Transcripts For CNBC Squawk Box 20150423

Combination with the animal orchestra. I think youre right. What happened to him. Thats what i mean. We just called him a sensation. At one point he was, right . 33 million views not bad. But still a fraction of the super bowl. Hes not opening in las vegas. Was he the true one hit wonder . There were two. It sounded very similar. Did it . That happens with the one hit wonders. You know what works. Go with it. Lets get you up to speed in the markets. The u. S. Equity futures at this hour at least. Youll see yesterday the market ended near the highs of the day. Were looking at red arrows again but this is what it looked like yesterday before the market started taking off during the session. You can see the dow futures down by 50 points. S p futures off by 5. Lets tell you about the big stories were watching as well. Its official tlied the heaviest day of earnings season among the names mostingposting results before the bell. Pepsi and procter gamble. Its a lot. Weekly jobless clamsims and new home sales. The fcc staff is recommending a hearing for the proposed comcast Time Warner Cable deal. Now that recommendation would put the proposed acquisition in the hands of an Administrative Law judge and that could be a very drawn out process. We had rich greenfield on the show this week. The suggestions have been a death nail for the deal but it makes it very very difficult and the view is that an administrative judge would be harsher on the transaction than the fcc. Thats what they said. The only reason you send it to this is if you plan on rejecting. Right. Among the stocks that were watching in addition to that facebook earnings beat the street but revenue missed the mark. The company also says higher spending on research and development weighed on results. Well talk to an analyst in a few minutes when you look at the way the normal world views earnings earnings, where every i look its blowout, boom pictures of him smiling. They also have all kind of interesting numbers that were out. 4 billion viewed from the service but then controversy about how to count the numbers because if its up and you dont turn the volume on they count that. We circulated something with our scooter squad, i probably have andrew looking like whatever and it was on facebook and i was excited and someone sent it to me and i clicked on it and i cant get in there. Log in or something i have no password. You forget your password. No. You dont have a facebook account. No. Do i look like a have a facebook account . Why do people the thing if is if you were on book you have to friend im not on facebook. Its complicated. Why would i want to share my incredible life with people that dont deserve to see it. They dont. Am i needy. Youre not at all actually. I think its a generation thing. Whats after millennials. Whats older than a millennial . Gen y. Whats older than that . I might be a boomer. Ed, are you here yet . Were the only people here that saw the moon landing i think, arent we . Thats right. I think we are and it really did happen regardless of what you think andrew. I know whoppi says that the flag was rough on the moon and it was the ventilation in a studio. Who was it buzz . Buzz lightyear. Aldrin. Oh thats right. Profits topped expectations at ebay. Revenues from the payment business increase and it was a mixed quarter for at t. Earnings beat but revenues were light. Fewer wireless customers switched to other networks which would be good for them an then qualcomm beating on the top and bottom lines but the forecast for the Current Quarter was below the street. Qualcomm blames that loss on a key customer also on delays in Product Launches by smartphone makers. Texas instrument are under pressure. Is that a three . 6. 5 . Yeah you need good eyes for that. It warns that Current Quarter sales will fall short blaming weak chip demand and the strong dollar. In political news this morning we got a big buzz story in the New York Times that a lot of people will be talking about. The donations from a group that sold the russians a Mining Company called uranium one giving them control of one fifth of all the capacity in the United States. Among the Government Agencies that approved that sale the state department. It was headed by Hillary Clinton at the time and the chairman made donations to the Clinton Foundation of more than 2 million. Others with ties to the company also made donations. Those contributions were not publicly disclosed by the clintons despite an agreement struck between secretary clinton and the Obama White House to identify all donors. So lots of questions. The thing that strikes me the most is not disclosing what they had promised too. Other was just suggesting money was going to the Clinton Foundation. Some of the deals were being considered by the state department and other departments as well. Their spokesperson had it totally ready to go on explaining how this happy. Brian fallon saying no one produced a shred of evidence supporting the theory. The times did a lot of its own reporting but this is in the book. This came from within the book which has already been by the left and Mainstream Media hes a push operative. Its a hit job. Look at the timing. Right after she announced. Which is why this partnership is so interesting. The New York Times has taken the reporting and going on. Its in the New York Times this morning. No one is going to see it in the New York Times this morning because its not in the New York Times this morning. We have the early edition. We do and ill tell you something talking generationally joe more people read the New York Times online than the print edition. It was out it was out in time for the print addition wasnt it . I dont know the mechanics but they put it out after midnight. I have no inside knowledge of this. For me if its not in a physical newspaper im not sure nobody sees it. Okay mr. No facebook account. So i have to look on do you have to be a subscriber. No you get ten free articles a month. A lot more than i would need of the New York Times. You use four for my column and then the six left. With your column i need something physically to burn so i would have to actually print it out oh man. Or to shred or to feed markets this morning, take a look at the futures right now. They are una little bit of pressure this morning. You can see the dow futures down by 50 points. S p off by 5. The nasdaq down by 15. The markets ended higher in fact picking up all of the ground. Making up all the ground they lost on tuesday. The dow was up by 88 points. S p by 10 and nasdaq up by 21 at the end of the session. Check and see whats happening in europe in the early trading there. Its mixed at this point. The ftse is higher and the cac is down by. 6 and the dax is down by. 8 . If you watched asia overnight you saw the nikkei ended up by a quarter of a percent. The shanghai composite down by about a third of a percent. If youre watching what happened in Energy Markets this morning it looks like wti is down by 21cents to 5595. Check out the bond market. At this point the ten year note is wow, okay getting close to 2 once again for the yield. 1. 958 . Still below 2 . The dollar is weaker against the euro this morning. 10752. Up against the yen at 120. Gold prices finally look like they barely budged. 1,188 an ounce. Facebook shares falling at this hour. Following a miss on revenues in the First Quarter. They did Beat Estimates on the bottom line and mobile growth was solid with daily mobile use rising 31 year over year. Here to help us break down the results, he covers tigress asset management. Good morning. Good morning. Am i wrong to say the mobile growth i thought the mobile growth was extraordinary. A agree. I think its phenomenal. Better than solid so they miss on the top line do you look past that . Yes. First people talk about the currency issue and when youre doing 13 billion in revenue on your way to 20 billion. Sometimes its with you and sometimes its against you. Theres no way to hedge it or avoid it. The stock is down this morning. The street is disappointed but the best piece of news is that the company is investing in their company. I love when companies spend on cap ex and rnd and spent on hiring people and marketing. These are all positive factors and the sad thing is as much as i like buy backs. But theyre growing 50 year on year. Theyre a Growth Company in the stage. Thats to be expected. When you think about the growth issue in terms of pure number of users, the thing that i worry about is this becomes an eye balls game. Remember back in the late 1990s when we talked about the physical number of eye balls. The eye balls grow and the money is supposed to grow. The number of users grows but then they begin to monetize the users so the revenue per user will start to grow as the number of users will inevitably. Whats the multiple . 237 billion market cap to more than chevron is only 200 billion. Jp morgan is 233 billion. 80 times. 237 billion. 80 times earnings. Theres not even that Many Companies worth more than it. Comcast has pipes, cables all over this country. 149 billion. 149 billion. You still have a buy on this stock. Yes. Where do you think its going . Right now our value at the current level is 108. I think thats going to continue to increase because you cant really measure some of these i dont want to get caught in the trap that you cant measure them like Traditional Companies but theyre not a Traditional Company and the value they create and the value they add to the economy and create for their shareholders is measured differently and youll see overtime this platform will monetize as they integrate new services. The most interesting thing when they bought instagram they said that was a horrible acquisition. When you look at the growth thats the expectations for growth. 1. 98 in earnings. Its not really 80 times. 82 times pe is what it looks like right now. 43 times forward earnings. Ill sell you some of mine. You dont even have an account. You should be buying in the weakness. You said instagram great success. Revenue associated with instagram. They dont break that out. But as you know theres very little advertising even on instagram. Probably dont make any money at all. Just an experiment. I like the way theyre somehow valued. Youre going to see that overtime theyll get monetized but its about connecting the people and the platform and the most interesting thing, that will be won by the candidate with the best facebook strategy. How much will they before we go how much will they end up spending on facebook . The politicians, Hillary Clinton, jeb bush, scott walker whomever . That i dont know how that would work for them to spend as much as for them to be engaged and then how other advertisers spend into that. And engage and connect. Okay. We appreciate it. Thank you. For everybody who is holding on to facebook shares i hope youre right. By the way they have done a great job in term of building the business. Whether its valued at the right place. Turn now to the broader markets. The nasdaq just 15 points from the high it set in the 2000 time period when we had the last bubble. The last. Com bubble. More to talk about markets. Managing director the backdrop of the economy is once again, i dont know like we cant get out of our own way it seems like year after year after year. After six years although is it weather . Is it the dollar . What is it . Well its a funny thing. Its a little geeky i admit. Thats why youre here. But in the u. S. The way we measure gdp is based on a quarter over quarter rate and annualized pace. So if you did it differently like we do with earnings in earnings you measure them First Quarter of this year versus First Quarter of last year. Growth in this quarter based on the forecasts would be around 3 . We had a horrible winter last year too. The reason it looks like a slow down is youre comparing a strong Fourth Quarter to a some what weaker First Quarter. I think he did a nice piece on this the other day where he argued First Quarters attend to first slower growth. Okay. Year 3. I think well do 3 roughly. Well do 5 one of these quarters then. We had a couple of good quarters last year. I think we had a five last year. So were growing in not a fantastic pace but a descent pace and growth is scarce all over the world. The stronger dollar will probably cut our growth rate a little bit but were still growing at a descent theres nowhere else to go is there . Stocks are not bargain relative to their own history of valuation but at about a 6 earnings yield on stocks that looks pretty good compared to a treasury bond at 2 and if you go to europe you have 2. 5 roughly dividend yield on the dax index and you have a ten basis point yield on the bund. Would you be looking at european stocks over u. S. Stocks for u. S. Investors . This year we have rotated some of the money we had in u. S. Stocks into europe and japan but we have done it by buying futures which allows you to hedge out the currency. So thats worked out pretty well so far this year but i still think thats a good place to be for 2015. You dont care about the fed that much. They dont go in june. Do they go in september . Do they ever go again after september . I think a quarter point like longterm is good. I think theyll do two moves this year. Well end the year around 50 basis points. Crazy. To borrow money, 50 basis points. Thats insane. Sounds crazy versus the consensus at this point. Well come to a screeching halt. That will cutoff all business activity. It will still give you negative real Interest Rates. Because im slightly more optimistic on the economy. Paul says inflation is coming back quicker than people thought. Wage growth is going to start. All the companies are starting to assume 4 wage growth. The democrats are saying 12 an hour. They want to go from 7 an hour to 12 an hour by 2020. Got no chance of passing the Republican Congress but theyre going to be i think you would support this the wages are rising because of private sector action more than raising the minimum wage. A lot of companies have raised that. It would be good if that would happen. The wages are growing already a little faster than the official statistics indicate because i think they were retiring and being placed by less expensive new workers is skewing the data more than usual. Thats right. Wages might be growing closer to 5 . Really . Yeah than this year. 4 or 5 growth. Does that create a problem if we are underestimating some of these things . Will inflation sneak up faster in a scary sort of way . I think youll see that well get back to the feds target of 2 a little quicker than the consensus expects and i do think there will be a debate whether that additional wages comes out of margin which is are high levels or whether it results in higher inflation. I tend to think with the dollar being stronger than it is inflationary pressures will be relatively model. Might as well get up to a little bit above that but not tremendously above that. Youll still be at a relatively low Interest Rate and low inflation environment but not as low as it is today. All right, ed. Thank you. Fellow boomer. When did the boomers start . People got back from the war. Like 45 or 46. They got married. Yeah. We know what happens after that and now were populated with boomers. Did you see in japan now . Less people. Sooner or later you just run out of people. Its a huge problem for the economy. And then you have the older people that are depending on the younger people to help them. If theres not enough of them. Thats going to be interesting to watch. You wonder why its still so slow. Thats the reason you need a different immigration policy. You cant allow that to happen to your nation. 80 of our population 50 million come in in the last ten years or whatever. I saw it on one of the websites. I didnt see that. 50,000,083 of our population growth has been immigration in the United States. Okay. Yes, when we come back we have a lot more to talk about. Multibillion dollar fraud. Petrobras putting a price tag on the Corruption Scandal engulfing that company. But first heres a look back at this date in history. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the well equiped volvo xc60 today. Visit your local volvo showroom for details. A neighborhood is a bit quiter this morning missing what had become a familiar buzz. Local officials removed a 90 pound hive housing about 80,000 fee bees. It took more than two hours. Pieces of the hive are headed nearby where the bees will continue their work of making more honey. So, you know. Id like that bee. Have you seen what happened next week with the bees on the highway. Wasnt it like a million or something . No like 43 million or something. Get stuck in that and youre gone. I would think so. Did you see the guys trying to clean it up in the bee outfits and everything. Did you see that last week . Saw the videos on youtube no less. I watched that on facebook i think. Explain how that works. Someone imbeds a Youtube Video of it because its sort of a viral video and they put it on facebook and then when you log on to facebook the video is there and it plays automatically. But it doesnt have to come from youtube. It can come from anywhere. It can come from cnbc. Com. Anywhere you follow . Put whatever video they want. So any dribble they feel like putting out you have to see it on your account. Well, you dont have to see it. But its there. I can block people the same way you like to block people on twitter. I do. I have zero tolerance. I dont need them. Even if i think its got the slightest tinge of twitter just changed their policy by the way to try to remove what they call trolls. These are the people more abusive. Would anybody be left. How does that happen . Theres more reporting. Theyre now looking more at word choice and automatically deleting and getting rid of people. Its a whole new thing because the feeling was that good twitter people were leaving the site because they were so upset with all of these people that were so frustrating. Theyre mostly nice. Theyre mostly nice. But some people are im not sure it is. Thats the concern. Basically we feel sorry. Their lives are empty or bad or something right . In their parents basement. You tweet. Hes talking about the trolls. I dont understand the trolls. I agree. If you ordered an apple watch some customers will get these devices sooner than expected. Some people that ordered a watch a couple of weeks ago were told they could take a month or more before they got delivery of it but apple is now filling requests in the order received and some deliveries could arrive sooner than expected. Thats the way you do it. Underpromise overdeliver. We eluded to this story before petrobras reported last years financial results. Thats three months late and also putting a price tag on the Corruption Scandal that is engulfing the company and cnbc chief international correspondent, michelle, really this is big enough to go to rio. How did you sell that. You are wow, nice work. Brazil the b in bricks. One of the biggest growers for years. Major disappointment. Come on. So the results were out nearly two hours later than expected but after waiting three months whats another two hours. Heres the bottom line numbers that were announced at a News Conference last night. Nearly 17 billion in charges and impairments. 2 billion of that directly related to the bribery scandal engulfing the company. They said we know the 27 Companies Involved based on the depositions in court over the ten year period. They said they padded contracts by 3 so we did the math and we shaved off 3 . Thats how they get the 2 billion. 14. 73 billion a lot of that due to the decline in oil prices. A well is worth a lot less money when oil is at 50 rather than 100. It was a clean statement from the auditors. Some fear there would be caveats in the fine print. If they had not reported these numbers it would have been catastrophic. The results can still be very damaging to the president of the are country because the company says theyre going to do Everything Possible to improve cash flow. Theyll sell assets and do less capital expenditures. This company is so important to the brazilian economy those are two big negatives for growth for this company and economists say it could slip into recession this year. That could be damaging to dilma. Take a look at the graphic of her Approval Ratings and disApproval Ratings which have already shot up dramatically because of the details daily about the bribery scandal involving the oil company. Those are one of the reasons weve started to see protests in the country again. Theres no evidence linking here to the scandal and she denies any knowledge of it but brazilians, many of them do not believe her because she was chairman of the company during much of the time in question and still many are waiting to see the final results of the investigation to see if theres any linkages to her guys. Its state run and state controlled and super important to this economy. Yeah big story up in siberia. Its russia its the r in brick. A lot of stuff happening at their headquaters. Shell get to that eventually. I already got a visa to brazil. I have been working on one to russia. The conciliate is listening. They can give me one. Michelle let me ask you, it sounds like it was a little bit of dodging a bullet for investors. It wasnt the worst Case Scenario but the stock is still down 2. 5 . Is that because of the capex being cut and not investing in the future . Uncertainty about whether or not they can dplifr oneliver on the plans. They said the results do not convince them to upgrade the stock because theres uncertainty about whether the brazilian government is going to allow them to do the things they want to because theyre the Controlling Shareholder and they go on to say the big run off we saw in the last week because of the impending announcement they wouldnt rule out profit taking at this point. Put some money on the table. Thank you very much. Michelle well be checking in with her throughout the day. When we come back this morning, check out this parade of news makers. Media mogul Robert Johnson will be joining us. Plus top executives from dow chemical procter gamble, eli lilly, General Motors, south west airlines. Big lineup this morning. Stay tuned. A lot to come. Squawk box will be right back. The Technology Changes the design evolves the engineering advances. But the passion to drive a mercedesbenz is something that is common. To every generation of enthusiast. 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They were debating with show time and hbo about how many seats everybody gets and what the mix is going to look like and all of this. If you want to go to this thing its going to cost you 1,500. Thats the cheapest ticket. Most expensive is 7,500 that does not include service charges. It has some competition. Its the same day as the Berkshire Hathaway annual meeting and kentucky derby. But a lot of people will be sitting at home paying 90. Warren buffet. Warren buffet competing with mayweather. Becky and i are going. I was thinking about those that have to be all over the country that day. Its going to be a big deal. It is. Im thinking about how valuable content is and thats what im going to talk about too after you finish your sports content. Thats a prime example of what people are going to pay. Hes the highest paid athlete. But what i was going to say, im worried that mayweather is going to go bankrupt im sorry to say because the guy just bought 100 cars from a dealer. Now he make ace fortune but do you remember mike tyson made like 350 million and found himself literally bankrupt. That story where he actually puts 100 bills in the. These guys spend crazy money. If he just said im going to take 100 million and put it in my lock box and then im going to go crazy, sure. Floyd mayweather probably has good people. But when you think about all the money see we hear these big dollar numbers, right . But hes going to give 10 or 20 to this promoter and his manager and his agent and then hes going to pay taxes, dare he pay taxes and im just saying hes not going to be left with. You sound very worried. I dont think you need to worry. Just putting it out there. If floyds watching we can have a conversation about how to be careful, spend our dollars thriftly. You are cheap. You can help him with that. Happy to. In terms of content what i was wasnt the super bowl like last week. Do you know that everybody is excited now because the schedule for the first week has been announced . Do you know its only five months away. Its been like three months. I dont know, has it . Its been awhile. Im not a huge i dont live and die with the nfl but im taking notice you know who is playing. Do you know what the first game is. Bengals. No. God know. Are you still pretending that youre bengals. Theyre dead to me. Steelers patriots very first game and then that sunday on the nbc game never too early. Never too early to promote. Cowboys giants in the first week. Back to back games. This is where i think things get more and more valuable. Its us. Yeah time is going fast. We have breakfast every hour. Thats an express from the lady on Downton Abbey which i wish wasnt ending too after only six seasons. Its a long time. But he has a new thing coming in new york. Yes, thats great. 20s or 30s . Yeah around then but i think manhattan. I dont want to go out to east egg or something. Im looking forward to that too. I dont juan leo cicapridicaprio in a stupid hat. That was earlier. Gangs of new york. Let me tell you about mosquitos. For a long time i thought that i smell good to mosquitos. Im convinced its something in my blood because if im sitting with 15 people outside ill be the one that gets bit. Theres been new research. They wonder if its what people eat or the bacteria on their skin. My wife feels that way too. Im convinced. This is a study that looked at pairs of female twins. Half are identical twins. They have all the same dna. Half are fraternal twins. Its the idea that they got these twins to do this study. The women washed their hands with the same soap and put themselves in a y shaped tube. One woman with each hand going into this tube. They each stick their hand into a big thing of smart. It turns out with the fraternal twins the mosquitos attacked them evenly. But with the otherwise twins that were not fraternal twins it would be one womans the identical twins got attacked identically and the fraternal twins the mosquitos were atracktracted to one arm more than the other. Which tells you theres something in the dna. So you feel very attractive to mosquitos. I dont know what it is but mosquitos like me. It is disgusting too because they carry things. All kinds of mosquito born illnesses. They leave stuff. Its what they leave in you to make sure that your blood doesnt clot so they can get enough out of you and thats what is the transition for all kind of nasty diseases like west nile virus. The world is a very threatening disgusting place to you isnt it . Sometimes. Bugs bacteria. None of this bothers you . Come get me. Beat me. I like to coexist. My bacteria i like. If you dont have bacteria you have big problems. If you dont have the right bacteria then you are just asking for trouble. I dont like thinking about it. You dont . I dont think i like bed bugs. No. In the meantime we have a tech note for you this morning. For all cnbc fans this morning millions of apple watches are on route to new customers around the world. The cnbc app is available now for download to users can get all the Business News and market data right on their wrist if you can imagine that. As soon as their watch arrives just one more way that cnbc is trying to help our viewers and users stay on top of all of that whenever and where ever they want. You wont have to sneak your phone out. Until this meeting is over. When youre in a meeting, it isnt a big thing for the boss either. This guy is boring. Although its a little better. If you dont appreciate what we do for a living the world sits through meetings. Mooes most of the entire world and weve been to a few lately. We have. No bargain. Nobody wants to go to meetings. We have six minutes meetings with commercial breaks so it works. Coming up a start up that began selling event tickets and is now worth more than a billion dollars. Eventbrites cofounder is next. Procter gamble cfo and eli lily cfo derica rice. Stay tuned. Going to be big. Squawk box will be right back. Ideas come into this world ugly and messy. They are the natural born enemy of the way things are. Yes, ideas are scary and messy and fragile. But under the proper care, they become something beautiful. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Small and medium event tickets online. Now with millennials love of whats called the experience economy this 1 billion tech start up is coming into its own. Julia is president and cofounder of eventbrite. Thank you for being here. Its kind of like the ticket master of smaller events correct . You could call it that for sure. Eventbrite powers 1. 7 million events last year alone. Very broad. The long tail of ticketing which are hyper local events like cooking classes and yoga workshops and musical festivals. And how do you make money on that . Because i know some of the tickets are free. If theyre not charging anything they dont pay you anything. Thats true. We sold 80 million in paid events last year. 2thirds of those were free and tho that drives a lot of traffic. So its very valuable for us. Our revenue stream is a small ticket fee. So 2. 5 plus 99 cents which really signals what we have in the industry because that is quite low. In terms of how the revenue is it was 80 million tickets. That was a huge increase over the year earlier. Our revenue is based on our gross ticket sales. Last year alone we did 1. 5 billion in gross ticket sales. We have a compounded annual growth rate of north of 50 . We have very strong top level growth and what were looking for is driving normore ticket sales. We focus on growth ticket sales. That signals that our customers and organizers are more successful. Its a great idea. Im not sure why nobody thought of doing this sooner. You have gotten out and are the leader in this space in this point. Its an overnight success nine years in the making. We founded it in 2006. My husband and i cofounded the company and there was a huge gap between what people were using in that long tail off line methods. They would be using email spreadsheets collecting cash at the door and then large incumbent Expensive Solutions and we were in that middle sweet spot and that market is huge. I know you guys thought of originally you would have gone to an ipo at this point. Why havent you . Weve always used an ipo as an example of optionally. Great Companies Drive great value and they also have great options and so we have been very vocal about not being afraid of being a Public Company and we are moving toward that but for us its about building this Growth Engine in the global marketplace and having those options and building the sustainable model. Would you be willing to sell . And i imagine people approach you all the time . I assume ticket master has probably said why should these people be out here. We should take these people over right . Whats really excited is we tapped into a market that many people werent watching for many years and for us our dream is to build this as an independent company. Do you dream about offering tickets at Madison Square garden . We do. I think that everybody who is in this type of business imagines that they can bring their technology that is quite different and Ground Breaking to Madison Square garden. Is one of the big reasons you vn gone for the ipo is the secondary market has changed . Theres more available cash for certain investors early on. Being able to take risks with that benefit of capital is unique to this time but were driving our company toward a place where we can be profitable and we can have options and where we can actually be a successful Public Company. Thats a marker of validation for any company. Its been a pleasure talking to you. Thank you for joining us today. Thank you for having me. Thats very cool. Coming up, stressed potentially out of shape, looking to improve your Overall Health . For years many recommended yoga. Strike a pose a youtube yoga sensation. Well be doing it next. Joe will be doing downward facing dog when we come back. Can you touch your toes . No. I care deeply about the gulf. I grew up in louisiana. I went to school here. Ive been with bp ever since. Today, i lead a team that sets our Global Safety standards. After the spill we made two commitments. To help the gulf recover and become a safer company. Weve worked hard to honor both. Bp has spent nearly 28 billion dollars so far to help the gulf economy and environment. And five years of Research Shows that the gulf is coming back faster than predicted. Weve toughened Safety Standards too. Including enhanced training. And 24 7 on shore monitoring of our wells drilling in the gulf. And everyone has the power to stop a job at any time if they consider it unsafe. What happened here five years ago changed us. Im proud of the progress weve made both in the gulf and inside bp. Yogas branching out from its traditional roots. Youtube is coming into play. This is amazing, 3. 3 million video views per month. 580,000 subscribers. Practice in the comfort of your living room and office. You dont even need the lululemon, wear it how you want. Youtube star also the founder of find what feels good. And its great to see you here this morning. Good morning, thanks for having me. So youre going to give us a lesson, i think, before we get there, tell me about the youtube business. Can you believe its 3. 3 Million People . No, its growing fast. Especially since january, weve had just over 280 k subscribers just since january after the 30 days of yoga program. For anyone and everyone who wants to try it. Everyone wants to try yoga. Yeah just since january its been crazy. Whats the Business Model, revenuewise, is there money coming in from the advertising on youtube . Is that the Business Model . Theres a little bit of a revenue coming in from youtube via monotization and advertising, but really we dont make a lot of money there. We just thats not the focus. We just want to provide free yoga for everyone via youtube in the awesome platform. We have products on findwhatfeelsgood. Com. We have them come to our website and then share thats the business then . Yeah more in depth programs experiences, daily emails, just a lot more the production value is higher. Just a lot more, you know bang for their buck. We also offer pay what feels good options. That sounds yeah keep going. Good business. No its really nice because its like donation yoga but on a digital scale. What do you mean by donation yoga . For instance, we gave the free 30 days which is still going strong and its awesome. Every day on twitter, i see somebody new starting day one or day two, feeling great, thank you. Things like that. Why has yours succeeded and others havent . Some wonder how you can become a social media sensation. Well its weird for me to hear, but, i think its because well im really blessed my my Business Partner is super smart and super savvy and an awesome person. From the get go he has encouraged me to kind of be myself. Like really just be you. Yeah. I know that sounds cheesy but it helps because it brings people in it invites people in to practice yoga or try the tools of yoga. They may decide thats not for me. Joe and i cant touch our toes. Becky can. Can you . Yeah. Give us a couple things we can do. Thats the great thing, its simple and its an invitation in you dont have to start with something crazy, start simple. I was thinking we start with neck and shoulder hygiene which is so important and a little goes a long way. I always say that. If you just you know take your nose and thats it no. Were just going to draw circles with the nose. This isnt like that huge rock and roll thing. Its nice soft circles. Okay. With the nose. What about more difficult. Big shoulder. I know but heres the thing, this is really where the moneys at. This is where the the moneys at. Think about how many hours just with the shoulders. Because we do talk about downward facing dog. Tell us how to do it. Yeah sure. Okay lets inhale. Okay. Then soften your knees so we dont pull anything in our pants. This is so embarrassing. Okay, yeah. Then well plant the palms and step the feet back. Okay. Send your hips up high. Yep. All ten knuckles then melt your heart back. Am i in it . Thats good. Sort of . The heel supposed to be on the floor . If i could push like that. You dont need to worry about it. Theyre drawing, come up here. Okay we have to go but thank you. Thanks so much for having me. Well done. Not so well done. Its okay. Impressive, i like it. Thank you very, very much. 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 oh, i love game night. Ooh, its a house and a car so far, youre horrible at this, flo. Yeah, no talent for drawing, flo. House car oh, raise the roof no one . Remember when we used to raise the roof, diane . Oh, quiet, richard im trying to make sense of flos terrible drawing. Ill draw the pants off that thing. Oh, oh, hats on hamburgers dancing drivein Movie Theater home and auto. Lamp squares. Stupid, dumb. Lines. [ alarm rings ] no home and auto bundle from progressive. Saves you money. Yay, game night, so much fun. Earnings alert. Results from pepsi, proctor and gamble, chemical, 3m all expected this hour. Well bring you the numbers. Plus first on cnbc interviews with the ceo of dow chemical and the cfos of proctor and gamble and General Motors. Guest host is an icon Robert Johnson is the founder of the b. E. T. Network and the Rlj Companies. Hes here to talk about Investment Opportunities, and new controversy over foreign donations to the Clinton Foundation. The second hour of squawk box continues now. Live from the beating heart of business new york city this is squawk box. Welcome back to squawk box. Take a look at u. S. Equity futures at this hour as we put the screen across the board. Dow opens down. Down about 66 points nasdaq also looking off around 17 points down. S p 500 opening down about little over six points. All may change the way the futures start to look this morning. Proctor and gamble is reporting, just moments ago, the dow component reported 92 cents on an adjusted basis which was right in line with expectations on 18. 14 billion in revenue which is slightly below the 18. 486 billion that people were looking for. Everything that we tell you about, especially with the company like proctor and gamble is going to be organic versus being affected by foreign currency. So just, you know, thats something that were going to be talking about with all the multinationals right now. If you had Constant Currency were up 10 . All the organic Sales Numbers that the Company Reported out of their five segments four of them of the organic sales were at or above prior year levels. And four of the five reporting segments. As we said the companys forecast for the year is being affected by the strong dollar. And as a result the company says its comfortable with full year core earnings being flat or down from last year in single digits. Last year the Company Earned 409, they are comfortable with 409 for this year. Yeah the analysts are at 398 right at this the point. Some of the other stuff that theyre talking about was the actual impact the head wind from Foreign Exchange for the full year is expected to be 6 to 7 . 6 to 7 that would put fiscal year sales, full year sales, sorry, for 2015 down 5 to 6 . But thats solely because of the currency. Organic sales growth for the year is actually going to be low single digits. So this is a prime example of what you see. You go from low single digit growth to down 5 or 6 in revenue. In sales. One of the things that he says in this thing, this productivity is accepted by Foreign Exchange then he says as weve done before were going to offset Foreign Exchange over time through a combination of pricing, mix enhancement, and cost reduction. Were focussed on the opportunities in our control including product innovation, but all of us always saying its not really but growing, truly growing the business. Its all about Everything Else but. To me better management too. To me theyre saying not going to hedge the foreign currency, were going to mitigate the impacts with pricing and other things. We had a guy on that his job was to tell people how to deal wl currency and not through hedging Different Things with pricing and things like that. So 8 third quarter, negative its an 8 percentage point impact from Foreign Exchange but for the full year. As i said theyre only looking for 5 to 6 down but i guess thats about a similar amount of currency effects. All right. So with all that said now the stock has indicated higher its up ebt 57 cents in the premarket right now. Then were going to talk to john moeler later, hell give us all the details and, you know, dont bring up the bengals though becky, bring up the reds although im turning into a mets fan. Are you really . Thatll kill their winning streak. Theyre streak. Go after somebody you wanted to see lose. I dont like compared to the yankees. Okay. Lets talk about dow chemical which is out with earnings this morning, just coming out a moment ago, the company came in with earnings on an adjusted basis of 84 cents compared to the 76 cents they were expecting. Revenue is slightly lower at 12. 37 billion versus the 13 billion that the street had been expecting. Joining us to talk more about it is andrew liverous. Thank you for being here today. Thank you for having me becky. Was that an app prescription . The street was expecting . Absolutely becky, its ten straight quarters for the company. Weve strung together a portfolio now that can handle volatility. I heard proctor and gamble we saw the same currency volatility and oil price effects going on on lots of markets around the world. And in terms of realtime growth. The bottom line matters. We managed strong volume and good margin management through productivity and launching new products. 2014, we launched more than 5,000 new products. Were a very different type of company. Company built to handle this volatility and practicedly having ten straight quarters that really speaks to the portfolio, but Geographic Diversification and market diversification, five of the six segments grew earnings it was the only one down due to weatherrelated reasons. Hardest since 2005. 294 increase year on year. So that all speaks to, you know the company being a company that can handle the volatility. Hey andrew i read an Analyst Report last night that took a look, and obviously your margins have improved drastically. Youve continued to keep coming up with better and better margin levels. Thats why youre beating earnings expectations when revenue comes in lighter than the streets expecting. I read a report and forgive me for not having the terms off the top of my head. Their concern was that margins, it might be tougher to improve margins from here particularly with oil prices coming down. The point, i believe, was that Natural Gas Prices being so low have helped tremendously. When you make plastics out of natural gas, youre at a huge advantage than others who used Higher Oil Prices and making coming up with plastics using crude oil as a basis versus natural gas. Now that the spread has disappeared and prices have come down like natural gas. They think itll be tougher to improve margins from here how do you respond to that . Yeah that particular Analyst Report and several others like that are writing about the old dow. They cant get off the notion that its all about oil and gas. If you look at our performance in this particular quarter and the last eight or nine quarters Agricultural Sciences packaging materials, Water Filtration membranes membranes, the products i talked about. Yes, we have low cost inputs were proud of that but we have value add outputs. Three quarters of the portfolio is in outputs where oil price and gas price doesnt matter. We dont mind low oil, we dont mind high oil. We like the spread between oil and gas, if you look at the spread between oil and gas, its as good as ever because gas has come down. More importantly, the details, we make money at the inputs and the value add outputs. Thats the portfolio we built. Thats how we can do earnings beats. Oils up or down we have kind of become immunized to it if you look at other reports, they now get that. If you grow earnings ten straight quarters or six straight earnings beats, thats a message about the portfolio, becky. Also i noticed in your retheres morning that you are saying release this morning that there are expecting that, can you expand a little bit on that . Yeah, its hard to find growth out there. Certainly with all the volatility that not just the earnings, but what we just talking about. And you know the way weve been doing it is targeted. I would say if you do a scan around the world. I mean the United States china, india, you can see it in the numbers, showing decent demand growth. It has to be targeted. This is not the old china, this is the new china. It suits the new china well. They need environmental products, Water Products food Safety Products we have all those products today. If you also look around the trouble spots of the world, south america is still flat lining to down mostly because of brazil. Europe germany has shown us green chutes. Obviously the noise around the grexit. You have to target yourself against this volatileityvolatility, figure out where you can grow. We have a big year this year, were starting up a new saudi arabia plant one of the large new plants on the u. S. Gulf coast. We have presold all of that product. We see good demand out there. We saw good demand in the First Quarter and were seeing it continuing on in the Second Quarter, but youre going to get volatility especially around commodities. Thank you for joining us on this busy morning, the stock is up by about 45 cents. Congratulations on the earnings beat. Before we get to thank you very much becky. Before we talk more about proctor and gamble 83 cents was the number nicely above the consensus of 79 cent revenue, 12. 217 billion which was above 12. 123 billion. The company will provide a lot of organic numbers. Then well go into the actual numbers because organic looks better because of the dollar. Up 4. 4 . And core Constant Currency eps was up 12 . However, if you look at the actual numbers, its just incredible for 2015 Revenue Growth will be cut by 10 full percentage points. Earnings per share growth will be cut, core will be cut by 11 percentage points. Thats what we heard from mcdonalds yesterday. Amazing. The stock hasnt moved. It hasnt traded. 97 to 99. The returning 8. 5, it is returning 8. 5 to 9 billion. Dividends in 2015 and 4. 5 to 5 billion through those, andrew those dreaded share recurrences. You look at pepsi and you say to yourself now pepsi is in a better position than cocacola. Or do you look i mean this is the debate for the past two and a half years, do you want to own the salty snacks and soda together duh. You say duh. Doritos, man im thirsty, has someone got a pepsi. Its kidneys. Thats not, to me it makes sense. Always made sense. Then the argument makes not only being together but all the investment that shes made over the past couple of years in trying to transition the business. How about people that say spin that off . Theres people that think they ought to get rid of the food operations, rights . The nelson pelts argument. Have you gone through the things that end in tos . Cheetos. Doritos. There are more and theyre all really good. Awesome. Do you know why . Salt. Yeah yeah. And now salt is not bad for you. And now its not bad for you. Proctor and gamble posted Quarterly Results just moments ago. The Consumer Products giant which has reeding brands in 180 countries at 92 cents a share. Joining us to break downtown numbers, john moeller, also a member of the cfo council. Thanks for joining us. Looking at everything organic is what we talk about, and am i correct to say that most of the organic results were at least as good as you were forecasting or maybe better . We were pretty much in line with what we expected. Modest organic top line growth very strong bottom line growth 10 on a Constant Currency basis. Gross margin up 90 basis points. Operating margin up 170 basis points, and we had a good quarter from a cash flow standpoint. Currency impacts both the top and bottom line as you said in your earlier remarks on an organic basis, good quarter. Its fascinating that you can do things we dont understand because were not running a multinational like proctor and gamble. Other than hedging currency theres things you can do with pricing or mix or i mean hue do you do that . What do you think in different parts of the world on how to handle that . Its all of the above. It is mix, and our innovation focus as a Company Helps tremendously in that regard. And its also, you know localization of sourcing both finished product and materials. Man. And its just straightforward productivity savings. 410 basis points in the quarter, and you need them at a time like this. You know on hedging, many of the currencies that are impacting us are nondeliverable currencies. So hedging is just not a way to solve the problem. You need to solve it operationally. How many people do you have working on dealing with that in terms of what you just said all those things it sounds so complicated. You know local sourcing, mix, pricing, do you have like 100 people just dealing just with that . The good news these are things you should be doing every day in our normal course of business. We just sharpen the focus and keep it going. Computer program . It sounds like big, youd need like big data or something. You know what wild use, john i might use the cloud for Something Like that because of the scaleability and the gran lairty. Those are words i hear. Have you thought about that . Just giving you some advice. I keep reminding myself joe, that, you know its not that complex. We sell soap. Exactly, dont listen to me. It does sound like chaos here. But it can be mitigated which is, which is pretty amazing. So in different parts of the world, where are you seen strength and weakness . Were seeing sequential strengthening on the market in the u. S. Which has encouraging. Thats the largest and most profitable market. China seems to have stabilized which is encouraging, and stabilized at a growth rate of mid to high single digits. Theres a significant opportunity there. Obviously markets like russia ukraine, venezuela, arnl tee in a are very difficult right now. And so as andrew was saying earlier, we need to be selective in where were targeting growth. Again, the u. S. And china are the biggest markets. Both impacted, both growing. Plenty of opportunity. Hmm. Weve got o go. I was hoping that you would lace your interview with the manager of the reds did you read that actual transcript . There were 77 not proud of that. There was, i think they scored 16 runs in the next game didnt they . Got the guys fired up. The media is annoying. I might answer the media like that if i were in his position right . Its all this is wrong, and thats wrong. Not a good strategy. Not a good strategy. Hey, the emotions get the best of people. At least he has fire in his belly. Dusty didnt have fire in his gut, i dont think. Well theyre over 500 now, hopefully we have a fix. Yeah. Okay. Good. And i said bengals are dead to me, you know that. Anyway, thanks. Thanks, john. Thanks joe, have a good day. Coming up, flood of earnings still to come including united continental, General Motors 3m and caterpillar. Guest host is Robert Johnson. Cable unbundling, Investment Opportunities, and todays big story in the u. S. Times about foreign contributions to the Clinton Foundation. Were back with him in just a moment. Welcome back to squawk box this morning, article in the New York Times detailing the contributions to the Clinton Foundation. Donations from a group that sold the russians a Mining Company called drain yum 1, one faith of all capacity in the United States. Among the Government Agencies that approved that sale was the state department. Which was then headed by Hillary Clinton. The chairman made donations to the Clinton Foundation of more than 2 million. Others with ties made donations, but heres the catch, and heres why its a story. They were not publicly disclosed by the clintons despite an agreement struck by secretary clinton. Were going to talk about that and more. Guest host this morning is Robert Johnson. Hes the founder and chairman of rlj. Companys also the founder and former chairman of Black Entertainment Television. We want to talk about cable and bundling, but we are going to start this morning with the news overnight on the foreign donations because in part bob, is a longtime friend of the clinton family. He is supporting the campaign for president , and we to want get your views on this story and more. Well, heres what youve got to understand. What i believe the American Public is both president clinton and secretary clinton played a major role in u. S. Government and u. S. Policy. And the reach of the state department is broad and deep as the primary promoter of u. S. Foreign affairs. And the president obviously is a global humanitarian after leaving the white house. So it is very possible and i dont think people understand this that those two functions would intersect. The question is is there a direct correlation between the role of hillary as the promoter advisor, and implementer of Foreign Policy and president clintons role speaking to people who are wellknown Business People who have a commitment to humanitarian issues to support let me finish, support the foundation thats what happened. Ill give you an example, im a big supporter of the Clinton Foundation, cgi. I own a hotel in liberia. As you know liberia went through the ravages of ebola. And what we did, like other businesses other there, we went to various Government Agencies state department we want to keep doing business here during this crisis but we need to know what things youre doing to help american businesses stay in there. Now, you cant argue at all that theres a correlation between what the secretary of state did and, not the secretary of state, the state department did to help end the crisis in liberia and my hotel. Its just these things when youre dealing with global issues, both on the humanitarian side and foreign side. To put a fine point on it then, are you disturbed, frustrated, update set by the fact that in this instance it appears those donations were not disclosed . I think the disclosure is the issue in this particular instance. Andrew thats what raises the questions and suspicions about this idea of crony capitalism and this idea of paying people off to get things in government. Obviously disclosure is always better, and if thats the law of the land the regulations, you want to disclose, but im not sure that there wasnt the right kind of disclosure as far as the way the clinton or the Clinton Foundation did, i dont know what the white house required or what the others. Yeah but you cant make that inductive jump from saying nondisclosure is therefore crony capitalism or behind the scenes i can make the jump to say theres a trend here though. Which is to say that theres a foundation, theres not always disclosure, and issues before about disclosure theres the emails, which are its own disclosure, there seems to be something amiss about all of this. If you take enough circumstantial ed to pin it on the secretary based on her global role of secretary of state, youd find these kinds of what i call correlations. But theres nothing there, and theres certainly nothing there thats going to impact the public while shes around talking local issues with local officials and local voters. Tip oneil said all politics is that. Hillary is focussing on local issue was working with the middle class to make their lives better increasing Job Opportunities i dont have a problem with that. The smoke of nondisclosure doesnt mean theres a fire where theres a cause and effect. Ill bet you this is way below her pay grade, this stupid transaction done. And it was signed off the confidence is there and the public has in the youre surprised that the clintons are not disclosing everything. When they do disclose things this is not surprising to me and everybody is close knit keep it tight to the vest in government. You better. I mean i know do you think the Obama Administration the most transparent in history, its been the most nontransparent. At this point, when people start saying the American People were 500 plus x number of days away from the election. And a lot of discussions will have to take place about the future of this country. Hillarys going to lead most of those thats the point. It irritates me. To say that the public is coming up as andrew suggested with a sort of a opinion about the secretary, you know, this far out, is just not true because the public wants to get to know hillary better shes doing that at a local level. At a touch and feellet level. And thats the way she should run the campaign. I would hope as you and defending the clintons i would hope they focus on the uranium 1 deal and not ask you questions about yeah, i want to topple the 1 . Business, we know business we know that doesnt do it. Ceo pays got to be reigned in. What was the last every single thing she says has been right out of the Elizabeth Warren playbook. Thats the stuff you cant defend. What the secretary is saying is not out of anybodys play book, its her own conviction. Its out of her own conviction. Suddenly shes no longer she stays in penthouses and flies on private jets bob. Shes always had the conviction there should be a narrowing of the income gap in this country. We all believe that. We have different cays. Any of her friends to make money want to the cap, i want to the cap what you make. She wants to bring up the workers who topple topple doesnt mean she doesnt want to hurt the people. Joe and i rarely agree on things. Im so happy about how much money youre making. I think she cant admit it she makes that much money. She flies on private jets stays in penthouses. Just rhetoric or real . Thats the problem with the clintons. People dont know if they have any 40 of streetlights in detroit at one point did not work. At the time that the bankruptcy filing was done the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. They had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. Kids are feeling safer while they walk to school. 40 of the lights were out but theyre not out for long. Theyre coming back. If youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. We have some of the numbers phil. Andrew we have al miss on the top and the bottom line by General Motors. The company earning 86 cents a share. That is well below what the street was expecting. Estimate on the street was for gm to earn 97 cents a share. Revenue coming in at 35. 7 billion. I believe the estimate was for revenue, i think, of about 37. 6 billion. When you take a look at a couple of the key components within the First Quarter for General Motors, overall margins, significant improvement, up to 5. 8 for the company last year it was at 1. 2 . North america clearly is whats carrying the water for General Motors 2. 2 billion is what the Company Earned in the First Quarter. Best First Quarter since the company went public again in 2009 a margin of 8. 8 increase compared to last year europe they continue to lose money as theyre trying to get to breaking even in 2016. China, profit of 500 million, and south america, this is one of the key reasons behind the miss for the First Quarter in terms of earnings per share. They lost 200 million and took a big hit regarding currency with the real in brazil. Also an adjusted tax rate. The analysts may have expected a lower tax rate for General Motors. Key things to mention, first of all, gm reaffirming its guidance, full year guidance when it comes to earnings as well as revenue, but the company did have a special item. We knew about russia they were going to take a charge of 400 million. The other charge thats going to get attention, they are increasing the cost of the fineberg ignition switch compensation program, it was supposed to be total of 400 million. Itll now be going up to 550 million. They are taking another charge of 100 million as they increase the cost of that program up to 550. Again, gm a miss on the top and the bottom line earning 86 cents per share. Dont forget we have cfo Chuck Stevens first coming up first on cnbc right here on squawk box in 20 minutes. Well talk about where gm is and the question thats out there for investors, is this as good as it gets . Youve already got the catalyst out there in terms of the greater dividend and the stock buybacks that are out there. Now the question comes if youre an investor why do you invest in General Motors . Back to you. Phil do you think it was a mistake to pursue the dividend . I dont, but i do understand in talking with analysts and those who are actively working, their investments with General Motors. When you talk with them. The question is looming out there, wheres the next catalyst . Okay they were focussed edsed on the dividend, theyve increased that, what next . Whats going to get this stock moving . Its stuck between 33 and 36 guys. And remember, when the ipo happened, where did it come in at . 33 a share. Thank you for bringing that news. We have a couple more results that are just crossing the wire as we speak. Results, joe. Well do lilly results right now, the first one i have in. This looks good for lilly. It looks like an adjusted number, which if you compared to expectations of 77 cents, it would be well above where expectations are because the adjusted number for eli lily is up 87 cents for eli lily even though that was down 27 from a year ago once again, it was hurt by the strong dollar. Also patent expiration os cured. And the company is backing the full year results that it had before that the revenue number the estimate was 4. 65 going in in the company was able to post 4. 64 billion. Are you looking at caterpillar. These numbers are better than expected. The stock is up strongly right now. Numbers came in in an adjusted 186 versus the 131 the street was looking for. Its one of the few companies we watched that revenue is coming in above expectations. 12. 7 billion versus the 12. 37 billion that the street had been expecting. Doug, who were talking with later, the chairman and ceo of the company saying that they focussed on operational improvement. Including lien manufacturing and cost management. Thats helping out. Its a tough time for the important businesses. They say theyre continuing to execute on delivery performance, theyre also talking about the outlook for 2015. They say that for 2015 the outlook for sales and revenue remains unchanged at about 50 billion, but they are raising their outlook for the earnings per share. They are now expecting a profit of somewhere between 4. 70 or 5 a share when you exclude construction costs. Thats above the previous guidance which was 475, also above the street street is 467 right now, and that may be a big part of the reason why the stock is up so sharp. What i dont get, every international, they do a lot of international business. And they are the only ones that i can remember that have not complained about currency issue yet. One of the things weve talk abouted with doug in the past when he first started at caterpillar, it was back in the 70s when you were looking at currency turns that went on. It was part of his coming into the business. Something he remembers vividly, as a result, caterpillar does a lot of sourcing locally to avoid getting stuck with these currency changes and things. Again, look at the stock though. 88 to 88. 01 to 88. 05. Closed yesterday at 84. 87. That is a big uptick for not doing things on a threemonth basis. Remember, every time we had doug on, its either its agony and ecstasy. Its like what happened this time, doug . Oh gee, and what happened its unbelievable. Really, the results are crazy above and below what analysts are saying. The other thing about doug i know him from the business council. Doug is probably the most focussed ceo on increasing productivity with the caterpillar. That is one thing they talk a lot about. And so to the point that they may not be impacted by denominated sales, i believe, they get more productivity out of their company than most companies in that sector would do. And hes committed to that kind of thing. Ly give you more of the color around this though they expect sales and profit in each of the remaining three quarters of 2015 to be lower than the First Quarter. We expect sales for Oil Applications to decline starting in the Second Quarter and from a profit perspective, the First Quarter included the gain of the sale of the remaining interest ant Logistics Business that wont repeat to your point, joe, it is not necessarily a smooth year but the First Quarter is usually the most seasonably favorable. The year for cost and dont expect the rest of the year to be as favorable. Yeah its let me talk about 3m quickly which is getting crushed. 3m has no excuses here. They earned 1. 85 and the expectation was for 1. 92. The Sales Numbers, 7. 6 billion, thats below. An estimate of 7. 8 billion. The company is cutting its full year earnings per share forecast to 780 to 810. And then the street still up at 814. So it hasnt come down already, thats below what the company had seen before. And its also increasing the effect of 4x on its fouryear sales. Now a 6 to 7 hit on full year sales. Due to that. In local currency sales were up. See sales up 3 to 6 but this is really getting hit hard by the, by the 4x and now down 68 cents. Still in the dow. I guess well leave it in for a while. Its 100 billion company. So it will impact trading today. I dont decide whats in the dow, but i will start about it being in the dow just yet. Just yet. Far be it from you. Im not sure postits and scotch tape are representative of the new economy. They got other stuff. They have other stuff. Remember. They do. We had screens and we had this on for yeah. Youre right, im sorry. Eli lily posted big, ive got to figure this out. Better than expected First Quarter earnings here with us now, derek rice cfo of eli lily preeminent drug company, but this is all from selling stuff for animals. For Animal Health what was it up 50 . That was better than expected explain that to us. Thats the beat isnt it . Ten cents because of Animal Health . Joe were off to a very good start to the year. As far as Animal Health recall that we acquired Animal Health business, we closed january 1st. So those results are in the First Quarter earnings obviously if you look at last year, it wasnt in our business. Thats whats driving that growth. Despite the fx head wind we had solid performance trends and through good Cost Containment efforts. Weve been able to leverage that to strong bottom line performance. And couple that with positive pipeline movements as well. Yeah you need that because youve known for years about patent expirations and thousand hand m those. And you know whenever we have your ceo on we talk about that all the time. Its tough to manage it but the street knows about it at least. Whats going to eventually replace these . Well the best way to deal with that is through the pipeline movement. We have positive data readouts here in the First Quarter. We filed psoriasis to the fda for regulatory approval. Were in the midst of launching oncology and diabetes products. We also got positive data for the arthritis, and the good news in the space of alzheimers, we were able to enroll that face trial we have two months earlier than expected. So we should have last patient visit by october of next year. And so that coupled with e verks a, well have two important drugs that will read out for us in the next 18 months. We have to learn how to say that one. I guess its some kind of antibody or something. Exxon had trouble, theyre awful, its just like you get a scrabble board and throw them down and try to pronounce what comes out . What is it . Its easier to come up with the name than it is to develop the science. Thats true. Thats why weve been focussed on innovation its been the source for 139 years, thats whats allowing us to manage the way through the expirations. As we stated return to top line and bottom line growth beginning this year. I cant shake him. I cant shake him. Kwhaebt, you did cut full year profits forecast thats totally new to the dollar isnt it . Well on a nongap basis or adjusted basis, we reaffirmed our guidance of eps of 3. 10, to 3. 20. We updated our gap guidance and this is to reflect restructuring charges as well as some Business Development deals that weve consummated in the First Quarter. Were able to license oncology drugs and do a deal with pfizer where we can move a drug begin to remove it to the fda and we can resume studies for that drug. That was about a 200 million milestone. Okay derek rice say hi to john. And well talk to you soon. John, next quarter. Thanks jeff. All right. Thanks. When we come back our guest, robert jaunsz weighs in on the demand pick up and the strength of the u. S. Economy as he sees it through his businesses rights now. Also later, gms cfo Chuck Stevens joins us first on cnbc to break down the companys earnings that were released just moments ago. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the well equiped volvo xc60 today. Visit your local volvo showroom for details. Welcome back everybody, markets will be getting the new home sales report for march at 10 00 a. M. Eastern time. Lets find out what Robert Johnson, who is the founder and chairman of Rlj Companies thinking about the Housing Market and the overall company. We ask you this because youre on the boards of kd home and lowes. From a macrolevel, i cant give numbers, from a macro level, the Housing Market for new homes is beginning to show an increase in sales, and were building up more backlog as people want to buy, buy more homes, and part of that is because the financing has come back and stabilized so you can get a Home Mortgage and i think thats helping the housing growth. Its somewhat regional at least for kb home and the southwest and in places like texas and arizona. Little bit of florida. But overall, theres a Movement Towards Home Ownership again, and thats very good for construction, its very good for the economy. I think the other issue is that as we see it from the lowes the Home Improvement store, you know, when people see home values going up you know they start spending to refurbish their homes. Were seeing people before people would say i want cabinets. Now they want to do the whole kitchen. Before they say, im just going to do maybe something with the floor, now theyre thinking of the backyard patio. Because theyre beginning to feel the home values are going up, and as a result of that theyre willing to spend and were seeing more movement in our sales for things to make the home better. And essentially more valuable. Backyard andrew is like people that are on like the ground floor of a structure, then they have a back door. Right. They go out and theres green grass beautiful backyard. Central park. Yeah you do. Very beautiful. Good answer. Its big and beautiful. This is ours out there. This is actually really good what were doing. I like coming on the show more one percenters on this show. Im not running from it. Im not running from it. Backyard is central park thats good. Thats pretty tall. Refurbished much there, how is your patio . They have one of the plugin ha baa which i things. I dont have one of those. We have guys like sam zell who talk about how this new generation, they put off home buying and stay in cities and theyre going to be apartment renters for a lot longer and theyre not really interested in buying a house. Do you think that was just a temporary thing because of the setback . Do you think they eventually buy houses houses . There was a mindset, the recession was awful in terms of consumer confidence. People just got scared to death about everything they started deleveraging, they stop spending and everything. And as a result of that, people start saying im going to stay in this house because im not going to take the risk of buying a house. And plus thebacks clamped down on borrowing and had rules and requirements if youre filing for a mortgage now, almost like a cia investigation. So it was, it was tough. But yeah i think some millennials and those who that are coming up behind them are saying urban life is good. Uber is an example of people saying hey, i dont need to own a car. And even air b and b is saying i dont need to own a property or go to a hotel if the i can mote around and go to somebodys house i dont know. But, i think thats sort of a natural reaction but i think at more and more as long as as long as the mortgage deductions stays in place, Home Ownership will be do you think nasthats in danger . Ill tell you what if you want to get a lot of money out of the economy for whatever reason you want to spend it thats the place. Eliminate the mortgages. Thats where the bank is . Thats where the moneys at. If they talk theyve talked about it before, during the time of both simpson, and it sort of got pushed off the side because its a political kind of thing. But that is the sacredest of the sacred. It is somewhere regressive and itll hurt people. But it is a subsidy to wealthy people who really could argue they need it. If you went at it in some way with a cut off. Its there to be had. I dont know if anybody has the nerve to take it. I mean would you either let someone stay in your house or stay in someone elses house. Not let someone stay. Ive rentsed houses before. If youre going to stay in a hotel, you can rent a home. Do you go in the with the white glove . Did you see the article in the wall street journal about what pwc did when talking about why they are gaining traction . At the same time, confidence and trust in society is going down. But they made the argument that people will go to a house where they dont know the owner to be an ax murderer or get in a taxi with somebody with the yellow thing and the commissioner sticker in the window. Its because not that they trust the driver or the homeowner, they trust the 24 or 30 recommendations that they [ radio chatter ] [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage or major disaster, when you need us most, were there. State farm. Were a force of nature, too. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. General motors just out with quarter results, phil joins us as a special guest, hey phil. Lets bring in Chuck Stevens, cfo joining us from the companys headquarters. You earned 86 cents a share, missed on the top and bottom line analysts get it wrong or what is the reason behind General Motors falling short of estimates . Yeah from rerks ps perspective, phil largely driven by two issues number one, we were spot on when you look across the world from a profitability perspective with the exception of south america. So i think about half of the tencent miss was related to south american clearly a more challenging environment than perhaps the analyst expected there. The other half is really tax rate. We had a higher effective tax rate in the First Quarter than the analysts expected frankly through the rest of the year we would expect that to moderate and be back in the mid20 range. Chuck, what do you say to the feeks out there looking and saying, is this as good as it gets . Youre making 2. 2 billion, your strongest ever but people will look at this and theyll say, nice, im glad that these guys are making money here but this is as good as it gets bh when youre an investor when you look at General Motors. I think theres significant catalyst still to drive consolidated and earnings in north america. Weve talked about them before. Our Product Launch is going to be exceptionally strong not only in north america, but in other key markets like europe and china. Over the last four quarters, we earned about 9 on core operating prves in north america. Were very constructive on our 10 margin objective in 2016, again, underpinned by the Product Launch case. Were getting transaction in europe and were really expecting to see revenue grow why we maintain our margins in china. So a consistent with our 2016 objectives, we believe theres significant earnings opportunities. Go ahead, go ahead. Go ahead. Two other reason why is i think General Motors is a good investment number one o transparent Capital Allocation framework. Weve initiated a buyback program. Through last night, brought back 700 million. We are focussed on driving and maximizing shareholder value. And the third point is the management team. We are focussed on delivering results and doing what we say were going to do. Chuck stevens, cfo of General Motors joining us from the companys headquarters, first on a day when the Company Reports 86 cents a share falling short. There tough, they have not hit peak profitability yet. More squawk box coming back in just a bit. The eclass has 11 intelligent driverassist systems. It recognizes pedestrians and alerts you. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2015 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. A flood of earnings setting the tone for todays training session. Well hear from three companies and three major sectors, ceos of caterpillar, janice, and southwest air join us first on cnbc. Plus is the deal in jeopardy . Media magnet and founder of the Rlj Companies, Robert Johnson, gives us his take on megamedia mergers and the future of content. And its a special day for youtube. Ouch, charlie ouch charlie that really hurt the Video Service celebrates a company milestone, hold on tight. Its as the final however squawk box. Continues. Live from new york this is squawk box. Welcome back to squawk box. Im becky quick along with joe and andrew we are just about 90 minutes away from the opening well. Watching the futures this morning, under pressure, dow futures down by 66 points. The nasdaq down by 18 this is coming amidst a flood of earnings that have been coming in this morning. Some of the dow components look like theyre trading higher some lower, just checking out proctor and gamble, looks down slightly. Caterpillar has been higher. Lets also look at the markets in europe at this hour. At this the point, things continue to be mixed there. The cac and dax are just down 1 . Greece, that market with all the headlines that we continue to hear its up just slightly. We have breaking News New York banking regulators are fining Deutsche Bank 2. 5 billion of reliable rigging. The firm also agreeing to terminate and ban individual employees who engaged in the misconduct and installing independent monitor. The 2. 5 billion is more than any other bank has been penalized over the rate rigging scandal. Started with barclays years ago. Your eyes are glazing over, please. How long ago that was . This is several years ago. Like five years ago. Five years ago . Bob diamond it was a long time ago. This all began. Anyway, stocks on the move this morning, 3m falling short. Thats cutting the full year profit, blaming the strong dollar. As a result, 3m is one of the big losers today, hurting the dow. Proctor and gamble matched estimates that revenue was just a little bit short, also citing 4x and foreign currency. The fluctuations in currency will hurt full year sales by 6 to 7 . That stock now lower. Pepsi earnings and revenue beat the streak despite a decline in sales due to the strong dollar. Thats basically unchanged, and eli lilly earns by a dime a share. Revenue was in line kb with expectation twhabs stock up over a percent. Dow chemical earnings and revenue, handling topping estimates, as a result creating higher on that news almost up 2 . Becky. Caterpillar earnings both beating estimates. Joining us now is doug obe rerks helman. Good morning, its great to see you. Good morning, becky, and great to see you. Before we start, i want to point out where i am this morning. Im sitting in our factory here in east peoria that building the big bulldozers behind me. Its famous and were proud of it. Its a deal evident, the largest two bulldozers you can see why theyre named bulldozers both are for export, one to moe rock co. To mining customers. Doug lets jump in and talk about some of the importing, exporting, from an earnings perspective, most the Big Multinational Companies weve talked to have really struggled with a stronger dollar. Caterpillar did not. Looks like it was good news better than the streak was expecting on just about every front. You also rayed your guidance for the full year. What is it about the dollar that doesnt impact you . The dollar has impacted us and actually becky, youve written about this in the past. Weve talked about it off and on over the years. Weve worked for decades to structure our company so that we have a footprint in the big economies around the world. We have a big asset base in japan. We have a big asset base in europe, u. K. And brazil for example among others. When those currencies weaken and we have high cost structures and high costs in those countries, we benefit from the cost site. If you look at the numbers in the First Quarter. Our top line was impacted negatively about, down 4 year over year 2. 6 of that was from currency translation. Just less dollars coming in because of the weak currencies. But our cost structure, because weve got lots of asset base and lots of costs in those weak currency countries, actually improved our operating profit 5. 5 . So we saw to the top line as we work through the cost structure, the operating profit but if it increased by 5. 5 or 80 million. Thats what weve been working on for decades here to mitigate some of the impact of that dollar. We feel it on the top line. Yeah the top line still though is better than the street had been expecting, 12. 7 billion versuses the 12. 3 that the street was looking for. Were really focussed on the year. We did hold our top line outlook at 50 billion, im going to be very realistic here with you, we will not repeat this quarter the rest of the year because we are aimed at 50 billion in sales. We did raise our outlook from 475 to 5 excludeing restructuring charges. Thats 25 cents 14 cents of that was a onetime gain we saw from the sale of the final sale of our Logistics Business. So really our net, net raise was 11 cents on that. Which is a slight raise, but certainly after the First Quarter, we felt comfortable doing that. Were aiming at 50 which is going to be a challenging year the rest of the year for us. Lets talk about some of the divisions individually. You point out that the mining was weak construction was also down, but was that in all regions . Actually we saw construction in the u. S. And north america up and thats the bright spot we have right now is fairly anemic, its growing and getting better, kind of quarter by quarter, and we see it and were happy with that. Everywhere else in the world were double digit decreases in sale year over year in regionally. So we seen a really dichotomy here in the world. U. S. Growing fairly slowly but growing steadily. And everywhere else theres not much good news outside the u. S. China is down significantly year over year. Brazil is weak economically and europe is still kind of flat but in our case down year over year. I would say in the case of europe that the qe 2, the weak euro, kind of resembles to me a little bit like it was here maybe in the second or third year of the recovery. Where we were really trying to stimulate and now a few years later, were feeling that. And i think eventually well feel that in europe as well. Im a little more optimistic medium turn. Hey doug its bob johnson. I want to ask you a question hi bob. How do you feel about the upcoming discussions about the transpacific trade agreement thats sort of on the consideration by the congress and the white house . I assume that from your standpoint, thered be a great advantage in implementing a trade agreement that would fa facileitate the kind of exchange and capital of products you like to make globally. Yeah hi bob. Its an imperative for us. Im sitting here as i mentioned behind me two tractors headed outside 80 of the production of this plant, its a huge plant, which our primary bulldozer factory in the world are for export. Right now, in many countries, were kind of looking in at other trade agreements. And certainly around asia. We really need the Transpacific Partnership if were going to have a level playing field. I was just reading the other day that a lot of investments are heading to mexico because mexicos a part of a lot of free trade agreements with europe and they avoid the tariff that we have in the u. S. Headed for europe in some of the other industries, like automotive. Thats going to exclude us from 95 of the customers. Thats one of the reasons that ttp is so important. Weve been a loud voice, we encourage everybody we can to get involved with it. We encourage our employees to be heard with our legislators. And its important to us. You are exactly right on that. Doug lets talk more about what you said with the u. S. Being strong. Strength and dlux is that a reflection of the Housing Market . Is that a reflection of commercial building or 12 is it all of those things combined . Its kind of a across the board with the exception of mining. Especially without coal mining. Were seeing it and ive talked to a lot of contractors around the country, their backlogs are up feeling better. For instance the state of georgia just passed a big infrastructure bill that will be coming down the pipe this year and next year. Theres some of that going on. I think that governments are in a little bit better condition than theyve been to do some spending. So its anemic and slow growth. We should have better growth than we do but it is positive and i think most of the contractor base that ive talked to anyway in the u. S. Feel good about rest of the year. And they say were aiming at 50 million for 2015 at this point. You did say though that energy transportation, while it was strong you dont expect that to continue why not . We had a great First Quarter, and weve had a really nice run in that entire business of energy and transportation. And within that segment is an oil and gas, within that business is an oil and gas segment, and within that oil, primarily well servicing and fracking is coming to a screeching halt and we read the headlines every day. We supply equipment, lampbl engines in that business were going to see that as we said in january, we havent changed our outlook with that. Thats going to be falling off throughout the year. Even though we had a really good First Quarter there, the gas compression side of that still looks good. And natural gas. Theres really a dichotomy, again a split in those two businesses. And thats really what were aiming at. Oil will weaken between now and the end of the year. I want to thank you for coming on with us every quarter. Weve said this before whether good or bad, you come on talk us through them and i never feel like you are spinning us. You always give us exactly how you see things across the board. We really appreciate that. Well thank you very much. Its very nice to be with you again as always, thank you. Thanks doug. Just one second. Do you find it annoying that harry reid about the trade deal says he doesnt say no he says hell no. Is it overall, i guess this is about unions and jobs and things like that do you believe that where we open up free credit eventually results in more jobs . Is this another example of a misguided liberal sort of sacred cow that really has the opposite effect of what its intended bob . Its an outdated philosophy and outdated policy. Does it annoy you that the left is just so out of touch it annoys me that will theyre so rigid on something that just flies in the face of global reality. I mean if we dont do thats the case. I know but this one, if we dont do these deals, i can assure you, other people who want to be dominant in trade, specifically china and korea and south korea, will take advantage of this. And deliver products and get better wage costs because theyre dealing with these countries, create more products to sell to these countries, and well be left holding the bag. The most powerful democrat in the senate in the most powerful democrat in the senate still doesnt know its 2015 and yet, i just dont, i dont understand how it can still be this way, bob. Youve got to understand that this is harry reids last term as senator. And hes got to have friends when he leaves. And unions are extremely powerful in even unions. So hes got to have friends, and hes going to go down with his friends. Hes not going to get a call from any of the Big Companies in new york say hey, harry, we want you on our board. Whats he going to do, what is he going even unions to be able to have their selfinterests, at least coming into the 21st century. Did you go to the school that people believe theyll do whats in the best interest of everybody . They dont do that. Well very logical. Very logical. All politics is not logical. It is so rigid, it is totally illogical illogical. Okay. There you have it. We have more. The fcc wants a hearing on the comcast time warner merger. A move that could sink one of the biggest mergers of the year were going to ask Robert Johnson of what he thinks of the deal and a lot more after the break. Then later, southwest air has seen the stock rise 80 of the past 52 weeks. Help by Lower Oil Prices well speak to the ceo with the latest quarter in his stocks performance in just a bit, squawk box returns in just a moment. Welcome back to squawk box everybody, it has been a very busy earnings day. United continental among the companies reported. Earnings that beat the street by 8 cents a share. Traffic and revenue both increased, that stock down by 1. 6 though. Duncan brands topping consensus on the top and bottom lines. And it is raising its full year outlook. Wow, check that out, its up 9 this morning. 52. 05. Staying on the food theme, hershey falling short. They were hurt by weak sales, growth in china and higher spending on advertising and marketing, and thats down by 1. 8 . Robert johnson is founder and chairman of rlj company, founder and former chairman of Black Entertainment Television true media magnet before you became a private equity big wig. You wear a lot of different hats. Lead story today, fcc staff recommending a procedural move that could potentially sink comcast proposed deal for Time Warner Cable, been going on for a long time. You made the point that the longer Something Like this goes on the more likely that it might not finally pass muster. Yeah i think it starts to collect all kinds of opposition from all kinds of players. And thats what happens when these things sort of get into the Public Discourse for a long time. Everybody who was opposed to it start coming out. For whatever reason they didnt have the impact on the consumer or the impact on the overall, you know economy and broad band access. But thats what happens. And its its possible, but i think its remote. With antitrust, i think a lot of times, its a fair attitude relating markets do what they do unless its just flagrantly obvious that theres something going on is the best way. And i think back to the sirius xm deal where you see pandora, you see all this stuff coming to where these guys theyll be luck gri they even survive, seriously. Together or apart because of all this but just because they were the two biggest players, these morons with blinders on like this say no you know they can add up the market share of the two, but is it similar here . Its similar here because ive never been a big fan of the notion that if you had one type of Media Business say broad cable, and then youve got television then youve got satellite, that any one of these distribution platforms dominate a market. Theyre all competing. I mean you can easily switch out of cable and go to directv like that. But in thing is tied to the deposition should that . 34 36. Communications act. It creates Net Neutrality. Why dont we update the way we think about things . You know i dont know the answer to that but theres powerful forces that are like sort of the monopoly that they have, and broadcasters have monopolies in market people in monopolies in cable market. Nobody looks at what the consumer has access to. Then consumers say, you know, that cable guy didnt show up when he was supposed to in the window, i dont like comcast, and that has to do its a perception. It is prices go up. Regulatory perception. The act does not take into account, thats part of Net Neutrality, the whole change in what i call the velocity of access to content. Why would they take into account . Your content creator, youre going to do over the top, if the fcc asks you about this transaction, you would say what . If they were asking me about the transaction, so we have an over the top streaming channel called acorn tv and urban movie channel where we deliver movies to consumers. What i would say is if this slows down my access to broadband, to my customers, so were like not in the lexus lane like netflix or others, then ive got a problem with it. Are you prepared to pay . Youre prepared to be in the lexus lane or no . Paying in the lexus line but not paying according to a decision made by the totally open market. You come in with a gap and you say, within this range, everybodys doing this level of business, gets this service. Everybodys doing this level of business gets this service. When you say not an open market. You dont want comcast some will confuse number. Youve got that. Does this mean directv and at t what if they do block this . Or the big merger deals off . What do you think . I think at t and directv will go first. Yeah. Thats funny because the timing around that looked like it was to make sure if one went through, the other did too. I think at t and directv will. Theyre broadband. At t has what directv has 18 million subscribers. Theyre not in the same region. Much less in the same with all the other stuff thats going on. I think the debate though is the control effectively of broadband, its not about anything else anymore. Its about the domination of what percent of the country you will own. That the point, theres a big theres an artificial number you cant go over 30 of anything. Its also 1936. It is you cant have 30 of a market here in the communications. Are there enough to be right is there anything that they can offer at this point in terms of it . Theres one in new york and l. A. Would that be . I dont think theres anything that they could spin off. They talked the spin off already. They had discussions with dr. Malone about how they could structure it is he behind the scenes here . John is always behind the scenes of getting more media content. Do you think hes privately pushing to kill this deal . No john doesnt like the government doing anything. But what he would prefer is god bless him. They kill it themselves and talk to him. So he can be the buyer. Possibility he buys . There was a time when they were going to split up some. They were going to trade up. That was supposedly the deal they were trying to put together, but comcast felt that they had the right political story and the right political caption. They can get it done. So did the Net Neutrality people. Yeah, but the rules are outdated. And theres no such making now the internet is a common carrier. I know. We have to go thank you. When we come back a special day for youtube. Where would the video be without gangnam style . And 8 30 eastern time we have the numbers and the market reaction. Plus the ceo of janice capital will join us also southwest airlines, still a lot left to come. E financial noise financial noise financial noise financial noise building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. Happy birthday to youtube, turns ten years old today, thats why were listening to a little gangnam style this morning. Hit made when did he do this by the way . I dont know five six years ago, i forget. His videos still hold the record as the most viewed on youtube, ever. There you have it. I thought we had a replacement for you this morning. No no we dont. Someone else said another person with your last name take your kid to workday. Your daughter was in the seats. Shes here shes in the house. Youre taking her out of the seat . They like to go to school late. It was a big day for austin minnesotas most popular attractions. The spam museum getting a new location. The old location expanding the globe, closed in september after hormel announced theyll move to the heart of downtown austin. Yesterday ground was broken on a new deal. The museum will have its soft opening in spring of 2016 and grand opening in july of 2016 and if you havent been to the spam museum you are missing out. You are missing out, yeah. When we come back jobs are front and center at the latest jobless claims data will be released. Ceo of janice capital talks market trend, the investment and the future of funds. Coming up next u. S. Equity futures, down 60 points for the dow. Friday night, buddy. You are gonna need a wingman. And my cash back keeps the party going. But my Airline Miles take it worldwide. [ male announcer ] it shouldnt be this hard. With creditcards. Com, its easy to search hundreds of cards and apply online. Creditcards. Com. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Welcome back to squawk box, breaking news initial jobless claims out, and they are up 1,000. Last weeks 294 stands as was originally released 295,000 the current read. If we look to continuing claims that we dragged behind us that isnt exactly on the same calendar table, its 2. 27 and a half last time and it moved up a bit to 2. 325 million. Of course all of the numbers get closely scrutinized to try handicap whats going on in the jobs market. Whether it this or jolts. Final analysis of course rates are going down on unemployment but the actual number of jobs get debated as to why it isnt putting more horsepower in the economy. Some soft data in china. Soft data for the most part in europe especially france. Preopening equities are down about 50 points and the dow, that hasnt changed. We are backing away from the top of the yield range which was close to a test of 2 . If you want to know the range in treasuries, look at the last month activity 286, right below 2 , we break out in either direction, maybe some followthrough, for the moment thats the rate to Pay Attention to. We have more home sales coming out. Squawk box gang, back to you. Thank you for that rick. In the meantime were going to have janice capital earning 23 cents per share, topping 21 cents. The biggest driver being topline growth which came in at 14 higher year over year for more on those results, were joined now by dick wheeler. Hes the ceo of janice. Were thrilled to have you here good morning. Good morning, thanks. So lets just talk about these earnings. Try to understand whats going on. This is now the second consecutive quarter youre had inflows. Yes, its the first time in seven years weve put together two positive quarters. So its the beginning of what will hopefully prove to be an exciting trend for us. And when you think about it youve been on the job what five years . Yes. Almost exactly five years. Just trend lines in terms of whats going on. Obviously you beat on the top line, but the bigger issue is how much, in terms of retail cut, when you see whats going on in the Retail Market in terms of stocks interest in the market, whats happening . Well for us the main story is our janus equity funds, very big percentage of our largest funds are doing much better. And are taking market share. And so were feeling some substantial retail momentum but i dont think you can say thats an industrywide condition. And so is that a function just of better results . Is that a function of new portfolio . What are you doing . Yeah i think sometimes people make the story too complicated. Fundamentally, its a performance story. We have to deliver risk adjusted returns that are better than the index and that are better than our competition, and when we do that, were likely to be rewarded with business flows. And thats been our story. Ive spent the last five years trying to strengthen our quarter investment processes with people philosophy and talent. About a year and change ago, we hired a gentleman named chang to be our equity cio. The people the process, the culture have been substantially strengthened. And i think those things are proving now the better results. And thats really the story that were on right now. Dick theres another name, talking about excellenttalents, that many people know, bill gross who joined your firm your chairmans a pimco man, whats happened over the past couple of months . What are you seeing . Well bill went through some volatility in his performance, were talking about a six or sevenmonth time period so i think its its a little bit silly to get too focussed on too small a performance time period but more recently the performance has been very strong. His bet on bonds versus treasury was much talked about yesterday. He thinks thats a source of opportunity and value for, for the future and so i think hes relpositioned, and in a way his performance has reverted to his longtime standard excellence hes far ahead of his competition in the six or seven months, the way we track it the last time i lacked full point and a half ahead of the median competition in his space. And what of the the influence with bills fund. Well in the most recent quarter, 100 million of inflows which is not really enough to excite anyone. And thats fair but this is a long story. Were looking forward to years together, and part of that is building a good, solid track record to get us off dime and hes well on his way. Theres been a question about how much of the money hes managing is his money. 100 million, thats outside money . That was outside money. Yes, no that was outside money. Do you know how much he put in . In this most recent quarter, i dont believe he put in any. But in terms of the total hes now managing . We announced more recently that he had invested 700 million last year in his fund. Got it got it. The other question just broadly in terms of the marketplace. The unintended consequence and how you see that shaking out to the extent that were going to see Interest Rates go up. What thats going to do to volatility in the potential for more retail to get in or out of the market. Right. You all talk about this often. We have concerted sensual bank action and the u. S. And europe and china and japan. Stimulating economies, developed economies around the world. And that has predictable and intended effects. It causes people to push investments out the risk curve and make more and more risky investments. They borrow more money to do those things for the cheaper price. It supports asset prices. Supports home prices. But the unintended consequences are of a concern. And the unintended consequences are likely to be that this conservative push creates asset bubbles. And as greenspan used to say, the definition of a bubble is you cant see its coming. Thats the risk. And so were spending time talking to our clients about tail risk thats an important thing to keep an eye on in this potentially bubbly economy. Okay. Well watch for the bubble thanks for joining us congratulations on the results. Thank you. Thank you. Thank you. When we return its takeoff time for southwest airlines. Company reporting record results for the First Quarter. Were going to hear from gary kelly next. Lets check out the futures so far today with all these dow components and other earnings. Were down significantly down 81 points. If youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Thank you for being a sailor, and my daddy. Thank you mom, for protecting my future. Thank you for being my hero and my dad. 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Its up by about 3. 5 . 3m falling short of estimates. Company is cutting its view. Blaming the strong dollar. Proctor and gamble earnings matching estimates. Revenue did fall short, thats a trend weve seen a lot of companies during the earnings season. They also talked about the stronger dollar as big reason for that. Proctor and gamble says currency fluctuations will hurt sales by 67 , and its down by just over 1 . Pepsis earnings and revenue beating the streak despite a decline in sales because of the strong dollar. Its down just slightly. Eely lilly earnings beating by a dime a share. Came in inline its up about 1 . Dow chemical earnings and revenue topping estimates. That trading higher on the news. You can see right now, its up by about 1. 5 . We have bob, Robert Johnson here to talk more and ill frame it this way, robert we have the notion that media, things are so disruptive that we cant really see the future. And that its very daunting and it could be totally different than what we think. Heres what i think. I have a 75 inch high def screen, and i got like xfinity, this comcast thing. All right. My world right now, i dont know if it can get any better. Were hearing slimming bundles. Mobile like watching like tv on something this big, were hearing its going to be over the top on computer screens, are all these, will unbundling totally disrupt the cable model . Content is so valuable. Keeps getting more and more valuable. About three to five years ago, i was quoted in the motley crew, i said that theres no way that you could sustain a bundling of content to people who are paying to buy channels or services, that they never watch. Particularly when the technology will allow freedom of choice so you can ala cart pick whatever you wanted to watch. And its happening. Theres a question whether its going to happen five years, ten years how many will people buy . Will the slimmer bundle be less expensive than the cable bill where it is right now . I dont need all 500, but i need 50 probably. I hate to they but the answer depends. The issue is not whether or not you will have a lower price, the question is, you will have the freedom of choice to pick and watch what you want to watch. And, on any device you want to watch it on. Whether its a mobile device or whether its a laptop or whatever. And itll get to the, itll easily get to the big screen your big tv. More or less valuable . Content will never get less valuable. Never gets less valuable because people will always want to consume content. Nobody buys with a cable wire or Internet Service or anything just to say i have it. They have to have something to interact with. Theres something to engage with. So content will get better. And itll be niched. Itll be targeted because you can, you can identify audiences that want to see compelling content. Content is king. I wonder about value profit in chain. Yes, madmen or sopranos or sports for certain, absolutely king because theyll be able to charge whatever they want for it. Lesser programming, not so much. Syndicated programming, reruns less so. So what happened, i mean there are a lot of theres a lot of programs out there. Theres a lot of channels out there. Theres questions even right now about viacom look at mtv, vh1, the weather channel, a serious brand. What happens is if you have a strong brand, people will gravitate towards it. People will be kind of lazy they like people to package it for them. Thats not going to go away but, at the same time people love new stuff. So the more you can give them new stuff to sort of get them excited, and they know its coming, hbo is an expert at that. I mean they continue to provide these series that layer on the movies they show and keep people paying in the 20 bucks. What we believe, what i believe is with my urban movie channel is doing in digital what i did with b. E. T. And analog cable and satellite because i think that there are 10 million, for example, there are 10 million African Americans who take cable. African americans tend to be call two to one basic. Theyll buy two pages. Theyre paying 20 bucks for hbo and showtime. Thats a billion dollars. Now, im offering those same consumers movies targeted to their interest before 95. Now my argument is if you want to watch a movie and it appeals to you, you have choice between 20 bucks or 40 bucks and you have 495. Logic would say ill take 495 plus 20 25. Thats their model that i think niche content is going to be and that content will become more valuable because it can be targeted. Thats what i feel. Thats the way we look at it. But itll always be king. I mean stories will be theyre eternal. You know disney has proven it by bringing back, you know cinderella for generations id be a 50 channels so quick. I dont know. You would. 50 channels so quick, i might as well do the 500. Theres times i go through all 500. Right now if you look at cable, 78 to 80 of viewing on cable, 500 channels is over about 22 channels. I know. But i want a choice i need trutv. We have gary kelly waiting. And you know airlines. Almost owned one. Almost. Now you dont need the whole airline. Im not going to go there. Im not going to out you on that. G4 anyway. Southwest reporting better than expected earnings this morning. Joining us now, gary kelly, had better than expected results, gary, can you comment on just the state of the industry versus three, four five years ago in terms of capacity and actually you know, now we have some full planes in the industry things like united record earnings today, 62 stock. It almost pays to be in the Airline Business all the sudden. It has for you, but now for everyone else. Whole different industry. Of course now, you know the Legacy Airlines all went through bankruptcy right. And strategically restructured themselves to be better positioned for today, but, i just speak for southwest, weve been able to transform ourselves and be prepared for different traffic trends different Customer Expectations Different Energy price Levels Energy prices have dropped, and you know our businesses is very very strong. You know weve had a huge benefit from fuel prices falling year over year but even if fuel prices were the same our earnings would have almost doubled just to put it in perspective. So the industrys really helping and southwest is on top. Gary we have an argument a lot, or discussion is it an industry right now that needs to be addressed by individuals to increase competition because of the way the route structure is set up . And theres not enough people flying to different markets and airlines can basically gauge customers for tickets . Well, first of all, theres lots of airlines out there. So its still brutally competitive, and its been that way since deregulation. Just look at whats going on at dallas luv field. We have increased our flight activity by over 50 . The traffic is up by 50 at that airport. Fares are down. Its just a perfect example of competition, were its not like that everywhere though. Andrew take over. Will you . It isnt like that everywhere. You need me. Reporter yeah, i dont agree with you. I set you up to talk about this. There you have a guy who knows whats competitive tell him its not. To me it doesnt make sense that you have gas stations that lower the gas price when gas prices go down, and you have air lien airlines that just dont do the same. Isnt that classic . Straight up situation. And i understand theres hedging, and i understand theres others but you know a lot of hedges have come off, look at american airlines. If it was a truly competitive business dont you think that prices, somebody would try to actually compete on price . Well we do compete on price. We compete on price, we compete on service premise is you dont. You know theres a long history, of course of the airlines not being able to cover their costs when energy price goes up. I think the concern that ill just again, speak for southwest, im not speaking for the industry Energy Prices continue to be very volatile if you look at the futures curve, they are going to be much higher next year. We have not raised fares systemwide this year and the industry of course has tried to do that multiple times. We dont charge for bags we dont charge for change fees we try to be americas low fare leader. Gary you have opportunities out there that new airlines or newer airlines are trying to take advantage of and theyre expanding rapidly and offering low fares. Big barriers to entries. Tough to get in costs money. You knowentry. Tough to get in. Costs a lot of money. Are there certain routes between certain cities where monopoly pricing is ruling the day . I dont think in that sense anything is different today than it has been historically. You have carriers that have an opportunity to dominate certain markets, so it takes when that happens, it offers an opportunity for them for competitors to come in and challenge that. So at any given point in time sure, you are going to have some markets less competitive than others. Over time and again, dallas is the perfect example where you had near monopolies or monopolies on a lot of routes out of dallas metro area. Now because weve been able to compete, you dont have that situation any more. That plays out across the country over time. Its bob johnson. I served on the board of directors for us airways for over 11 years. We went through prebankruptcies so i understand the Airline Business. One thing i do remember. At one point you guys had a market cap that was larger than the four five other airlines combined. I think its because of the legacy the way southwest has come about, you did certain things you had a lot of short haul routes you focused on flying the same equipment, i dont think you ever went to a merger where you gobbled up other Regional Airlines and dealt with the pilots and Flight Attendants and unions and consolidations. So i guess the question i have to ask is why is it over the years, southwest has had this culture of just being the bestrun airline in the country all the way from its people to its pilots to Flight Attendants to mechanics even to the way you promote yourself on television and being involved with sports and Everything Else. Where does that culture come from, gary . You know from your own experience and so many successful businesses, what is important, what do you stand for, what is your purpose . What do you focus on . We care about people. We care about our people. We care they have a good job. They are well compensated. We care that they are proud of what they do. And we work really hard to turn out a good product. Its been very successful. Congratulations. When we come back well talk to jim cramer at the New York Stock Exchange. Down at the New York Stock Exchange jim cramer joins us now. We saw multinationals today and got a good look at the strong dollar and its effects on u. S. Business. Yeah. I tell you, unless you have strong north america, strong north america, pepsico has strong north america. May not be enough to offset the dollar. We are taking no prisoners today. General motors, gm. Stock getting crushed. There is a great quarter from domestic. Today we are not giving a pass to any company thats overseas. Better not raise rates. Raise rates . Wow. I think you would have to go against this market because you are seeing doubledigit declines because of this dollar. No one says anything by the way. Its fine. Hey, do whatever you want. We are ridiculous here. Why dont we defend our country . Why dont the politicians defend our country against what is obvious, ridiculous trade bashing with every deal we make. Every deal we make is bad for our country. Thanks jim. See you later. We want to thank bob johnson for joining us. Thank you very much. Its been a pleasure. Before we go we want to remind everybody it is take your kids to work today. Here at cnbc we are celebrating it. Take a look at some of our little squawkers who are here. Not only in new york but in inglewood cliffs. We thank the parents, thank the kids. Have a great day. When we come back, squawk on the street. E financial noise financial noise financial noise financial noise when a moment spontaneously turns romantic why pause to take a pill . 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For a free 30tablet trial go to cialis. Com. Good thursday morning. Welcome to squawk on the street. Im carl quintanilla, jim cramer and david faber. Who would have thought caterpillar would be a good standout . Futures are relatively weak. Oil claims below 300 k for the seventh week in a row. Road map begins with caterpillar