Transcripts For CNBC Squawk Box 20170511

Flat. The ftse is down by 0. 1 in italy. Crude was the big story yesterday. Wpi this morning is up once again by 1. 6 . Gain of 77 cents to 48. 10. This comes after it looks like additional countries from opec are standing with saudi arabia saying those production cuts need to be expanded and also we saw a surprise decline in the supplies here in the United States. Now lets talk about todays corporate story. Shares of snap plunging after the Company Released its first report since going public. Snap missed on the top and bottom lines. The company struggled to keep up with user growth validating a lot of concerns about its ability to take on facebooks insta fwram and tgram and the s feature. Heres what evan spiegel had to say about competition on that call. People will copy your product if you make great stuff. When google came along, everybody felt they need a search strategy. When facebook came along, everybody felt they needed a social strategy. With snap, we believe everybody will develop a camera strategy. Just because yahoo has a search box, it doesnt mean theyre google. Not a good day for mr. Spiegel and his cofounder, robert murphy. Each lo. We have some deal news that broke overnight. Verizon reportedly winning a bidding war to acquire Straight Path for 3 billion. The deal could be announced as soon as this morning. Straight path uses High Frequency radio waves which could give verizon the edge on developing a fifth generation or 5g network, which is what the hole whole at t time warner merger is about, moving to 5k, bypassing cable. Finding faster ways to get more data. Straight path, the original deal was broken when we were on the air. Nobody seemed to know or care what Straight Path was. Its been remarkable to watch the little battle for this. Now we know. Some other stocks to watch today. 21st century fox reporting quarterly revenue below wall street expectations. The tv and film company weighed down by weaker box office results. That stock down by 3 . Whole foods getting a bump after posting earnings that were in line with forecasts and announcing a dramatic board shake up. The highend grocer adding a new cfo and five independent directors as it changes more than half of its board. One month ago management was pressured to deliver better results. The stock up by 4 this morning. Symantec shares getting hit on weak guidance for the quarter. Results for the most havent quarter were in line with expectations. The stock off by 6 . The top political story of the morning. More fallout over President Trumps firing of fbi director james comey. Its on the front pages again of every single newspaper. Eamon, tell us more. Were learning more about the circumstances behind that firing of the fbi director, james comey, earlier this week. It was a surprise to almost everybody in washington. But apparently the president had been considering it for quite a long time. Heres how sarah huck babee sanders referred to this in the press briefing yesterday. I think its been an erosion of confidence. I think that director comey has zone over the last several months and the last year of a lot of missteps, mistakes, and i think that as youve seen from many of the comments from democratic members, including mr. Schumer, they didnt think he should be there. That was a different rational than the white house initially offered. Initially they said it was Rod Rosenstein who came up with a reason for firing director comey, and it was due to the fact of how he handled the Hillary Clinton email investigation last year. There you heard Sarah Huckabee sanders say there were a lot of mistakes by director comey, implying there were more reasons to fire him than just the letter released by Rod Rosenstein. Director comey released a letter of his own to his staff at the fbi saying it doesnt matter ultimately why he was fired. He said ive long believed a president can fire an fbi director for any reason or for no reason at all. I wont spend time on the decision or the way it was executed. I hope you wont either. It is done. And i will be fine, thoughly miss you and the mission deeply. The Washington Post has a new nugget. I cant independently verify this reporting, but this is intriguing nonetheless. The Washington Post reporting that Rod Rosenstein, the Deputy Attorney general whose letter was cited as the main cause for all of this, theyre saying that rosenstein threatened to resign after the narrative emerged from the white house on tuesday evening that cast him as a prime mover of the decision to fire comey. If thats true, it adds an element of chaos to all of this. This is a decision that clearly caught a lot of people including a lot of people inside the white house by surprise. The white house has been on the defensive over the past 24 hours or so and trying to explain why they did this, what they did and what comes next. Today we will hear from the new acting director of the fbi who will be testifying up on capitol hill later this morning. Maybe well get more answers there and some indication of what direction the fbi plans to go going forward. Preet bharara tweeting overnight, does anyone believe the state the reason for comeys firing was the actual reason . Interesting how outspoken Preet Bharara has gotten in recent months now that hes no longer employed. He has the freedom to say what he wants. Hes skeptical here. He is somebody who has also been fired by donald trump. Look, the real question here is what happens to the russia investigation inside the fbi. Will those officials be able to continue moving forward, making progress and wrap up that investigation . The white house says they want it wrapped up. They dont think theres any there there. They would like the fbi to continue its inquiry, do everything it needs to do, button it up at the end and say there was never anything there. There were two pieces from the Washington Post yesterday that caught my attention. The one you mentioned talking about rosenstein threatening to quit over that. Which changed the narrative entirely from what the white house had been talking about what i assumed 24 hours ago. The other piece of that investigation that they pointed out was that this happened after comey apparently asked for additional funds. There has been fak and forback n that. Hill staffers saying comey asked for more fund for this investigation. The Justice Department has denied that but those are interesting and different narrative than we had heard 24 hours ago. Absolutely. Even the white houses own narrative on this has been shifting. They initially stood on the Rod Rosenstein letter, and said this is why he was fired. Its because he mishandled the Hillary Clinton investigation last year. Then we saw Sarah Sanders saying there are many reasons, multiple reasons why he was fired. The president himself said he thought comey was not doing a good job, which is a big umbrella explanation. The explanation has been shifting over the last 24 hours. Can i bring it back to policy, Economic Policy and the ability for the administration to continued to pursue the pledges it has made. How much harder or not does this make it . Is this a story that will continue or will we talk about this for 48 hours or are we going to be talking about this for much longer and it will stymy whats on offer . In the shortterm this consumes all the oxygen in washington th washington. The white house is it n relativy aggressive mode. The real thing is how will this affect republicans on capitol hill. The Trump Administration knows it wont get democratic cooperation on healthcare, not much on tax reform, maybe not much on infrastructure. If this makes republicans go wobbly on trump in general, then that is where you could see it impact the agenda. Otherwise republicans on the hill still have their own vested interest of passing tax legislation. You could see it, they could cooperate on that and maybe not on some of this fbi stuff. Eamon javers, thank you very much. You bet. Lets talk about what is coming up on todays economic agenda. The bank of englands latest rate announcement at 7 00 a. M. Eastern time along with its monthly Inflation Report. Weekly jobless claims and the april Producer Price index out at 8 30 a. M. Eastern. Bill dudley is at a conference in mumbai, india, to speak about the benefits and challenges of globalization. More retailers reporting today. Indicating that were getting towards the end of the retail the end of the earnings season. Kohls, macys, nordstrom, so well talk about those things, too. Lets get to our market roundtable discussion. Joining us on equities is ed campbell, Portfolio Manager at qma, which has 1 116 billion in assets under management. On the economy, we have david owen, chief european financial economist at jeffries. Our guest host for the hour is peter boockvar, from the lindsay group, also a cnbc crib ontribu. Welcome to all of you. Peter, tell us what is driving things. You hear these headlines, the distraction out of washington, yet the s p 500 and nasdaq are setting new highs. Is the market just writing this off . I think so. Theyre focused on 19 trillion economy that will not get affected if comey is in place or not. Theyre focus the on tax reform and believing that something will happen this year. Thats the hope, that could get pushed out to 2018. Theyre celebrating good earnings. Granted off an easy comparison. But after six quarters in a row of earnings declines, to start to see an upward trajectory is important. I think the year will be defined by the hopes for a fiscal tailwind versus the growing monetary headwind. As we get deeper into the year, thats a beg deal. N big deal. You think washington has to move to get things done to produce that tailwind . Right. Its interesting. You listen to eric rosen gr ngre said the more stimulus on the fiscal side if they can improve the economy, get more stimulus into the economy, the fed will have to raise Interest Rates . Right. Hes a nonvoting member, but his comment just right there talked about the battle between fiscal and monetary this year. Ed, where do you think things stand in the markets . How comfortable do you feel with new highs being set almost every day . Yeah. The market has been consolidating for 2 1 2 months now. We had a run up in the aftermath of the election. I do think that the disappointing developments or the lack of progress on the policy agenda has taken the wind out of the sails of the market. Its not that were falling off a cliff. Were talking about modest gains, but enough to put you atny recordat atny at new records. The reason for that is the excellent earnings so far. Were getting 15 year over year, almost 5 Percentage Points better than was expected at the beginning of the quarter. If you look at calendar year 2017, our expectations for Earnings Growth were 6 to 8 at the beginning of the year, we have to move that up higher. We have gotten a lot of returns off the bat here so far yeartodate. I think we need to consolidate more, pull back before we go higher. But we do think the general trend is up between now and the end of the year. In terms of you raising your earnings forecast, youre not necessarily raising the Market Forecast as a result . You think it justifies the levels . I think if we were thinking that we were going to get 6 to 8 earnings, and tack a 2 dividend yield on that, if you upgrade the earnings, you have to add more to the total return forecast for the year as well. Weve talked an awful lot about sorry. But last year, 2016, earnings were flat and the market went up 10 . Can you argue that we priced in the 10 earnings increase this year last year . I think valuation is much more prnt for stock market returns if you look over a longer horizon. If were looking at a horizon between now and yearend or the calendar year, the macro conditions will be more important to driving things than actual valuations. So i think valuation is a little bit rich, but i think it hangs where it is rather than pull back. David, we had guest after guest recommend european equities over u. S. Equities because they think the upside potential is greater there. Does that fit in based on how you see the economy . Its obvious theres a twoway flow. You have european investors actually recycling a massive current account surplus in the eurozone and in particular germany over to the u. S. And in fixed income. The so were seeing aggressive buying of european investors. Which explains the treasury crisis. You have the record gap between the tenyear treasury yield and the tenyear bund yield. You have the ecb yesterday saying they want to taper but at the moment aggressively buying every month. Theres a real hunger for yield. The european recovery is very slow. It will be very confusing going into particularly september when the ecb has to give much more guidance about what it will be doing on the bond buying front in 2018. Peter pratt and mario draghi were clear in frankfurt, they will not raise rates until they stop qe and theyre waiting to see core inflation and Wage Inflation pick up but theres no sign of that happening. You think the reason european equities have done so well has more to do with the stimulus continuing from the central bank and less of an actual rerival . Theres a recovery. But were talking growth of less than 2 annualized. So this is a slow recovery. We have Political Risk coming back on to the rise and the brexit discussions between the uk and the rest of the eu. But possibility of a snap italian election in october. That for mar shkets should be m worrying than france. In italy theres a prospect of renzi calling on aan election i october. You have low yields across the system, but within that you have sort of widespread spreads in s cases, and italy is the standout. For equity investors, the message is clear. For fixed income, its a more confused message. By september it will get much more confusing. Do you think mario draghi says anything in june hinting at a further tapering . No. Weve g theyve got to be clear. It was clear a month ago there was no way they will do that, but it will be difficult to hold the line. You have a council which will splinter, and in september the market also be hungry for clear communication. The problem is they dont know whether core inflation next year will pick up. They have to make a decision about what they do next year. They have to make that very clear. He was almost heckled in the Dutch Parliament yesterday. Yeah. I have to believe the dutch and particularly the germans are going to put extraordinary pressure on him this year to back off. Part of the problem is one of their own making. In germany, theyre running a massive account surplus. There is a limit of 6 on account surplus, germany is way beyond that. France needs Structural Reforms as do italy and so forth. The dutch have space to do physical easing. If you do fiscal easing, bond rates would rise and make Mario Draghis job easier. David, thank you, ed, thank you. Peter will be with us for the hour. When we come back, it will be a bad day for snapchat today. It is plummeting on weak user growth. Well have the reaction from an analyst when we return. Oh, snap i count on my dell Small Business advisor for tech advice. With one phone call, i get products that suit my needs and i get back to business. But weve got the get tdigital tools to help. Now with xfinitys my account, you can figure things out easily, so you wont even have to call us. Change your wifi password to something you can actually remember, instantly. Add that premium channel, and watch the show everyones talking about, tonight. And the bill you need to pay . Do it in seconds. Because we should fit into your life, not the other way around. Go to xfinity. Com myaccount welcome back to squawk box. I dont say this with a smile. Shares of snap plunging after the release of its First Quarterly report. Revenue nafalling short of estimates because of slower user growth. A sign that facebooks copycat strategy may be taking a toll. People will copy you if you have great stuff. When google came along, everybody felt they need a search strategy. When facebook came along, everybody felt they needed a social strategy. With snap, we believe everybody will develop a camera strategy. Just because yahoo has a search box, it doesnt mean theyre google. Joining us is michael graham. Fortune magazine describing evans on that call as trolling facebook based on some comments he made. How bad is the situation . You know, i think its really too early to tell. Snap is still growing users at a fast rate. Its slowing down a lot, though. The question on peoples minds, is that slowdown from facebook and instagram creating another snapchat in a short amount of time or more temporary youre the analyst. Whats the answer . I think its too early to tell. But facebook came out, had a rough couple of quarters when they went public, then rebounded dramatically. The one thing they didnt have that snap what is a big competitor in front of them. So the fact that every month snap will be battling instagram for users is a rel difference in the stories. People say is it facebook or twitter . Those are the two ends of the barbell in terms of what could or could not happen. Where do you put snap . Its in between. Twitter had a dramatic slowdown in users from the moment they came public. Thats the biggest reason the stock has not worked. Snap is still growing the user base nicely and theyre engaged. The number of snaps that the average user is creating is going up even as user growth is slowing down. Thats a big difference between the two. As you know in modya, revenue always follows the eyeballs. So snap is growing its audience. We hear often that the big media companies, big advertisers are trying to spend more time on snap as well as facebook but are attracted to the sexiness of snap. Have we seen that play itself out in terms of revenue and what were where this business is going . Not yet. The ad business is still early on snap. They waited a long time to start monetizing the audience. Some things theyre rolling out like a selfserve platform for smaller advertisers just rolled out a couple weeks ago. Its early days. I think theyll do a lot in terms of ad load, getting more revenue out of the service. We have a long way to go there. Do you see snap as a messaging service . Meaning a one to one messages service, which is the way i know people use it, or a one to many, which is the way facebook works, instagram works, and frankly twitter to some degree. Snap is a Small Group Communication tool. Its more like a conversation. You speak and then your words sort of go away. Thats what happens on snap for most use cases as well. One question is can it also become a source for news and pop culture. Thats the publisher story part of snapchat. Most of the usage so far is in the user storage. If it doesnt expand to that, whats the implication from the stock . Is there one . I think the use case and the time spent per user starts to go down a bit. They did have over 30 minutes per day of usage per user in the quarter, which was very solid. If you move away from things like consuming video content and consuming news and other content and it becomes a communication tool, its hard to burn 30 minutes what are you telling your clients to do . Were saying hold tight. Hold tight as a buy or weve been hold rated. Weve been cautious on the stock since it came out. You still dont like it at a 25 discount . Theres a bit more upside. Our price target is 22. I would say thats not a super conservative price target, but i think the stock is likely to rebound a bit from this volatile reaction. Whats your conviction on the stock . Im convicted that i dont want to own it now. Good answer. The disruptor list for 2017, before it went public, snap was a threetime disruptor. Find out who is on the next list. The annual disruptor 50 list will be revealed tuesday. When we return, the senate tackling healthcare this week. Dr. Toby cosgrove will join us. And well talk to senator john thune about healthcare. Stick around. Squawk box will be right back. . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Welcome back. Youre watching sqsquawk box live from the Nasdaq Market site in times square. Good morning. A look at u. S. Equity futures. Snap is down, but the larger market is down as well. Dow looks to open off 22 points. The dow down about 12 points. The s p 500 looking to open down had 1 2 points for now. A little news for you. The eu top court saying uber is a transport service, not a digital app. If it is a transport service, it could be required to obtain licenses. The advisers opinion is not binding, but the judge and the court tens to follow recommendations. Uber argues it is an app that connects drivers and passengers. This whole issue of are you an employer or contractor. This is probably pretty important in terms of what it means for the valuation of the company down the road. Their ability to do business in europe and whether other parts of the country will follow. Again, youre held to a much higher standard if you have all these employees, not just contractors working there. Aetna announcing it will completely pull out of the obamacare exchanges. The insurance giant will not offer insurance plans in delaware or nebraska. Health and Human Services secretary tom price says the move is a sign of continued instability in the healthcare sector under obamacare. Senate republicans working on their Healthcare Plan this week week, and joining us is Toby Cosgrove. Thanks for joining us. Good morning. Aetna pulling out of the last two states where it had an exchange. What does that say to you . Says that they are very much concerned about the Insurance Industry of getting involved. You see this happen with united, now aetna doing the same thing. There is great concern amongst them whether many more will stay. Is that because obama care is collapsing under its own weight in is that because theres not the funding that was there before . Because consumers are not interested . The fact this they lost a lot of money. They have overestimated the number of people who will sign up, and they have underestimated the cost that it will be. And i think theyre having great trouble troying to figure out what the future law is going to do in terms of helping them with covering these individuals. You expect to hear other Insurance Companies follow suit . Is this operationally specific to aetna or is this a much, much, much broader problem . I think its a broader problem. I talked with other Insurance Companies, theyre concerned about whether theyll participate or not. I think this is something that is across the industry, because there are really no guidelines on how they go forward. A lot of it was people sicker were signing up, people who were well were not. So every consumer you signed up cost way more money than you anticipated. How do you change that . Does this new law or the new bill passed by the house tackle that or not . I cant tell whether the new bill will handle this or not. I think theyre trying to do this and reassure the Insurance Companies they will be there to support them, particularly with highrisk pools. The real question is is this enough to satisfy an industry which doesnt know how to plan for the future and how to understand what they are going to be getting into. Right now i hear a lot of anxiety in that group. Preexisting conditions has been a huge touchstone for this. Something Consumers Want covered. Something the president said should be covered, but gets back to this issue of how much you can charge someone for preex t preexisting conditions if you dont have healthier patients signing up in the pools to offset costs. Were back at the starting point for all of this. This goes back to adding on to the instability in the Insurance Industry. They dont know what the rules of the game will be, so they opted not to play. What does that mean from your perspective as someone running a hospital . I think the concern, quite frankly, is this has not been coasted out by the cbo. So we dont know how many people will be covered with this bill. And how many will lose coverage. As you know, it was projected that 14 million would initially louz lose coverage and go up to the low 20s over years. This has major significance for hospitals and providers. If you look at the data, 25 of hospitals last year and tin the country lost money. 55 lost money on the care of patients. If you have a group of patients that we are going to be taking care of for which we will get no payment, then this puts more hospitals at financial risk. That is a problem for the provider industry. Just straight up and down, when you saw the house bill get passed, you smiled . You shake your head . What was your gut reaction . If that were to become the law. I think its going to be challenging for providers. And i think it will not be particularly popular with the general public. Have you told the president that . I do know you have his ear as part of that counsedowcouncil. We have not had that discussion. Well have to wait and see what senate does. I suspect this will be quite a different bill in the senate. Whatever the compromise is, we have to see where we go from there. Whats really important is were not dealing with the root cause of the problem. The root cause of the problem is that healthcare costs are going up continuously across the country, and they will continue to go up unless we do something that makes the care of patients more efficient and we deal with the chronic diseases caused by obesity and smoking. So there is an opportunity for a bipartisan bill that would look at the causes of the rising costs and how we can deal with that. Theres a lot of things that the administration can do administratively and legislatively to begin to help control the costs. And if we dont start doing it now, ten years from now well be dealing with the same sort of problem. So i think its important that we begin to get to the cost r. Cau cause issue. Do you see pom price or donald trump taking that issue on. I have talked to people in the administration about this. They have not dealt with that particular problem, whether they will do something with that or not. It remains to be seen. Toby, this is the first time we talked to you since you announced youre stepping down at the cleveland clinic. Congratulations. Why are you stepping down . What next . Well, let me answer those three questions that everybody asks. First, im not sick. Two, i dont have another job. Three, i didnt get fired. So, those are important to understand. First of all, ive been at this job for 13 years. The organization is in great shape. We have great people coming along. And there comes a time when its important to move on and give someone else an opportunity. I felt that this was a good time to do it. It was my call. And im delighted to have had the privilege of leading the organization over this period of time. We appreciate you always being on with us. We hope you will continue with this. We appreciate your insights. Again, congratulations. Thank you very much. Coming up, guest host david nov novak, he was the ceo of yum brands and is now focusing on ko corporate leadership. Then well talk russia, north korea and the firing of Richard Comey with richard haase. And retailers under pleasure. Mapressure. Macys set to report at 8 00 a. M. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. I count on my dell small for tech advice. With one phone call, i get products that suit my needs and i get back to business. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back. A check of the markets on this thursday morning. The futures have been slightly lower. The dow futures down by 22 points after the dow was down slightly yesterday. S p futures are down by 4. Nasdaq down by close to 13. This comes after both the s p 500 and the nasdaq set new records once again yesterday. Look at whats been happening with oil prices. That was the huge story yesterday. Energy stocks were the biggest movers after you saw a gain of more than 3 in crude oil prices. This morning wti up 1. 6 to 48. 10. This came after supplies in the United States fell by a bigger than expected amount as a surprise draw down and a couple other count res likeries lookin they would side with saudi arabia to continue production cuts. In the treasury market, the tenyear note looks like its yielding 2. 398 so ticking up from recent weeks. Time for the executive edge. The Trump Administration expected to expand a ban on laptops on commercial aircraft to include some european countries. Officials studying how to ensure the lithium batteries stored in luggage holds dont explode in mida midair. Laptops were also restricted from ten countries because of fears that a bomb could be concealed. American airlines have not American Airlines specifically, but American Airlines the group of them have been a beneficiary of this rule because if you wanted to go on one of these flights and use your laptop, you actually from a competitive point wanted to go on an american airline. If they include American Airlines as well, it becomes more complicated. If you show up with sunscreen, you cant bring it on, you throw it out. What happens if you show up with a laptop . They take it from you. Do they send it back or throw it out . Theres a system. A storage area for you to pick it up . Ship it . Im not sure how they set it up. They have done it. Emirate the and some other airlines tried to create a system to that if youre connecting through dubai, for example, or Something Like that, your first leg you can use your laptop. When you get to dubai, they have a Concierge Service where they take the laptop with you and do something with it. Everybody is trying to figure out how to grapple with this. You understand the safety concerns, you also understand the commercial aspects of trying to deal with implementing it. Adidas is getting out of the golf club business. The Company Announced yesterday it is selling its golf brands, taylor made, adams golf and ashworth for 4 425 million. Adidas will continue to use progolfers like Dustin Johnson and Sergio Garcia to sell clothing and shoes, but revenue from the golf business declined from 1. 1. 7 billion in 2012 to 0 500 million last year. I dont know what that says about golf, the sales of these things. I wish kernen was here. I own a pair of adidas golf shoes, are they collectors items or no longer cool . I think its the taylor made brand. The shoes may be okay. The shoes may be okay . I think. This decision follows a similar move from nike last year. I guess it speaks to how difficult the golf business is now. Its not a growth industry. All these millennials are not necessarily playing golf. You have to find how can it change . Play nine holes, ways to shorten the game. I want golf to be easier. Thats all. I want it to be shorter in time. Shorter. And easier. Vladimir putin taking part in an annual tradition, playing in a gala hockey game in sochi last night. He showed off his skills scoring 7 goals. Putins team pulled off a win with a score of 176. He scored 7 goals . Yes. Because . They let him. The goalie was like go ahead. This is probably what happens if you maybe play golf with the president. The losing Team Included some of putt putins friends, including some of the wealthiest businessmen in russia. If hes barrelling down the ice, you get out of the way. Particularly ifrests on it. Breaking news, the Straight Path deal is official. We mentioned it earlier. Verizon buying Straight Path communications, 184 per share. Maybe we can get that chart up on the screen. Straight path will terminate its definitive agreement with at t. Look at that. Look at that. Its the deal was first announced, you could see what happened when it popped there in april. You know, this thing was trading 50 . I think it was 50 originally. Its going you can see what it is there. 184 a share is the deal. But thats about 43 below where the stock had been yeah. Trading. Correct. Thats the bad news if you were betting on even more. Still, if you were possibly in there in in there before this speculation picked up. When we return, Better Living through Artificial Intelligence. Meg tirrell looks at new technology thats changing the way we stay healthy. Our modern medicine series continues next. As we head to a break a quick check of whats happening in european markets. Things are flat across the board. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. I count on my dell small for tech advice. With one phone call, i get products that suit my needs and i get back to business. Check this out. This is really cool stuff. You got to imagine a tooth brush that can analyze your saliva for Health Problems or a clock that can wake you at the precise moment in your sleep cycle that is easiest for your body to awake. Good morning. Im sure you could use those sleep cycles. Ive tried those but then i feel robbed if they awake me before i want to get up. Were collecting so much data on ourselves, experts say the way to make sense of that all and to use it to improve medicine is going to be through artificial medicine. Soon Artificial Intelligence may be able to predict what diseases we could get. The potential is perhaps the biggest of any type of technology weve ever had in the field of medicine. Its being worked on by technical giants from google to ibm to phillips. We are using a. I. Already. In patient monitoring, we can predict hours in advance whether a patient will get a heart attack. Researchers are Training Computers to analyze information from sensors, images and language, using a technology known as deep learning. We give it an imang and we tell it this set of pixels represent cancer and these other set of pixels are not cancer. So can you learn who distinguish between these two automatically. Without human inputs and with data, computers may make connections were not capable of. Depatients minds Health Information on millions of people in the hospital database. It combines the information and helps to us predict for example, who will get type two diabetes. Hurdles from access to data to reimbursement to simply understanding data abound. A survey from mit says they expect computers to be analyzing medical information in about a decade. I want to know about the tooth brush. This is a phillips thing. They say possibly you could be analyzing your saliva and sending it to the cloud and the computers understand all the Different Things happening in your mouth that could potentially imply youre going to get sick. Before you get a heart attack, is that not for the heart attack. They do say gum disease is a great indicator, sadly, of heart health. All of these inputs could be used. If youre not depending on one doctors brain, you can depend on computers to put to the massive amounts of information. What kind of sickness . That im coming down with a cold in. Id be very excited about that. If i knew i was getting a cold and i could douse myself with emergenc and all of those and not come in to work and in infect the rest of us . Our next guest will be david novak, the ceo of yum brands and well be joined by Richard Haass on the firing of james comey and thees escalation with north ko. You think traffics bad now, the futures going to be a nightmare does nobody like the future . Cmon, the future. He obviously doesnt know intel is helping power Autonomous Cars and the 5g network they connect to. With this, wont happen in the future. Thanks, jim. Theres some napkins in the glovebox. Okay, but why would i need a napkin . You could have just told me a bump was coming. We know the future. Because were building it. After a disappointing first report, we will tell you what went wrong straight ahead. Plus more on the comey fallout. What the former fbi director said to his colleagues about his departure. And we talk leadership. Business and the yum brands china spinoff with david novak. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Ive got the power good morning. Welcome back to squawk box right here on cnbc live, im Andrew Ross Sorkin along with becky quick. Joe has the day off. Well see him soon. Ta take a look at the futures. We are in the red along with snapchat. S p 500 looking off about 4 points, nasdaq opening off about 12 1 2 points. Just across the tape, verizon announcing a deal to buy Straight Path communications for 184 per share. The boards of both companies have approved the deal. At t will not be making any new bids. Straight path down materially but only because the expectation had been the stock would go even higher. It was trading in the high 40s, around 50. If you owned it long enough, it was a very good day. Some executive sweet changes, and aig will name brian hmm, how do you pronounce it . He was a ceo under Hank Greenberg for about two decades. And april Producer Price index at 8 30 eastern time. Economists looking for a slight uptick in jobless claims. The pound has fallen about 0. 4 off the back of that lack of action from england. We werent expecting them to hike rates. The vote was 71 but it was expected to be 62. The fact that theyre very much, a, not increasing, and forecasting no increase is why the pound is 0. 4 off the back of it. The stock of the social Media Company snapchat falling more than 25 at one point. Shares are down by 21 . When it fell earlier, it was below its opening price on that ipo. Julia . Snapchat taking a big hit on a reported miss on revenue and earnings. The ceo saying theyre pleased with the progress, reaction sell rating after a slowdown last year. On the earnings call, asked if hes scared of facebook, spiegel laughed and said this people are going to copy your product if you make great stuff. Weve seen this happen a lot in technology. When google came along, everyone felt they needed a search strategy, when facebook came along, everyone felt they needed a social strategy and now with snap, we believe everybody has a camera strategy. He was asked to defend why everyone should buy snap ads and he said their users are more engaged and hard to reach anywhere else. Spiegel defended the companys user growth said they dont artificial inflate numbers, knowing users spend an average of over 30 minutes a day on the app and theyre creating and sharing more content than ever. Analyst reaction is mixed, Kanter Fitzgerald upgraded it and others pro rating saying it has problems with its business model. Before snap went blook, it was a cnbc disruptor. The fifth annual disruptor list will be revealed on tuesday. Shares of whole foods getting a bump after posting earnings in line with forecasts and announcing a dramatic shakeup. The new ceo says it changes more than half of its board. While activists disclosed a nearly 9 stake in whole food and began pressuring management to deliver better results. The share are up 4 this morning. Semantymantec is down 6 as can see. The former ceo is grooming leaders for tomorrow, author of o great one and creator of the platform o. Lead. Com. What do you think of snapchat . I think snapchats the upandcoming thing. I think its a disruptor. I think its early days for them. I watch what my grand kids and the kid i see are using. I think theres plenty of room for snapchat. If you were coaching evan speeg el on leadership, what would you say to him today . Hes passionate, hes really protective of it and confident about the future. I think when people ask if youre worried about a facebook i think you should be a little more humble and maybe not laugh. Theyre around. Theres plenty of room for both of you. I think he should temper his passion and competitiveness a bit. What about holding all of the investors rights so the ipos have no power. I think hes very passionate of what he wants the company to be and he structures to stay true to what he believes. I give him all the credit in the world for it. Where do you think the economy is right now, not just the market about the real economy . I think the economy you see income is rising a bit, Consumer Confidence is up. When you look across retail, you just really dont see that much more increased traffic, you dont see more increased spin. So think youve got kind of a very cautious economy. And i think Consumer Confidence is up overall but youve got such a divisive country in terms of that. People who voted for trump, Consumer Confidence is through the roof. People who voted for clinton, its way down. I think you got a real waitandsee culture. Its really different from the past. Its interesting. Where is your confidence level . I believe in this country, ive always believed in this country. I think were moving in the right direction on a lot of front. Id love to see our country come together more, be less divisive. I think we need leaders to Work Together. I dont like it when i see 100 republicans vote one way and 100 democrats vote the other way. Youd like to see people get to the and work through the issues and really come up with a solution thats going to drive america. In terms of stimulus and tax plans, does it worry you if these tax fund plans arent fully funded or is there room to play . I think we have a growth model. People are assume being were going to grow our way in to pay for the upcoming tax cuts. But i think this economy is ready to take off with the right Regulatory Environment and the right tax structure, we should be growing a lot faster than what we are. You spend a lot of time with a lot of senior people in Corporate America today. One of the questions ive asked multiple times recently, for so many years ceos would come on our show and say things are so uncertain that theyre paralyzed, if you will. Today it feels like even if you just look at the vix or the way the markets running, you youd think theres no uncertainty, yet you see the headline of the paper and you think its a much different world. I think people are much more confident than they were and the fact that the Regulatory Environment is moving in the right direction, the fact that taxes seem to be moving in the right direction to give people stimulus, i think theres hope. I think theres issues and theres always going to be issues and i think people say look at the Economy Today than what it could have been and theyre much more optimistic. Whats the biggest challenge for leaders . The biggest challenge is getting employees engaged. 7 out of 10 employees are not engaged and 20 are disengaged. Youve got on average 30 of your employees base driving your results. Thats not good numbers. I think what leaders have to do today is get their employees engaged so you can get better results what does that mean disengaged . Theyre not actively paying attention at work . They dont want to be there, theyre not productive and they dont believe in the mission . Theyre going to work and they cant wait to go home. Versus tap dancing to work, i really want to be there, this is something i make a difference in, i count. I count in my company. And i think the Great Companies create environments where everyone counts, everyones valued. I think thats what leaders have to do, have to create the culture where everyone feels they can make a difference. Is the 7 out of 10 number higher than it used to be . I dont know that. Thats a lot. Let me ask you about messaging to employees, at the same time youre often messaging to the black. We talk about how divided the country is. Certain ceos feel like they have to message a certain way to their employees. Im thinking of pepsi and some of the companies in Silicon Valley that have felt that they have to suggest they want to try to protect the employees from the politics of the moment and have sometimes had to be critical of administration in washington. At the same time, they have a Consumer Base which they can alienate with that type of messaging. Right. How do you deal with that . I think has a ceo, i always felt your external message and internal message should be totally linked. I think they should be the same. Because theyre going to figure it out consumers are figuring out where youre going anyway and employers are going to figure it out and the worst thing you can be is inconsistent. I strongly believed whatever i was going to tell wall street or squawk box, whatever, i wanted my Employee Base to hear the same thing when im giving my situation to them. I think andrew is getting at a situation we dealt with, the united Ceo Oscar Munoz who dealt with that video by saying he supported his employ lee base but then youve got customers dealing with irate gate man injuries and other on a rg basis. Hes been beaten up and broke of rule you should have in terms of crisis management. I think when you have a problem like that, you have to acknowledge it and were going to fix it so it never happens again and speak in consumer terms. Talk about reaccommodating customers. I never knew what that meant. Hell learn and hell move on. How do you speak to both your Consumer Base and your employees because youre throwing somebody under the bus. I think theres a problem there. Your culture as it relates to customers is not where it need to be. If your job is to make sure that customer is happy and we handle the customer with the upmost respect at all times, i dont think you see that kind of problem. They have a better way of handling it. Just coming off a united flight the other day, the pilots were wonderful, the attendants were wonderful, the gate personnel, not some. You just have to keep driving your culture, your customer focus and you can never really rest on that. And youre going to have people who disappoint you. We did in our company. It happened at American Airlines, but you as the leader, i think youve always got to walk the talk on what matters most and thats making your customers happy. Real quick, best manager in m america working today. I think its a tie between jamie diamond and brian roberts. Coming up, the latest on the investigation of the president s interference and the russian election. And a stock pop in recent months and Richard Haass will join us in a moment. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. If you want to stay on top of your health, one simple thing to do is take the pledge to go and get screened for the cancers that might affect you. So stand up to cancer and take the pledge at getscreenednow. Org it only takes a minute to take care of yourself, and nothing rhymes with org. For the week as a whole, the nasdaq up about half a percent. The Senate Intelligence committee holding a hearing regarding russian interference in the 2016 election. Eamon jafe eamon javers joins us. Coming up this morning, well get testimony on what the fbis plans are going forward. Well hear from Intelligence Leaders and you can imagine that senators will have a lot of questions about all this. The white house for its part spent much of wednesday offering explanations for why the president fired the fbi director, including Sarah Huckabee sands are in the White House Briefing room one, he was a candidate for president , not the president. Those are two very Different Things. Once you take over leading the department of justice, thats very different than being a candidate in a campaign. As you guys all know, theres a very clear distinction between those two things. There you heard Sarah Huckabee sanders saying that the president had changed his mind, for the one thing praising james comey for the very thing he was fired for this week. s james comeys letter i have long believed that a president can fire anyone for any reason or no reason at all. It is done and i will be fine, although i will miss you and the mission deeply. Sergey lavrov on the lefthand side of your screen there is the Russian Foreign minister, Sergey Kislyak on the righthand side. The russians were able to get this photo, put it out there and that is something thats being debated in washington. Why did the president feel it was important to have that meeting with those two russians on the day after hed fired the fbi director, who of course was leading the investigation into russian collusion in the American Election in 2016. All of that swirling around as we go into this hearing today at 10 00, andrew. Eamon, we appreciate it. Thank you very much for that. We will see you many times later today. When we return, we have this mornings top corporate stories and much more from our guest host today, david novak, ceo of yum brands. And well break down the Retail Sector and talk about the state of the consumer. Futures are indicating a little bit weaker. Dow down by 19, s p and nasdaq down slightly after setting records yesterday. Well be right back. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Wheres jack . Hes on holiday. What do you need . I need the temperature for pipe five. Ask the new guy. The new guy . Jack trained him. Jacks guidance would be to maintain the temperature at negative 160 degrees celsius. That doesnt sound like jack. Actually, jack would say, hey mate, just cool it to minus 160 and were set. Good on ya. Oh yeah. Thats jack. The owners of 5 string furniture are back together after a twoyear break. Now theyre growing faster than ever. Dear predictable, theres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Welcome back to squawk box. Adidas is getting out of the golf club business. It announced it is selling its brand for 425 million. It will continue to use Dustin Johnson and Sergio Garcia to sell its shoes. Revenue has declined. The decision by adidas follows a similar move by nike last year. Coming up, when we return, this mornings top corporate stories and then council on Foreign Relations president Richard Haass will join us. Squawk returns in just a moment. Its still rock n roll to me billy joel this morning. Good morning, welcome back to squawk box right here on cnbc live. A couple stories making news this morning front ant centsen it is a big day for retail today. Were expecting quarterly numbers from macys at the top of the hour in just about half an hour. Analysts think macys will post profit on 35 cents a share on revenue. Nissan has joined fellow japanese automaker toyota from forecasting a drop in profits. Nissan expecting operating earnings to drop 7. 7 for the fiscal year, citing a negative impact from currency fluctuations. Our next guest increase of over 300 restaurants in 2016 and an additional 100 restaurants so far this year. Lets bring in yum chinas ceo mickey pant. Thanks for having me. Yum china owns the biggest share of the Fast Food Market in china. Why dont you tell us where things stand right now, how you see the consumer in china and how your business is going. Yeah, well, you know, since around the fall of 2015, weve seen the Business Climate really improving. As you know, the shanghai stock market stabilized and the currency has been very stable and in our business we depend a lot on chinese infrastructure buildout. Unlike in the u. S. Where you build driveins on big lots, in china we build in malls and inside. Thats testament to the incredible both and retail opportunities and the consumer has been spending as well. All in all its been a good story. Are there any things that you see on the horizon that concern you . If there is something you were really focused on, what would it be right now in terms of looking for any bumps in the road . I think generally speaking, as i said in our last earnings call, we are looking at the future with increasing optimism. As you probably know, we spun off from our Parent Company yum just over six months ago. We had our first Board Meeting for the independent company on november 10 and we got the u. S. Election results. Considering whats happened in the world in general over the last six months, were extremely encouraged and seem to be insulated from the macro effects. You always have concerns about currency and primary spending but in general we are very optimistic about the business and so far so good. Mickey, when china became a Public Company, the goal was to become even more chinese. What have you done differently as a new Public Company . David, first, thanks for the opportunity. Yeah, a number of things have happened, david. As you know, we now have an independent shareholder base. So yum has no shares in yum china, its all public. And as a result of that, weve got a completely new board of directors. Its headed by a very distinguished chinese businessman, dr. Fred hu and its well balanced. Weve got directors from Mainland China and the region, as well as from the u. S. So the government is now focused totally in chinese. And chinese talent is Getting Better all the time. Were blessed that a lot of employees have stayed with us for a long time. Weve made key appointments of people born in china, raised in the region and educated abroad but came back. So can you see a lot more flourishing chinese in the Upper Echelon of the company. In the short term weve seen perhaps due to a bit of credit tightening in china, is that something youve seen through your business as well . We dont really see that. As i said at the start, the new unit build program is very important for us. Its been on track. We expect to build at least 550, maybe 600 restaurants this year. In terms of sales in existing stores show a healthy trend so we are not seeing that. We are much more correlated with infrastructure buildout and for kfc particularly, fast foods is generally more insulated from the rate change and gdp and all that. Were have not seen all of that. Given where you sit in china, its a political question for us back here in the u. S. But how do those around you feel about the Current Administration and the politics of the moment here and the perception of the United States right now . I think its pretty much the same everywhere, frankly. Chinas no difference. Its a lot of interest because things are happening that were not happening before. But just a test ament in general to the stock market there is very strong and the stock market is stable here as well. So i think theres growing sense of relief that big change in the political process in the u. S. Has not impacted business on the ground. And we dont really see it day to day. I think theres expectation in the u. S. Economic policy will continue to be favorable to business on taxes. Well be watching that closely. What does concern us are the exchange rates. Our shareholders are principally the u. S. ,y have to declare our results. But unfortunately i think everyones watching with interest. Thats what id say. Watching with interest and you bring up the exchange rate. I guess youre also relieved that the Trump Administration has kind of walked back some of the rhetoric concerning china when it comes to currency manipulation, theyre not declaring china a currency manipulator. It looks like that trade war we worried about for some time with china isnt materializing, at least at this point. That must be a huge relief there, too. Yeah, i think i dont know how much that much can be controlled by policy. A lot of that is dependent on basically the Economic Trends underlying it. Companies like ours have a very big stake in this country and big corporations. I mean, Apple Computers does a superb job of their business globally but all their products are manufactured in china. This is one of the biggest markets in the world. So i doubt very much that thing would happen to destabilize that. The chis are intertwined. It very interesting to watch what happens next, the last six months considering what could have happened, things are very good indeed from where we sit. Mickey, when you look at just your Competitive Position today, how do you stack up against your maybe top four, five competitors . Youre growing 600 restaurants a year, you have a huge Employee Base, how are you developingneck Generation Leaders . Are you doing everything you need in. This is something, david, you started but really the big strength of yum china is that it got a massive program for recruiting, training and developing store managers and above store managers as well. One of the nice fallouts as an independent company is we were able to get approval from our board of directors and give stock, actual physical stock to more than 5,000 restaurant managers. So we are the largest sort of employees owned companies, at least in our business. But as you go above the restaurant, we have 7. 5,000 restaurants, theres a whole tier of managers above that, and these are people who have typically been in the country 20 years by the im they reach market manager. We and thats the underlying strength of the company. As id say the two main reasons were successful is couldnt few p knewity and depth of talent and second has been localization of product. I hope that covers what you wanted to hear. Mickey, thank you very much for joining us this morning. We really appreciate your time. Thanks, mickey. Thanks for having me. David, thats what you were talking about in terms of 7 out of 10 employees not be engaged in the workplace. One way of changing that is giving managers stock ownership. Thats something they could do, making themselves more and more china. This is the most. We used to have a program called customer mania. We would have chinese team members to tell me stories of customer mania they had memberorrized in english. The passion these kid have is amazing. Does that man local offing is has its a huge mammoth company with huge up side. Their average unit volumes were 1. 7 million. Theyre lower now. Theres asset leverage opportunities. They have all this infrastructure that gives them a big competitor advantage. Its a beg scale business. Management question for you. How do you think about activist now . The reason i raise it is because kei keith. After getting this successfully done, was that a good thing . I love keith, when he made his presentation, i said you stole my presentation to the board. We were 1,000 in line. I would say he and yum management worked to make that spinoff effective and do it the right way. And he was invaluable to our company in terms of making it happen. And i think, you know, not all activists are bad activists. This is a very good activist to have in our company. He helped make our company better. Just quickly on read railroadship and china, i think this guy is was very, very smart i go the leaders in china are very, very bright. Most of them have masters in engineering and theyre very well educated. Theyre respected by the chinese populous as well. I think this guy is bright. He understands that the two countries need to Work Together and im hospital mist and Richard Haass joins us after the break. Futures have been pretty steady. The dow is just in negative territory for the week, the nasdaq up about half a percent today. Back in a couple minutes. Across the state. Ing nel new roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov a 10speed directshift 5. 0transmission. Ine. A meticulously crafted interior. All of these are feats of engineering. Combining them with nearperfect weight distribution. Is a feat of amazing. 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Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back, everybody. Aetna announcing it will completely pull out of the obamacare exchanges. They will not offer insurance plans in delaware and nebraska. Those are the last two remaining states where it had planned to provide coverage under the Affordable Care act next year. We talked with Toby Cosgrove earlier about this, the head of the cleveland clinic. Its a big problem that the hospitals see. Hes been talking about it from his perspective as well. The Senate Intelligence committee is asking james comey to meet in a closed door session next tuesday. They are hoping to hear from his side of the story in regards to where things stand in russia as interference in the 2016 election. Joining us is Richard Haass, author of a world in disarray. We were just talking to an executive in china. How do you think the world, the globe, looks at this . And how much does it matter . Im sorry, the precursor of this, andrew . The comey thing . The comey thing. How do you think the world youre in touch with all sorts of foreign leaders. How do they look at this and what does it do to the perception of our country and how do they deal with us . Parts of western europe, this adds to their dismay about the trump presidency. It looks like something different, something wrong, this is not the United States they thought they knew and felt comfortable with. Other parts of the world shrug it off, if youre erdogans turkey or putin, you have the commingling or the overlaps of very various types of authorities and you dont have truly independent judiciaries or truly independent media, theres a sense of this is business as usual. In western europe and places like that, whats the display related to, the fact that he dismissed the head of the fbi or the way its been handled . All of the above. Its not operating in a vacuum. This is an american presidency thats been against the eu, raised questions about americas commitments to nato, cozying up to russia. This is not isolated. But youve got two very different narrative. One is you have a narrative and administration where the president essentially felt uncomfortable with comey, to tall, to visible and you got something much more nefarious, the desire for more resources to pursue the Russian Investigation was leading to something substantial. Its two different narratives and people arent sure which is closer to the truth. Which one does Richard Haass believe . I dont know if theres something there. But theres something odd, i got to tell you, about this protection of the u. S. Russia relationship. From the getgo, through the campaign, through the transition, through the first four months of the administration, theres been a sa sanguin, benign role. The fact that you and i are having this conversation, that is why you need a legitimate investigation. Whether the congress can do to or somebody independent out of the Justice Department, what is this administration visavis russia, why are they treating the former head of the fbi this way, thats why you lead an investigation. Some people who are critical of President Trump would say all of this suggests an inconsistency in the way he approaches things. Some would say its almost strategic in that it creates Bargaining Power with trump with others because you dont know where hes going to land. In some ways you have the raising of what i would call a tactic, unpredictability into something of a strategy. The problem is doesnt really work as a strategy. It may keep your foes off balance but it you are nerves your friend and allies. Whats the cost of unnerving your allies . They made the decision to put their security in our hand. They will eat start deferring or theyll take matters in their own hand and say, hey, we need our own Nuclear Weapons or we need to make this decision. Less u. S. Influence, a less stable world. Despite what President Trump appeared to have a positive meeting with the Russian Foreign minister yesterday, should we say this is a good thing or do people have a right to be concerned. Hard to answer in the abstract without knowing the substance. But if we can agree with something with syria and bashar al assad, if we can start making spaces in syria safe for people to return to, i would say fantastic, if the russians are willing to work to do that, why not. I dont think our goal should be to isolate russia or humiliate russia, it should be selectively to work with them if and when we can. How much more difficult has that become because of all the of noise . Any time there as in question of u. S. And the stock market currently, you look at the vix, you would think we live in a very certain world. I would think a lot of people are on valium. Thats the question. Given your history, looking and the world, you know, how uncertain are things . Things on a relative basis over the years. If we were to tick this chart back offer a decade or two decades, do you think things are more certain today or less certain in. Theyre much less certain. The basic characteristic of this world were living in compared to the cold war. Cold war you had two centers of power very predictable and structured. We now have hundreds of centers of power, the United States p y playing a less certain role. Isnt one of the lessons weve learned over the years is the headline risk often moves the market briefly quickly but often brief. Meaning you hear about north korea testing some kind of missile, youd see the headline, the stock market would move but youd realize later that maybe it shouldnt have. This isnt a case of the stock market not dropping on this. The stock market has risen dramatically since President Trump has come in. The stock market has priced in every conceivable positive in the world. And if you factor geo Political Risk, i dont think the stock market, my experience individual companies, i dont think they know how to price that in. Its like they have their normal mod els and then they have whats called geo political list, wild uncertainty, they can figure out what somebody like janet yellen is going to do. Go ahead. Does that change the dynamic of the u. S. Right now . The new president , president moon is more out of the tradition of a socalled sunshine policy. I had an interesting meeting with the South Koreans the other day and they said we have confrontation fatigue. I think theyre more interested, were also more interested in negotiating with south korea but against the back drop of military force. Were in 140 countries around the world and basically what weve found is that basically gives you diversification of portfolio and what happens globally is episodic. Something will happen in one part of the world which will take you down and other place it is will be moving up. So i dont see it any more uncertain today than it was ten years ago. I think whats different is theres more places that could unravel a bit and because of globalization, i think the degree of connectedness is somewhat higher. Theres nothing as big as there was during the cold war, nothing like a cuban missile crisis but theres many more thanks that could have a global impact. How big of an issue do you think korea is . It issue enough one on the agenda because north korea is getting awfully close to having nuclear missiles. We have to figure out if we can work with that or have to work against it. Were going to talk retail with an analyst given whats been going on earlier. Squawk box coming back in a moment. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. You wont see these folks they have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Still to come this morning, earnings from macys. Plus well be talking Cyber Security and much more. Lots to stick around for. Check it out. Squawk box will be right back. The power of 100 of the worlds top companies. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia what are you doing . Getting your quarter back. Fountains dont earn interest, david. You know i work at ally. I was being romantic. You know what i find romantic . A robust annual percentage yield thats what i find romantic. This is literally throwing your money away. I think its over there. That way . Yeah, a little further up. What year was that quarter . What year is that one . 98 thats the one. You got it nothing stops us from doing right by our customers. Ally. Do it right. Lets get out of that water. Shares of the messaging Company Slide wiping out 6 billion of shareholder value. Roadblock. Uber suffers a blow. And hacking america. Ceo of fireeye will join us with a stern warning for business owners. The final hour of squawk box starts now. I always feel like somebody ses watching me welcome back to squawk box. Im Andrew Ross Sorkin, becky quick is here and joe kernen is off this morning. The markets are off this morning. Lets show you some treasury yields right now. The te10year right now, 2. 93 a we have some headlines. Looks like were just getting some macys earnings that are out. I just have headlines at this point. I havent seen a press release. Looks like earnings are coming in at 23 cents a share, which is below the 35 cents expected. And First Quarter sales at 5. 34 billion, just below the 5. 46 billion that the street had been anticipating. These are numbers coming in from the headlines here. It does look like its a miss on both the bottom and the top line if thats the case. Shares of macys down by about 4 . People have been watching very closely to see how the retails are have been faring, particularly retailers like macys where youve Seen Department stores that have seen massive pressure coming from on. Macys itself has a very strong Online Presence but again, amazon has made massive inroads into all of those stores. And macys saying we remain on track, its important to meet our 2017 guidance. He says we are encouraged by the performance of the pilot programs we tested last year in categories like womens shoes, fine jewelryon and mattresses. They will have a measurable impact on our performance in the Second Quarter buildings through the fall. He said a digital platform showed continued strong growth in the First Quarter. They have an adjusted earnings that ill dig into to see if its an applestoapples comparison. Bank of England Holding Interest Rates steady at 0. 25 as expected. Policy makers say they may need to raise rates before late 2019. Thats because of the inflation rising. The pound has slipped significantly off the back of this Inflation Report this morning. It was more the down Beat Estimates for the economy that has hurt the pound as well as the fact that the vote on raising rates was just one person that some had expected, too, might vote in terms of the breakdown of the eight current members of the management policy committee. Snap posting a wider than expected lost. With snapchats smallest yea yearoveryear additions. Verizon announcing a deal to buy Straight Path communications. The boards of both companies have approved the transation. Straight path says at t will not be making any new bids. Now to washington, the Senate Intelligence committee is holding a hearing today on worldwide threats. It will include the head of the cia, nsa, dai and acting fbi director andrew mccabe. Kayla. Reporter good morning, becky. Its an annual hearing to try to gauge outside threats to the u. S. But the conversation could take a departure from that top being today. As of yesterday the attendee list swapping out former fbi director james comey for now acting director andrew mccabe. Hes a longtime burden of proof owe empl bureau employees. He will have some intense questioning today, no doubt, because there have been bipartisan criticism from this committee about the fact and the timing of the firing of director comey when it happened this week. Particularly because this senate panel was just one of the committees that is in the middle of an investigation into the russian interference in the u. S. Election last year as well as russias relations with trump associates. To that end this senate panel has requested documents from treasurys Money Laundering unit and just as of yesterday, subpoenaed former nsa director mike flynn. Here is the committees chairman richard burr of North Carolina yesterday saying specifically what the panel is looking for from general flynn. Wed like to know the full scope of his contact. Wed like to know the content over and above that that we know today, and thats something that can only be done through an individual interview. Of course because this Committee Hearing is about worldwide threats and there are other leaders of the intelligence community, it will discuss that as well but there is the elephant in the room of this investigation of the events that took place this week at the fbi. Both the republican chair and the democratic vice chair confirming that director comey has been invited to testify in a closed session next tuesday. So perhaps some of those issues will be taken up then but no doubt, guys, they will come up today. Kayla, thank you very much. Well be watching through the day as we hear more about all of this. In the mean type, technology is evolving at a rate that is far outpacing our ability to try and secure it. Forcing companies to try and rethink their longterm approach to security strategy. Joining us to talk about Data Protection is kevin mandia, the ceo of fireeye. Thanks for being here. Thanks for having me. Coming from washington and coming from kayla and the story thats out here, how could you characterize the Security Threat nowadays . Every modern nation is developing an offensive capability and every nation, even the emerging nations are all following different rules of engagement. The unfortunate root eality tha have a fair deal of industries and theres always going to be spray and prey attacks. The two things you got to think about as a leader of a business is will we be targeted by the best in the world as far as nation states. If youre a company targeted by a nation state, can you protect that or do you need the help of the u. S. Government . I think you need a deterrent. Thats where the government will come in. Youll need a level of exattitude for attribution. I would think its an unfair fight right now. If you have a Cyber Company trying to break into, the odds are in their favor. What are the rules of engagement and what are the permissible rules . Youre looking for a loss thats quite a bit smaller than had been anticipated. Whats happening in your company right now . I know youve made this move towards the cloud. Is that going better than you anticipated . Theres a lot of companies that have to go through that transition. When i took over the job as ceo a year ago, i had to make sure we were innovating and at the same time doing a cost restructure. We had to go from appliance to software, protecting people from the most advanced threats to really all the threats. We have to have a bullet proof vest for the small caliber weapons and big caliber weapons in cyberspace. Really it comes down to managing expectations. You tell people what youre going to do and then do you it. Thats what we did as a company last quarter. The street has really jumped on board, when do you expect to turn a profit . We intend to do that in q4. Its important for us to have a path to profitability. Were going to stick to that, were seeious about it and well make it. Kevin, what do you think about the big cloud providers trying to provide more and more security programs, if you will, to the stack and what that means in terms of competition for you. First lets look at if youre providing infrastructure as a service, if im the chief Information Security as you, the buyer, i want two things from you. I want great authentication and i want an audit trail. I want to make sure youre providing me the data i need to manage my people, to know who is accessing what. Right now between aws at amazon, google cloud and microsofts azure, which do you think is the safest . Hard to tell. For most companies, going to the cloud gives them an oopportunit to get more secure. You just named three very big companies. I can throw ibm in there but i think those are the big three at this point. I think youre right. When you look at those cloud providers, they have to protect their infrastructure. If it ever leaked out that it had been breached in some capacity, that would be a big it hasnt leaked out that they have. Does that mean they have or it hasnt leaked out they have . They do have Great Security teams. They think about it a lot more than the average business do you see. When you go to the cloud you think theyre a provider, they provide discs, they provide cpu capabilities and it will be hard for them at the application level for them to provide your security. I still say to all enterprises, its on you to secure your applications and secure your data. Theyll provide the infrastructure for that and often times the audit trail to help you monitor and audit it. Focusing on innovation, where do you see the big break throughs coming in your industry . You have to Blend Technology with everybody is inundated with too many alerts. What are the three bad ones ive really got to focus on and theres only a few ways to reduce that funnel and one of the ways is in fact experts, with people to do it. So one, a way to seamlessly integrate technology and multiple people doing defense. If you have company a comprom e compromis compromised, why cant they work with companies b and c as ven r vendo vendors. We need to have our defenses aligned by industry. And Network Visibility with end point visibility in a single platform and traditionally in my histo industry, nobodys brought it together. It seems like there was hacking taking place in the French Election as well. Is that going to become the norm now . I think its going to be on the list of options for folks to influence outcomes of potential elections. Different nations will ploemplo that tool in different ways. If i were hiring you, if i was on one of the campaign, you would you tell them nothing on computers at all . No, you still have to run your business. Ive been responding to breaches for over 20 years. I think every Election Year you have a challenge. You have volunteer staff setting up networks as fast and furious as they can, and theyre going to be targeted. I think you should always write your emails period, all your Communications Online and typed in, how would they look if they were taken in isolation and published. I think thats the challenge were going to have. Kevin, thanks you very much for joining us today. Coming up, retailer macys getting slammed. Then at 8 30 eastern, breaking economic news, key read on inflation. And later, well head to capitol hill. Senator john thune gives us the rundown. Youve watching squawk box. A, retail is in focus, macys getting crushed, First Quarter comp sales much less than expected. Joining us is jan kniffen, ceo of Worldwide Enterprises and a cnbc contributor. This seems to be another nail in the coffin, jan. I expected the full line to all run about 3 average negative storetostore comp and the off guys a 3 comp and so far were on point for that 6 spread. Its been going on for a long time and it still is. Macys number, even though they said it was what they expected it, sure as heck wasnt what we expected. We thought theyd be 34 cent and 3 negative, not 24 cent and 5ish negative. Thats pretty ugly. Kohls and dillards were pretty much above plan as far as what they reported on earnings but they were tough on sales, too. How long can you keep getting the bottom line but cutting expenses and holding up gross margins. Dillards came out of the Fourth Quarter pretty heavy on inventory and had better than expected growth margins. Ill have to see their Second Quarter before i believe that. Whats your take on the Digital Sales piece . There was a time where you were bullish on the strategy of macys when it came to the omni channel. Im bullish on the strategy for all of these guys. Theyre all going online much faster than they were in the past. Theyre getting up to the 20 level of online sales for pretty much everybody here but dillards. They have to do that. Its the only way to hold sales. The bad news is every time they put a sale online and take it outin t iof the store, their re on sales goes down. They havent solved the issue of last mile, they havent solved the issue of pricing against m amazon and theyre not liking to in the near future. You said macys might sell themselves. Does this earnings miss make you believe theyre more or less likely to do that . Whats your overall take on the stock because you had been positive. Im positive because i think there will be a transaction on the real estate or someone else will do a transaction on the real estate. When i look at that i say im not feeling good about what they reported. I think its more likely there will be transactiactions going forward. I do think that theyre doing good job of getting to where they need to be but its still going to be at lower returns. They need to monetize that real estate. I think they or somebody else will monetize the real estate. When you think about getting to where they need to be, how long do you think it will take Companies Like macys to restructure so they can be competitive again and be back on the growth track if. Theyre actually pretty strong financially across the board here, except for penneys, who is Getting Better financially as well. Its not like we have to worry about them being in the bucket of the bankrupts because theres going to be a lot of bankruptcies in the bucket this year, too. We have to see fewer stores, better stores, better online, they have to recognize that the cost of being in business is Free Shipping both ways probably. They havent gotten there yet and thats a Long Time Coming so were going to they have to have fewer stores. No one has come down nearly enough on stores. You just cant have 600, 700 stores in america. That means were going to have to see a lot of penny stores close, were going to have to see kohls stores close and another hundred macys stores close and then theyll be a size where they can become more efficient and more competitive. Jan, always great to talk to you. Always appreciate your perspective. Thanks very. When we return, well have much more from our guest host, david knnovak. Plus the price index a due at 8 30 eastern time. And Dicks Sporting Good chairman and ceo edward stack joins us at 8 40. You are watching cnbc. Welcome back to squawk box. Our guest host this morning david novak, yum brands cofounder. Weve been talking a lot about leadership. I wanted to ask about different types of leadership across industries and genres, if you will, particularly in mind of the present today. Does Business Leadership cross paths to political . I think the best leaders have similar traits. I just started this online leadership platform called ogo lead. Basically i want to make the world a better place by making better leaders so were providing free content to help people get after this. Two things that i believe drive great leadership is number one, you have to be heart wired and number two, you have to be hard wired. Being heart wired, you let everybody know you care about them and you believe in their success and hard wire is where you put consistency and expectations where. You have to have the heart wire to get people inspired and have the hard wiring to really go after the execution thats going to drive the results. The best leaders have both. The best leaders clearly lead from the heart and then they clearly make sure that their company has the right process and discipline in place to ensure you get great results. We talked earlier about a higher proportion of people than wed want being disengaged with their jobs. Is that particularly a problem with millennials . Millennials get bashed all the time, they dont want to work, its a different thing, balance, whatever. The biggest challenge ive seen from the research that millennials have today is theyre looking for more leadership development. They change jobs i think not because theyre impatient, but theyre looking to grow. But you look at all the debt that the millennials have in terms of college education, theyve got to be impatient. I think the millennials are definitely a challenge, and what theyre looking for is theyre looking for more leadership development. David, earlier you mentioned brian robert and jamie diamond as the best ceos and youve added jeff bezos to that list . Yes. Welcome back to squawk box. Breaking news, initial jobless claims move from 238,000 all the way down to 236,000, down 2,000, no revision on last week. Continuing claims, 1. 918, i whisker under 2 million. Our appi headline number, up 0. 5, up half of 1 , thats a stunner. And last month unrevised. If we look at xfood and energy, also up month more than expected. Up. 7. Food over energy, lets see how that goes through time. Last time we had a number higher than 1. 9 on that, boy, you have to go way, way back. Looks to me like december of 2014 when it was up 2 and if you look at the trade year over year core, that was 2 hadnt. 1. So these numbers are hot, hot, hot. People can say cpi is more relevant but well know soon enough within 24 hours. Wi wilford, back to you. Steve, your take . I think rick is right. Its a big beat. Its something the fed i think is going to take note. Hes also right that the connection between the price changes on the whole sale level and consumer level can be different, that are a profit margins, not necessarily good for profit margins. Food and energy had been a source of deflation on the whole sale level in the past year. That has turned around, looking at 0. 9 and 0. 8 respectively on food and energy. Those are pushing up the index. So we got to watch tomorrow retail sales very important as well as the Consumer Price index. I just want to look and show you the Unemployment Rate versus claims. What im looking at here is the unemployment inshoord rate, which is the percent of those covered by Unemployment Insurance and look at those numbers, folks. They are going down, down, down, down. You want to wonder why. Just recently there was a reuters headline emblematic of the change. It said hawk eric rosengran. He was one of the original doves and now they just use the word hawk. Neither of those news, the Unemployment Rate as well as the employed uninsurance rate have been this low in a very long time. We havent seen it quite in wages yet but if it starts to happen in inflans and the jobs marketing well take notice. It was 84 when i checked this morning. Im check now the to see if its changed at all. Ex is down a little bit. It is pretty well baked in. But more interesting, wilford is were following they are looking for that third rate hike to come this year. There is a question as to whether or not they stop hiking rates and do the balance sheet, which is what some folks are talking about, reduce the balance sheet. Thanks very much. President trump, Steven Mnuchin and gary cohn gave an interview last week thats just been accomplished. Secretary mnuchin talking about tax reform and trillions of profits held overseas he said were letting that money come back in. Its got a barrier of the tax, which we will make it 10 . Its now 35 . We will think whether ceos think the 10 new will work. Were joined by senator john thune. Hes the chairman. Republican conference. Good morning to you. Good morning, andrew. I just heard this number that Steve Mnuchin put out. Does the 10 number make sense to you . I think its in the ballpark. A couple of years ago it was at 8 3 4. I think what we hear out there is in that ballpark and how thats received across the country by those who have earnings offshore and want to bring them back into the country. I it to look forward to hearing from the administration about what their proposal is. Senator, where do you stand on the dismissal of comey and to what extent will that impact the work you folks are doing on health care and tax reform. I think the Administration Needs to give a more full explanation with respect to the timing, how it was done and if they answer those questions as quickly and honestly as possible and submit a new name, things will get back to normal. As far as our agenda, Health Care Reform is now in the senate. Weve got tax reform hanging out there, some trade stuff. Of course Regulatory Reform that will hopefully lessen the Regulatory Burden in this country. Most of our agenda is focused on jobs and the economy. How has it changed the dynamic or youre suggested it hasnt changed the dynamic at all in terms of the timing with which you folks plan to address health care. No, we have conversations going were assuming a the this point at least that the democrats arent. Find out to to bridge some of the differences of opinion that we have in our kof fren but thats moving forward in is sort of a distraction. It certainly not helpful or conducive to us with our agenda but were moving forward. Lets talk to some of the fault lines. I have an amendment that i will offer with respect to the tax credit that drives more of the assistance to the lower income and elderly population, that cohort, as opposed to what the house did. I think that will be essential to change that in order to get enough votes to pass it in the senate. There is some interest of course in some of the market reform issues, market stabilization issues as well. I think this will have a different look than what the house did. Thats the way it usually operate one thing i do know is move forward and rescue people from a failed obamacare system and aetna has come out and said that theyre pulling out of the obamacare system. A big part of the problem for the Insurance Companies is they are getting all kind of people who are very sick using their coverage but not the Healthy People theyve anticipated. A big problem is preexisting conditions. You can only charge so much for preexisting conditions. Its difficult for health Insurance Companies to really deal with. Where do you come down on that there have been several Health Insurance ceos who describe what were facing right now as a death spiral. I think thats essentially whats happening. As you look at this to the states to help them Design Solutions knowing full well thats going to require federal financial assistance. Some will rely on highrisk pools. Thats worked fairly well in south dakota before obamacare came into effect. Thats essentially what i think philosophically i think the house did. The senate will probably have some changes to it but well build on that concept. The problem is a mathematics one, though. The people want and people who are healthy dont want to pay for it. How do you make Health Care Affordable in those situations . It is a really good question. Thats the probably the thing that we grapple with the a lot of times what we saw under obamacare is people would get sick, go get insurance, get treated and drop it. You have to find ways to inse incentivize people. Again, i would suggest that one of the ultimate solutions will include giving more flexibility to the states to help them design programs that work best for them. Is that potential projection of 24 million uninsured, how real is that . And is that acceptable . Well, its not thats a very high number obviously. I think it probably reflects if you look at the way the cbo scored obamacare, for example, they anticipated there would be a lot more people participating in the exchanges that ultimately were. I think that could be overstated by some, you the question is how can we make sure that people in that population have access to Affordable Health care and that really is the goal and objective in all this to to make sure people have access to health care and how they afford is is another issue. And a timeline, when can we move the conversation about taxes . I think andrew, what were doing right now is were hoping to see health care. The senate will take its time. Were going to do this right, not necessarily nfast. In a deliberate way but its something we know we have to make progress on. Its hard to state any timelines on it. For sure over the course of the summer, this is going to be what occupies our time. We know were going to pivot to tax reform. One followup. Are you of the view that if tax reform get pushed into 2018, it becomes increasingly hard to get through given the mid terms . I think thats true. I think we have a window of opportunity this year, thats why we have to move aggressively through the Health Care Agenda to get to tax reform. Doing health care helps create a much more favorable and i think it important to include both health care and taxes in 2017 because once you get into an Election Year, all bets are off. Senator, its really good to see you. Thank you for your im. When we return, Dicks Sporting Goods chairman and ceo ed stack, well get his views on the industry and macys shares are getting pounded after the Company Reported a quarter miss. Stick around, squawk will be right back. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Welcome back, everybody. The Retail Industry has been dealing with its fair share of challenges, especially when it comes to Sporting Goods but Dicks Sporting Goods is dealing with that. We are joined by ed stack, the chairman and ceo of Dicks Sporting Good, the nearly 60yearold Company Founded by his father, dick stack. Thanks for being here. Thanks for having me. And macys got punished just like all the retailers have when they disappointed. You dealt with this yourself back in the First Quarter after the reporting Fourth Quarter earnings and talked about revenue that was up by double digits, talked about a lot of strength that was happening in terms of what you saw online, things that were happening with private branding but your guidance was lower than anticipated and the street took a dismal view of that. I think retail is certainly under pressure. Weve already started to see it. I think theres going to be some very big losers and theres going to be some very big winners and i dont think the street really understands whos going to be the winners and whos going to be the losers. So any opportunity they have to sell a stock, any little bit of bad news, i think theyll punish you. I take it you think youll be in the group of winners, especially since Sports Authority was taken out. Yes. Sports authority is consolidating at pretty rapid rate. We expect to be one of the winners. Youve also been investing online and you are making gains when it cops to market share, especially despite the fact you have competitors likes ammazon. Our first online sale was in 1999. There werent a lot of traditional Retailers Online back then. Weve been at there for a long time and our Online Business has continued to be pretty good. Youre one of the most progressive retailers out there. You not only are winning on the Business Front there but you focused on corporate responsibility. I watched one of your shows the other night that i a there is a real issue going on in the country today in funding for youth sports, and its expected by 2020 you could have as many as 27 of the public high schools in this country without a sports program. Thats amazing. And if you think about that, thats catastrophic for our kids. You know, the ability of them to not be able to go someplace and just be able to play and be a part of the team and learn all of those things that sports can really give you for the balance of your life. So we got really very involved in this over the last four years had the diks Sporting Good foundation, one where two rival high schools were consolidated and how the Football Team reacted with thoo kid. You watch this and it just goes to show how important sports are to these kids. There was one person who was talking a the a board of education meeting basically said i only go to school to play football. If we cant play football, were not coming to school. And i thought that was such a profound statement, that one of the ways for us to keep kids in school is to give them ability to play sports. It could be the art or whatever it is, but weve got to give these kids these extra curricular activities to stay in school and the funding issue is a real problem. And you have movies out there. We have two movies, one was keepers of the game, it was a girls team in upstate new york. We are trying to help to save youth sports teams that are running out of fundy. We have a web site where people can donate to a team and well match the funding. Youve got involved with sporting teams but not souch with particular athletes. Well partner with some of the sports teams from an advertising and promote standpoint and the teams players will take kid shopping in athlete. Is there any traditional retailer that you think has made the transition or you look at or look over your shoulder and say theyre doing something clever we should be watching in terms of making that Digital Transition . I think what walmart is trying to do, you know, the acquisitions that they have made and theyre very aggressive in that arena. I think a lot of people are making some best buy, you know, best buy was thought to be dead a few years ago. They have made a great transition in their business. I think there are some people out there doing pretty well. As i said, i think theres going to be some big losers which gives the opportunity for some big winners. I think the street and the consumer is just trying to figure out who that is yet. Do you think five years from now youll have more or less stores . I think well have no more. No more. No more. That will come from both the consolidation kind of taking certain markets that we have today and trying to determine do you want Bigger Stores, which is Bigger Stores that are more theatrical, more of a draw, do you want smaller stores. I dont think well have significantly more than we have today. Ed, thank you for coming in today. Great. Happy to be here. When we return, jim cramer live from the new york stock exchange. Stay tuned. Youre watching squawk box on cnbc. Welcome back to squawk box. Lets get straight down to the new york stock exchange. Jim cramer joins us now. Jim, snapchat. Whats your take . All right. Im not going to go to the total disaster route. Im going to say i have to sit down with them and how to orchestrate a conference call. This was out of the chute for facebook. Yes, theyre paying themselves too much. Yes, they didnt develop the daily average users i would have liked. I think the advertisers are going to be happy. Were back to where the thing was. Do i think its a buy, i would not sell it down here at 17. I would if i was them having soul searching about not being so arrow gant on the call because theres real money involved. No need to feel this is a prep school call, i went to public school. You know this stuff. It just didnt they had no mojo. David novak said the same thing. Just about the arrogance on the call, david. Yeah. You cant laugh off facebook. David, you and i are from the same address. We both lived in our cars. And the one thing you never do when you live in your car is come out and say, you know what, i have a better car than everybody else, because youre living in your car. So lets be a little more humble. They did not make the playoffs so do not say youre belichick, do not tell me youre better than belichick, because youre not belichick, because i know belichick. So anyway, when youre the cleveland browns, maybe theyll have a good draft choice, but do not tell me how good you are. Be humble. Thank you, david, i love you and i loved your book. Its great that youre on. Thank you. Jim, thanks very much. Thanks also hey, wilf, wilf, you dont have to be humble but you are. I certainly do have to be. Jim, thank you as ever. Well see you at the top of the hour. And on power lunch dont miss kenneth frazier, 2 00 eastern time. Stay tuned. Youre watching squawk box. Think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov thereit comes to technology, about my Small Business so when i need someone that understands my unique needs. My dell Small Business advisor has gotten to know our business so well that is feels like hes a part of our team. With one phone call, he sets me up with tailored products and services. And when my advisor is focused on my tech, i can focus on my Small Business. What we do every night is like something out of a strange dream. Except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive, farreaching and, yes. A little magical. Fedex. Com slash dream welcome back. Our guest host david novak, the young brands cofounder and former ceo. David, your talks about leadership have picked up a lot of people on twitter who have been following this today. How engagement is the biggest problem. One guy said the best career move he made was moving from the large multinational to the small 50 person shop so you can engage with the ceo and the chief operating officer. Yeah. Im passionate about teaching people so im writing weekly blogs. Im doing podcasts every two weeks with ceos i know. Or leaders of other businesses and people in sports. So i can share their wisdom. Then im also doing online q a where ill get questions from subscribers and then answer any of the questions they have about leadership. But ultimately my goal, the summer im working on content for a Leadership Program that ill be able to offer subscribers and ill have ebooks. I think the world fields we need more leaders. Were in a leadership crisis. I agree. Its been great having you here. That does it for us today. Join us tomorrow. Right now, time for squawk on the street. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, whos getting off the phone. David faber at the new york stock exchange. Futures under some mild pressure as earnings from retailers continue to show some weakness. Political discord over comey remains a focus as the Senate Intelligence committee holds hearings later this morning. Europe is pretty weak. Bank of england pretty cautious today. Oil climbs almost back to 48 after the