Transcripts For CNBC Squawk Box 20160427

A barrel. And you have to go back to november so when weve seen prices like this. If you went to bed early donald trump declared himself the presumptive gop nominee. After winning all five states yesterday by huge margins. I use the analogy of the boxer. You dont have to wait around for the decision when the boxer knocks out the other boxer. So that is what is it is. Hillary clinton beating Bernie Sanders in pennsylvania, maryland, delaware and connecticut. Bernie sanders winning rhode island. Sanders is showing no sign of dropping out. Well have more on the race coming up in a few minutes. Corporate news. Comcast reportedly in talks to buy dream works for more than 3 billion. The price represents a big premium over the current market cap. Comcast parent of course of cnbc has enjoyed success with animated films. The Company Reports earnings before the opening today. Well bring them to you. Dream box is behind shrek and kung fu panda. The company has been on the block for quite some time now. They almost did a deal with hasbro. You can see why comcast would want to do it to try to keep up to make sure they have constant content for the parks and things too. And animation is one of the biggest businesses. Not that i follow the stock closely or something. But i thought it was 61. 05. There was a quote that was higher i had 60 yeah its 30 cents different than what i thought. I have to factor that into. Its either been results have been consistently good the last few quarters. Results coming in from comcast 7. What disneys done with paying and over purchases and. And there arent many of these around. Things like that. What is it called . Like a . Content creator . No. I dont know. There is a name for it when you are buying something that is rare. That there arent. Yes. Beach front property. Yes. I know. I know as a writer it sometimes takes you a while to get to that spot. Thats not what it is. You will experience this. Its not that far off. And, you know. And you didnt have to go to bed that early. I actually saw most unless you are on squawk box you know what happened last night. Because i even know if you were busy and you should a rock. They called those things at 8 00. Right at 8 00. I knew they were going to make those declarations right at 8 00. And then went straight to the reporter at trump headquarters. And it was crickets. And is everyone there excited hearing the news. And they werent watching. It was like crickets. I thought 40 was the maximum. 40. And he got 50 once in new york. And that was supposedly a fluke. And he got 60s. Hes your nominee. Im scared for you. Hes your nominee. I am not endorsing it but youre fighting on it. Base on the people who said they will leave if hes electelected. Im not going to mention any names. He actually said this is going to add to my mojo. Ill th elena dunham. There are people who have threatened to leave the country and move to alaska. Rocket ship . Outer space . If you werent watching cnn they were probably on twitter last night. A mixed quarter. Average monthly active users coming in at 310 million now up only 3 from the prior year topping streets expectations which had been so low to begin with. But posting Second Quarter guidance significantly lower than streets estimates. I think were focused on our things. Weve never had more focus as a company and Development Team and were engineering what we believe to be the best experience out there around life and around whats happening now. And i want to make sure twitter is the place you check to start your day. It will tell you whats important, what matters and thats what were deriving towards. Periscope before the products launched and said the company would continue looking for other great teams and other products to acquire. The beard is back. The himself pster. Did he move to brooklyn or is he live over san francisco. Free food. I understand when you are in the playoffs or something, you know. You dont want to lose your mojo. You dont understand facial hair in. The mojo for twitter is definitely you want to shave the beard and put the hat on backwards. The beard is not working. Three food stocks today. Buffalo wild wings getting clipped. Missed expectations across the board. Same store sales falling 1. 7 at the companyowned restaurants and 2. 4 at the fracturesowned locations. Chipotle losses. Same sales tumbled nearly 30 from last year. But the chain is still looking ahead, opening 58 new restaurants during the quarter. The bakery cafe for panera serving upbeat on the top and bottom lines. And increasing full year guidelines. Not supposed to eat anything white. No pasta, no bread, no milk. No dairy. If says who . I dont know. For everything. Everything that happens you know you got to watch the sugar in your bloodstream. You got to watch your irritable ib thing this comes hand in hand with, you know. This no. Trying to keep it sharp. Trying to keep things running. Shares of apple, posted a miss on to top and the bottom line. That is being polite. Shares were down about 8 for a lost of about 46 billion dollars in market capitalization. By the way that loss in market capitalization is greater than the total for about 391 of the s p 500 companies. Apple shares down about 7. 60 to 96. 75. First Quarterly Sales drop year to year since 2003. Thats 13 years. Apple shipped 51. 2 million iphones. Ipad sales at 10. 3 million topping expectations of 10. 1 million. And 4 million macs, fewer than the 4. 5 they were looking for. Dividend boost and 50 increase to capital return program. Joining us is aaron rakers. Manage director at steval nicholas. We new sales for the iphone were going to come down. Revenue was going to come down but it was steeper than anticipated. What happened . Yeah, i think it is more about the expectations on a forward basis. The guidance was obviously weak at 41 to 43 billion. I think the street was 47 billion. That led us to estimate about 39 million iphones shipped for the Current Quarter where we were previously modelling more. And i think we knew the two quarters for march and june were going to be challenging. Clearly the guidance was the weaker point. On top of that the gross margin guy of 37. 5 to 38 was versus the street estimate of north of 39. I think you could adjust that though because there is clearly some channel inventory burn. Lot of moving parts. We still like the set up for the iphone 7 cycle. Does this raise the question what kind of Company Apple is . Is it no longer growth . Market growth for china sales were down 26 . Thats eye opening in whether they have reached a saturation point . Thats a fair point. When we look forward and look back at fiscal 2015, top line revenue close to 28 . Were modelling around 9 this year and return of growth into fiscal 2017. The point on the growth versus the value story, i think we were seeing that in the valuation with shares trading back somewhere 7 times cash. Thinking about the iphone seven cycle next year. Were estimating 9. 40 in earnings power. I guess we found you. I dont remember whether you had the 200 price target and refused to come down. Those guys, you know, we call them down and its like oh no. Dan ernst . Brian white . Hes not here. Is there a brian. And so many of the apple annians hate me already if price going up forever and forever. And thats thing. You dont have a birthright to do 60 billion every quarter when everybody is nipping at your heels. Obviously. There is people trying to get into this business. Did you see the chinese gentlemen talk about mocking apple in their technology earlier this week saying the entire platform for the compared to but why do they argue with so many analysts . Why . Whether do they get paid for . To think that all the trees just grow to the sky and there is no law of large numbers. They had the stock doubling to where it it would have had a 1. 2 trillion market cap. And all they could keep saying over and over time is thats all i could say. Please do not discount because im im not discounting anything youre saying. The question is, is this the trough though . It is just a question given the cycle of these phones. Now that is the question. And we heard even talking about this saying we knew this was going to be down or. Now from the future here what if we dont get anything great until there is a car. This idea that the next great apple product if there is one is four years out and it is the form of a car. I dont come to you for non conventional typically. But do you think it is the trough . I think an relative basis i do. I think so you think it is the trough . Yeah i do. I think a lot okay. Go on. The work we do in terms of the install base and the opportunity that sets up for the iphone 7 given that we like the cycle going in. Apple has a 95 plus loyalty rate in terms of upgrade rate on iphones and two questions. First what is your price target . 120, ten times x cash. What was your high . What did you come down from in. What were around 135 when it comes to iphone 7 do you think the take rate looks anything like the take rate on the 6 . And the reason i ask is because there was such a monumental shift in the form factor in terms of the size of the screen that there were really people upgrading not just from the 5 but the 4. But if the form factor isnt substantially different do you think people wait it out . To be clear when we lock at numbers going into the next fiscal year, were roughly around 75 million units. The take rate on the iphone 6 in late 2016 was around 14 . Growing to their pre iphone 6 install basis. Were clearly assuming a lower upgrade rate. Thanks for joining us today. Thank you. We have onto analyst coming up later in the show that weve never heard of. That is fresh. So isnt sort of being blind sided by any of this. There is still a 200 price target out there. Would you lower your price target. Or were you just that dog gone market is wrong. At 200 i think id lower. Hes not in a terrible place. I do think that on a relative basis where we are today would be surprised what . More people would buy the 7, the next version of the phone. A lot of people have to buy it. Thats the thing. When it was really humming there was a lot of things going right. A lot of price to perfection. And there was take the cash out and icahn was right there too. So what do you do with the cash . Thats the fundamental question. What could they buy . Anything you want. Basically anything you want. What do you want . Id probably buy comcast for 235 billion. You think . There yougo. And id finance the rest of the purchase because id paid 400 billion i think for it. And a fee for that. A giving a premium. Shareholder. Including the Battle Ground of pennsylvania. John harwood joins us now with more. John, yeah, you didnt have to stay up very late last night to see what was gonna happen, did you . Nope. Weve been slip sliding towards this result for some time of a trumpclinton general election. And last night moved us a giant leap closer. First on the republican side, the stop Trump Movement has talked about the ceiling on his support of 40, 35, 2. He busted through that. Over 40 everywhere. Every 60 in delaware and rhode island. And Hillary Clinton wins 4 out of 5 with robust majority. She loses rhode island to Bernie Sanders but Bernie Sanders needs to win big in every state to try to overcome her lead in the proportional delegate allocation system. None of this makes on these last night makes either of these two candidates the nominee. Hillary clinton is not over the 2300 delegates she needs but shes on her way to do innidoin that. And on the republican side there is still some flickering possibility of Holding Donald trump below the 1237 he needs for a first ballot nomination. But he still has a solid chance of doing that. California on june 7th is where he has the potential for wrapping up that nomination and by declaring himself the presumptive nominee on the heels of these results. Donald trump is trying to break the will of the optiposition. And when you look out weak cruz and kasich were across the states it looks hes going to succeed. I dont think there is a lot of optimism that donald trump is going to be stopped at this point, guys. If you want to win indiana. And the great sports movie, gene hackman, you know, hoosiers. They played a lot of hoop hoops. Or would it now be referred to as they play a lot of rings . Did you see that . That ted cruz referred to the basketball hoop as a basketball ring. No. Oh yes. He didnt do that. And its all over twitter this morning. This must be be bobby knight is campaigning for donald trump. This i think if you have to win indiana and you are standing in indiana where the hoosiers are, i think they might take your name off the ballot. Endear yourself to the voters. You have never heard lebron at the top of the key saying im going take it to the ring . Ha ha. I watched two of the speeches last night. Ted cruzs speech and Bernie Sanders speech. Seemed remarkably similar. They both blame the media for why they are not going to win. And both say they have a much better chance to beat the opposition. And how successful is that argument at this point . The argument is not true first of all. Second of all it is what happens when losers whine to the media. These are lame complaints and they are it is not correct that ted cruz and Bernie Sanders would be stronger general election opponents. I suppose nobody can know the future for sure but there is no reason to think that Bernie Sanders would be stronger general election candidate than Hillary Clinton, whatever match ups say now. And ted cruz is not the the polls do not show ted cruz as a strong general election candidate. So take it with a grain of salt. And certainly Republican Voters are taking it with a grain of salt. Thank you sir. Great to see you. When we return, the fed finishing a two day meeting today. Were waiting on the statement at rates. That is at 2 00 p. M. Eastern. More when squawk box returns in a moment. The eclass has 11 intelligent driverassist systems. It recognizes pedestrians and alerts you. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2016 eclass. Now receive up to a 3,000 spring bonus on the e350 sport sedan. Joining us. One more this year steve . One, maybe two. Rate hikes . Yeah. They said it would be urgent, seam urgent if they were to move in april. So it is going to seam urgent any time over the course of a year. Tough uk vote on the referendum right after the meeting. So june is difficult. Unless they are taking chances or the polls are very far apart. The lecture in chief delivered the speech over here. The same speech he gives over here. Now they are going to probably go. Well the polls did move in the other direction to be fair. They did . Yeah. If it was this, if it was other things. The polls moved slightly away from the idea that there will be a break from the european union. This tightening cycle that we had. How many have we had . One. Feasibly it could be none this year. Steve leisman made the point were now entering the longest period weve ever seen between a rate hike moving cycle and i guess that raises the question was it a mistake to go . I guess wire going to find out in time. They are focuses more on developing. With good reason. Absolutely. And take a look. There is never a good time to set off certain triggers and you can look at the very direct line they have made between chinese currency risks and the u. S. And if you run Monetary Policy with these sorts of issues in mind, the problem is delayed. And it can become bigger. So you look at where we were in the past. And not to say were repeating all this right now. The data have been modest in terms of u. S. Strength. But it is still an issue for us if we run Monetary Policy with the rest of the world in mind and those risks build. Do you agree with that . And do you think the fed missed its chance a year or two ago to get up to 1 or 2 . It is hard to say what the is. I think the dollar has done a considerable amount of heavy lifting for them. Equivalent too roughly six hikes. The cumulative tightening has been quite considerable. 106, 107 and the euro back to 113 now. I think proponents of a june hike or even april will say that financial conditions are back to where they were early december and they were comfortable lifting rates. The dollars back to where it was in october. But my problem with all of this is that this is all built on a foundation of a much more dovish rate outlook. December, october the market was priced for three hike this is year. Can the fed put a hike back on a table for june or even september. Its almost full employment. And if we are going to see a victory tour for the Current Administration and about economic rebounds and activity, what kind of victory tour can it be if you cant get out of your own way at 0 Interest Rates . What is the real story of whether this economy is above or not . We cant afford 1 or 2 interest . I think the real story is the supply side is a problem. And in the u. S. Weve managed 2 gdp growth in the cycle and taken out a considerable amount of excess capacity. Look at the kploimt rate. Weve cut it in half. So telts you potential growth has expanded at 1 in the past five years. And that is the real story. And if potential gdp really is closer to 1 than 2 that means the equilibrium real rate is much lower than what the fed assumes well even that would be 1 and 3 4 percent or Something Like that. Does mean we just have to change our expectations of whats possible in the world . Just think about whats going on in the world. 30 of sovereign bonds across the world trade on negative yields. You may more than your future catch flows and return of principle. There is tremendous stretching in the rest of the world to provide accommodation and it is feeding back and doing heavy lifting of tightening. But as you said, janet yellen pointed to the fact that we back off and financial conditions eased around the world. Everything is going well now. But that is putting off issues to the future the problems build abroad or here. We used to assume that we didnt have to think that the best we could do was how the rest of the world was. We used to think that we were exceptional. Basis. Exceptional on the relative basis. That is exceptional for the world. And look at our Interest Rates at. Be doing better if we were 3 or 4 . We all wish we could grow stronger. Absolutely. Yes we can. Another factor well never know about. Thank you steven. Thank you. Coming up. Slumping sales in china helped end the streak in quarterly revenue growth. And then later, former Texas Governor rick perry is here to talk about the race for the white house. A ted cruz backer. Obviously hes from texas. But well see whether he still is after last night. Also the climate for business in america right now. And the s p 500 winners and losers. Time now for the executive edge. Shares of apple under pressure this morning. The companys earnings missed on the top and bottom line. Big part of the story is china. Sales fell 26 from last year. Joined from beijing with more. I just want to know, we still have some comments last week that there is technology out there that at least one individual thinks apple is even behind the curve on this. And doesnt surprise me. You know, there is always a better mouse trap coming along it seems like. Well that is actually what was on social media today. A lot of people were talking about la eco chwhich is a compa, kind of the founder of netflix in china. And he called apple outdated and said the market is moving differently. From his perspective he was showing me some of his phones and you can watch on his phone nine different broadcast channels at the same time. So hes saying it is all about content now. You are seeing that with xiaomi as well. La ecos founder is saying he thinks the future is more about the content is apple is not only having a problem because they are more seen as the Hardware Company with some services but also facing challenges because of the government here. The government recently starting champing down on some of apples services, itunes and ibooks. And regulators came in and as part of a greater sweep of the internet clamps down on those services. So he is saying that the future in china is now more all about the services and especially content. And that is one of the reasons he thinks apple is going to face a lot of challenges and that it is as he said outdated. Wow. I wish i could see into the future. Id like to go even two years. Id really like to go 10 or 20. About the super bowl or. To about this. Or what we say. I guess it is going to be an internet of things. Were going to know about everything i uhoh, i have a little mutation in one of these genes. Got to get that checked. And theres going to be a lot of innovations and awesomeness. Who should we buy . What should we buy . Cloud and. Next generation cloud. Higher altitude. Right. Definitely with more co2. When we come back well give you your checklist through the morning. The squawk planner is next. Plus oil prices gaining this morning but iran wants to ramp up production and that could put some pressure on crude. Michelle Caruso Cabrera is into iran and shes up next. And also a check on the european markets this morning. Slightly mixed but no major movers. Foot mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Welcome back to squawk box. This morning, it is time for the squawk planner. The fed rapping up its two day policy meeting today. And in earnings central were going to be hearing from boeing, comcast, and other technologies before the bell. Then after closing, facebook, paypal and marriott. And pearson testifies before a senate panel this afternoon. Pearson says the company was to aggressive in pursuing price increasing and on monday named form former parrigo ceo joseph papa as the ceo. Barred in 2010 for a alleged role in a pay to play scheme. The about face now coming after two commissioners objected to the a deal. Says hes no longer interest in restatement. Hes pull that request. Little bit of an interesting back and forth. Hes a morning voe. Guest more than are the they are political appointees arent they . Yes. Its very political. No a republican . No. One republican, one democrat. So it is not a party line issue. At least at the moment. But you could argue that the two commissioners are on the in the same way people think that bernie is on one end and donald trump is on the other. You might say these are not the folks in the middle. Definitely it is a new york story. Definitely. Can remember the woody allen new york story. That that was an actually movie i think. A huge media meister for a while. Couple of stocks to watch today. Barclays quarterly profit dropping 33 . Results hit by weak performances in its Investment Banking division and also losses as it continues to sell unwanted assets. However the shares are getting a little after the lender said that it is in talks to sell its french retail unit. Although now down about 35 cents. Shares of ebay beating consensus on increase in sells. Gives investors hopes the turnaround efforts are working there. And at t earnings such and such. The. And u. S. Steel. Sales fell 30 . U. S. Steel is also filing a trade complaint with regulators against the big chinese producers. I swear you could have read this same story any time in the last 20 years. Accusing of conspiring and steeling trade secrets. Coming up. Were going to talk to an analyst and asking the person if Ceo Jack Dorseys focus on live events can maybe keep twitter relevant. When we return. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive whats that . The number of units well make next month to maximize earnings. Thats a projection. No, its a fact. Based on hundreds of proprietary and open data sets folded into a realtime, actionable analytics model. Nine. Eight. Three. Five. Two. Youre not gonna round that up . You dont round up facts. Powerful analytics driving decisions for the worlds most valuable brands. Twitter out with quarterly results. The social media giant missing the mark on revenue and reporting slowing ad growth. The company gained 5 million new users in the quarter after winning a bid to stream nfl games in the coming season. Ceo jack dorsey telling Julia Boorstin about his bet to bring users together on the platform during live events. Life is not just about Live Streaming but its around the live events and we think twitter is better positioned than anyone else out there because of the people on it who are tweeting every day about what theyre seeing and thinking and about whats happening right now. Because were public, because were distributed, because were realtime and because were simple, that allows people to see the world faster than any other platform. Lets bring in ron josie, senior internet analyst at jnp securities. How disappointed are you . Hi, andrew. Disappointed is a relative term. The engagement numbers, adding 5 million new users in the quarter was in line to expectations. The Biggest Surprise was just that advertising demand fell off as much as it did in the quarter and the acknowledgement that, what used to be their bread and butter, promoted tweets are quoteunquote legacy products and newer ad products like video, and installs are taking share. The Biggest Surprise was just that advertising demand fell as much as it did. I am looking at a headline, the verge. Com, part of vox, with the headline nothing twitter is doing is working, with the subhead jack squat. Is that overstating the case . Probably. Its a little its a little over the top. There is a lot of things that seem to be working. It was good to hear some encouraging signs around the onboarding process and enhanced time line. A lot of things need to go better. Good to see profitability better but if domestic monthly active users are not growing. One cue is a very a very popular quarter because of a lot of National Events. The oscars, the ncaa tournament. All the National Events came out and you would have expected to see better overall miu growth. A lot of things can go better. The Biggest Surprise on the street was the advertising falloff that really began in march. How much of this is about not just attracting the big advertisers, which i think they have done a decent job at so far, but really creating a selfserve platform that works for everybody so that you can actually get all sorts of Small Businesses jumping on the band wagon . Thats exactly right. Remember, twitter launched their new selfservice platform i think in 3q. Went live globally. That, in theory, is what got a lot of people excited. Weve seen what selfservice platforms can do for advertising with whats happening at google and certainly on facebook. Thats the future. Thats where things have been going. Twitter is still very much a brandbased business. And so i think one of the takeaways from last night is just that, okay, brand fell off, and selfserve or direct response, snbs are not necessarily looking to twitter to spend. One of the reasons why is maybe i dont think they have as good of tools for planning, buying and measuring their ad products. It will come sooner or later. Its a matter of time. Exactly right. We would hope the direct Response Service and selfservice platforms go stronger. How do you feel with what facebook has been doing to steal market share or change the narrative around twitter . Launching facebook live, bringing celebrities onto the service, trying to take advantage of instagram in a more meaningful way than they have thus far. I would argue turning instagram to some degree into a mini imagebased version of twitter. I completely agree. Facebook is our top pick. Just got back from f8 two weeks ago. Theyre one of the few Public Companies that talks about a tenyear plan. We see where theyre going for the next one to three to fiveplus years. And they are approaching the business in a methodical, calculated way in a way that users its resonating with them. If i am twitter looking back and you say a twitter is a one to many platform, public versus facebook or instagram are more private. Or can be private depending. Twitter is looking at ways to increase engagement. How long has the honeymoon for jack dorsey last . When do people say we have to try something new and do something drastic . Were a few quarters in of him taking the reasoins officia as ceo. There were some improved statistics there. But covering two companies, at least being the ceo of two companies, a lot on his plate for sure. Well leave it there, ronald. Appreciate it. Thank you. Earnings just minutes away. Expecting reports from comcast. Well hear from glaxosmithkline and dow component technologies. Nasd. Apple shares bruised and battered. Company posted its first revenue decline in 13 years. Sales of the flagship iphone falling for the first time ever. Big trouble for the tech giant in china. Well go inside the stock slide and get tim cooks comments to cnbc straight ahead. Clean sweep for trump. Big night for Hillary Clinton. Well break down the race for the white house with former Texas Governor and president ial kentucky der candidate rick perry. Reports out that comcast in talks to buy Dreamworks Animation. The details on that potential tieup as the second hour of squawk box begins right now. You close the door on so many men live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc. First in business worldwide. Im joe kernen along with Rebecca Quick and andrew ross sorkin. A couple of big hours coming your way. Nasdaqs bob greifeld here to talk earnings in a minute. Guest host governor rick perry is waiting in the wings. Next hour, a rare squawk appearance. Travis kalanic. I like colonic. Its kalanic. Uber ceo joins us on set along with aryana huffington. She is going on the board, right . Maybe. Its an idea. John chambers, executive chairman of cisco. Earnings from the mothership. The dow component utx came in with earnings of one second. Let me doublecheck. 147. 1. 47 versus the 1 1. 39 that th street was anticipating. Giving guidance for the full year. Seeing revenues of 56 billion to 58 billion. The street is in the middle with an estimate of 56. 99 billion. Looking for a full year earnings per share of 6. 60 versus the streets estimate of 6. 50. The shares are still unchanged. But well continue to keep an eye on that. We have results out from our Parent Company, comcast, coming in with earnings of 84 cents a share for the First Quarter. 5 cents better than the street had been anticipating. Revenue beating forecast. Of course, when it comes to comcast there are a lot of other numbers that the street tends to look at. If youre looking at operating cash flow, those results came in a little better than expected too. They talk about some of the breakdown for this. The cable, they say, had an outstanding quarter. This is impressive. Grew subscribers across every product line as they added 269,000 new Customer Relationships. Thats a 36 increase over a year earlier. And that gets rid of some of the naysayers who had been so concerned about cable nevers or cable cutters. Talked about how they added 53,000 video customers and achieved what they call their best First Quarter video customer additions in nine years. High Speed Internet grew. Achieved best results in four years on that front. You can break through a lot of the numbers. They also talk about how Free Cash Flow for the First Quarter, 2. 8 billion down 12 reflecting growth and consolidated cash flow offset by higher capex as they invested in businesses like x 1. Wireless gateways and businesses. Cable Networks Revenue up 4 to 2. 5 billion. Okay. Other big earnings story of the morning is apple. Shares down sharply. Earnings to revenue falling short. The tech giant posting its foyefirst year over year sales drop in 13 years. Iphone sales declining for the first time ever. More later. Twitter out with disappointing resulted. Adjusted earnings topping estimates. Revenue missed consensus. Here is jack dorsey on user growth. Were total audiences is massive. Over 800 Million People are experiencing tweets on a regular basis. Thats just immense. You cant go to any media, see any Television Screen or outdoor space or billboard without seeing a hash tag or app. Thats all twitter. Ebay beating consensus on an increase in sales giving investors hope that the turnaround efforts are working. Chipotle posting its first loss ever. Samestore sales sliding after the foodborne illnesses last year. Buffalo wild wings, samestore sales fell. Taat ts profit increased helped by the acquisition of directv. Nasdaq adding to the list, just out with its quarterly results. The stock has been on fire. Up more than 10 this year and trading around the 52week high. For more on the numbers we bring in bob greifeld. Are you doing a victory lap . Ceo of nasdaq . Its an endless series of quarters. One good quarter begets another one, hopefully. Whats happening . Were doing well. We have picked the proper businesses to diversify in. In the businesses were competing in, were gaining share. Between the two factors its been a good quarter. 14 increase compared to average s p company declining 7 . We like that. Yet the ipo market is, dare i say, close to dead. It has been. Certainly it shows the diversification of our model. We had a great quarter without any real ipos. Ten for the quarter. Thats sub par. We see some signs of life. 120 ipos on filing to come public. Whether they all make it out, we dont know. With secureworks and others planning secureworks has been a disaster. It got out, right, and that does help. Certainly we like that was the ugly situation, no . It could have been better, but it did get out. What was wrong with that . You have to understand in the First Quarter we had a lot of ipos that tried to get out but didnt. That was those were a couple of hairy days. We could have done better. Again, the point is, in the First Quarter, we had ipos that could not get out. Now we have those that have come out and were going to see when you say on an ipo you could have done better, whats that mean . When you look at the firstday price, secondday price, you would like it to price up. Then, when you look back and say, okay, was there a lesson there, for the exchange, is there something that nasdaq could have done differently . Is there something a banker should have done differently. Im talking about the ecosystem, in terms of how our systems worked and how we process the orders and its a fairly active ipo. We did very well. Clearly we care about the ecosystem. Your broad comment is whats going to make the ipo market more resilient or more active. First you have to get Companies Get out. I think there are two broad categories. We have to have really companies that have strong Economic Performance and when you look at biotech, which continues to be strong, companies that have pure innovation can continue to get out. Bob, you probably need a little more stability in the markets too. Weve seen some incredible volatility just over the First Quarter into the early part of the Second Quarter. We saw that in january possible february. We have a mismatch because the indices are high and then the market tends to be more buoyant. When you talk to ceos of potential Public Companies, do they worry that, if they start the process, all of a sudden youll see another collapse in stock prices which puts them in a bad position . I would say anybody who is thinking of floating the company is worried about everything, right. Its a difficult time for them. And there is a bit of emotion through the process on the investor side and the company side. Thats why windows will open and shut. How much do you think the political cycle is playing into whatever instability you think is out there . I dont think its a major factor right now. I think investors are certainly looking for the returns in tshot and medium you said you stayed up late last night watching the returns. Yes. You look at where the political process is and say to yourself, as ceo of a major exchange, is there a candidate out there thats more attractive . You dont have to tell me your own politics, but to the extent that you think one candidate is more attractive than the other for purposes of the economy and for your business, that person would be whom . I would say this. Listening to all the political debates, i think whats missing in a large sense is the great innovative, entrepreneurial culture in this country and more singing the praises of capitalism, right. You just dont hear enough about that. I was at your conference last week. Its a tremendous uplift to see all these young entrepreneurs wanting to help change the world and advance their business models. We need to hear more of that from the politicians. This country is built on capitalism. We just are you surprised you dont hear it more from donald trump . I think you will. I dont want to speak for donald, certainly, but as the election waxes on and you get past the primary season, i think youll see, you know, the benefits of capitalism being extolled by the theyve both done very well. One is a billionaire and one is worth 200, 300 billion. One with a Government Foundation but theyve both done well in this system. I like hillary talking about donald flying around on private jets and living in expensive markets. Capitalism is a great thing. Hypocrisy there. Were done. Coming up, donald trump and Hillary Clinton scoring huge victories in the northeast last night, moving them both significantly closer to being the nominees for their party. Former Texas Governor rick perry joins us for the remainder of the program. Squawk box will be right back. Welcome back, everyone. Even though the world is awash in oil iran wants to bring on even more since some of the economic sanctions against the country were lifted in january production and exports have climbed sharply. Our chief International Correspondent is in iran with a look at the efforts of that country to try to ramp up production. Michelle. Reporter hey there, becky. The government of iran wants the world to know it is back in the oil exporting business. Earlier this week the oil Ministry Said theyll be back up to presanction levels by the end of june. If that is true, and there are a lot of skeptics, that would be incredible. They seem very eager to prove it. They gave cnbc access to the island of kharg, about 25 miles off the coast of iran and its extremely rare for journalists to be able to see it. American journalists, workers there said they didnt recall a time when that had happened. Consider this place irans cash register. Solely dedicated to exporting iranian oil. The oil is sent to kharg and placed in storage tanks and they pipe it to tankers which arrive on a daily basis. When the toughest of the sanctions were put into place in 2011 irans exports fell sharply. They had been exporting 2. 2 billion barrels a day. That sunk to 700,000. Their production was impacted dramatically as well. Now, reuters thinks that theyre exporting about 1. 75 Million Barrels per day based on International Shipping data. One insight into the intense and bitter rivalry between iran and saudi arabia was on full display out on kharg. This tank has persian gulf painted on it in huge letters. The director of the facility told me they did this on purpose so that when tankers pull into the island they see it. Thats because the saudis call the huge body of water the arabian gulf which unfewinfuria the iranians. Three english language newspapers in iran. The predictions about oil output the big lead this week. 4 Million Barrels per day. Wow. Michelle, thank you. Well see you soon, hopefully. After a landslide victory in five northeastern states a confident donald trump declared himself the partys presumptive nominee during a party peaspeect trump tower. If you have a Football Team and youre winning and you get to the super bowl, you dont change your quarterback. I am not changing. He picked up delegates with sweeps. Hillary clinton won four out of five states. Joining us now is former Texas Governor and former republican president ial candidate, rick perry. Will we ever see you standing next to Chris Christie and behind donald trump . Im sure ill stand by whomever our nominee is. Im not quite into the presumptive category yet that its donald trump. If it is, you would stand behind him . Absolutely. So the the way to victory is shrinking for ted cruz it is. But we have known that all along. I think the issue is are we going to a contested convention. I think i have thought for some time that that was where we were headed. Lets say its 1100 or somewhere close to interesting he would use that analogy about the super bowl. I use the analogy that, just because youre leading in the middle of the Fourth Quarter that somehow or another the game is over the game is not over yet. I understand how it works. But what happens if you if say youre right and its 1,050. It goes to a contested convention. Where do they go from there . Why wouldnt they somehow try to get up to the 1,237 for trump instead of thats the reason they play the game. Thats the reason they play. Its the reason they have if you pick kasich instead but youre going to lose the election when 40 of the trump people dont show up, right . Listen, i dont buy into all of the scenarios of somehow or another, if you dont pick this individual, youre going to lose the you know, you can square around. Really, you can argue this thing all the way. I just know how the rules are set up. And if youre not going to follow the rules, why are we a rule of law country . Its like tom brady being upset about the way that the judges when he signed the contract to play with the nfl, you gave Roger Goodell the ability to make these decisions. And so, if you didnt want that, dont sign the contract. Right. If you dont want to play by the rules of the republican party. Dont run in the primary. But we also its not the horse in the race. These are the rules. The other side would say, if you have got millions more votes and youve got twice as many states that you won in the the spirit of the nominating process, the spirit, not the law. Sounds like al gore grousing about not being the president of the united states. You pick the guy who got the most votes to be the republican nominee, you dont are you saying you can have both sides . Your side is saying its the rules the rules say if you have 1,236 and you go with the letter of the law you can give it to john kasich. But people would say that is probably not the spirit of the law in the nominating process to give it to a guy who won three states and has a tenth as many delegates. Thats not what people think of when they entering into the nominating process. Well see after indiana. The guys should have known it was called a basketball hoop and not a basketball ring. Did you see that . No. Indiana. The movie hoosiers. He said the height of the basketball ring around the country is ten feet. If were going to start to go back and criticizing people for using were not going back. It was less than 24 hours ago. You dont think a contested convention ultimately breaks the party . No, i dont. Not at all of the these are the rules. This is the way its set up. People are upset in this country, i get that. Theyre mad about whats going on in washington, d. C. Right. And they feel like that the whole system is rigged against them, that kids are graduating from college and they cant get a job. They think the convention process is rigged against them. The rules have have already been are they arcane or different . Yeah. There are a lot of different rules for every kind of organization ive ever been involved with. Lets talk about what got us to this situation, because the rules have been out there for decades and decades and decades, and we havent tested them because we havent been in a position where youve got somebody like donald trump or a Bernie Sanders who are huge outsider candidates who have really stepped into a position like this. Well, ted cruz is not exactly mr. Insider. This is true. But whats going on with the voter, with the electorate right now, that makes them so angry . I think they have seen whats going on. The middle class in particular. When you think about the diminishing of their wealth, of their ability to raise their standard of living at all across as a matter of fact, i would suggest to you the middle class has gone down over the course of the last eight years. Theyre really mad about that. In terms of their standard of living or in terms of their feeling of security . I think its both, not only their able to save or to be able to acquire more or to be able to most people feel that their children are not going to have as good a future as what theyve had. And they cant retire anytime soon. All of that is really grinding on them. Its made them incredibly upset. They are mad. When you do i mean, i speak for myself, when ive gotten mad a time or two, ive made some irrational decisions that i looked back on and went, wait a minute, maybe that wasnt the best decision. I thought from the getgo that this would be an election where experience really mattered. When youre talking about someone thats going to be running the most important country in the world, the experience of someone, you know, a jeb bush, bobby jindal, squawker. Rick perry, one of those individuals would probably be who we settled on, a governor with a proven track record. We know now that thats not its not the case. Theyre like, you know what, we dont want anybody who has been involved in that business at all. Thats why we keep coming back to the idea that what put a lot of the republicans that are voting for trump in that position is like a Reince Priebus or the republican establishment, and thats just the only point i am making. If after all of this, if were in this position because of that, and then you have those same guys saying, look, we dont like the way this turned out, were going to put in our guy here or someone that we think is better as a kingmaker, i just dont think its the right its not going to bode well for the general election. And i think you know that. I know youre from texas and everything, but i mean, one of these a hand to play. There is a hand that includes bobby jindal and jeb bush. That hand got thrown away a long time ago. The only three cards you have left are trump, kasich and cruz. I agree. Actually the only two cards you have left are trump or cruz. If we had a kasich surrogate on he would be talking exactly like this. Really . Yes. Theyll point to polls that show Bernie Sanders does this, kasich does this and cruz does this and theyll be saying i do better in a general election. You think kasich or cruz could be a Vice President to trump . Do you think any of these wounds can actually be healed . Oh, sure. Really . Jeb bush cannot be Vice President to to donald trump. There is no way. Theres a difference between whether someone would take it and whether they could be one. I just wonder that theres so much bad blood this time around. Thats my point. What about cruz talking about Carly Fiorina . Make any sense to you . Yeah. Listen, there is some great talent. When you look at the 17, 16, however many, there were some amazing talent in that pool. And the argument was made the other day, had there been 16 people running in the democrat side Bernie Sanders would be very close to picking up the nomination today. Its really an intriguing argument, but i think there is a little truth to it. Trump might be able to win texas with you as a Vice President. I dont think so. He wouldnt be able to win texas . No. Never . With you as a Vice President . Trump will win texas either way. Im sorry. I thought you were talking about a primary. We have to go. Governor, stay with us. A republican will win texas. 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 xerox personalized employee portals help Companies Make benefits simple and accessible. From anywhere. Hula dancing . Cliff jumping Human Resources can work better. With xerox. Which allergy . Eees. Bees . Eese. Trees . Eese. Xerox helps hospitals use Electronic Health records so doctors provide more personalized care. Cheese . Cheese patient care can work better. With xerox. Thats it. The answer to todays aflac trivia question. Whats the worlds most used web browser . The answer, google chrome. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click, then simply select the best candidates from one easytoreview list. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 welcome back to squawk box. Among the stories front and center at this hour. Nbc Parent Company comcast in talks to buy movie studio dreamworks. Price tag more than 3 billion. Comcast would combine dreamworks with the Universal Studios division. Both stocks higher than expected. Comcast reported better than expected earnings this morning. Mortgage applications falling 4. 1 last week according to the Mortgage Bankers association. New purchase applications and refinancing activity fell. Outgoing valeant ceo mike pearson having a meeting today. Saying he regrets the purchase of two heart drugs and rising the prices. That later on cnbc. Earnings out from dow component boeing. Missing estimates by 8 cents. Profit of 1. 74 a share. Boeing took a 24cent charge for engineering changes to its refueling tanker program. Thats the third charge for that program which now the charges total 960 million. Boeing did not, however, change its fullyear guidance. Can you see at this point, the street seems to be reacting in stride. Stocks down 1. 5 . The dow component looks like its trading at 131. 24. Microsoft suing the Justice Department over customer privacy arguing that its unconstitutional of the government to ask for access to individuals personal data without their knowledge. Joining us is the companys president and chief legal officer brad smith. He is in washington at tech net day as a gathering of executives and lawmakers on technology policy. Brad, first up, why is the move necessary . What has the government been asking for . Well, what were here today with tech net is to talk about a broad range of technology issues. One of the important ones is peoples privacy. The case that we brought recently is really all about a situation where the government is obtaining peoples emails from data centers, from the cloud, with nondisclosure orders that mean that over half the time people will never know that the government has their email, whether theyre an individual or a business. We think that goes too far and really infringes on peoples constitutional rights. Is this something that the government is doing on a regular basis beyond their need to try and investigate for Security Issues for the nation . Well, when we pulled the data at microsoft, we found that just at our company we had received over 5200 of these warrants over the last 18 months. We found that half of them had these gag or secrecy orders and twothirds of that half had no Expiration Date at all. So it really has become in our view too routine and too widespread. Its interesting, to put this in the context of bill gates comments around the Apple Department of justice situation. The way he kind of looked at it is, if this were a bank the bank would be required to turn over its customers information. What do you think of his stance and does it match up with what microsoft the company is doing . I actually think these things absolutely do match up. All of this needs to be put in a broader context. The world is moving towards cloud computing. Data is being stored not just digitally but in data centers. There are times when the government is going to need access to data. It will go to court to get it. But peoples rights continue to matter, just as they were when information was stored on paper. Now the data is in the cloud. People have a right to know, certainly eventually, that the government has their emails. Brad, how do you feel about the decision by the fbi not to share, or at least their recommendation not to share with apple exactly how they hacked the phone that was involved in the San Bernardino shootings . I am not familiar with all of the details in that case. I guess i would step back a bit. As an industry, as a country, were working through a set of complicated issues that go to when Law Enforcement can get information, how peoples privacy rights will be protected, fundamentally how do we preserve the balance that weve had in this country for over two centuries . And i think were all trying to get ultimately to a position where people feel that that longterm balance is preserved. In terms of preserving that, part of the balance you, by the way, i mean, microsoft has been very aggressive about trying to protect some of not only some of these rights but certainly, you know, protect against some of these subpoenas and other things. There is the little bit of a question rick perry is here. Im curious about that. Who should we, the public, trust more . Part of this is a debate about whether you trust the government or you trust microsoft or do you trust apple. Right . Thats an interesting question. I will suggest to you that the American People dont trust either. Right. At this particular point in time. I mean i think brad . Yeah. I actually think you raise a very interesting point. And i think fundamentally people should trust themselves, but in order to trust themselves, they need to have enough information to know how their data is being handled. And thats what were fundamentally standing up for. Greater transparency. I think our industry has been moving to provide more information, and i think thats a good thing. We think the government should provide more information in an appropriate way. Then people can evaluate that information for themselves. They deserve that right. Because of the way the apple situation was settled, it kind of takes that off the table. We thought at one point that maybe this would go through the court system, maybe have Congress Weigh in on this. Whats your hope for on outcome . Would it be to have Congress Weigh in and try to come up with rules of the road . Absolutely we need more action by congress and by the white house. There will be more action by courts. I mean, the end of the apple case sort of brought a chapter to an end, but this book has a lot of chapters still to be added to it. Well be working through this as a society over the next few years, and were going to be working on it in a way that, frankly, brings together a number of strands, from how we have Economic Policy to create Technology Jobs in this country, how we create trust in technology for people, and how we educate the next generation of people in this country so they have the skills needed to fill the jobs that our industry is creating. Ultimately all of these things actually need to come together. Brad, i want to thank you for joining us today. We really appreciate it. Thank you. Apple, as we have been talking about, posting top and bottomline results that missed analysts expectations. Reading this. Revenue declining 13 . 13 year over year. Stock at this hour indicated down below 100. Been there before. Its bounced off of the mid 90s and gone back up. Well see whether the same thing will happen. Joining us to break down the results. Sherry scribner. Senior analyst. In your view its been here before recently. Down from 130. Got into the mid 90s, went back up. Back into the 100 and teens for a while. Is it the same situation this time, or is there a 70 or 80 number in the cards . Yeah. I mean, i think there is some support for the stock in the low 90s. Thats what we have seen in the past. We are in a little bit of a different situation now with the revenue coming down for the first time in, what forever or apple really. Looking at a quarter Going Forward where revenue will be down in the mid teens. So its a little bit different. Revenue potential is slowing here. I do think there is some valuation support for the stock as you get into the low 90s, definitely into the 80 range. The next thing that happens that, you know, that gets the company to consistently do 55 billion a quarter yeah. I mean, thats hard. We say it. 55 billion a quarter. I can say it in less than a second, right. Yeah. Its a lot of stuff, isnt it . Its a lot of stuff. I think thats the problem apple has Going Forward is that theyre already in one of the Biggest Technology markets in the world, the Smartphone Market. And the Smartphone Market is slowing and theyve maxed out their share. Theyd argue that they have not but theyve kind of peaked at share. This all along has been an argument. Why isnt someone working on a better mouse trap, smart people around the world, to try to leapfrog the next whatever the next technology is . Its not steve jobs anymore there. Its just normal human beings trying to figure this out. The next mousetrap, we dont know what that will be. Thats what i mean. It has to be these creative people thinking about that. At this point we dont know what might come out of apple but there is nothing to indicate there is anything significant in the near future. One analyst yesterday said the only thing is the car. Thats a ways off. Tim cook said last night this too will pass. What do you think . Weve continued to say were concerned about the slowing in the smartphone growth and their share. They have high asp products. We think its going to be hard for them to grow Going Forward. Which means you value the company how . Is it seven times earnings it should be trading if its not going to be a Growth Company . I dont think its been a Growth Company for a while. Its been a trading stock. You see that with the ups and downs. We still look at p. E. As a good multiple to use for valuing the company. Many talk to us on the buy side of using a market multiple. But some companies this big just cant trade in a market multiple. Let me ask you a steve jobs question. Is there an innovation problem at apple . When you look at in a post steve jobs world. Do you think if steve jobs were there today somehow it would be different for this company . Its a hard question to answer but i do think there was something very special about steve jobs. Somehow he was able to have this vision and get people to come along to create these amazing new products. He had sort of a visionaryness to him that i dont know that we have there necessarily now. There are a lot of really talented people at apple but you havent really seen that visionness out of apple. Its always a hard act to follow. I look at trying to do 55 billion every quarter. You talk about a multiple yeah. I understand trying to figure out where the multiple should be. But i dont know what the earnings are going to be. I dont care about the multiple. The earnings could go down in half if someone takes over their market. Yeah. I dont know how thats a relevant metric at all which is what ive been telling these analysts for years. Anyway, thank you. Coming up, former chief of staff to Vice President joe biden will join us to discuss the race for the white house. The delegate drama and the beltway buzz. Back in a moment. Take a look at futures. Dow looks like it would open off 30 points, nasdaq off 40 points and s p 500 off about two points. A good car has to maneuver quickly. Thats also true of a good car company. People have always bought cars. But we saw an opportunity in sharing cars. So we moved fast and launched car2go in 29 cities, all around the world. Doing that required dozens of data centers, designed for speed and performance. We built our business on the ibm cloud. Because thats what the ibm cloud is built for. Welcome back to squawk box. Results it in. Donald trump sweeping all five of tuesdays primaries while on the democratic side Hillary Clinton getting four out of five states. Joining us now the former white house chief of staff to Vice President joe biden, ron klain. Now executive Vice President and general counsel at revolution ventures. Of course, thinking a lot about entrepreneurship today. One of the things we brought up earlier in the show was the idea that actually neither of the leading candidates talk a lot about entrepreneurship today. If you look at the polls, so many young people actually seem to have a negative view, if you will, of capitalism and to some degree even entrepreneurship itself. What do you make of that . I think that each of the candidates, theyre engaged in their own primary right now, theyre largely speaking to voters in their primary, so thats why you get this dynamic. I do think that, as we move towards the general election, i hope both parties will address entrepreneurship more, the needs of the startup economy. Thats what were here today tech net day in washington. Leaders from the Technology Sector from all over the country have gathered to try to persuade policy makers at the white house on capitol hill that advancing this innovation economy is an important part of our future as a nation, economically and more raising wages and growing the economy. If hillary or donald were watching right now and you were to tell them one thing that you would want them to do assuming theyre the frontrunners. Rick perry will dispute that. I think youd like to see ted cruz get the job. Say ted is listening too. Whats the one thing on in the first 100 days, you would want them to do when it comes to startups and technology . First of all, i will be honest. I am a democrat. I am a big supporter of secretary clinton. Its not my place to give advice probably to donald trump or ted cruz. Look, i think Immigration Reform is a very important issue for the Technology Sector generally, for startups in particular. And i think secretary clinton is a big supporter of comprehensive Immigration Reform. I think it is important to get that done. Its crazy that we have the brightest people from all over the world come to our colleges and universities, we educate them, train them, give them a great start and then tell them to go back to their countries to start businesses, create jobs and Economic Activity there. We should want those people to stay here, create jobs, create growth in our country. I think comprehensive Immigration Reform is an important part of that and i hope the next president will make that a high priority for his or her first 100 days. I would suggest were way off base there if Immigration Reform is the first thing were going to do in the first hundred days from the standpoint of entrepreneurship. I think that was the question. Right. The issue is about taxationltaxation taxationregulation. Thats whats stiefifling growtn this company. When people cant get out and get a job, thats the issue. Thats why people are mad in america today, because they dont have the opportunity to get a job or to go upwardly mobile in the place that they are. Whats really strangling americas economy at this point in time, highest Corporate Tax rate in the civilized world and these regulations. I would suggest, first 100 days thats what ted cruz will be focused on, lowering the Corporate Tax rate, giving relief on the regulatory side so that entrepreneurs know they can risk their capital and have a chance to have a return on investment. Do you think that the next four years will be easier or harder for the president to do anything, given how the how difficult it has been for the last four years and how polarized washington has been . So everybody can walk in with a plan, but i think there were executing the plan is more complicated. I dont get confused that washington is a difficult place to get things done, but it can be done. Its about reaching across the aisle. Thats one of the things we learned in texas, you have to have democrats helping you as well as republicans. Dont get your, you know dont get your hair all on fire on the issue of whether or not youre helping a democrat or on the other side helping a republican. Get the job done for the American People. Thats going to be an issue that i think whoever the next president of the united states, one of my real criticisms of the current resident of pennsylvania avenue is that he has no interest in working with republicans. And thats that day has to be over with, regardless of who the next president is, we have to have some people to work on both sides of the aisle. Ron, go ahead. Its funny to hear governor perry because actually i worked closely with governor perry and david laky, who works for him and a bunch of people in texas on the Ebola Response where we reached across the aisle and ultimately congress on a bipartisan basis passed a 5 billion plan to fund and fight ebola and turn things around. I was president when president obama talked directly to governor perry. I think there are things where we can Work Across Party Lines and i think its important that we do that. I agree also with governor perry that tax incentives, Regulatory Reform are also part of what the next president can do. I do hope that were in an election season right now. Passions run high. Partisanship runs high. I hope that after the election the two parties can sit down and solve some of these problems like repay treeization and economic reform. All these items are on the agenda. Let me ask you this. You went straight at immigration first on your list. Youre at this technet event. If we were to do a quick poll this morning of the folks who are going to come to technet and ask them the question i asked you, do you think theyd say immigration is their number one concern or do you think theyd be talking about some of the issues that rick perry talked about, whether it be taxes or regulation . I think theyre all important. Theyre my concern. You asked me to pick one. I picked immigration. Clearly we need to do something on tax reform. We clearly you know, i worked for a company that invests in startups. We need to make our labor laws fair and dynamic. We need a safe harbor so Companies Want to provide in this new sharing and gig economy, companies that want to provide benefits to workers dont have it counted against them in litigation, regulation. There is a lot we can do. At technet we have a robust agenda to help startups that includes immigration but also better s. T. E. M. Education. More dynamic labor laws and access to capital and washington. The federal government is the number one producer of goods and services in the country. They should be open for business to startups. There is a lot of government can do to help to fuel dynamism in the economy, fuel innovation, and i think thats what we need to see out of washington. Ron, appreciate your time this morning. Thank you. Thank you. When we come back this morning, uber ceo traviskalanack is here with arianna huffington. She is joining the uber board. Later, executive chairman John Chambers joins us on Old Technology versus new technology and much more. Squawk box will be right back. Checking stocks to watch this morning. Comcast rising this morning after beating estimates on the top and bottom lines. Nbc universal parent of this company also said to be in talks about an acquisition of movie studio dreamworks for more than 3 billion. Youre looking at that. Yeah, its going to look pretty up. Shares of dow component boeing under pressure. Earnings 1 1. 74. Due to a 24 cent charge for engineers changes to the refueling tanker program. Apple taking a hit after reporting disappointing earnings late yesterday and its firstever iphone sales decline. Shares of Buffalo Wild Wings going down after the Company Results posted results that missed expectations across the board. Same store sales fell 1. 7 . Company owned restaurants and franchise owned restaurants down 2. 4 . Chain lowering its forecast for profits for the year. Chipotle Mexican Grill logging its First Quarterly loss in history. Same store sales tumbled nearly 30 . Chain looking ahead, though, opening 58 new restaurants during the quarter. And better news from panera, the baking cafe. Bakery cafe serving up a beat on the top and bottom lines. Company boosted its fullyear guidance. When we come back, uber Ceo Travis Kalanick on the sharing economy and his companys massive valuation. Well speak to him exclusively after the break. Arianna huffington is here as well. We have news about her joining the board there. Plus, much more on polapple. Its has some impact on the nasdaq. Futures this morning. Right now looks like the dow futures down 33 points. Also reflecting some of the apple weakness. Nasdaq down 42 points. S p futures down 2. 5. Well be right back. This clean was like, pow it added this other level of clean to it. It just kinda like wiped everything clean. My teeth are glowing. They are so white. I actually really like the two steps. Everytime i use this together it felt like leaving the dentists office. Crest hd, 6x cleaning, 6x whitening. I would switch to crest hd over what i was using before. A squawk box exclusive. Uber ceo travis ckalanick joins us. His vision for the ridesharing service. No topic off the table. Apple and twitter join the list of names posting disappointing results and then getting punished by the investors. Decision 2016. Big wins for donald trump and Hillary Clinton as both move closer to securing their partys president ial nominations. Is it time for the rivals to drop out . Well ask former president ial candidate rick perry as the final hour of squawk box begins right now and it goes like this take me by the tongue and ill know you live from the most powerful city in the world, new york, this is squawk box. I got the moves like jagger welcome back to squawk box here on cnbc. First in business worldwide. Im joe kernen along with Rebecca Quick and andrew ross sorkin. Our guest host this morning, former Texas Governor rick perry. Great to have him here for another hour. Less than 90 minutes away from the opening bell on wall street. Futures continuing to trade a little bit weaker this morning. We have had a good month, good six weeks actually. Now positive across the board in what looked like it would be a tough year. Oil prices have also rebounded almost to 45 now. Almost to 45, which would be up more than 50 . Thats one of the biggest, quickest, snapbacks that we have seen. We take it for granted. Goes from 27 to 45. Thats a real move. We should tell you about some of todays other top stories. Apple shares under pressure this morning but the earnings and revenue for the First Quarter falling short and the Company Giving a weak outlook for the full year. Take a look. You see that that dow component is now down by over 8 . A decline of declined to 95. 90, a loss of about 46 billion in market capitalization just since earnings came out yesterday afternoon. That market capitalization that it lost, 46 billion, is greater than the total market cap for 391 of the s p companies. Declining year over year for the First Quarter, 13 . The first Quarterly Sales drop since 2003. A few other metrics. Iphone and ipad sales topping expectations but the max sales missed wall streets mark. Aaron rakers joining us earlier this morning. I think we all knew that the two quarters for march and june would be somewhat challenging and the setup was really for the story going into the iphone 7cycle later this year. Clearly the guidance was the weaker point. We like the iphone 7cycle. But clearly disappointing. Twitter shares down. Revenue for the Company Light for a quarter. The guidance fell short of the streets consensus. Julia boorstin spoke to Ceo Jack Dorsey in a cnbc exclusive and asked him about the drop. Were focused on the right things. We have never had more focus as a company, as a Development Team and were engineering what we believe to be the best experience out there around life and around whats happening now. And i want to make sure that twitter is the place that you check the first thing to start your day. It will tell you exactly whats happening in the world, whats most important, what matters, and thats what were driving towards. Comcast earnings and revenue topping the streets expectations. In the meantime, the Parent Company of Nbc Universal is also in talks to buy Dreamworks Animation for more than 3 billion. Dreamworks is behind the shrek and cunning fkung fu panda fran. A reerprevent proxy filing show that jack catsenberg who get a big payout if the company is sold and he leaves the company. Also hearing from two dow components in the aerospace industry. Boeing missed estimates. Took a 24 cent charge for engineering changes to the refueling tanker program. Thats the third charge for the program. Boeing did not change its firstyear guidance. See how i do that, arianna . I dont even read whats there necessarily. I change it. Because you had a good nights sleep. You are running on all cylinders, you are cognitively at peak performance. Youve heard the term preaching to the choir here. You know that. Thats why i love you. I need sleep. I love it. I love it. Were so simpatico on this. I didnt do the meditation thing. Thats okay. Thats interesting. I couldnt think of a good word. They were all taken. You wouldnt tell me yours. You wouldnt tell me your word. Uber is a good meditation word. Thats good you do it from the back of the car too. Right. I can meditate better its one of the unintentional benefits. I dont care whether i do ut i x or not. Its there. Will you bear with me for a second. Quickly, though, okay. Quickly. Utx earnings and revenue topped estimates. Shares right now indicated up 70 cents. Youre done thank you. To the news makers of the morning. They were sort of introduced. Well do it again. Uber is the best funded startup in history and the most valuable unicorn estimated 62 billion available in over 60 countries and growing. This transportation titan doesnt come without controversy. This morning a squawk box exclusive. Ubers cofounder and ceo. Travist kalanick joining us with the latest addition to his companys board. Arianna huffington joining the board. Also cofounder and editor in chief, of course, of the huffing post. Good morning to both of you. We have a million things to talk about but lets start with the news. How did this happen . Why did this happen . Arianna and i had known each other for a couple years, a few years now. And i you know, we have just we just kind of had a connection from the beginning. We just sort of youre into sleep too . A simpatico thing on sleep. We have a simpatico thing on building companies. I like to say, look, on my board right now the the noncommon board seats, right, the preferred shareholders, theyre financial folks. I like to say theyre chess enthusiasts. But actually as a ceo entrepreneur i am a chess i play chess, and i play chess 60 hours a week. I needed a fellow chess master at the board level. This is your chess master . For sure. There are a whole bunch of other things that arianna brings to the table thats really important and very valuable having her, you know, at the highest level at uber. And were really excited. Did you just call her up and say, mahey, do you want to do this . You said yes immediately . We were having dinner in san francisco. And it was his girlfriend and me, michael, his girlfriend and i. Halfway through dinner he says to me, can we meet tomorrow to talk about something . I was thinking to myself, were having dinner and we want to meet tomorrow to talk about something . Okay. So so we meet tomorrow to talk about something, and he asks me what i loved about it, he said, we need to have like three long sessions to walk you through everything, through the big bets for the future, through the controversies, through the Cultural Values, and the final meeting was last week at my home in l. A. When, for four and a half hours, travis circled my dining room table, did not sit down at all, talking to me about it. And that was it. Thats how it happened. Mmhmm. Let me ask you this. Is this in advance becky was saying it somewhat sarcastically, i think. We were watching the twitter news and how difficult some of these things are. She said, i can see why you dont want to go public. Or now i understand or when will you. Is this in advance of going public . Is there something going on here that we need to know about . I mean, i you guys heard me answer this one before. I mean, i am your classic founderentrepreneur thats way more into Product Innovation and building a company than i am like thinking about liquidity. And so this is about building the company. You guys have seen me over the years. Its the its always been that way for me. Right. And i have said even on cnbc, that were going to take as long as we possibly can to go public. Right. So thats not top of mind right now. I understand that completely, and looking at what these companies go through, i get why you would be focused on building the company because it seems like a lot of Different Directions to be focused when you are looking at trying to run a company but then also deal with shareholders. I started thinking about it and i refinanced my house recently because i could get a 2. 99 rate. I could get that because of an 800 credit score. When you dont need the money is probably when you pay the least for it. If you go public, based on what you have said to this point, i might think, okay, he needs the money now and i think why . You have an 800 credit score . Amazing. Thats good stuff. Thats the lead. Whats your uber rating . Exactly. Whats your uber rating . Unfortunately, its only 4. 5. Little henry sorkin threw up in the back of a vehicle. He is always he is always nice to the driver. Yeah. I know. Well, what do you think . Its the kids fault. I think a lot of times this is something were working on the technology side, a lot of times were running a couple of minutes late as riders. We have to think about the drivers in that situation, right . Theyre making a living. Those minutes where theyre waiting for you are not paid for. And so sometimes that the wait can you confirm that, if that were a child throwing up could result in the four or fiveers. The attitude of the father in general. Can you confirm that a throwup would cause the four or five . I put this in the attitude category. We have Training Programs for this. On the rider side. Can we go back to the ill make it my first job as a board member to investigate how you got a 4. 5 rating. And then well come back to report. One point i wanted to make from my point of view is that i was a champion of uber and the transformation not just of transportation but of cities thats going on. Before i became a board member and its exciting to see whats going to happen in the years ahead. Back to the ipo question for one second. I want to read you something that fred wilson said. These are fighting words. I would like you just to respond on this issue. Oh, wow. He says the following. He says that, quote, i dont know if we can show it as a full screen he is wimping out. That should be a publicly traded company. When you take money from me, am i getting money from you . You have a responsibility to give me my money back. Sometime. You cant just say well this is a family show but f you. Take the g. D. Company public. What do you say to fred wilson . First, he doesnt have money in uber. Fair enough. He passed on the series bfe. That was a 300 million valuation. Just putting it out there. Nice generally, as it relates to vcs and how they think about this ill start with how well, where we are. First is, yes, we have a number of investors who put money in. There is a moral obligation to find liquidity, right. Thats part of the deal. Thats part one. Part two, i have a number of employees that have put heart and soul, blood and sweat, into making uber a great company. And theres a lot of that is sweat equity. So we have to find a way to get that liquidity at some point, but we are five and a half years old, and its a little early in our life cycle to go there. Now, well go there eventually. We have to find liquidity for these folks. Right. I am not sure where the sort of negativity that that commenter may have had. Let me ask you about a couple other things. I want to talk politics, china, some of the controversies. Something that Hillary Clinton said, i think its important because we are having a debate about the gig economy and what employment means these days. She says, by classifying employees as contractors employers can exploit or even steal their wages. This on so on demand or socalled gig economy is creating exciting opportunities, she says and unleashing innovation but its also raising hard questions about workplace protections and what a good job will look like in the future. How do you think about that . Well, look, i think, you know, first is the taxi drivers across the u. S. , like i think over 90 of taxi drivers are independent contractors. Its because, well, they can choose they can choose how to make a living. And on the uber system, we have one which well, its not just about the ondemand economy where you push a button and get a ride. Thats the riders side of the equation. On the drivers side, i can push a button and start work. And i can push a button and stop work, whenever i choose. So for the first time, i think, in possibly history, work is flexible to life and not the other way around. And so, its not just about the things i think that uber is doing on the Positive Side for cities and making them, you know, creating jobs, reducing congestion and pollution and reducing drunk driving. But its also changing the way we work in a way thats very, very positive for the average worker. And i think thats a story we need to get better at telling, but i think its a very positive one. And if we get better at telling that story, i think, you know, various politicians will get a look at these very positive changes that are happening for folks, for workers in cities. And, you know, just all the great things that it takes a i mean, can you are the taxi guys in greece so entrenched that uber is running into all kinds of resistance and you dont have to go to greece. You can go to austin, texas. Look, what we see is that, wherever uber does well, we eventually see resistance. And its because we happen to be in an industry that has set things up that essentially competition has been outlawed. I am planning to work on the greek situation. Whats interesting about the flexibility question. If you talk to riders, and after here were going to meet actually with a group of female drivers. But if you talk to the drivers, the key thing for them is flexibility. And over 50 of uber drivers are not fulltime. They may do, what is it, 10 or 20 hours the average is under 10 hours a week. I think moms who want to make extra money, people who are in transitions between jobs, i mean, thats the future. And the question is how can we make it as good for the drivers as possible and how can we keep innovating to improve their own experience. And the reduction in stress, the importance of being able to start work when you want, to be able to take your kid to school or take your kid to a doctor without the stress that all these issues have created. Probably sleep more. Absolutely. Very important. Think about this. Think about when you know, because youve got a system where the average driver is doing less than ten hours a week, it can become a safety net for a city. Like, oh, manufacturing plant for whatever, you know, falls on hard times, a few thousand people get laid off. Uber is there. Uber is there to make ends meet for those folks who are maybe finding a transition in their life. Ubc uber is there for people who need to add a little extra income to their job. These are positive things for folks who are, again, just trying to make ends meet. Governor perry was excited that you guys were coming in today. One of the most fascinating things for me to watch is the city of austin, unquestionably one of the most innovative cities in the country. I think about the eighth largest market for uber. And theyre in this pitch battle with uber. The Political Class is against uber in austin, texas. I am sitting there watching this and i spent 25 years living in austin, and this is someone on the right side of the political spectrum saying that uber and that Disruptive Technology that you all are bringing to this whole concept and all the Different Things that you bring to the table here, and why thats not being embraced in austin, texas, rather than this huge fight that the Political Class is putting on to try to stop uber from being able to do what you do very, very well in austin, texas. I am curious about your observation of that. Well, look, i like to say that, you know, these the taxi rules that exist today, right, these old rules today, there was once upon a time those were the new and controversial rules, way back. I like to say every new and controversial rule has a right to become an old rule. But then it also has the privilege of being replaced by new rules that bend towards people and towards progress. So weve gotten into a situation where some of these old rules have become protectionist and have essentially outlawed competition. And ultimately those things need to change. Right. Yeah. Policy question for you. One of the things youre doing is talking about employment and the ability to create employment through uber. At the same time youre also working on creating Autonomous Vehicles and working with the carnegie melon and the folks outside of carnegie melon now. How do you square that . How far are we off from that . What do you do then when you have to talk to workers who will be this debate gets flipped around. You look at the effort and autonomous cars, Driverless Cars thats happening. Its been going on for almost ten years. It was started in earnest on the commercial side by google. Why . A Million People a year die from cars. Because many probably tens of millions of people are getting injured. Because, well, when youre behind the wheel, like the quality of life is just, you know its a very stressful thing. I am from los angeles. I have spent contiguously years of my life behind a wheel on the 405. And so, theres just so many great things that will happen. But thats what progress and technology is about. And so this kind of technology is happening, and so the question for uber is, do we resist the future or do we find a way to become a part of it. Right. If were going to find a way to become a part of it, if we embrace it, then how to you optimistically lead through it, how do you partner with cities as that transition happens . Its going to take a while. The transition will take a long time. To be honest, theres going to be i mean, that transition literally could take decades. Okay. So we when guidelinioogle says wee driving Autonomous Vehicles in five or ten years you think thats off the mark . You dont drive an autonomous vehicle. I think in that time frame youll certainly have a lot of Autonomous Vehicles out there but it will have not rheplaced everything. You think of the history in the agricultural side. In california when they came up with a new type of tomato that could be mechanically picked. All these people who were picking tomatoes lost their jobs. But technology is what continues to change, and well manage this. I mean, our challenge is what is the next big thing that will use the educated workforce that we better be working on in this country today. Thats it. We are planting the seeds five, ten years out but working also to mitigate the inevitable, unintended consequences. Remember, when we not we, but 50 years ago, 80 years ago when there were operators who had to physically switch phone lines, right. And the world moved on, and that was okay. Then look at today. Uber is five and a half years old. This year were bringing over a million drivers on the platform in the u. S. Alone. Maybe close to two. And so who would have predicted that five years ago . So there are going to be other ubers, other companies that come from nowhere other uses for labor. That create huge opportunities for people who want to work in new ways. Dont you get off the 405 now with google maps or with ways and go surface streets . I lived in l. A. For seven years. I was afraid. Now you put in google maps. Im going through neighborhoods. Its weird because there is traffic going through the neighborhoods now because everybody is its better to be in the back of the car like reading, talking. Sleeping. Meditating. Using uber. Lets cover it all. Eating toast. Arianna, some of us are children of the 60s that still like to be behind the wheel. Depends on the car. Fair enough. Let me ask you about china. Which is to say youre still working hard there. Of course. Unfortunately losing money there. There is a little bit of a winnertakeall thought about Companies Like uber. You have a huge competitor there thats already number one. Yeah. Can you be number two . Is that acceptable to you . Well, look, i think the way we look at it is, you know, when you are a tech company or maybe just a new company generally, you need to invest in new places and new products. China is like a very interesting place to do it. Were able to invest and lose money in china because we have markets that are profitable. That helps to fund, well, new places and new products and were totally okay with that. Winner takes all or not, i mean, i think were just there to serve customers, we have riders, the drivers, and make a system thats super efficient for helping people to get around. If we do it right, well be there for the long run. Youre investing or losing about a billion dollars a year in that market right now. Thats correct. Will that number go up . Whats acceptable . Whats the time line . There are some interesting when i was quoted with that, there are some interesting commentary. It was like i said that we will be able to invest sustainably a billion dollars or more per year in china. But thats, again, because we have profits in the more mature markets that were in. And so, for us, its when you go to china you cannot you cannot go there sort of halfhearted. You have to go in allin. The opportunity for uber is to say, well, if you have a chance to be amazon and alibaba at the same time, you should most definitely try. And if you try, you do it full hearted, you do it all the way, and you give it a shot. And the expected outcome, the r. O. I. Is there, so lets go. Do you think of yourself as we often talk about uber potentially in the future as a platform company, not just driving but bringing you food, delivering, doing all sorts of things. How far are we away from that next step . Is it easier or harder than you thought . Well, look, right now i think we have made a number of bets in different areas, and i am good with the bets weve got right now. Ill keep you posted if weve got anything new. But right now were sort of making sure we get our existing bets right. I am really excited about uber eats. Its really taking off. And were launching in a number of markets here in the u. S. And even starting to do it internationally as well. Ceo question. Now that you are on the board how much time do you spend thinking about the business, and when i say the business, what markets to grow in and all these other things, versus having to deal with Public Policy issues, different lawsuits, classaction suits that youve settled, various controversies. I imagine you wake up every single morning after a lot of sleep. After a lot of sleep and read some headline from somewhere in the world that is not as attractive as you would like. I mean, look, my management style i like to say is Problem Solver in chief. I am an engineer. I like to solve problems, the same way, like, a math professor likes to solve math problems. Like, thats what she loves to do. And so i am the same way with problems. And so, whether it be a regulatory situation or a legal situation or a product thing that we want to invent or a new country we want to roll out in or launch, those are all things that we get excited about. And if the problem seems really difficult, we get super pumped about solving it because, if you solve it, there is a huge outcome on the other side. Actually thats one of the things, andrew, that i have learned from travis watching him over the last couple of years is how relentlessly optimistic he remains in the middle of the biggest battles, including the battle here in new york with the taxi drivers and how its like a challenge that energizes him. And thats sort of a great thing for leaders to to learn from as a way to navigate challenges. And for i think from travis point of view from everything i have learned, a lot of it has to do with the culture you create in the company and the Cultural Values and communicating that to every employee so its not just coming from travis. Look, i cant be the only Problem Solver. To be Problem Solver in chief means you need to create a culture of problem solving at a company as big as ours. You settled a number of big suits recently. Can you speak to the decision process in terms of doing that rather than trying to take the case all the way, and are there a lot more settlements to come . Well, look, i think, if we we call it the oconnor case, the most recent one, you know, it reaffirms independent contractor status for the folks who are on our platform, which by the way, that status is one that they appreciate and prefer. But also, sort of holds us to account in some ways, right, like you know, you should have a deactivation policy thats straightforward and transparent. And essentially fair. And so, you know, there are things that we have to do to get better too, and were always getting better. And sometimes you are able to figure those things out out of court, and thats okay. And thats just thats one of those specific incidents. Were going to thank you. Thank you guys both for coming in. Congratulations on joining the board. We should do this more often. Nice to see you again. Fred wilson was on twitter admitting that he missed the early investment. He said that was correct. Somebody tweeted out what you just said and he wrote back that is correct. I guess were on better terms now. Next time we should have you both in together. Happy to do that. Thanks. See you in austin. Come on good luck with the that election there. I just i am stunned that you all would be even at this position where youre having to fight and push back on it. Anytime we succeed in a city, we see resistance in a city. I leave here and go to my next stop, and ill be using uber. Awesome. I cant wait to make it back to austin. Its a great city. Sometimes south by southwest. Its a great city. Thank you. Coming up, tech heads to washington. Cisco executive chairman and former ceo John Chambers joins us from technet. Talking trade and Public Policy. Stay with us. Thank you, guys. Austin. Stay with us. Austin. Stay with us. My name is melissa snyder, im a Customer Relationship manager with pg e. Ive helped customers like plantronics meet their Energy Efficiency goals. So you save energy and you can save money. Energy efficiency and the environment go hand in hand. And i love how pg es commitment to the environment helps a Community Like santa cruz be a better place to live. And being able to pass that along to my family is really important to me. Just being together and appreciating what we have right here in santa cruz. See how you can save energy at pge. Com. Together, were building a better california. Welcome back to squawk box. Here is whats making headlines this morning. Apple the big drag on Market Sentiment after its quarterly numbers came out late yesterday. Missing on the top and bottom lines posting its firstever iphone sales drop and firstever quarterly revenue drop in 13 years. The dow component down by over 8 to 95. 85. Opposite fortunes for Nbc Universal parent comcast. The companys earnings and revenue both exceeding streets estimates, additionally they added people and cable lines, brought in new video subscribers, new high Speed Internet accessors. That stock up 1. 7 to 62. 10. Additionally sources say the company is in talks about dreamworks about possibly buying the movie studio. For more than 3 billion. Earnings beat this morning from snack maker mondeelez. 9 cents above estimates. Bottom line was helped by a strong gain in profit margins. That stock is up by about 3. 6 . The ceo Irene Rosen Feld joins squawk on the street. Cisco executive chairman and former ceo John Chambers joining us now from washington. He and other Technology Leaders meeting with lawmakers today to discuss Public Policy, trade, tax reform, education, and other issues. And i you know, i know youre busy down there, john, probably havent seen the whole show, but its been a common theme to try to figure out how to make sure this entrepreneurial spirit in this country, which has made this country and were still tops in the world there, but wed like to make it even better. And i think thats going to be on the plate down there for what youre talking about. Completely agree. Joe, if you look what were doing, government and business have to work closer together. You look at the future of our country, 92 of the jobs created over the next decade will have Technology Skills involved in those jobs, regardless of if youre in the Service Industry or manufacturing. If you look at what other countries are doing, over country in the world except the u. S. Has a digital plan for how theyre going to grow their gdp one to three points faster than they would have otherwise. How they create in india a million jobs a month. How in France Business and government are working together. A socialistic government to really say how do they get unemployed back to work. Business committing to a million incremental jobs on it. Each of these countries when you go to the top, you say here is what we need on tax reform, here is what we need on education. Here is what the Public Sector and private sector should do. You go back six months later and its done. In the u. S. Were falling behind. All of you know it. You heard the comments earlier both in terms of the number of startups. Been relatively flat for ten years. Only going to do 60 this year in terms of the nasdaq where normally you do 240. We have to reskill mid america and change the Education System so when the young people graduate from high school they have the skills necessary to get the jobs. Instead of talking about tax reform, this is my tenth year coming on the same International Tax issues. Fifth year on patent. We have to say how do we act more like countries that we used to say move slowly. Now theyre setting the innovation pace. Youve given up on tax reform, john . Never. Never. If you watch tax reform and governor perry i think it was one of the questions you asked one of my colleagues. Tax reform allows us to create jobs in america. Right now the tax reform as you all know and many of your viewers know, it not only does not allow you to bring back the earnings you made overseas. There is 3 trillion overseas. It means you cant create the jobs in america, and what the overseas governments are saying, the u. S. Isnt stepping up to its obligations so theyll start taxing the earnings we have overseas. Unless you locate new employees in their countries theyll tax you more. So our tax policies are completely broken. I have been here for ten years. We need to fix it in this next year. If i would have told you that france is moving so much faster than the u. S. And india moving so much faster than the u. S. Two years ago you would have said no way. Theyre getting the job growth because of it. I see youre a clintonfriendly republican. I understand that. Youre not alone probably there. But just wonder who is the real hillary sometimes. When you hear someone say that dont let anyone tell you that its the private sector that creates jobs. When you hear a quote like that, do you think she got just off base or moved off center by her her competitor in the democratic race . Do you think that when she was if she were to become president , do you think she would be a privatesector friendly president , john . I guess you must. Well, i would break, joe, it into two pieces. First the Political Parties have moved so far to the right and so far to the left whoever wins each of the primaries has to move appropriately on that. America wants to be governed from the center. Youll see whoever wins, in my opinion, theyll have a tough decision to make. Will we be the company that leads in innovation is this were falling behind. The longer we wait on the decisions we just talked about, the further behind we fall. It does require the courage to make fundamental changes with business and government working together. If i would have told you the socialistic government in france would be so businessfriendly that we actually speak to universities together, that medef is saying when you cut taxes you can create jobs, you would have said no way. I think the next leader needs the courage to develop a Digital Strategy for the country and say well grow one to three points faster. America has not had a pay raise since 2000. Were at the same level we were in 1992. I will point out those areas happen to balance i am a strong but moderate republican, that clinton during his eight years of presidency, 22. 5 million jobs created, 18 growth in real gdp. 17 growth in real per capita income. Last time the america got a raise was with the information era. Youre about to see a digital era that can have the same effect on america except three to five times larger. We as a country are not moving with the speed necessary to create the startups to give middle class america a chance to participate in this. Policies cannot take a year. Theyre taking five and ten years to get the job done. Thats our message today. How do we win together and how does america win . Is there a candidate who you think best represents that . I really do. I think john kasich best represents that. I also am realistic. Both Political Parties are pretty smart. If you are really going to get gdp growth and i think its one to three points incremental gdp growth. If you get back to being excited not about generating 2 million jobs a career, which is not enough. We have a job shortage of highskilled workers of two million. I think youll see the candidates move that way. Kasich has been the most balanced in terms of saying how do we do this as a country and how do we do it in a logical way. Use trade as an example. No country has gdp growth for any sustained length of time or economic benefit without key trade programs going through. At the same time, as you do trade, you have to reskill the work force and show that the average american will have a much Brighter Future and the children will as well as opposed to the last 15 years. John, fun of tone ever the t thats important that you talked about in the last couple minutes, is government and business working together. I think thats so important that we have the next president of the united states, and, you know, regardless of who that will be, obviously, you know, i am for ted cruz. But the point of this is that a very thoughtful plan and what you all are doing on digitalization weve worked closely on this back over the course of the years and what we saw done in israel. Israel is now going to be israel 2. 0 as they come in and take the next step up. But what you have done in france and what we should be doing in the united states. And the next president of the united states, along with congress, that needs to be one of their most important issues that they work on together. Obviously, you know, bringing the wealth back into this country, repatriating that money with tax policy makes a huge amount of sense to me. But being able to have a plan and to devolve that plan back down into the states where we give states really the lead on it, where you let these, you know i will suggest to you that governors and legislators working together can take a lot of this and develop the digitization concept and have the federal government be a partner with those states and the private sector. So youve got, you know, the states, the federal, and the private sector working together. If we can if we can put all of that into the tank of the engine of america, this economy can explode. The economy, governor, you nailed it, could probably go three to four points faster than we are. The job creation could be 2 x what were currently doing. We could retrain the unemployed like in france where we put Training Programs in place where 70 of the unemployed go through the Training Programs and all of a sudden get a job in six months. Israel is a great example. All they have is their innovative spirit. Theyve redigitized the whole country and made a huge difference on it. In india, the chief minister gets it. They are not talking 3 or 4 economic growth. Theyre talking about 15 . Youre talking about modi growing the fastestgrowing economy in the world at 10 , not 7 . Youre talking about bringing the capability to every citizen in the state. They use a federalism where the Central Government outlines key concepts and literally does reviews with all the states about are you on your metrics to achieve those or not. Governor, what you did in texas was remarkably basic but very effective. You outlined a vision. You are the easiest place to start a business. During the time you were governor you saw 30 of u. S. Jobs created in texas. You go to hunting in california nice way of saying come to visit us. Come to texas and locate your jobs, you said. You create a citizen friendly, government friendly approach where they work together. This is a the exact approach that this country needs to do. But we have to quit following people. We led during the 90s. We got the economic and job growth benefit and middle class america grew income by 17 . Now were moving the slowest of the major countries in the world. We are moving not pointed together to outcomes. Somebody needs to pull us together as a country and have the courage to take the risk like modi did in india. Like netanyahu and perez in israel. Like hollande in france. I couldnt agree more. John, you found a sweet spot. I know you always wanted to do Something Like this. Youre perfect for it. Maybe ciscos loss is everybody elses gain. Were going to change the world. Thanks, pal, good to see you. When we come back, 100 days until rio. We get ready for the olympics with nbcs bob costas right after the break. 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 we return, well have the countdown to the Olympic Games. In rio. Its not too soon. Were just 100 days away. Nbc primetime olympic host bob costas joins us live from the ground. The futures right now. Still down a little bit but trying to come back. Well be right back. Good. How was your commute . Yours . Good. Xerox real time analytics make transit systems run more smoothly. And morning chitchat. Less interesting. Transportation can work better. With xerox. Thank you for calling. 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 . Welcome back, everybody. Were just 100 days to the 31st oy limb pad in rio. Bob costas is joining us. Were here on the famed copa ca nana beach in rio where this summers Olympic Games get under way in exactly 100 days. We have been here the past few days checking out the city and talking with people. Various olympic and governmental officials about preparations for the games. On the issues that they confront, the zika virus, water quality, political turmoil. After all, the president faces the possibility of impeachment. But all of this hasnt dimmed the anticipation and the excitement about all the stars who are returning to the games like Michael Phelps and carey Walsh Jennings who will be competing in beach volleyball. Usain Party Atmosphere we anticipate in brazil, everybody has their fingers crossed that these serious issues, no ones trying to minimize them, can be surmounted so these games can proceed and everybody can have a heck of a good time. Bob, i think thats one of the huge questions people have been asking though. Obviously every time we start to open olympics theres all kinds of questions about whether the cities will be ready, whether travelers will be able to get around. But the political backdrop in brazil is a huge one. Is that having any impact on things as theyre trying to get ready there . Reporter well, i spoke the other day with the head of their olympic organizing committee. And he made this distinction, he said, we are we being the olympic organizing committee, are in charge of every aspect of the games with two exceptions, security and power. The electrical grid. So thats the only part that the government has direct control over. So he said even if there is turmoil, and there is, even if theres a changing of the guard at the presidency, it will not have a direct effect on our preparations for the olympics. It could be a little weird as they try to decide who it is that officially opens the game because the head of state at the Opening Ceremony has that duty and perhaps theyll have a new head of state a half hour before the games begin. Who knows. Bob, youve been covering these olympics for so many years, i think youre now the longest running anchor hosting olympics like these. Just physically being on the ground and seeing the preparations and all the questions that people have again about, you know, how prepared are they, does it look to your eye that theyre closer, worse, better . How does it compare to other olympics where there have been these questions about how prepared they are . Reporter well, the ioc to be factual about it, the ioc warned them sternly not long ago that they were lagging behind in their preparations. The same thing happened in athens in 2004 where there were threats to take the games away and will they be ready in time. And remember visiting athens in april of 2004 and thinking there is no possible way they can be ready. And then the rush to the finish line and in fact they were ready. And they were able to pull it off. Brazil says theyre moving closer. Theyre moving in supersonic fast motion at the moment. Theyre getting more accomplished in the last six months leading up to the games than maybe in the years prior to. And they assure us that they will be ready. Theres skepticism, and that skepticism is understandable. Well have to wait and see. Bob, you think about in the past and contrast when the olympics are on the other side of the world and there was one channel, nbc might be doing it, and then contrast that with only an hour difference and all the different platforms that nbc can broadcast this on. Its mind boggling the amount of live finishes or gold medals or moments that youre going to be able to experience live given where it is and given the number of platforms it can be on. This is going to be by far the best ever in nbc sports. You know, probably going to be hard to do it logistically, but i have a lot of confidence. Reporter well, in that respect there should be more live competition in primetime than in most Olympic Games. And the other point you made is very important, be it the Live Streaming or be it all the various Television Platforms that come under the nbc banner, if you want to see even some of the more obscure sports, nothing is going to stop you from watching them from start to finish. And if you see something out of which necessity taped, delayed and played in primetime but you want to see it live, youll be able to and see all the lead up and really the background. Really the olympic menu serves everybody pretty well, i think. I think were ready to eat up. Bob, thank you very much for joining us today. Reporter thanks, becky. Okay. Coming up, i think youve seen it all this election season . Well, you might have to think again. Were going to talk voting booth selfies when we return. 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. Trolling for a gig with cant blame you. Its a drone you control with your brain, which controls your thumbs, which control this joystick. No, im actually over at the ge booth. Were creating the operating system for industry. Its called predix. Its gonna change the way the world works. Ok, im telling my brain to tell the drone to get you a copy of my resume. Umm, maybe keep your hands on the controller. Look out ohhhhhhhhhh. You know what, im just gonna email it to you. Yeah thats probably safer. Ok, cool. Making headlines this morning, snapchat is fighting for the right to selfie. The company filed an amicus brief in New Hampshire voting against a ban on taking photos in the voting booth. Calling it a key part of how young people participate in the voting process. Who knew . I dont know. Our guest host this morning former republican governor of texas rick perry. Whats next for rick perry . Back to roundtop, texas. Thats where i hang my hat now. We have a wedding coming up. I kind of meant the big picture. That is the big picture. I got a daughter getting married, thats the big picture. Middle of october were going to have a great wedding. Are you done in Public Service . Oh, i dont think so at all. Thats what i mean. What are you open to . You know, whatever comes along the road im going to be open to. I love this business. I love my country. You know, were really passionate, my wife and i, about the veterans and being able to help them. So maybe on the public side, maybe on the private side, but you havent heard the last of me, joe. What can we do to help Johnny Football . He is a really fine young man whos got some great problems. I hope he will listen to some people who really care about him and get the help he needs. The whole Substance Abuse issue, you know, we as a country have to deal with. But hes a high profile one that maybe some lemonade can be made out of these lemons. I know youre a cruz guy, but just for argument sake lets say the guy who calls himself the presumptive nominee does become the nominee, who would you suggest he picks for a Vice President . What would be the most important carrying ohio, carrying florida . Well, there were 16 men and women who were competitors one of them . You can do a whole lot worse. I mean, there are some really great talent there, people with a lot of experience. When you look across that board of the governors, when you look at carly, who i think is one of the most capable ceos, you can pick a John Chambers. Outside the box. You want to bring somebody out of the box to the vice presidency. I happen to think John Chambers is one of the great ceos of all time. I think he is every bit of innovative and consequential as steve jobs. Monumental. What do you think should it be about winning a state or maybe offsetting some of the downside of trump . I think it would be both. You think the Vice President should be both. About winning a state and maybe being sure. But listen, theyre not going to pick a guy like me from texas because republicans are going to carry texas. Thats going to happen. Can you go pick someone who maybe can deliver a state and help down ballot, help in a particular mexico governor, maybe, a woman, hispanic. Marco rubio. I mean, theres some real talent out there. All right. Governor, pleasure. Well see you back here tomorrow. Right now its time for squawk on the street. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the market exchange. Earnings from apple, twitter, boeing, chipotle. A fed statement this afternoon, the nasdaq going for a fifth down day, the longest streak since january. Europes in the green, oil hits 45 this morning. Thats the highest since november. As