne bought that wayne bought a used truck when he was 22 years old, i think, and he quickly realized that if you got a dumpster you need to empty it every week and that persons definitely going to pay. Right . Because if you dont empty the dumpster its just one time i said on the air that after doctors, garbage men are the most important in the world. Its just an annuity for you. Every week they pay. How much of that is Waste Managements business now . Roughly about 35 of our business are those small commercial businesses that have what you all would refer to as a dumpster behind them. When you look back it was really wayne and dean his brotherinlaw, that really started the current Waste Management. But deans grandfather actually drove a horsedriven garbage vehicle in chicago many many many years ago. Thats amazing. And as we said the rest is history. Waynes done about ten other Companies Including waste, blockbuster, now autonation as well which is the same kind of concept. Anyway, David Steiner, its good to see you. Hows your game . Not bad. Youre down in some warm weather, right . You Single Digits . Weve had a lot of rain. So i havent been able to get my my goal in life is to beat joe kernen at the at t pro am. I dont have the game right now. No, you dont. [ laughter ] talking trash to the trash guy. Talking trash to the trash guy. All right. Thanks, david. Good to see you. All righty. Thank you. Up next were going to head down to the New York Stock Exchange to find out whats on jim cramers radar. And later larry van tuyl, part of the new york autoshow this week. Well talk about berkshires expansion into car sales. Well also hear from buffett about his part in the kraft heinz deal. And he wrote a 50 million check to the Nuclear Threat initiative. Were going to ask him what he thinks about the deal with iran. Following all of that on power lunch, well monitor a panel at the forum that will be live streamed on cnbc. Com. Squawk box is coming right back. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Lets get down to the New York Stock Exchange. Jim cramer joins us now. We have had more of the days reversals, jim. I dont know churning around i think you were talking about that yesterday. There is some churning and i wouldnt put that much money on either on figuring out ultimate resolution either way. Do you know . Absolutely right. One of the things thats happened, we see some institutional buying. It wasnt institutional buying it wasnt bought bay. Came in yesterday, tried to finish buying by the end of the day and disappeared today. This is classic. Why do big institutions underperform . They sit there underneath and take stock and by the end of the day, theyre full boat and then you come in the next day and its down and they are nowhere to be found. These guys dont know how to trade. Had they been able to trade and do their program over a couple of days they wouldnt have such bad prices. This is why institutions dont beat s p, they just dont, because of this kind of nonsense. Youre i was reading your tweets yesterday. Wondering how to play months. Was it the Health Care Mergers that resulted in almost 300 points of gains yesterday, or is that looking for some reason to explain it. No, i thought it mattered. I think people feel more confident when theres so many bids. Again, this bid this morning, charter bid, bright house is a big bid. Montpelier is a big bid but nobody cares. There was a program to buy stock ahead of the end of the quarter. These people wanted to move the stock market up for whatever reason, can figure it out, but thats what they did. Buyers moved the market up and disappear. And im sure that theres some trading, right now saying im so glad i got the call from blank firm, they were going to take the market up and i got to sell it right at the close into these buyers. Its just bad trading. Sometimes thats what happens. People dont understand the mechanics of the market take over. There was some or a couple that dont know how to trade in there moving stocks and now paying for it. Jim, well see you in five six minutes. Thanks. Thank you. Coming up kevin warshs words of advice to the fed. The cuba opportunity summit. Headliner, ceo of norwegian cruise lines talks about opportunities for his business in cuba. Dont move. Well be right back. E financial noise financial noise financial noise financial noise constipated . Yea dulcolax tablets can cause cramps but not phillips. It has magnesium and works more naturally than stimulant laxatives. For gentle cramp free relief of occasional constipation that works mmm mmm live the regular life. Back to our guest host former fed governor, concern warsh. Youre a good friend of Ben Bernankes hes just come out and starting a blog. What do you think about ben reaching out to the masses . Bens a very good communicator, thats terrific. Im not sure i would have recommended that he become a blogger in this day and age, but hes got his views, he wants to express them and thats an effective way to do it. Why not . Why wouldnt you recommend he do it . Well, i think that the former chairman of the Federal Reserve has some serious thoughts that need to be shared lessons learned. Its not obvious to me a blogs the best way to do it but this bens decision. Ill give him credit for the idea that, look this is something accessible to everyone, a lot of guys come out and say im only doing it if you pay me six figures to come it a speech and its i an elite group who hear it. Democratization. Of course. Almost every fed chairmans legacy is set in the years after they leave than was true of paul volcker, extremelien popular, we look back on him as a hero. Alan greenspans expectations and reputation have changed in the years since hes gone for better or for worse. I suspect ben understands that his legacy will be made in the years that are still to come. So being able to inform that to educate on that is part of what he thinks of his mission. Part of what and define it because we know how the media in a vacuum the media will come up with its own narrative. If youre supplying it then at least youve got a chance of fair coverage. I think thats right. I think his legacy for being a fighter in the depths of the crisis that legacy will hold. But its how do you win the peace . How do you respond to a period of 2 Economic Growth for a long time . Whats the right policies there . Not easy for an existing chairman to be reading a blog if the views are quite contradictory. Right. But between ben and janet, nikly like to similarities. You can follow him on twitter, he tweeted about the blog. You didnt see i like that in instagram . Thank you so much. Shirtless selfie you didnt see that . Thanks very much. Ive learned to block joe out. That does it for us. Join us tomorrow. Right now its time for squawk on the street. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with Jim Cramer David Faber at the New York Stock Exchange. On this final day of q1 broadbased selling around the globe, including premarket in the u. S. Caseshiller home prices out on your screen and chicago pmi next. Oils down 7 in just three days, as though Nuclear Talks with iran are in their final session. Tenyear