Transcripts For CNBC Squawk Box 20160425

Government institutions but is connected and responsive to the every day concerns of our people. Theres no doubt that how a united europe works together can be improved. But look around the world at authoritarian governments and those that are ruled by fear and oppression. And there is no doubt that democracy is the most just and effective form of government ever created. [ applause ] and when i talk about democracy, i dont just mean elections. Because there are a number of countries where people get 70 , 80 of the vote but they control all the media. And the judiciary and Civil Society organizations and you have to be registered and are intimidated. I mean real democracy, the source we see here in europe and in the United States. So we have to be individuvigilae pillars of democracy. Not just elections but the rule of law as fair elections, a free press, vibrant Civil Societies where citizens can work for change. And we should be suspicious of those who claim to have interests of europe at heart and yet dont practice the very values that are essential to europe. That made freedom in europe so real. So yes, these are unsettling times. And when the future is uncertain, there seems to be an instinct in our human nature to withdraw to the security of our own tribe, our own sect, our own nationality. People who look like us. Sound like us. In todays world that is a false comfort. It pits people against one another because of what they look like, how they pray or who they love. And yet we know where that kind of twisted thinking can lead. It can lead to oppression. It can lead to segregation. In internment camps. In the United States we have long wrestled with questions of race and immigration and do to this day. And we still have a lot of work to do, but our progress allows somebody like me to now stand here as president of the United States. Thats because we committed ourselves to a large r ideal. One based on a creed, not a race, not a national outline, a set of principles, truths that we held to be selfevident. That all men were created equal. And now as europe confronts questions of immigration and religion and assimilation, i want you to remember that our countries are stronger, they are more secure and more successful when we welcome and integrate people of all backgrounds and faith and make them feel as one. And that includes our fellow citizens who are muslim. [ applause ] look, the sudden arrival of so many people from beyond our borders, especially when their cultures are very different, that can be daunting. We have immigration issues in the United States as well along our southern border of the United States and from people arriving from all around the world who get a visa and decide they want to stay. And i know the politics of immigration and refugees is hard. Its hard in every country. And just as a handful of neighborhoods shouldnt bear all the burden of refugee resettlement, neither should any one nation. All of us have to step up, all of us have to share this responsibility that includes the United States. But even as we take steps that are required to insure our security, even as we help turkey and greece cope with this influx in the way that is safe and humane, even as chancellor merkel and other european leaders work for an orderly immigration and resettlement process, rather than a disorderly one, even as we all need to collectively do more to invest in the Sustainable Development and governance. We need to reduce the conflicts that cause so much of the refugee crisis around the world. Chancellor merkel and others have eloquently reminded us that we cannot turn our backs on our fellow human beings who are here now and need our help now. [ applause ] we have to uphold our values, not just when its easy but when its hard. In germany more than anywhere else, we learned that what the world needs is not more walls, we cant define ourselves by the barriers we build to keep people out. Or to keep people in. And every crossroads in our history, we have moved forward when we acted on those timeless ideals that tell us to be open to one another and respect the dignity of every human being. And i think of so many germans and people across europe who have welcomed migrants into their homes because as one woman said in berlin, we need to do something. Just the human impulse to help. I think of the refugee who said i want to teach my kids the value of working. That human impulse to see the next generation uphold this. Refugees are not numbers, they are people who have faces and names and stories and need to be treated as such. I know it may sound easy for me to say this living on the other side of the ocean, and i noknow that some will call it blind hope that im confident. The forces of buying europe are ultimately much stronger than a part. Your parents, your grandparents, i say to the people of europe, you forget that you are the jer mans, the french, the italians and yes, the british, who rose above old divisions and put europe on the path to union. [ applause ] good morning, everyone. Welcome to squawk box here on cnbc. Im becky quick along with andrew ross sorkin. Joe is out today. We have been watching the president speak in hannover, germany. The president is making the case for free trade. They are sending additional troops to syria to cooperate on issues. Well get you caught up on the u. S. Markets. The last week was a good one for the dow. A weaker week for the nasdaq but there are red arrows. These are modest declines at this point with the dow futures down by 23 points below fair value. S p 500 futures off by one. The nasdaq down by five. Overnight in asia, the nikkei was down three quarters a percent. So was the shang hang. For european equities as president obama talked about these things, really making his case for a united europe. He said what happens in europe affected the world. The markets are in the red. The biggest decliner of the major markets is in germany with the tax down. 70 . The ftse 100 down by a quarter percent. Take a look at crude oil prices up by 2 last week giving back some of that this morning, the june contract for wti down to 43. 16. Ted cruz and john kasich striking a deal yesterday. They have agreed to stay out of each others ways and some state primaries in hopes of blocking donald trump from winning the nomination. Cruz will focus on indiana and give kasich a clearer shot in oregon and new mexico. Now in return, kasich will shift resources away from him. Heres trumps response, wow, Just Announced that lyin ted and kasich are going to collude in order to keep me from getting the republican nomination. Desperation no nickname nor kasich. He doesnt need one . Amazing twitter skills, collude, desperation, perfect twitter skills. As becky mentioned, the president is in germany today meeting with german chancellor Angela Merkelle and visiting a Big Industrial trade show. Obama is making the case for america to move forward with a free trade accord. The deal is still under negotiation. Supporters say it could boost each economy by about 100 bill. Heres what the president said just in a moments ago. So ive come to the heart of europe to say that the United States and the entire world needs a strong and prosperous and democratic and united eur e europe. In the meantime, president to ma warned that the u. K. Could take ten years to negotiate a trade deal with america if it decides to leave the European Union. We wouldnt abandon our efforts to negotiate a trade deal with our largest trading partner, the european market. But rather it could be five years from now, ten years from now before we were able to actually get something done. According to the book, we saw the markets fall. Today we get new home sales out at 10 00 eastern time. Then at 10 30 eastern, we get the results of the Dallas Fed Manufacturing survey. Then on the corporate front before the bell, we have a lot of results, we have kkr, xerox. Then after the close youll hear from express scripts, pioneer natural resources. Those guys set to release earnings as well. On the econ front, well get the postmeeting announcement wednesday at 2 00 p. M. Eastern time which well bring you live and other data to look out for like gdp on thursday. Also, personal income and spending on friday. And finally, another busy week for earnings. Heres what is exactly on tap. Mark your calendar. On tuesday we have apple reporting along with dupont, proctor gamble, at t, chipotle on wednesday including boeing and facebook. Thursday is the busiest day of earning seasons. Ford and amazon releasing results. Friday, exxon and chevron, two bigger ones to watch. At lo of numbers coming. We do have a lot of other Market Metrics to show you. Check out the bond market, the tenyear note yielding 1. 88 . If you look at germany, the tenyear boon hit a year of. 228 on friday. It may not sound like a lot but thats up from the low. 89 hit early in april. So we continue to watch that. Also, check out gold prices this morning. Right now it looks like gold prices are up another 4. 30. And well get a check on currencies as well. Looks like right now the dollar is trading at 112. 57. The yep rebounding that the the yen rebounding. We have lema croft here, thank you for being here early monday morning. Lets Start Talking about the bond market first. Thats what people are watching ahead of the Federal Reserve meeting on tuesday. What is happening . Do you think things are starting to move higher this time, not just a false start . No, i dont think so. I think the bonds are capped at these levels right now because i dont think the fed is going to communicate any sort of hawkish message into this economy. It still looks like they are wobbling but the bonds are acting like there is sort of a bottom here. They clearly have found the bottom at 1. 60 or 1. 75. For that reason the dollar finds itself the fed may not sound hawkish when it comes to talking to things, but it will be nearly as dub i dubbish . Is there assessment of Economic Conditions . If they brighten their language, you will see the market respond. She doesnt have to be super bullish but just less bearish in her assessment of the economy. Scott, well talk stocks, we have seen things rebound sharply. What comes next and how much is related back to what the fed ends up saying . I think a lot has to do with the beaten down sectors Like Health Care financials, transports, youre seeing a move out of growth technology, its been underperforming so its a cruel oil. She smiled, thats good. Crude will continue to bring about lows over the next year. If the dollar breaks down, how do we talk about a fed hike if the dollar is at a low . I just dont see that. Wouldnt a lower dollar make it easy for the fed to raise rates . Part of it is worried to make the dollar so much stronger against the other currencies and that would hurt our trade. Commodity currencies are rallying. The fact we are starting to see a pickup, maybe in inflation, and the Global Economy is fragile enough where if they do begin a rate hike, which i dont think they can do another one and done. That would hurt economies. I think the dollar has been a big driver of commodities. So i think it is something to watch certainly. If they hike in the dollar which is why they will never be in that psyche mode. When they start doing the full cycle, never going to happen. Look at japan, one step forward, ten steps back. Thats where we are in the world. Its a world of bankdriven markets. And the essentials that have succeeded isnt there going to be a break at some point. Yes. How are you going to fight that . Until it gets to the point where the fed cant really control the markets. At this point the central bank owns 10 of all the stocks on the nikkei at this point. This is the next level of Central Banks. 10 of shareholders, 90 of stocks on the nikkei. Lets just talk about oil because so much of the debate has been around the central park. When you go back into it, a lot has to be supply picture, right . U. S. Production is when doha didnt produce an agreement to freeze, we didnt have to sell off as anticipated. Sentiment has really shifted in this market. So do you think weve seen the lows . And were not going to go back and test 27 again . The only thing that worries me is if you get a negative mack xro headlimacro. This is a supplydriven price. We talked ourselves out of the idea that a recession is imminent. How quickly could that come back on the plate . Or do you think we are through that and it is really the just the central bank . We will be back facing the recessionary pressures. The Central Banks are right where they want us to be. Data is okay. Earnings are not very good in here. So it needs to have the Central Banks report to fend off that recessionary pressure. Quickly on the technicals, the walls that we keep bouncing against, do we break through these or do we continue to hit them and fall back down . Its such a tough call, brian. Im carrying very light possessions right now. Thats why youre on tv. We could go high or low. Theres a 50 50 chance of that. No. Thank you, todd, for your final appearance ever. No. I dont like the small cap underperformance. We have lost the nasdaq. The s p and dow are driving us. We are starting to get a push into the transport, so i do think we will push higher but there is significant loss of leadership in tech, small crash but if oil keeps going up, that will help the bullish case. That will help the bullish case. You want to be in beaten down names or transports are coming back for the increased commodity transports because we are doing better. But to oil, what about iran and russia . What about everybody just the moment we think everybody in this market is pretty much capped out. So when they say theyre going to bring it on, theres not much more to bring on. Folks, thank you very much. Great to see you this morning. Thank you. Coming up, when we return, the auto dealership of the future. Forget the High Pressure sales pitch. Mercedes rolling out a more laid back buying experience complete with a restaurant and a juice bar. Phil lebeau has that story from the beijing auto show. Its pretty cool when we come back. The first stock index musiwas createdoughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Im in vests and as a vested investor in vests, i invest with e trade, where investors can investigate and invest in vests. Or not in vests. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Shoshow me more like this. E. Plan your never tiring retiring retired tires retirement show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Welcome back to squawk box. Mercedes is looking to revolutionize the future of suvs. Phil lebeau is from the beijing auto show with more. Phil . Reporter brian, this is unlike any dealership you would find in suburban, new jersey. This dealership in the heart of beijing is really very cool because its not really what you expect at a dealership. We have had a chance to walk around since they opened the mercedes Flagship Store dealership last week. It has a bar, it has a sitdown restaurant, a cafe, a juice bar. Yeah, there are a couple mercedes models in there. The reason this is important for mercedes is because mercedes is now the number one luxury automaker in china. And its sales last year rising more than 13 . This has now become the top market for mercedes. So they were very proud of showing off this store and talking about it last night here in beijing as they unveiled the new eclass. The extended edition of eclass, what they call the Longwheel Base because there are so many people who have chauffers over here in china. And we also had a chance to try to catch up to the ceo asking him if he had a comment regarding the department of justice probe into emissions standards at daimler and whether or not there are irregularities. We werent very successful. Heres what he had to say. A lot of americans are asking about the doj investigation. And thats where we walk away. Reporter the executives were very clear saying we are not talking about this doj probe into the emissions standards for daimler vehicles in the United States. So this mercedes dealership, there are a handle of them around the world. I wouldnt be surprised if eventually you see it somewhere like in manhattan. Phil lebeau in beijing, china. Well see more from phil including at 7 40 a. M. Eastern time. Thank you very much. When we come back, a new report on executive pay. Ceos getting a raise last year but how did compensation stack up to performance . And which ceo topped the list at 53 million . Thats a trick question. We have the answer next. And a look at s p 500s winners and losers as we head to break. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. If you are dancing at 6 30 eastern in the morning, i hope its with someone. Not by yourself. I dance with myself, thank you. That was good. Too well. Welcome back to squawk box on cnbc. First in business worldwide. You practice in the mirror, didnt you . Like this morning. U. S. Equity futures this morning not indicating a big change. There may be a slight dip, it may be down 22 points, the dow, but well see. Stock prices are mildly weaker because oil is mildly weaker. We are seeing wti crude just down 1 . But thats 51 cents to 43. 22. Its time now for the executive edge. The latest report on ceo pay over the weekend. Some of the Biggest Companies in the u. S. Got a bit of a pay raise in 2015. Mary is here there are a lot of these surveys. Mary thompson is here to tell us all about it. Nice to dance with you guys. You were dancing. I was. Dancing with ryan is a little intimidating. How about mone mone . You want to do that . Okay. We see lots of these lists this time of the year and they have different parameters. This excludes a lot of firms that file later this month, but median pay for executives up to 14. 5 million. The average pay rose 17 . The highest paid ceos of oracle, mark hurd and safra katz at 53. 2 million. And bob iger from disney at 43 million. David cote at number four and jeff immelt of ge is in number five. Missing is phillipe dauman who pulled down 54 million didnt make a cut for this survey because it was not put in the largest so100 companies. Warren buffetts compensation was 470,000. The cutoff for revenue for these companies, 20 billion. So viacomm had revenue of 13 billion. When you look at the list, it will tell you as far as total revenue and things like that. So does it measure revenues per share or Revenue Total shareholder. Okay. Is there anybody on the list that you go, okay, they really killed it this year. Good for them. And is there anybody on the list where you go, this makes absolutely no sense. The Philippe Dauman may be an example. He would be one of them. I would have to go back and check. I know there are numbers. I apologize for not having the names at the top, but certainly there are some where you look at them and say, youre paying yourself 43 and your performance is down 43 . Is that a lot of times because of stock awards granted previously or something that then come into the money . Or how does that some of them you receive a stock award for retention like mr. Dauman did. Thats part of it. You try to exclude the ceos only there one or two years because usually you have big grants they were given in that. But certainly there are disparities there and something that is often used by the proxy advisers. You have been covering this for years. We tell people the number of what they were given on the day of. But we rarely tell what you that actually equated to. She was here three or four years later when the restricted stock vested. Yes. Not only did you think the number would go up or down . I thought the number would go up. So we are not lowballing it. Thatss interesting. In many cases it would go up. Although there are others who were he didnt reach the metrics assigned to him in his pay, but then you have other people who are cashing in options and stock grants and the realized pay is what they have and its much higher. In 2008, the government was worth a lot more. And theres a whole different pay structure from 2008. Does anybody do a realized pay list . Maybe we should start one. The squawk list. Its a difficult thing to do. You can take one individual and can do it. But its a lit in itself a full lift. A lot of the ceos and what doesnt get publicized. You retire with 100,000 years of lifetime consulting contract, private jets, et cetera. I think its been dialed back a bit, quite a bit in the last couple of years. The say on pay, not saying there arent some that do that, but thats been dialeded back. The boards are much more aware of shareholders concerns about this. Its not a perfect science by any stretch of the imagination but they have tried to reduce things like opening parachutes and things like that. You dont need a parachute if you keep a plane. Thats true, too. Mary thompson who makes just a bit under the average. Oh, yeah. Marginally under. Just a little bit under the average. They have baseball pitcher making 15 million a year that have a 6. 5 e. R. A. Its not the only industry with overpay. I have a bit of a different feeling on that. A baseball pitcher is a person that has a singular talent. Not that a ceo doesnt as well, but you also have tens of thousands of people working below you, too, to generate the troub troubleshooting as well. When we come back, jack moore is here with some value picks and sector sweet spots including Chesapeake Energy and southwest energy. Each of those stocks up more than 50 just in the last two weeks. Some more ideas that could make you money, next. Right now as we head to break, take a quick check on what is happening in the european markets. A little bit of weakness with the tax down just over a half a percent. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. 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The National Average currently at a price per gallon stands at 2. 18. And lists are pointing to a creep in crude oil prices and a hike in the cost of making gasoline in the United States with the seasonal switch to the summer blend. A full plate of earnings this week. Youve got and, at t, boeing, facebook and many, many more including chevron and exxon on friday. One of the Big Questions out there overall regarding your investments and your money, has momentum in the stock market shifted from growth . Jack ford is here, Research Director at the street. Com. We can go through a lot of names, potentially being value, but allergen is interesting because i can understand making the fundamental argument when you look at the ratios, it looks cheap. But this is not a company that is just producing widgets. Everyone knows the argument. Obviously, it got a big blow when the treasury valued earnin earnings. Everyone is very concerned that the deal to sell the generics business for 40 billion is not going to go through. You can walk through every single talk to any expert, there really arent any issues from the standpoint. If you wipe that out, you can still generate and have around 50 on the up side. Still it has 10 growth annually. Youre looking at 15 growth. I feel like everyone is kind of pricing in a worse case scenario. The lower hurdle is going to appreciate. But you are still betting on th that . Because theres a lot of risk there. A lot of people are fearful the deal will fall through. Just because the treasury reversed their stance doesnt mean they will make a totally unprecedented move. The ftc is dealing with backlog, which is why its delayed. Now that faze r they are getting approval in the u. S. , but either way youre looking at a company that on a core basis, just forget about teva, its growing sales 8 organically. We are not talking 4 of that as a price. You might have liked the next stock a while ago, i dont know, but alcoa, its just interesting timing today because while you can make again the arguments, the stock is up 52 in three months. I mean, when i see an alcoa, which i dont know has gained 52 ever in the history of the company, in three months it makes you do a doubletake. I agree. Alcoa no one is buying this stock or very few people are buying this stock ahead of the splitup. Which happens in the fourth quart quarter, they want to completely eliminate the volatility we see in the stock. One of the pure businesses is the aluminum cycle, if its working, it will have cash flow. The other one is a much more it should be getting credit for trading as a multi maybe i wouldnt buy it right at this point, let it come down a little bit, but when i look at trough multiples in the companys history. If i assume trough multiples on both sides of the business for the new value and the old business, then you have around 25 downside. But on a base case, i think its around, you know, 2 downside. Up to 40 downside and you can look through the numbers. I think that, look, its a very volatile stock but think the volatility is going to really diminish once it splits it off. It was at a 43 stock a few years ago and doubled in 2013 and fell back down. Jeff mohr, thank you. When we return, the overall for mtv. They plan to return to their music roots on television. Well see if the move is too little, too late, for the struggling owner of the network. 38 just over the last year. Well return about it when we come back in a moment. Very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Dondont go to la. Dont go to tokyo. Live there. Hey, welcome come in, come in. When you airbnb, you have your own home. Make your bed. Cook. You know, the stuff you normally do. Wherever you go. Dont go there. Live there. Even if its just for a night. Everything old is new again. Cable pioneer mtv announcing plans to put the music back in music television. How important is this for viacom . Barney crocker joins us to weigh in on the deal. Hes the Senior Analyst at fpr capital markets. Good morning to you. You know, weve been talking about mtv. Were talking about viacom, the future of viacom. When you think about mtv on its own with, which is clearly a diminished brand for what it is, do you think its actually going to give it a little bit of kick in its step . You know, look, im a wall street guy. Im not going to make a hard call on the programming and what its going to develop. I think they need more excitement under the brand. The key to the stock is bigger picture. They renewed their Distribution Deal with dish. They have a stake in the par mount studio up for sale. Thats great. The icing on the cake is some excitement under the brand. It is intriguinging you see a l of things from the pop klture from the 80s and 90s becoming popular on netflix. As a guy sitting with a spread sheet, it does zero for you. Yeah. Mtv is not the biggest network. Its smaller than comedy central. It would be nice to see it work. But im not going to change it does nothing for the ability to make itself more attractive in all of its channels to other cable or satellite providers. When you say it does nothing. To be clear in success it would be great. I think the networks if you get a hot programming concept it works that generates excitement. I think at viacom the expectations are solo that if anything works, it could be really terrific for the stock. Because people think they can do anything right. If they get something right, that would be great. Is it going to work . I dont know. Well have to see. At dish they made the deal, of course, you heard before they made the deal forget about these guys. I dont necessarily need them. Theres a couple of Cable Operators who dropped the channels. Seemingly without a problem. Why do you think they made the deal they did . Because Viacom Networks in aggravate get nearly one in five. Nickelodeon is the most watched network. Tons of kids are watching cartoons on tv and nickelodeon has a big share of that. Its a big brand if youre a nationally distributed paid tv service would want to have. I thought that viacom was going to, you know, concede rate to a degree that others werent. I dont think they got much of a rate in the initial year. And, you know, i think it got worse and what you miss is you need programming. So you to have programming. In is popular. Its cheap. Not nearly as expensive as the sports stuff. Thats what i was going to say. In terms of the depth of viacom you think overstated and over sold . Yeah. I think it is. This was a stock trading at 7 pe. That would make it about the cheapest stock in the s p 500. One of the cheapest around the world. Theres a price for everything, and i think here you had a Better Business that was discounted and better prospects than they understood. I think were seeing that play out. What is this Company Worth then . About 51 a share. I think the optimal base case for me is that its broken up. I think you have a lot of assets that could make a lot more money as part of some other conglomerates and a lot of cost cutting and value kind of relationshiped from that. I think you have a control situation that makes it difficult to see how that can happen. You want to break up or a take over or combination of both . To be clear, they can turn it around. That would be great. I think everyone would love to keep their jobs and the business going. If they cant turn it around, you know, i think you could see someone will take it over, sell off the pieces. You know, you can tax efficiently, i think, parse the domestic Cable Networks and people like disney and time warner at the studio and maybe someone like a lions gate or other majors. And the international Cable Networks i think are interesting. You can see a break up creating value if they cant make the business work. I think things like mtv the turn around there is important if they want to stay together. They have to make the case they can do Something Interesting and exciting with the business. Okay. Barton, were going to leave it there. Thank you. Did you watch beyonce over the weekend . I thought it was yeah. Beyonce. He heard me. Its an mtv thing it was on hbo. You dont know what im talking about. Beyonce released the album over the weekend. I have no idea. Im sorry. Its okay. Its just the biggest thing going. In your life. Yeah. I have a 1. 5yearold kid, man. Have a baby. Coming up ted cruz and john kasich shaking up the gop race forming a coalition to stop trump. Getting enough delegates to win the nomination before the convention . We are going to speak politics, the economy, and everything in between with our guest host howard dean. Former governor and dnc chairman. It should be a great hour. speaking japanese oh watson, your japanese is very good. Thank you. speaking japanese exactly. I can understand nuance, context and idiom in seven languages to help companies all over the world with everything from retail solutions, to banking, to cyber security. speaking japanese well be with you shortly. Yeah right. Xerox Predictive Analytics help companies provide a better and faster customer experience. Hello mr. Kent. Can i rebook your flight . Im here Customer Care can work better. With xerox. Wait im here mr. Kent . gasp shark diving xerox personalized employee portals help Companies Make benefits simple and accessible. From anywhere. Hula dancing . Cliff jumping Human Resources can work better. With xerox. Shoah, ha ha. Ew artist. Show me top male artist. My whole belieber fan group. Its not a competition, but if it was i won. Xfinity x1 lets you access the greatest library of Billboard Music awards moments, simply by using your voice. The Billboard Music awards, live sunday may 22nd, 8 7 central, only on abc. Dropping turn. Ted cruz and john kasich team up to stopple billionaire from being the delegate. Well speak with howard dean and former u. S. Comptroller walker. Taking center stage in d. C. Today. A decision on whether or not it gets fast track approval weighs for investors. A live report ahead. And the buzz from beijing from selfdriving vehicles to the return of the suv. What is making headlines. The second hour of squawk box begins right now. Live from new york where business never sleeps. In is squawk box. Welcome back to squawk box on cnbc. First in business worldwide. Im becky quick. Weve been watching the futures and theyre a little bit weaker but they have come off the lows of the morning. The dow features are down by about 27 points below fair value. And the nasdaq down by about a 5. Weve been keeping an eye on oil prices. After a big rally last week you can getting back about 1 this morning. The june contract down by about 44 cents. Its above 43 a barrel at 43. 29. Here are some of the stories making headlines for you on this monday morning. Gasoline prices are on the rise. The latest lundberg survey shows average price per gallon 2. 18. Its up 8 cents a gallon. Ford ceo is not interested in a deal to merge. It comes after chryslers ceos that ford could be a potential merger partner. Those remarks came at the beijing auto show. Well hear from our own philip oh in beijing later on this hour. Its a busy week on the Economic Calendar with a number of key reports and fed policy meetings. One report today the earning at the march new oklahoma Sales Numbers at 10 00 a. M. Eastern time. Theyre expected a rise by 1. 6 . And a developing story out of europe this morning. President obama speaking in germany confirming the approval of the deployment as many as 250 additional troops to syria to train and assist local forces fighting Islamic State milita militants. German chancellor Angela Merkel visiting a trade show. The president is making the case for the European Union and the United States to move forward with a free trade accord. That deal is under negotiations. Supporters say it could boost each economy by about 100 million. Here is what the president had to say an hour ago. Ive come here today to the heart of europe to say that the United States and the entire world needs a strong and prosperous and democratic and united europe. And in the latest effort to stop donald trump from becoming the president ial nominee, ted cruz and john kasich are teaming up in a sort of nevertrump campaign. John harwood joins us now. Good morning, andrew. For months even though they werent beating donald trump, his opponents have been saying if they could get one on one match ups with him they would. Now ted cruz and john kasich are trying to make it happen. Ted cruz is going to concentrate on indiana. John kasich is going to step aside. John kasich is going to concentrate on oregon and new mexico and ted cruz is going to step aside. This is a move of desperation that tries a lastditch effort of denying him the 37 delegates he needs and taking advantage of the disquiet among donald trump about the republican dodonors. Is it possible another clinton could be better than another republican . Its possible. Its possible. You couldnt see yourself supporting Hillary Clinton could you . Well, her we would have to believe her actions would be quite different than her rhetoric. Let me put it that way. Some of the republican candidates before we can support them, we would have to believe their actions would be quite different than the rhetoric weve heard so far. I wouldnt hold your breath waiting for charles koch to endorse Hillary Clinton. Take a look at the numbers in pennsylvania. Donald trump has got a comfortable double digit lead. Hes leading in the other states connecticut, maryland, delaware, rhode island. And the vote tomorrow hell rack up bunch of bell gaits. The question is does the move isolate the opposition to trump and produce victory for the antitrump candidates . Or does it signal to Republican Voters he doesnt have even one viable opponent left and accelerate trumps momentum . Well see. Why dont you stick around. We have more on the race for the white house. Were bringing in former dnc chairman howard dean. Its great to have you here today. Great to be able to comment on the republican race. Not just the republican race but what is happening with democrats. Are you surprised at this point, i mean, youve been doing this a long time. At this point, we have many candidates running for the nominations. Normally at this point its on the republican side you started off with the 17 and were down to three. I would be shocked if the business with kasich and cruz works at all. Here is why. Those voters not go to vote against somebody. They dont do that. A few do but mostly not. It if youre for john kasich in oregon, which is a pretty moderate state, youre not going to feel like youre pulled toward ted cruz. Does that mean you wont show up or you might half you may to go to trump. Half of you may go to trump. Thats when we saw when marco rubio walked out. Trump picked up more votes than some anticipated. I think its going to be a close call whether trump gets enough votes to convention. I think this is why polls we have a few of our own, theyre just not telling us anything. Right. If you call somebody and you say who are you voting for . I dont plan on voting. If you were, give the name, but you dont vote. Im sure a lot of people will say this candidate even though im a republican if its trump i wont go or maybe if its this or that i wont go. This nonvoting side is going to be huge. Thats the other thing. People say that now but, for example, on the democratic side with hillary likely to win. Well see what kind of day she has today. There a bunch of people on bernies side a saying theyre not voting. They are going to vote. If youre faced with the vote of Hillary Clinton or a right wing extremist. Why is bernie in it . Hes a deeply committed guy with ideology. He wants a vote. He is probably going to lose the vote and give a speech about his ideals. And the question here is the critical question. When he got into the campaign he said im not running as an independent. He said hes never been a democrat. Or a member of any party, actually. Am i going to would i do anything to help a right winger president of the United States . The answer is no. I heard him last night trashing hillary again and the crowd booing. He has to stop that. He has to stop with the speeches of Goldman Sachs. Think hes going to change his stripes . If he doesnt i dont think hell be taken seriously again. Me might not care. I think Bernie Sanders is going to go on. The solution to the problem that the governor is articulating may not be Bernie Sanders changing what he says but fewer people paying attention to what he says. Right. He has some strong supporters. He has 25,000 people. He does. He does. But hes losing, and hes likely to lose pennsylvania tomorrow and the other big states. So he is behind the eight bam in this race. He knows it. Everybody knows it. On the republican side, i want to say in defensive polls after what ryan said. With the exception of michigan, which was a big fail by pollsters that suggested Hillary Clinton was going to win and Bernie Sanders win. The polls have benched fairly accurate. In other words trump has been leading and winning primaries. Hillary clinton has been leading in the big states and winning those. So i think it is true that there are some people who dont vote who show up in polls, but their track record hasnt been that bad. Do you centhave any idea wha happened. I have yet to see a reasonable explanation. I think every person that pays attention this is gun shy. Every pollster was off internally and the public polls. There was no reasonable thoughtful explanation of what happened. The only thing i heard i havent seen anything systemic is that an under estimation of the share of young people that were going to turn out and vote. Thats where Bernie Sanders rolls up huge margins over Hillary Clinton. If youre off by a few points in under 30 voters will show up, your polls will be way off. Governor, one of the things that has been so interesting is that the populism that is strong on the right and the left. In some ways theyre related. There are people in the financial business who get this. When you have ceos making 5800 times as much of the line workers thats the problem. Thats been the case for 20 years. The middle class dont mind rich people getting very rich as long as they get something. Theyre cosigning the loans on the own kids and theyre never going to be able to pay. They could lose their house. Theres a whole lot of middle class people who never recovered from the great recession. And wages not rising. Exactly. Thats the problem. Some people react by voting for bernie and other people are furious and vote for trump. Im a trump supporter but my second choice is bernie, thats what a lot of people are saying. The president said this morning in a speech in germany this is one thing we often forget. And i understand the inequality issue here is a wbig one. You have gaps. I get it. Eventually somebody has to remind us, i think the president did this morning is Global Inequality is never more narrow. The world is getting richer were living 30 years longer. The point is capitalism moved around the world. So the point im trying to make is some point were going to have to become maybe not protectionists, but the rest of the world is their income equality gap is shrinking. Our tends to be growing. How do we fix that . Do we say we need to be america and thats what the pop lists are saying. Here is the issue. Trade agreements are great for interNational Security. I spent a week in vietnam a year ago with the government on a delegation at a democratic function so forth and so on. All want ttp. Why . Because they see it as a bull work against china. Its geostrategic. Its true that a rising today creates stability. The problem is short term dislocations, which is tough in this country, which is not all about trade, by the way. Trade gets the blame for the internet for a set of skills that arent there anymore in high school. There are manufacturing jobs that used to be the heart of the working class. Thats exactly right. That have been moved offshore. And our Education System hasnt been able to keep up with the demand for the different kinds of training. Hey, guys the long run is important. I think the short run we have to be careful about what were doing to our own middle class and working class. Cant we agree at least 5 or 10 years out theres no manufacturing jobs. Manufacturing is being taken over by automation anyway. I dont want to be fatalistic. Were making a lot of cars in this country. Cars in places like alabama and tennessee which is raising the lifestyle which is good for our country. John . Yeah. I wanted to say i think he put his finger on the core of the anger that people feel. It goes to the reality that the president was addressing in that speech. We had an economy for decades dominated the world. And it produced very high Living Standards in the United States. When you have the global sbe that domination was fated to continue indefinitely. As the rest of the world comes up and we go down, people sense that. Its probably inevitable result of globalization, but people dont like it, and thats whats fuelling a lot of what we hear from the trump and sanders supporters. It is, john. I appreciate it. It is tough because you dont want to go to the huge issues at 7 19 but you can point to 1950 to 1975 the boom of American Manufacturing because germany and japan had complete Manufacturing Systems destroyed in world war ii and spent the next 30 years rebuilding. We were the only manufacturers of scale for the world. By the way, we were the low cost manufacturer for the u. K. We put the u. K. Out of business. Because we were the low cost builder for much. How dow you save the rest of the world . Get poor so we can get rich er. Our immigration problem is eventually going to fix itself. Howard dean, we have more to go with the governor. Its only 7 15. We got him for the whole hour. Thank you. Coming up another big week of earnings ahead for investors. A look ahead. What companies are coming out. What numbers you need to watch. Some are more important than others. Wall street is open for business. The future sup this hour not indicating a big move. Maybe a slight move for the dow. About 20 to 24 points. Very early in the morning so far. Maybe a slight drop for stocks. More to do on squawk box. Well be right back. 0 the welcome back to squawk box. Take a look at Oil Prices Saudi Arabia expected to announce a comprehensive plan about the post oil era economy, its being called Saudi Division 2030. Saudi stocks suffered a bit. Youre looking at wti at 43. 44. The dow and the s p 500 posting second straight week of gains amid mixed results for the First Quarter earnings. Its early. A little boost from oil prices helping your investments this week as well. We have a big earnings week this week. Thursday is going to be all kinds of craziness. We have key Economic Data as well. Joining us now to talk about this is fidelity director investor. Last week with google and microsoft falling. You say it was a tech wreck. Do you think they are one off or two off or a real macro trend concern here especially among technology . Yeah, i dont know exactly about technology specifically, but there is definitely Something Interesting going on. So what were seeing over the last few weeks is that were seeing the typical pattern where, you know, companies tend to guide below where they think theyre going to report. The numbers coming into the quarter, if youre looking at the progression of earningsest mates tends to be too low. Coming into the quarter expectations for minus 10 year over Year Growth Rate which is a bad number. So far even after two weeks the number is down 9. Typically youre going see that balance. What is happening is that the numbers for the next few quarters are coming down. Actually, the number for the overall calendar year 2016, at the beginning of the year the wall street consensus is earnings would grow about 7 . Three weeks ago that was down to maybe 2. 5 or 2. 8, and as of last friday, it was down to, like, 1. 8. The wall Street Community is expecting very little Earnings Growth even though, as you mentioned, oil is up, the dollar is down, and over the last year or so the dollar and oil explain most of the progression about 85 correlation. So im not sure what to make of that. Whether theres a more broad based slow downgoing on, but it certainly is an interesting development. And as our viewers know and the fed comes out at 2 00 eastern which is generally im on power lunch. Ive been critical of the fed. I think they talk too much. I think were too overly obsessed with the fed. That said, its been the binary investing world lately. If you think the fed is not going to raise you buy stocks, if you dont think they dont maybe you dont. Is it still that binary . As long as the fed has credibility, and it does, we may not be able to say the same for the bank of japan and the ecb given what happened with how the markets reacted, but as long as the fed has credibility, you know, they it work that way. And what weve seen over the past two months do they have credibility . I know they have power. Do they have credibility to you . I know they have power. Do they have credibility . Theyre different things. Yes, they still do. And what weve seen over the past two months is that less tighting is the new easy. Two things happened in the last couple of months. One, china once again, went back to the reflags their well 1 trillion u. S. Has been pump spood the chinese economy in the First Quarter. Were seeing that reflags their activity again regardless of whether it will change anything over the longterm. At the same time the fed has gotten more dubbish. The dots have come down and the market is well below the dots even. And the fed has come out in recent weeks saying were not going to do anything and expectations for june hike are down like 14 . And the market is way up. So the fed does have to be careful that it doesnt paint itself into a corner. With oil up at some point, inflation will be running north of 2 and unemployment down at 5, well have this conversation yet again. It seems what frust mated me about the fed it seems like everything time and they raised rates in december and we had china act up and whatever so they use the word global you do the word searches. It seems like the fed is hanging on everything that happens around the world. Theres always going to be something happening around the world. If were reliant, by the way, on global movements, which is not the feds dictate, were never going to have higher rates again, it seems like well, i dont agree with that. Right now thats been the case. Thats because while the u. S. Economy is in a pretty decent expansion still, you know, we have this global trade recession and we have a policy divergence ightenthe fed wants to t and the rest of the world needs to ease. That creates pressure on the dollar and all kinds of tightening and financial conditions. I think the fed is right to listen to the markets, because as you know, the markets will tighten for the fed, and if the fed set the a rate hike we got to go. They know they can control the fed. A long discussion. Well talk about it again some other time. Thank you. When we return, a wild couple of days for shares offer is rep data. They were down more than 40 on thursday. Today an independent panel of experts will see if they approve the drug to fight a disease. 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Show show me more like this. S. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go online and switch to x1. Only with xfinity. Welcome back. Lets catch up on the Earnings Reports. Xerox reporting 22 cents a share. That missed by a penny. It cut the fullyear forecast. Part of expenses related to the plan break up the stock is up 1 . Lap corps. Estimates by 6 cents with quarterly profits of 2. 02 a share. Raising the full year forecast on accelerating demand for the services. That stock is up slightly. One Earnings Report due out this morning but has been postpones halliburt halliburton. Delaying the results as it tries to address merger concerns. Separately they cut about 6,000 jobs during the quarter. Pennsylvania primary results as we get one step closer to determining the follow natinomi both parties. Which has the best tax plan . With is us david walker. So with us our guest host former democratic governor of vermont howard dean which plan do you think is the best . If were playing on the tax front . Who are we trying to play for. Lets talk about the general categories. Look at the three republicans in the race, they want to do comprehensive tax reform that either goes to a flat tax in the case of cruz or broadens the base and lowers top marginal tax youre not a flat tax man, if i know you correctly. Im not a flat tax man for a lot of reasons. Okay. Secondly, if you look at the democrats they basically want to build on the Current System with some exceptions for secretary clinton, and increase tax rates or provide additional minimum tax rates. But, you know, you cant just look at the tax side. You have to look at the spending side. And thats when we have a problem. Because nobodys numbers add up or come close to adding up. Who comes the closest to adding up . Well, on the surface, governor kasich has said hell balance the budget within eight years. He provided a framework for how to do that. There are no details. Theres not details with regard to what do you with regard to social insurance programs. What do you do with regard to spending. He has a track record of being able to do that. Candidly, its just a frame work. So, look, bottom line we need comprehensive tax reform in order to make it simpler, fairer, more competitive, to generate more revenues, and improve or competitive posture. I feel like we were closer to that conversation four or six years ago than we are now. With something that seemed to have a lot of urgency. It seemed like the public and politicians were picking up on it. We havent heard of any this election cycle. Were hearing more with regard to the corporate side with inversions. Corporations s engaging in vars to minimize tax burdens. We have to do comprehensive tax reform and start taxing just like every other major nation. That is on a territorial basis, rather than a global basis. We need to treat the disease rather than the symptoms. How can we change the tax code to get wall street to actually do things and create jobs as opposed to pushing paper around like derivatives . Theres the argument. Youre talking about bringing earnings back and whether the money will pay off shareholders. Yeah. I mean, deerertives, flash trading, all this stuff. It doesnt do anything for the economy except take money out and put it in peoples pockets who dont need it. But wall street traditionally is where you have capital and allocate into a place to create maximum number. I would say wall street plays a larger role in terms of financing. If you want to start a business, if you want to buy a home. Thats true. My argument is youre getting away from that you know why, governor . Im not defending wall street but they cant make any money. Rates are solo. You cant make money on mortgages or doing the stuff. You know what theyre doing . Crazy things that maybe my question to david is what can we do with a tax code to make it making money . We need to encourage longterm investing. Okay. And change our tax code to be able to do that. Okay. Secondly, we need to pursue Public Private partnerships including trillions of dollars in form of Pension Funds that might be able to used to make income producing infrastructure to let the government focus on nonproducing investments. We need a plan for infrastructure. We have no plan. As a result when we want to spent 87 billion with the Stimulus Program we repave streets and dont do things that dont end improving Economic Growth and generating sustainable jobs, dont improve the environment. Theres a number of things that we need to do that are fundamental. What sort of tax reforms would you recommend . Some of which, im sure, in there. Theres some in here. For example, one of the things it talked about is income is income. If we broaden the base and lower the rates, then you tax the same rate with regard to ordinary income and Capital Gains if we can lower the top tax rate enough. Secondly, you know, if you want to end up giving a preference for Capital Gains you want to require longterm investment. You want to go out a number of years. I go back to my point, guys. And i agree with everything you say. The only way you get a home built in North Baltimore is offer a rate of return. Right. And with rates where they are, theres no spread, and the reality is, governor, ill lend you money for a house but if im only going to make a 1 above the cost of capital its not worth it. Use the tax code to accentuate the return. We have breaking news that just crossed the table. Tribune Company Making a hostile bid for the Tribune Company this morning. Putting out a letter 1225 in cash per share. Thats a 58 premium to the stock over the past 90 days. A multiple 5. 6. Theyre putting out a letter they sent within minutes ago. Apparently they had tried to make a deal with the company. There was a letter on april 22nd. They apparently they say theyre disappointed by the response, which i assume means the tribune said no we dont want to do this. Nuntless, a big deal within the world of journalism and publishing and media. Tribune publishing is not the same as the media. Were talking about the newspaper portion. We can understand why tribune is a bankruptcy story. Theyre offering 12. 50 a share. Tribune was a 15 stock. 18, excuse me, one year ago. If youre the board saying i understand youre offering 50 more but were coming out of bankruptcy. Were tight at 225 guessing that number, more than we are now. Apparently its not dead. To get back to the tax discussion. Get net said it will not affect the recent transactions to prove that tax policy matters. You want tax policy to encourage sound economic decisions. And our current tax system is overly complex and noncompetitive that it doesnt. And it, also, enhances the ability of people with at lot of money or companies with a lot of employees and resources to employ a lot of lawyers and acow assistants to be able to game the system. Dont we think the companies every ceo says they want tax reform. Right. They want it. I believe them. I sort of believe them. I get cynical because when you get into the details behalf they want relative to what another ceo wants, they dont really. Do what we need to do, francly. We ought to listen to the American People. One of the good things about the no labels ideas, these are ill lustive ideas. Bottom line is what it does is lays out 60 ideas for jobs dealing with fiscal responsibility including tax policy, dealing with Social Security and medicare, dealing with Energy Security that have been tested with the American People. They all get super majority support. Right. What we need is what we havent had for many years. Leadership right. We need to listen to the American People and find out what theyre willing to accept because special interest will never get us to where we need to be. Youre going up against the whole thing. I ask people. I love the trivia question, which state has the highest perj age of millionaires . What state . New york. New york and connecticut. Maryland. Maryland. You cant name one fortune 500 company base there had except maybe marriott or under armour. You think where are they coming from . You know . The beltway. Theyre lobbyistsaccountants. What is your stat . Youre going after the highest percentage. Per capita. This is interesting. Number one and number two. The point is its high. You cant name an industry there except for horse farming and sailing. Maybe under armour. Its the d. C. Money machine. Its left, right, everybody is taking here is what happens when you talk about tax reform. Theres been a lot of talk a lot of talk about lowering the Corporate Tax rate. Okay. I think general speaking thats a good idea. Thats the only way youre going to fix the inversion problem. In order lower the tax rate you have to pay for it. Otherwise we run up the deficit, which is what usually happens. Cut taxes. Not pay for it. How do you pay for it . Get rid of special interest exclusions. You have a big fight about whether you need the oil completion allowance decades after it was put in to encourage which it doesnt. Thats a huge chunk of how you pay for lowering the Corporate Taxes. The biggest argument is how do you score them . How you can possibly score things dynamically. Its signed by the Republican Party not to have to pay for the stuff historically how its been done a you need to score dynamically. Wh what we need to focus on is debt as a percentage of the economy. Thats what we have to focus on. Thats a progrowth strategy but fi fiscally responsible. And its a show many me test. Brian wants me to tell the viewers you were right. I saw you connecticut is number two and basically its a complete farce because youre taking two of the smallest states . The country. How about this . Virginia is number six. Name a fortune 500 another tiny state. Tiny state. Have you ever been to virginia . I own a home there, yes. In terms of people. It is a beautiful state. Tmobile does data differently. So it can do more for your business. When work takes you across the globe, your unlimited data travels with you to 140 plus countries and destinations at no extra charge. And thats not all. Because with tmobile theres no overages. Ever. Switch your business to tmobile at work. And get four lines. With 10gb of 4g lte data each for just 35 per line. Nobody does business data like tmobile. Right now apple is the Biggest Country in the world. If something happens apple will not only be the Biggest Company but it will be worth onethird. Because moments ago saudi arabias deputy grand prince 31yearold who is arguably running, for all intents and purposes, the saudi kingdom as his father has not done well. The oil and Chemical Company is going to be worth about 2 trillion. Theyre not identifying an ipo date, or saying theyre going public, not that ive seen, but a company that arguably, many of our viewers may know about but probably only loosely because its not a visible corporate name. It could go public and have a mark value of 2 trillion. Making it six times bigger than exxonmobil. Based on selling off 5 . Yeah. Of course. Sarepta is up in front of a Economic Advisory committee today. Whether one of the drugs is effective for the treatment of muscular dystrophy. Good morning. Good morning, becky. Its shaping up to be an tense and emotional day here at the meeting of outside advisors to the fda. Patient advocates and Community Members have been lining up for more than an hour. It starts at 8 00 a. M. People started arriving at 6 00 a. M. To get in the room. More than 850 people from the community are expected to come today. Fda doesnt make the decision today. Its expected by the end of may. The panel will discuss the drug. What is at stake . Its a rare universally fatal condition. There are no good treatments now. Usually puts kids in their wheelchairs by their teens. There are no drugs on the market. The for sarepta the application supporting the approval the Clinical Trial was run on patients. The argument from the Patient Community they say its keeping their kids walking for longer than expected. The fda said its not enough data to tell. Thats the main argument central to what is going on today. People said its a bigger issue picture how fda considers drugs like this. Its going to be an intense, emotional day. Back to you. Thank you very much. Fascinating. Obviously youre a doctor this is a chronic problem in how the fda deals with this stuff. This is a drug that, for these people, essentially, has no downside. In a sense that all they it doesnt do anything they dont lose anything, theyre going to die for sure 100 of the time if they dont. This is a drug that is different than 98 percent of the drugs that the fda looks at. Why does the fda have a hang up . As you said, having a best friend who died of brain cancer in 2009 right. It. I get mad about the subject. He was looking for extra help in experimental treatments. He didnt care. If people are facing this 100 . The drug may have a downside but the other downside is the muscular dystrophy. Why dont they loosen up on those drugs . There should be two tiers. Theres a such thing as the patient advocate si. The patients are more willing to take a chance on a drug like this than the fda. Because the fda gets the hell beat out of them by senators who want to make a big name for themselves. The default position is never do anything for aggressive to get yourself in trouble. Its, you know, congress is part to blame for this. There should be two tracks. There should be a particular a different track when Patient Advocates are arguing for something. Give them a hope. Theres plenty ofsha cane i are and stuff that doesnt work. The fda has a role but i think they need to take a different approach on drugs like this. Well continue the conversation in a moment. When we come back the buzz from the beijing auto show. Check out the futures. Its been a little bit weaker this morning. Dow down 28. Squawk box will be right back. 0 show me movies with romance. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Suv sales have soared 52 in china over the past year. But American Auto markers largely have not been able to cash in like they used to. Philip oh joining us with more from the beijing auto show i would assume why and how the suv market from americans is going to get bigger in china. Its already gotten bigger and continues to grow. Ford and gm have a huge presence here when it comes to suvs. Theyre doing well here. Increasingly, if you walk around the beijing auto show, youll see there are more chinese brand suvs for sale. Chinese brand suv sales are hot in this market. Saems of those suvs are up 52 in the last year. China has become the number one suv market in the world in chinese brand suvs control 60 of this suv market. Why . Because theyre pushing lower and cheaper suvs. Its the low end of the Market Driving the suv sales. Suvs around 10,000 made by local automakers thats the heart of the market now. Reporter 10,000. Now for entry level suv here. Thats very appealing to at lot of Chinese Consumers. Compare that with ford and gm. Theyre at least, you know, half or double that as far as the price goes. And overall sales here in china still outpacing what we see in the u. S. Guys, this is important for ford and gm. They get a lot of profits here in china. In fact, gm probably on pace to get about 2 billion in profits here in this market. Well hear from ford later this week. Thats the story here in beijing. Back to you. Okay. Thank you for that. Were going to turn our attention to our guest host this morning. Youre only here for another three minutes. Im here as long as you say. Thats right. Unless youre out by 8 00. Here is the question im trying to understand. If you think well go back to politics. If you think its trump and you think its hillary, my question is how much do you think that trump is going to do damage to hillary in a debate . What do you think is going to happen . Nothing. Hillary is a polished gaither. Trump is effective because he swallows up the attention. He knocked out five solid republican candidates because they dont get any oxygen including jeb bush. He cant do that on a oneonone campaign who has the best resume of anybody in the country. Hell carryon his sort of schtick doesnt work. I hear that all the time. Because you get 2 billion worth of free media time from us a because he was outrageous. In a oneonone race it doesnt happen that way. You can see it happening on both sides, the closer you get to the election you think about this person being president of the United States. And the more you think about that, the more serious you get. Howard, his poll numbers are going up. More and more republicans say theyre likely to get behind him at this point than there were a month or three months ago. You know the republicans by themselves arent going to win anything. They have to bring a lot of independents. An independents are horrified. Women are horrified by him. Members of every Minority Group i hear white men dont like hillary. We dont get many white men voting for us. You get to the elect trait, which is fine for the Republican Party. Its not so great as an electorate where over 30 is people of color. I think its usually 6 that swings the selecti s election. I dont think it will be a run away election. I think trump has dug a deep hole. Theres never been a republican president that has won by getting less than 35 of the hispanic vote. Trump is at 19. Howard dean, thank you. Its been fun. When we return well welcome ian bremer. Were talking geopolitics, the election, and the economy. Later this morning apple is set to report Quarterly Results. Well get you ready for the results talking iphone sales, products, and the iphone pipeline. 0 yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. When bargain carriers talk about unlimited data they dont talk about all the extra unlimited that comes with it. Like unlimited frustrations when they slow your data after just a gig or two. Or unlimited angry girlfriends. Because of unlimited undelivered explanations. And unlimited searching for. Whatever youre searching for. Stop searching and switch to verizon by calling 1. 800. 870. 8149. To avoid unlimited misunderstandings. Mom mom, whered you go . Maybe, not baby. And what feels like unlimited videos that wont go viral. So if youre done with your unlimited plan limiting you, call 1. 800. 870. 8149 and switch to verizon, americas best and most reliable network. And now get 20 gigs on four lines for eighty dollars a month. Flip your way through your last 9 shows with the tap of a button. Change the way you experience tv. Xfinity x1. New this morning president obama officially announcing he is sending additional military personnel to syria, increasing the u. S. Presence there. Well talk about what this means and hit the worlds other hot spots with ian bremmer. Breaking political news. Ted cruz and john kasich are teaming up to stop trump. Bernie sanders is acknowledging a narrow path to a democratic nomination, and taking the music world by storm. Beyonce drops a new album. Her exclusive deal with title is short lived. Well explain as the final hour of squawk box begins right now. Announcer this is squawk box. Welcome back to squawk box on cnbc. Were less than 90 minutes away from the opening bell on wall street. Take a look at the futures now. Things like theyre offer a little bit. Dow off 35 points, nasdaq down a little over 9 points. S p 500 looki ining off about 2 points. Again, you looking at it is off. Among todays top stories. Saudi arabias cabinet approved a plan laying out reform priority for the next decade and a half. They want to turn the economy around from reliance on oil to being investment driven. The saudi deputy ground prince expects ram koe will be valued at more than 2 trillion. Less than 5 of aram koe will be sold off in the offering. Back in the United States earnings in Central Bank Decisions likely to dominate the market conversation. The fed will begin a twoday policy meeting tomorrow with decision of rates due wednesday afternoon. Bank of japan meets later in the week. Get this, some say that the boj could announce more asset purchases and take steps to apply negative rates to bank loans. Yeah. Those are the type of loans you want. The corporate projected out this weeks earnings calendar will be outlined by apple. Other names include dupont, proctor and gamble, at t, boeing, facebook, ford, amazon, chevron, and exxon. Two big corporate stories elsewhere this morning. Began net offered to buy Tribune Publishing for 12. 25 per share in cash. 63 above the Closing Price on friday. If the deal goes through georgia net, would add the l. A. Times and Chicago Tribune to the newspaper portfolio. As you can see perrigo shares are down following the news. Valiant, by the way, is higher. Quick on the gannett news. They sent a letter back to tribune saying give us until june 2nd. We need time to do this. They have the Shareholder Meeting then and want to evaluate it. A little bit is a bear hug. They didnt reject the offer. They said give us time. Theyre hiring Goldman Sachs and want time to think about it. Having said that, it doesnt sound like theyre ready to do this. And the sad part about this story if we werent in the media, we wouldnt mention this deal because tribunes market cap is 200 million baby company. Yeah. It would never make our radar. Because its media. Also because the properties involved. The other question is whether this will push somebody else to show up. A couple of properties out there. The stock is up 62 . Its already all the way up. You get in on the action . Trying to figure out what extend nups have the model. In that regard, these are interesting. The New York Times we referenced it yesterday had a story about the gilded age and how the 1 are separating themselves on cruise ships. And you have billionaires buying up the newspapers. All right. The president is in germany today meeting with german chancellor Angela Merkel. Nbc ron allen is traveling with the president. He joins us live. Welcome. It was a long speech. He addressed security, he addressed trade. What was the take away from hanover, germany . Reporter well, a lot of talk about trade and pushing the tra transatlantic trade deal. It may not be completed before the time president obama leaves office. Also on the agenda is the fight against isis and terrorism. And announcement by the president hes sending 250 u. S. Special forces into syria. Thats not a lot of troop bus its significant because the president said he doesnt want to put Ground Troops on the ground at all in that conflict. As you know, the coalition has been leading the fight from the air. Here is some of what the president had to say about what the troops would be doing. Theyre not going to be leading the fight on the ground. But they will be essential in providing the training and assisting local forces they continue to drive isil back. So make no mistake, these terrorists will learn the same lesson as others before them have. Which is your hatred is no match for our nations united and the defense in our way of life. Reporter the key point is that these troops are going to be assisting syrian and iraqi forces on the ground. Local forces. The United States feels it reached a turning point. A lot of momentum in the fight against isis. The president is sending more Ground Troops to advice to sort of augment the gains made. Theres been a major push to try to strangle hold the area called raco, the isil headquarters in syria. Theres a push to try to take back the city of mosul in iraq. The president making the moves when he thinks the sus making progress and calling on european allies, while hes here, to increase their contributions to the fight. Okay. Ron allen, thank you. We appreciate it very much. Joining us now for the next hour, as we mentioned, sort of broke in early talking newspapers ian bremmer. Lets talk about this president ial trip. He talked about a lot of stuff on the trip. We talked about syria, we talked about germany, we have talked about grexit. What is the most important . The trip is getting better. Every stop has gotten a little bit easier. The saudis by far the most problematic. The germans with merkel theyre pretty closest and aligned. In how much they want to do and how little they want to do in terms of the middle east. The biggest story for it, especially for the markets is grexit. It was controversial when obama comes in and saying youre not a special relationship. You can get to the back of the bus on trade if you actually dont get this pro union deal done. Of course, the opposition to that in the u. K. Is very significant indeed. Do you think he made better or worse . I dont think he made a difference. The cameron asked them to weigh in. The u. S. u. K. Relationship will get stronger if they end up voting against brecks it. If Boris Johnson wins then the u. K. U. S. Relationship will take a profound hit. Were receive the politics playing fireworks on the ground for Boris Johnson. You might as well take a shoe and put mustard on it. The mayor of london made unbelievable but also seen as a potential leader. Yeah. Johnson [ talking over each other ] you dont think hes the donald trump of the u. K. . I dont. He has shown in addition to being he has the baa foon i are but he can shown he can run a city. Hes popular for what he has done. I wouldnt call him the Michael Bloomberg of the u. K. Hes a very canny politician. Not that hes in favor of the brits leading the union. In the week before the vote he said he was going the other way. He does recognize he gets it done then hes got a straight shot. You said obamas comments dont change the game. I would think it could backfire. It could. In your case what is this guy doing telling us what to do. Thats right. Its not going to change the vote. In order if brexit is not the basis of obama showing up and what he said. The point is the u. S. U. K. Relationship, i think theres going to be a more significant backlash favorable or unfavorable. It would be unconsciousble for britains most important ally to say nothing that if we believe if they vote for brexit will have a damage to the relationship. Indian w i understand why he weighed in. He weighed in too hard and heavy. It set off fireworks. For our viewer in chicago or milwaukee getting the kids to school, thinking about their job and investments. What would britain leaving the e. U. Mean to anything . Its an important american trade partner. Its going to cost a million jobs a year over time it will probably cost some 14 billion off an annual economy. Their numbers from the confederation of british fry indust industries. Why is it youre using the stuff that is negative. And polls show most people dont support it. Why does it have 30 support inside the u. K. You know, sort of pop list view were getting here . Usa tree begans had a vote for the president yesterday where the populist party took by far the most votes. No one is in favor of europe. All the terrorist activity, all the refugees continued negative growth trends, the imf two weeks ago downgrading it yet again. Its hard to get up a lot of excitement for the brits to say i want to stay a part of europe even though it may be larger. You may not get the turn out. I think its close to a coin flip two months away. Most important vote theyll be taking in their lifetime. They may move europe in a different direction. Thats clearly the most important part. The saudi trip would be important if he could do anything but even the white house said after his trip to saudi arabia is it because of chinas rise that europe and america are losing jobs and manufacturing and were feeling less significant in the world europeans largely, having traveled extensively. Feeling the same way because and you look at the u. S. Military were shifting to asia. Right. From europe and even from the middle east. Is this all because of chinas rise . Thats a big part of it. Certainly chinas rise and globalization meant the emergence of a global middle class that depressed wages for the wealthy middle classes of the u. S. And europe. The europe not as productive took a hit. They have a second problem, too, which is the implosion of the middle east. Thats the u. S. Not wanting to play the security game. Thats, you know, the information revolution for good and for bad for people that are no longer you take the implosion of the middle east and the rise of china in the emerging market and europe is getting caught in the cross hair. Theyre not prepared to stand up for what europe stood for when we were fighting the soviet union together. You dont have a lot of europe leadership in those countries, either. A great man or woman in some of these countries would make a difference. Were going to keep talking to ian. I want to talk politics in the u. S. Lets do it. When we come back animals beat the hunters at the box office. How much the junglebook brought in over the weekend. A busy week on earnings. Economics reports and central bank meetings. You are walking squawk box on cnbc, first in business worldwide. Welcome back to squawk box. For the second straight week the jungle book is the king of the boz office. A mix of live action and cgi brought in another 60. 8 million. Thats in the u. S. And canada this weekend bumping the total to 191 million in north america. Ticket sales were down about 40 from the films opening weekend. The jungle book overshadowing the huntsman winter war. Cast of hunts worth, emily blunt, and Jessica Chastain is in the film. It took in just 20 million. A big week for the markets and your money. You have the fedss latest decision on rates on wednesday. A cornucopia of Earnings Reports coming out. Lets talk about it all. Joining us on set, of course, we have our senior economics reporter addressing corporate earnings. Lets talk about the fed first. What can we expect from the fed on wednesday . Is it more prince doves flying and doves crying . I like that. I have to think about that. Were inside i would love to do a prince metaphor here but i dont know how it works. Let me tell you what is going to happen and ill sing it no. Were in a Holding Pattern with the Federal Reserve. I think it won a few battles here. The yellen view on labor slack and inflation is predominating. Its winning out. An incredible influx into the labor force. 2 Million People plus and the strong wage gains. Some people are worried about it. Her view are winning out not a lot of opposition. Two, the markets are kind of chill with the fed right now. Theyre convinced the fed is in no particular hurry. A little work this morning on looking at if theres a break between december 2015 to june 2016 between rate hikes, it will be the longest break ever in a rate cycle. The fed has never weighed in what would amount to 180 days. Its one of the astronomy questions. If the planet is so far outside of the solar system, is it part of our solar system . Is that another rate hike. Does that imply it was a mistake . I think that there was a sense of just getting it done and some people nobody weve asked said it was a mistake. I think people thought have might have been premature. And the fed has been successful. First of all, its backed off. They said they were going to be for and its probably forecast for and now forecasting two. The market is in a place where, drum roll, please, earnings can be more significant. How about that . What a great segue. Guys, first of all, i dont think steve believes that pluto is a planet. I think that pluto is a planet. Thats me. If we take a look at the overall picture for earnings. If it comes to the macro environment being stable and turning to the microcompanies, it would be one that people would to overlook in terms of the markets maybe perhaps going higher. The reason why i say that is weve known for ages now that corporate profits in the u. S. Are not going to be great. In fact, theyll go down. If you take a look at what happened with the s p 500 companies that reported and all those one s yet to report. If everybody left to report reports in line with analyst expectations, Profit Growth will drop by 7 this time this quarter over the same time last year. Now people say, okay, thats earnings. What about sales . People have hung their hat on that. Its still growing. If you look at the s p 500 Companies Set to report left. If they report in line with expectations, youre talking about a 1 drop in overall revenues for s p 500 companies. The health of Corporate America has been better in the past. Youre saying exsoil . People are looking at that but the s p 500 will show profit decline. Thats how much of a impact oil is having. If you look down a half point of gdp growth, if were lucky, in the First Quarter. We started this year with tremendous optimism. And 2. 3 was the sense where growth was going. Its whittled down report after report and now were just at half a point in an environment where were growing inflation adjusted a half a point. Its tough to do anything on earnings well, the tough part about this, again, is whether or not you can see any kind of improvement in the places that really matter, guys. And we talk about apple as a company. Apple is a huge weight for the s p 500. Apple will report today. Well see what happens here. But as a member of the Overall Technology sector, the reason why its key because among sectors leading the way higher, you like to see things like Consumer Discretionary show gains. 15 Profit Growth. However, technology, which is far and away the biggest sector will show 5 profit declines. So if the biggest sector in the s p 500 is going to weigh everything down, then thats going to be a real concern. The issue now is whether or not markets overlook it. They have. Were sitting 2 Percentage Points away from record highs. I dont know if you can overlook it. But certainly something to keep an eye on. Dom, thank you, sir. Great to be here. Were talking beyonce. Ive been following the news over the weekend. Its been interesting. Okay. The Music Industry is changing as we live it. Its amazing. Hes a musician. He is. You would think he would know about the stuff. So much for titles exclusive. Beyonces visual album lemon e lemonade on sale. Well see what happens the next 24 hours. Back in a moment. Owen hey kevin. Hey, fancy seeing you here. Uh, i live right over there actually. Youve been to my place. No, i wasnt. Oh look, you dropped something. Its your resume with a 20 dollar bill taped to it. Thats weird. You want to work for ge too. Hahaha, what . Well were always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. Why dont you check your new watch and tell me what time i should be there. Oh, i dont hire people. Im a developer. Im gonna need monday off. Again, not my call. You would think he would know the first stock index was created over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . The welcome back to squawk box. Beyonce releasing her highly anticipated album lemonade over the weekend on hbo. Fabs could only access her music on title but lemonade is on sale for itunes. I dont know if jayz has started it or bought it. It makes sense. Some of the songs talk about also, if you understood the implications its very complicated relationship. Or they want to continue the theory that has been out there and driven so much publicity on again, off again. Maybe. Who knows what it means. Theyre truthful or very good at keeping up with the public. I dont know. I dont know. Anyway. Very good, apparently, for title. But i didnt realize they were going to make it available so quickly to everybody else. That cant be good. I would assume as jayz youre saying what are you doing . Sales of princes music has skyrocketed since the artists death on thursday. There were 2. 3 million songs sold in the last three days including nearly a million on thursday. They were lead by princes biggest hits like purple rain, when doves cry. Authorities say it could be weeks before a cause of death is released. In sports news on squawk. The nba playoffs after sitting out the past two games with an ankle sprain steph curry returning last night for game four against the rockets. But in the second quarter, a scary moment. He tweaked his right knee. He left the game prior to halftime. Hell undergo an mri today. The warriors beat the rockets. They have a 31 lead. This is a big worry among warriors fans. Meantime more trouble for johnny manziel. The em battled quarterback reportedly will be indicted on a misdemeanor assault charge. Hes accused of assaulting his exgirlfrie exgirlfriend. Manziel was released by the browns earlier this year. Hes been dropped by two agents in less than three months. And check it out. British astronaut became the first man to complete a marathon in space on the same days the london marathon, the 44yearold ran 26. 2 miles. He completed it in 3 35. He is used elastic straps to help keep in contact with the tread mill. Astronauts have to work out in space. They have to work out like three hours a day. I want to know how much easier it is if youre floating in the area . I dont know. I couldnt do it. I couldnt do it. Lack oxygen may make it tough. Yeah. Breathing circulated air. Yeah. When we come back north dakota feeling the pinch of the crude collapse. Well talk about the slow down with senator heidi height camp. Thats next on squawk box. Show me movies with romance. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Welcome back to squawk box. Here are the headlines at this hour. Gasoline prices on the rise. The average pump price at eight cents over the past two weeks. Gasoline up over 41 cents in the past nine weeks. The Justice Department dropped the latest fight with apple over unlocking an iphone. A new york drug case in brooklyn but an unnamed person provided the authorities with the pass code. That reportedly unlocked the device. Some people say apple won it. Some people say the government won. Well see. Department stores should close hundreds of locations. Thats according to a new study by green Street Advisors last Year Department store sales averaged 165 per square foot. Down 24 from 2006. All right. Check it out, folks. Solar powered plane crassed the Pacific Ocean on sunday in the ris riskiest voyage. It landed safely in San Francisco on sunday after a 2200 mile voyage from hawaii. Solar panels line the top of the plane. It only goes 28 miles per hour. No. Thats why it works. Would it work in manhattan . No. The reason youre never taking it to los angeles i resume the blips the future of air travel. The latest effects of the collapse in crude oil prices reverberating across the nation. North dakota seen a nearly 90 drop in oil alone. North dakota senator heidi height campbell joining ining height campbell joining us. Ive seen the preboom, the boom, i dont want to call it a bust but the turn down. It seems lying everything is half filled. How does shake out . I think at the end of the day weve been through the ups and downs of the oil market. Were building the infrastructure and ready to come back with a price point basically would dictate further activity. On the good news, we have a thousand wells that have been drilled that uncompleted ready to go once we see a recovery in the oil price. But fundamentally right in north dakota the biggest concern is not the decline in oil prices. Its actually the decline in ag prices and what is going to happen in agriculture in north dakota. You got a lot of different things, senator. Your state is faces. I understand youre good, hard working people. You have to be tough to live up there. Its cold most of the year. You seem to be facing this pain on all sides. When i heard when i was there people said all the workers left. Were not sure if things turn around were going to have the people to restart the industry. Yeah. One of the things we really were benefactors of was, in fwakt, the downturn in the rest of the national economy. So you saw construction workers from idaho, you saw rig workers from oklahoma and texas and louisiana. Its going to be hard to get them back. But we plan on doing everything we can to build the infrastructure so that next time when they come theres going to be Single Family housing. Theres going to be multifamily housing that is affordable for families to live in north dakota. Thats one of the challenges we had is offering a Community Environment for families. So they didnt come and stay. Now we are seeing, i talked to high school principals. They have not seen a decline in enrollment. Were waiting until the end of the school year to find out if those families move out after school is over. Senator, one of the things weve seen this morning is saudi arabia laying out parts 1569year plan. And the country itself the kingdom seems to be moving away from this idea that it can rely on oil indefinitely. It seems to be trying to diversify in saying its looking more toward investment. What do you think about the future for oil prices when you see Something Like that . Well, i think that theyre being realistic. When i was in saudi arabia we heard the same thing. What was going to be the movement. They were curious about what north dakota was doing. We have a very aggressive start up community in fargo and the eastern side and in bismarck. You hear this, also, in north dakota. We need to diversify. We need to not just be a commoditydriven economy. Were getting hit by currency and low commodity prices. If were going to have our own destiny, keep kids in our state, we need to offer other alternatives. What are some of the alternatives . I think weve got second or Third Largest microsoft complex in the country. I dont know if people know that. From that has been a lot of employees who have now left and are spinning off new investments, new businesses. We have a very large medical industry in north dakota that serves a whole region. We think canadian tourism is critically important. Were getting hit by the currency discrepancies with canada, which affected our tourism. Were going to weve done this before. Ive in politics since 1984. I will tell you ive seen the ups and downs. Ive helped manage the downs. Well come back and this isnt anything that anyone in north dakota didnt anticipate what happened at some points. The prices stayed down for, you know, five years, lets say. It becomes more structure. And there are reasons to believe it might. What would you say the thing to watch what brings you out if we cant count on ag, fracking, and energy . I think the biggest diversification is innovation coming out of the two research yumpts. Weve got great bio tech happening. We have wonderful nano technologies. A lot driven by the work that byron dorgan did. Aka earmarks. That paid off dividends for the country. We have a uas napark part of th extended use base. I think were going to be the center for remotely piloted aircraft. So weve got lots of tun opportunities. Its going to take time to see this transition take full circle. Senator heidi height campbell of north dakota. Ian bremmer, the things we were talking about with the senator. What saudi arabia is laying out this morning. Talking about how theres a 2 trillion evaluation potential for saw aramco when they come out with the 5 of the company. What do you think about that . What do you think about the prospects for saudi arabia . How does it play out to what is happening in geopolitics. Clearly in north dakota its lesson thats saudis would be wise to learn. You know, a 2 trillion evaluation, if remotely right, and if they pick it up 100 million out of that, thats a few months of the deficit from last year. That said, i mean, this is serious problem. Keep in mind, its mohamed, the 30yearold deputy crowned prince pushing the issues. Hes been incredibly assertive in terms of reform of the saudi economy. Has been equally assertive in terms of more militaristic orientation around yemen, syria, and the geopolitical issues in the region. No guarantees hes going to succeed or be there in the few years. His father, the king, is ailing and an in his 80s. Theres a lot of uncertainty within the family. Theres a lot of uncertainty of what needs to be done to make it stable. Anywhere else in the region is saying we cant just have a saudi relationship. Weve got to be henl hedged. We have to work with the iranians, the turks, the chinese. Everybody. Part of this is because the u. S. Has pulled back and not the force it once was there. Probably intentionally. There wasnt an american appetite for troops on the ground there. Theres been a vacuum. And a lot of chaos has come out of that. I think thats right. But if we imagine instead of obama, you know, you had any of the major republicans in place or Hillary Clinton who is a bit more hawkish on many issues in the middle east would you ask me would the saudis not be in the pickle. They would be. Theres no question that the iranian deal hurt them more than anyone else, but this is fundamentally about the end of opec. Its about a break down that came from north dakota. That came from texas. It came from oklahoma. It came from new mexico. New technology. Absolutely in the break we were talking about how new technology is fundamentally taking labor out of the Global Economic equation. Before that happens, new technology is taking power away from the Traditional Oil producers who thought they had a grab hold on it since the 70s. Sorry, over the course of two years the u. S. Has gone from a highprice producer to mediumprice. You had 40 years to figure out what you might do. They wasted that time. You say the americans dont want to play ball. The real problem you dont have a governance model. You dont have an economic model for the and the emirates do. They have health care, transit, finance, they have bubbles and busts. The saudis i remember going to saudi arabia three or four years ago and ministers saying were diversifying and doing chemicals. You want to tear your hair out. Ian bremmer is going to be with us for the rest of the hour. We have breaking news regarding valiant. Joe pop pulmo, the ceo of ver go will become the former. Hes going to join valeant. Becoming the chairman and ceo of valeant. I deal with him with name only. If youre a company with this much scrutiny, i wonder if its smart to have a chairman who is also your ceo. Why not split those things up . Why not have four eyes, two brains, all looking at the same problems. Yes. You have to find those people. I dont think thats the issue. I think the issue is whether this guy is a smart thing to do. The question is whether this guy they needed them to fix valeant. Thats the longterm question. Im going say its not. Why . I dont know. If you look perrico is a fine company. They were looking for other names. We dont need to talk about them on the air. We can goat it after the break. They were looking at other names that didnt want the job. Its really not enough. What access would an incoming ceo have to the books . The question of valeant is when are they getting restatement done. Two holders of bonds have petitioned for a default ruling. Theyre in a technical default because you need a certain window of time after the quarter ends to release results. They got extension. Bondholders are saying default. You wonder what papa has seen. I wonder its a question not a comment. What do you know about the company when you come in . Okay. Well talk about that when we come back. Apple set to report Quarterly Results this week. More than 30 tech earnings could be out. Could apple be the bright spot . More on that debate when we return. Its been smashed and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. And dragged through the mud. The 2016 gle. Its where brains meet brawn. Lease the gle350 for 599 a month at your local mercedesbenz dealer. Welcome back. Technology is back in focus this week with apple and afacebook among the names set to report the Quarterly Earnings results. Josh lipton joins us live from San Francisco. Hes got a look at what we heard from technology so far. Good morning. Well, becky, we know transitions can be tough, especially i if youre an old tech giant. Thats one theme investors have been reminded of during the earnings season. Take big blue. Ibm did best expectations but revenue slipped nearly 5 . Thats as new businesses so cloud analytics, mobile and security arent big enough yet to offset the pressure that is more Mature Services and hardware businesses are under. When challenged for Tech Companies like ibm contending with the change of Cloud Computing we know competition is heating up. Microsoft told us its Cloud Services reached an annualized revenue run rate of more than 10 billion. These are dollars that google crow made clear he intends to compete for. Google can build data centers as well as any internet giant and hired the well respected diane green to lead its cloud business. Another take away maybe the pc market isnt dead. At least at the high end. Intel lowered the full Year Revenue Guidance along with that news it would lay off 12,000 people. The chip maker isnt giving up on the pc market. That move makes sense for intel since microsoft reported its consumer pc business grew 15 as people bought more of the premium devices. This week is going to be another busy one for tech investors. Apple reports tomorrow after the bell and amazon on thursday. Back to you. Thank you very much. Joining us now is gene muenster. Senior analyst. What are so. Things youre looking for when the Company Comes out . Well, i think the big thing is the march numbers call it 51 million iphones. Thats kind of a nonevent. The biggest thing is the june quarter is going to be derisk. Its going to be a down quarter for iphone. Our belief is theyre probably going to guide overall revenue a couple percent below the street for june. Thats actually a net positive because essentially that resets the board because then iphones starts to return to growth. So i think thats one of the big things. The second big thing youll hear more about is services. This is something they hinted to in the december quarter. This is about 10 of their revenue growing about 15 plus and has a 50 operating margin. That compares to the overall operating margin at 30 . What their trying to do is get investors to value their Services Business at a higher multiple than overall hardware business and look for apple to be aggressive at sending that message out tomorrow night. What is their Services Business . Well, thats everything from itunes, if you buy tv shows and movies, to apple music, apple care, and apple pay are basically it. So that encompasses their services. In terms of what how they will react. You think that by taking down their numbers they will react positively because theyre going it see it as a drop . Exactly. Andesters, obviously, will look forward to what ultimately is iphone returning to growth. What will be mathematically below where the street is. As long as investors know they can comfortably look toward the september and december quarters. We think thats going to be positive for apples multiple. You know the watches, the apple watch have done okay when it comes to sales. Yet theres a lot of detractors. A lot of people who are nay sayers on the project. Yeah. Its a small part. Its still about 6 of total revenue. So i think this was expected to be more like 10 at this point. So thats why i think theres been a disappointing aspect to it. Theres probably going to be new hardware around the watch in the fall. Look for apple to stream line all their products ahead of the holidays now. And then the real sizzle behind the watch is going to be 2017 where it gets decoupled from the iphone. Right now you need the iphone to use the watch but ultimately youll be able to use the watch as a stand alone product. Thats probably where it becomes more interesting investors. You tell people to buy the stock ahead of the earnings . We do. We think once the numbers have been reset and that actually the stock will trade up on those reset numbers and the last piece is that theyre pushing this iphone upgrade program, which could help the speed and pace that people upgrade their iphones. You yeah. A lot of big tech firms that had difficulties in china like facebook and googlefacebook and google. One of the biggest trends i see in china is making National Security for i. T. Much better. The iphone store was shut down for the last six months, six months open last week just down. And theyre saying were going to create it so nobody can have access to your data, just going to be in the cloud. Thats antithet kal to where the chinese want to go. Theres going to be a question of are you valuing iphone with access to the biggest Consumer Market in the world or are you not . What then happens . Either apple has to change their model, which i dont think theyre going to do. Or theyre going to have big problems gaining access to the Chinese Consumer. Shutout . Its very possible. Absolutely. So youre making a call apple is going to get shut out of china. I would be very surprised in five years time we see apple having the kind of access to the Chinese Consumer that they currently enjoy. Really . Yeah, i really would. These companies are run by incredibly smart people, but the Chinese State is also a client of yours. If youre right you would have the value of that stock. I dont know what that means for the value because im just a political scientist. If youre telling me cant do business in china. If im telling you theyre going to have the kind of issues facebook presently has presently means youre not in china. I think people misunderstand the nature of the chinese tech involvement and that government over time. Gene, we have to run, but what do you think of that . You know, the governments been pushing back on using iphones for the last couple years. And the china growth still has been 15 to 100 . I think theyre always going to make it difficult, but apple will have a booming business in china. Gene. The great irony is the flipside, the reason theyre supposed to be trying to be so secure is to keep that business, right . The reason theyre trying to be so secure is to keep business that allows them to be in the financial world, right . Its a very different model for them. Guys, when we come back jim cramer will join us from the new york stock exchange, big week of earnings, the fed, what does jim think of it all . Stay tuned to find out. Why do we have aflac. Aflac. And Major Medical . Major medical boyyy, yeah berr, der berrp. I help pay the doctor, aint that enough for you . Theres things Major Medical doesnt do. Aflac pays cash so we dont have to fret. Something families should get like a safety net even helps pay deductibles, so cover your back, with. Aaaaaaaaflac learn about one day pay at aflac. Com rap lets get down to the new york stock exchange. Jim cramer is standing by getting ready to go. Jim, we were talking about apple. Do you want to weigh in on what youre expecting to hear from the company tomorrow . Look, i think this is the quarter that doesnt matter as much. I think the service is going to be up even more than gene said. I do think the possibility that there could be problems in china down the road is realistic. But China Remains a big market for them. The chinese the more they try to shut down apple somehow this new 5e in china took off among younger people. I think that could be a good story for them to tell. Im not looking for much from apple. I think what matters is the iphone 7. What matters is what kind of new technology were going to have. And its pretty much urnder wraps. I was listening tobeck ki, the watch, which i have, you know, its okay. It could get better. It seems to be it rations it will get better. So im actually not im staying with apple. I think it will be fine. Jim, what do you think of papa going to valeant . Papa turned down the big bid from mylan, lost a lot of share when jnj got back on the shelves. Maybe papa, whos been a frequent guest on mad money can lend us some stability to valeant. In the meantime left behind omega, which was just a nasty impairment charge theyre taking. So i wish joe had left on a higher note, how about that . Left on a low note. Is this the guy that saves the company . I think the fact that they got an actual publicly traded guy makes it so they can play again. Okay. Jim, thank you. Get that debt reduced. Well see you in just a few minutes. Squawk box will be right back. And why stop to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. 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Trump responding with a new nickname for kasich tweeting, lying ted cruz and 1 for 38 kasich are unable to beat me on their own so they have to team up in twoonone shows weakness. I think they need a better name than 1 for 38. You could do 3 , 3 kasich or something if you wanted to. I dont know. I think its not enough. I think needs a different name. Trump really loves deals and hates them when other people make them. Thats what were seeing. Ian bremmer, thank you very much for joining us. Well see you tomorrow. Squawk on the street begins now. Good monday morning. Welcome to squawk on the street. Jim cramer, di vang di vang and im carl quintanilla. Big week ahead. Busiest of fed meeting, primaries, gdp, premarket soft for the moment. Oil is steady as the saudis disclose plans to take their state oil giant public. A road map begins with saudi arabia laying out its plan for economic reform and