Transcripts For CNBC Squawk Box 20170516

Note, the hang seng. The hang seng hitting the highest level since june of 2015 during that session. The picture of europe here, inflation data hit the tape moments ago. A mixed bag. Fractional losses in germany and france. Home depot just out with First Quarter results. Earnings of 1. 67 a share, coming in 5 cents above estimates. Global Comp Store Sales were up 5 , that beat the consensus of 4 . U. S. Comps were up 6 . Wae above e home depot raising the fullyear earnings forecast. Market reaction in the currencies from the Washington Post story. I to be honest with you, i didnt buy it because what were seeing across the board is that people are willing to take on a little bit of risk. Euros are turning to levels since before the french election, yen is coming off. We saw the chart. Its been a while that the dollar euro has been strong. You can do just about anything you want in the Financial News reporting, sort of and im sure we didnt make that up. Im sure the person that wrote that can find a reuters report. Theres probably a trader who believes that out there. But its sort of a test, what do you see in the ink blot there. Yeah. Even as we talk about the stock market going up or down, usually the best reason is if its down, theres more serls thllers than buyers. Answer bubsolutely. Profit taking. Value hunting. All of that. I dont know. Whatever. Then the reuters story could have been written by i love millennials, but it could have been a 26yearold that started last week or something. In another country. Who knows. Heres some of the big stories. Disneys ceo bob iger said hackers claimed to have stolen an upcoming disney movie. Iger made the comments to abc employees during a Company Meeting. He said the haeshgs a s ahacker threatening to release the movegy in bits online unless a ransom is paid. He says disney has refused to pay and is working with federal investigators. Deadline i guess thats like a blog, industry blog reports, that the movie is pirates of the caribbean. This is the latest cyberattack targeting a Media Company demanding ransom. Last month a hacker stole ten episodes of netflixs orange is is the new black and leaked them ahead of the new release. Ford is going to cut 10 of its global work force among efforts by mark fields to boost profits and the stock price. If we look at a longterm chart, its like a flat line. Go back another five years, it doesnt look much different than that. It rebounded from the financial crisis and went from low Single Digits back to 15. Then nothing. Nothing since then. Reports say that the cuts which may be outlined this week will come from salary employees in north america and asia. Its unclear whether the cuts include hourly workers at plants in the u. S. And abroad. Ford says it wont comment on speculation. Ford is targeting 3 billion in cost cuts this year. The stock is down since fields became ceo. Jeffrey immelt is pouring more money into his own company. He bought another 100,000 shares of the dow component yesterday for roughly 28 per share each. Immelt now owns more than 2. 5 million ge shares. Ge has had a difficult start to 2017. Had a difficult start to 2016, 2015, 2014, 2013, 2012, 2011 a difficult start going back to 2001. You have to wonder if the stock will get any boost. Immelt has tried anything. Sell this, buy this. Restructure this. Do this. Do that. 28. 28. Still. Yeah. President Trumps National security adviser is denying a Washington Post report that claims trump shared classified information with russian officials. Eamon javers joins us with the latest. Good morning. It was a story last night that rattled official washington when it posted on the internet a little after 5 00 p. M. Yesterday. Heres what the Washington Post reported that got everybodys attention. They say that President Trump revealed highly classified information to the Russian Foreign minister and ambassador in their closeddoor meeting last week in the oval office. The officials telling the Washington Post that trumps disclosuresopardized a critical source of intelligence on the Islamic State and that the underlying intelligence was provided by a u. S. Partner considered so sensitive that details have been withheld from allies, the Administration Even asked the wag powashington pos withhold some details in its story. Alleged by President Trump said to the russians in the oval office, i get great intel. I have people brief me on great intel every day. The gist there is that the president was boasting about how good his intelligence was and the russians could rework where the intelligence came from. H. R. Mcmaster came out to talk to the press about two hours after the story broke with a big denial. Heres what he said. The president and the foreign minister reviewed a range of Common Threats to our two countries including threats to Civil Aviation. At no time at no time were intelligence sources or methods discussed. And the president did not disclose any military operations that were not already publicly known. The key there is that h. R. Mcmaster is denying is that the president revealed any sources or methods for gathering intelligence, but thats not what the Washington Post story says. The post story says he revealed specific intelligence to the russians that could lead them to reverse engineer and figure out what the source and methods were. De democrats pounced on the news. Senator Chuck Schumer issuing his statement. He said if the report is true, its very disturbing. Revealing classified information at this level is extremely dangerous and puts at risk the lives of americans and those who gather intelligence for our country. The president is the ultimate classifying authority in the United States. That is if he decides to reveal classified information, thats his decision and at his discretion. Theres no legal prohibition on the president revealing classified information to anyone he deems necessary to reveal it to in the course of doing his business. One question around all of this is where did this story come from. Who were the people in the room for that meeting . We dont know the answer to that yet. The white house did not allow American Media into the meeting. They did allow a russian photographer into the meeting. We have some photographs from the russian side, but we dont see who the american officials were who were in the meeting who could verify the president s account. H. R. Mcmaster said he was there. Rex tillerson said he was there. Those are the pool of sources that people will want to hear from throughout the morning today. Were in a position, eamon, to were way out of our comfort zone, all of us, talking about classified stuff. We need, like, a primer or primmer to even talk about it. So im hesitant to even weigh in at all. I guess what theyre basically saying is that by since the president has the right to declassify things, that you dont want to do this to a partner who has not given you the goahead to declassify it. And the russians could connect the dots to where it came from. You havent talked about this much. Once again, who the hell is the leaker here that is close to the president . This is after, you know, you saw earlier this week and late last week that hes infuriated by these leaks. They keep coming. This would be a state department leak . In the Washington Post they stress that its an anonymous sous agai source again, right . Yes. This is why the deep state conspiracy people think because the only reason to leak this is to undermine trump big time. Again bigley. Again, you have someone in there that definitely does not have trumps best interests in mind in this. Somebody had access to the actual words spoken by the president of the United States in a closed door meeting inside the oval office to the russians about extremely sensitive intelligence information. The pool of people who that can be is very small. The Washington Post itself reported that ultimately officials were so concerned about what the president had done that they ordered that his remarks be stricken from the official transcript of the event that was prepared for internal use. And that that transegypt whicri had the real remarks ky g can you get on that . Believe me, ill get right on it. Somebody in a parking lot. Deep throat 2. Ill go hang around in parking garages and wait for deep throat to show up. Am i too much of a conspiracy here wrist to say this comes on the heels of reports that there will be a major po tents inittet of the white house and he is looking to purge the ranks, and that there is somebody right now trying to discredit the administration . Anything is possible. Those rumors have been swirling around. This feels to me, on inisninst it feels to me somebody from the intelligence community, who was concerned about the breaching of this relationship with the u. S. Ally here. That would be the motive for leaking this. I think we know the motive. You know, the other thing i heard you talk earlier about hillarys unsecured server. The russian intelligence, i imagine, is pretty good. In general. They probably know a lot of things that we think they dont know, but we actually know that they do know. Right. Theyre good at this. I think during the unsecured server days they probably knew everything. They probably knew everything that was happening. I dont know this is bad. I understand, but i just like oh, my god, theres gambling going on here. Round up the usual suspects. I think they know a lot already. Thats possible. What is concerning here is that the people who reveal intelligence to the United States are doing that and putting human assets, lives on the line when they do that. Thats the concern here. Someone talked to a u. S. Ally in confidence that ally talked to us, now those relationships and lives on the ground could be at risk here. And thats what has intelligence officials concerned. I talked to a few former u. S. Intelligence officials about this yesterday. They were blown away by this story. They couldnt imagine this had happened. I think well wrestle with the implications of it throughout the morning as well. Eamon, thank you. Were getting a peek into what some of the worlds most powerful investors are buying and selling. Paulson co Holding Steady in the Gold Exchange fund. Also trimming in allergan. Carl icahn took a new stake in conduent and increased its position in navistar and herbalife and sold out of allergan. Warren buffett doubled its investments in apple. Sold out of 21st century fox. George soros took a stake in snap ink, also sold amazon, abbott. He added positions in conocophillips and fireeye. Green light cut its stake in apple, riteaid and time warner. They also hiked stake in gm and yahoo dropped position in yelp and took a new position to micron. An old holding way back when of einhorns. Thats right. That was his. He was really excited about it. Thats gone to Single Digits so many times in my life. The s p 500 and the nasdaq closing at record highs. Lets talk markets with simien himen from pro shares and todd gordon, founder of tradi tradinganalysis. Com. And a cnbc contributor. Every morning i wake up and look at the futures. Whats happening today. It just its never down 150. You know, we have constitutional crises, all kinds of things happening. Are people just worried that this is a bull market that were in that will head higher because sooner or later tax reform gets done . Is it earnings . Was it already set up . Everybody is complacent. The vix is at a 25year low. A trading point of view, its been boring. Were seeing a rotation back into large cap tech. The action is not in the u. S. , which would make you think when you wake up in the morning futures are moving and theyre not. Were at 0. 0 now. Were flat. So i think a lot of it is focused back on a thin anemic rally. The advanced decline is dropping. Were being led by big cap tech. Theres been rotation out of the u. S. And into europe and asia. When the volatility breaks, i have no idea. I do think were coming up into our 2500 target that you and i have been talking about for about a year or so. At 2500, its not just psychologically important, its technical resistance. That would be another nice move here. 100 points. I thought you were starting to tell me there are cracks developing. There are. The ndx, the work we do, were looking at 5700 to 6,000 in the nasdaq, which is key. If you look outside of tech, you have emerging markets that are holding up the markets domestically. Transports lagging. Small caps well off. Just a lot of dow and s p industries. Energy, crude oil came back from the brink. Energy stocks underperforming. This has been the case for a long time, yet we grind higher to new record highs. Thank god for apple. These cracks have not really done anything. Until they have. Theres still not a lot of other things to invest in. The move by the fed or the tenyear or anything else, its glacial. You cant buy bunds at 40 basis points. Still nothing else than stocks. Im going fundamentals. This is earnings driven. Its not that theres a lack of alternatives . 8 top line growth in the s p. Double digit earnings growth. Even the carnage that was talked about for days in retail was just a multi line. Even the Consumer Discretionary Retail Sector had double digit gains. In a low Interest Rate environment thats plenty to prop up stocks. Even from the fundamental side, opportunities outside the u. S. Are there. Europe is coming around. Europe had slightly higher gdp growth than the u. S. Last year. All right. France cooperated with us. Its a multi speed recovery around the world then. This makes perfect sense to you . The fundamentals are there. If Commodity Prices stay stable, that should be plenty to hold up emerging markets, which have only put a small dent in the underperformance since the financial crisis. No one thinks the fed is moving too quickly . Still flush with central bank liquidity. I want to go back to an old measure people dont talk about as much. Capacity utilization at 7 5. Typically you dont get a lot of inflation pressure until you get past 80. So theres a little breathing room. The fed will move, but they dont have to go crazy to stave off inflation. Wow. So when Capacity Utilization, when that number comes out, i shouldnt just blow it off. I need to look at that. I think its still relevant. When is that coming . Dont know. A lot of times we have government you know you read those. This is coming out this weekend. So i will Pay Attention to Capacity Utilization . Absolutely. Underemployment, too. Got to write that down. How do you spell capacity . In your opinion what percentage of the emerging markets moves is europe versus asia . Im hoping to lead you towards technology. Im personally long emerging markets, i have had that position for a while. But its tech driven, correct or no . I think theres more opportunity in europe because the stagnant economy is coming around. With the stabilization on the political front, theres more opportunity than even in some of the nontechnology sectors. Of course financials with potential moves away from zero Interest Rates. Looks like its released today. Oh, my god. What time . What time . May 16th. Today is may 16th. What time . 10 00 . 9 15 a. M. 9 15 damn, i wish it was our show. I wont predict it, but i still think below 80. So still room there. All right. We did the viewers a service this morning. You flew that wknew that was co today, didnt you . I didnt. Home depot out with Quarterly Results. Well dig through the numbers after the break. Shares of home depot were strong yesterday. At 9 15, watch squawk on the street for Capacity Utilization. Squawk box will be right back. Wh happened . Dad nda walked into my swing. Wh hahuh . Ed . Dont u mean dad kind ofruined . I thud go to the thothpital. There goes the airfair. I nt think Health Insurance will cov all. Ofhat. My fathe withouthatash from aflac we might have to choose tween hawaii or yo face. Hawa what . Aw you might haveescoverage than think vit aflac. Com and keep your lifestyle healy. Aflac the shlike a bald penguin. How do i look . [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Home depot just out with Quarterly Results beating estimates on the top and bottom lines. Joining us is brian neagle. We should note u. S. Samestore sales and global samestore sales beating estimates. If anybody has a complaint about home depot, its valuation. Do these earnings justify where its valued . I think the answer is yes. Were trading north of 20 times. We held that multiple for a while. In my positive call for the stock, as long as these fundamentals exist, the multiple stays where it is. We were saying how much of a beat it was for u. S. Sales, but for 2017 total they keep it the same. Should we be concerned or is this home depot being conservative . This is home depot being conservative. Theyre talking about 4. 6 comps for the year. I suspect that as weve seen in past years, theyll keep beating throughout the year. What does this mean for lowes . Just as good as for lowes or what can we read through . Wihat this says is that the Home Improvement market remains strong. Thats a tailwind for lows as lowes. Home depot is the better operated company. Usually they outcome lowes by 1 , 2 . What can derail the home depot story . Rising Interest Rates . How are people financing these renovations that they seem to be doing . What could derail home depot is a slower housing market. I dont see that happening. If Interest Rates were to rise dramatically that could be a problem. But i dont see that happening either. I think as far as the question about how people who finance these homes, the real key is home price appreciation. Homes have appreciated for a while. Thats given the consumer as well as home equity extraction, people taking money out of their homes to make the remodels. Home depot has outperformed by 50 . If home depot is counter cyclical, can it withstand a rise in Interest Rates . Possibly. If the stock market started to wane that could impact confidence towards bigger ticket purchases. Housing. Dynamically i think that plays out for a while. Interesting. Brian, thank you. Thank you. Coming up, the 50 Fastest Growing private companies that are changing the world. Well look at disruptor list. Uber took the top spot last year, followed by airbnb, find out to see if they held on to the top spots. As we head to break, look at yesterd yesterdays winners and losers. Your mcles look good, but we should be seeing more range motn. Im fi. Les look good, okaywell letseeou g up more from the couch. Im sorry,hat . Doctors, insurers d tientsre ung on a collaborative care platfo, making it easier im sorry,hat . Too whats best r everyones health, every stepf the way. Ung you may need more physical therapy. Ug. M i vered for th . P. Ook. Ana cah grdpduck woahha there you go grandpa ke doing that. Get ready, because rlple companielead with tal. Wait for tve that colle eernce th ihad. E the friends, the inp. Since we plann fort, at stunt debt is the o expeence, im glhell mis whenou have thrigh financial advir, le be ant. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning. U. S. Equity futures at this hour are doing absolutely nothing. Actually, theyre up. Dow up 17. I spoke too soon. The s p is down three quarters of a point. The nasdaq is up 2. There have been recent records hit. I think its just interesting that theres theres not a 2 pullback, much less 5 , 10 . We hardly have 1 moves. I dont understand. And people have said since november th, peop8th people hav the day of reckoning is coming. We were supposed to go down immediately. We had these legs up followed by periods of consolidation, but no one has been able to get back in or get in. The s p is now 2402. At 2300, remember, it was called dont buy this rally. That the the yearend target. 23. Small caps have been rangebound, only the last couple weeks have they broken out. Theyve done nothing. I was saying a couple years ago we were asking have we bottomed . We were asking everyone who came on, have we bottomed . We dont ask that. We havent asked that question in a long time. We havent been in a down trend where you can say i wonder if we can make a stand here. Weve been saying is this the top . Is this the top . The entire way which is probably a good sign for continu continuation, right . This morning were unveiling our disruptor 50 list. Our lineup of the Fastest Growing private companies that are shaking up status quo and stand a chance to become the next generation of giants. Julia boorstin is in San Francisco to debut the list. Good morning. Competition to be named to this disruptor 50 list was tougher than ever. 838 private companies were nominated from social networking to senior living, mining to machine learning, even a basketball team. They are all using technology in a different way to transform the business landscape. We narrowed it down to 50. Here are the top five. Number five, uptake technologies. It gathers big data from machines and industries from rails to retail. The disruptor 50 first timer uses ai to deliver insights to planes in flight. Grab making a disruptor 50 debut. Its the uber of southeast asia. Also offering food delivery and a digital wallet service. Ride hailing is going mainstream. Number three, wework. Began for thousands of freelancers and Small Businesses, now attracting Big Companies like microsoft, allowing flexibility to a mobile work force. Number two, lyft, surpassing uber on the list. It is more than 160 million rides in 2016. It is working on selfdriving cars with gm and partnered with waymo. And airbnb. They have transformed travel with its marketplace for everything from an apartment for a night to a villa for a month. Well be in over 50 cities next year. Do we aim to be in every city around the world . Yes. Plus guide books to exfloor the world. You can find the rest of our list and details for criteria and process at disruptor50. Cnbc. Com. Ill be at airbnb later in the day, then we move to lyft. We break down the competition with ly between lyft and uber. Lyft number two, uber 19. What happened . It was interesting here. As we made the decisions about how to put together this list, 75 quantitative, 25 qualitative. One big factor in the quantitative decisionmaking is the type and variety of patents they have. And the company we worked with to evaluate the patents found that lyfts patents were more unique, defensible. Uber may have had more patents, by lyfts made the company more unique especially as they grow and expand dont line. Uber is much, much bigger. About ten tile times the valua but lyft has some technology that uber may not be able to replicate. Does that shift focus on the quantitative side . Weve changed the different criteria over the years and tweaked it. This year we are putting more emphasis on at Technology Behind these companies, especially the patents. We also have a huge emphases of how fast the companies are growing and how big the potential is for them to be down the line. The rate of growth is also a huge factor here. Julia, thank you. Julia boorstin with the disruptor 50 list. Coming up at 8 30 a. M. Eastern, well speak to the ceo of up intake, number five on the disrpdi disruptor list. Still to come, an hour with the man known as the hollywood brand father. He sects celebrities with brands to endorse. His casting list including aaron rodgers, shaq, lebron, katy perry and mra do madonna. Toes bringing red sox slugger david ortiz. Thats coming up at 8 40. [vo] when it comes to investing, lit can provide what we call ane unlock a realization thatnce. 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. 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. 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. Time for the executive edge. Though many saw 2016 as a good year for the markets, the same cant be said for Hedge Fund Managers. A measly two managers made more than 1 billion last year, others had to settle for mere hundreds of millions. Joining us is kit mcdaniel. Welcome. Thanks for having me. This is like hedge fund comp porn. You said it, not me. Walk us through the list. What are some surprising changes versus last years top ten. This is the worlds smallest violin, ken driven had a rgri g made only 6 600 million. He fell from 1 to 6. Jim simons, no surprise, still at number one as he is probably on his yacht someplace sailing around the world. Hes the only man who made the list every year we published it i believe hes made around 20 billion, 30 billion in that time. The whole list as a whole as earned 2 202 billion. Hedge funds have seen a drop in total pay. Why is that . Its not necessarily because of market performance. Whats at work . A few things. Big funds and mediocre returns. You had some funds, renaissance, doing well. But a lot of funds, they just had very mediocre years compared to the s p and dow. Because of the math of how hedge funds are compensated, they can still get on this list. It staktakes 13 130 million to this list. Sometimes the most interesting movements are not within the top ten but just what happens with making the bottom cut. Did you see any surprising r revelations of how much a Hedge Fund Manager has fallen compared to past years . The threshold to get on the list is lower. To get on the second team is only 30 million. Still a lot of money to make the list. Theres always a lot of movement. People coming in and out. Its not surprising when you see people make the news. You have paulson and ackman with double digit losses. Are they not even on the second tier list . Not on the second tier list. Paulson lost double digits. We would use the words he hemorrhaged assets from the fund. He will not make money from fees. His own portion of the fund goes down a lot. So you wont make money in either one of those situations. Base on the trends youre seeing, in terms of resetting the entry level lower or the second tier team lower in terms of comp, does that indicated there will be pressure on fees . I know we say it every single year, but at some point arent investors going to say what are we doing here . For investors its hope. There are 6,000 hedge funds. The vast majority are tiny. If a limited partner, High Net Worth individual or pension fund walked up to seth klarman and said i want fee cuts, he will say i will go to the next guy main line. These top managers dont have to compromise on fees, theres such demand for their funds. Its not fee pressure lowering the total, but the funds in the middle were seeing real evidence they have to take different fee structures and the average fee is coming down. Thats hurting them. How much is this a function of everybody is a genius in a bull market, volatility at a fivemonth low. Fees start getting cut, people say i can do it by myself. Will that top tick the market . Exactly. The Big Conversation in the market is the death of active. People will read this report and say the death of active. You just make money, sit on it. As soon as everybody panics out of the active community, thats when it will go, i believe. If you believe in the reversion to the mean, if you believe there are individuals on earth who for years on years can beat the market, these numbers will rebound. You will never see what will explode volatility. We can tall about all the things that happened in the past, range so low, all the things happening in the globe, the macro community, whenever things come down, thats when active management will return, right . Exactly. The conversation about the death of active will die itself when we have a 20 correction. We will all of a sudden be touting the manager who had the great bet. The john paulson of the next crisis. These funds will show their value again. They are hedge funds, then the conversation will shift again. So, in terms of talking about who has fallen, any surprise rising stars that we should be watching for in the next year . Not exactly sleepers anymore. The two men from two somethicig. Its a Technology Fund that happens to manage money. Last year was their first time on the list. Theyre now tied for fourth. The fifth is the patron saint of stock pickers, david tepper. So i would watch them. Those are the most exciting people coming up. Thanks. Thanks. Spacex successfully launched a rocket from Cape Canaveral last night carrying the largest p payload yet. It deployed a Communication Satellite worth 13,000 pounds. The satellite will deliver broadband to those with immerstat. Its the sixth rocket launch for spacex already this year. And Delta Air Lines will begin Testing Facial Recognition Technology this summer. It will start at a bag drop station at the minneapolis st. Paul airport. The 600,000 initiative will make it the First Airline to try a biometric based Self Service Bag Drop in the United States. I guess they still charge you for the bags. They charge you more for official recognition . Thats a good thats a good point. Coming up, outdoor voices, outdoor voices is one of the Fastest Growing brands in athleisure wear. Thats where you want to exercise, but you dont want to go absolutely crazy. The companys founder and ceo joins us next. As we head to break a quick check of whats happening in european markets. Right now mixed. 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. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. 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. leisure. Im going to practice this, athleisure has been the best selling category in outdoor performance. Creating apparel for recreation, joining us now is tyler hanes, founder and ceo of outdoor voices. Its good to see you. Good morning. You know, you have to work with me and go slow in explaining these things. But once you said, so youre sort of working out but boulder style because you grew nup boulder. I went to school in boulder. Yes. I understand that. Doesnt mean you work out any less but youre having fun while youre doing it. Yeah. Were focused on building the next great active wear brand around activity for the joy of it. Most traditional active wear brands the goal is to cross the finish line first and for us thats not the goal. The goal is to get out there on a daily basis and we say activity must be fun and approachable and friendly and inclusive to get you out there on a daily basis. The reason i know about that is 300 days of sunshine a year in boulder. In january and february it might be 60 degrees. Yep. Right after it snows. And you want to rub around the flat irons and youre not trying to hit a finish line youre just hiking, biking. Enjoying life. Which is pretty easy to do out there. That makes sense. Youre trying to take on Companies Like what lululemon. Nike, under armour, yeah. You going to bury all of them . Or just take market share. Absolutely. Our sense is that theres so many people who want to be more active yet the options are just adding pressure. And theres pressure to perform and so we want to create a brand that approaches activity with moderation and ease and delight. And its all about the future of athletics, not about being there first but being there frequently. And its working, too. You started by looking at materials and figuring out like when you sweat, which materials work best comfort and movement, yes. So all of our materials are meant to sweat in. All of our products are meant to sweat in. And, what what is the best material to sweat in, where what it goes out and evaporates or something . Pulls sweat away from the skin. Weve actually just released something called ov kiss which is a functionality on your site that allows you to mix and match tops and bottoms to create an outfit for activity or uniform for recreation. Its a new way of shopping. Because traditionally, youre going through like an assortment of 100 different leggings and you get decision fatigue. So we created like a very focused simple way to shop that one click youre in a top and bottom and youre out there on the boulder flat irons. On the flat irons. Which you dont want to i got stuck on those a few times. Where its like you go out, you think i can do this and then all of a sudden im like trying to hold onto Little Things so i dont die. Its scary. Okay. So it started mostly with with the female side of things, right . Mmhmm. Started with leggings and a sports bra and a couple things . Yeah, the kit. This idea of the kit. The outfit for activity. Youre male its gender neutral. It is now . Yes, 80 women but we also make mens products. Thats for you todd. Hes a man i know, but i thought so wear no, i dont want to pigeon hole you but you identify there, right . Go ahead. Im i can wear it. Im secure. Women dont sweat they glisten. Ooh i love that. Every woman says that. My wife my wife learned about the company through social media in terms of marketing. How much are you doing traditional media route versus how much are you trying to tackle social networks . Its been interesting. Weve been focused on driving engagement in real life. We have four Stores Currently and four more coming and amplifying that engagement, that recreational electricity through social and digital. We were born online but the stores have been a great way to introduce people to the brand so they can walk in, touch the material and figure out their size and fit. Weve seen 4x growth and are projecting the same for this year what if lululemon or nike came up with some program that says hey, heres some outfits. Were focused on making the simplest experience. We used tech to enable this kind of mix and match system that gets you in the right activity for your recreational preference. And its almost as ov is the recommendation source. That says if youre doing tennis or dog walking or hiking here, heres the outfit for you. Whats your demographic . Whats your average age of your consumer . Its us, so its for millennials . Young demo. Youre targeting millennials. People who are active but not defined by it. You have stores here . Two stores, one in soho and one on the Upper East Side and were headed west later this year to l. A. Amazing in boulder that not everyone just is laid back, and just i mean theres a lot of entrepreneurs. Mmhmm. Even though its such a, you know, i dont know whether capitalism really sells in boulder as well. There seem to be a lot of people with great companies. Thats good. Something in the water. Or in the mountains. Maybe its in the water melon water. We needed andrew here today. He needed to do this interview and the watermelon water. Im trying. Thank you. Good luck. Thank you, so much. We need to get you guys in kits. We call them the kits to get fit. Get some leggings. Oh, yeah, leggings. You should try the leggings. Im worried about leggings. Im worried about that. Youll look good in them. Okay. All right. Thanks. You want leggings also . She said i dont want to be around you with leggings on. She said id look good. Dont be mean. Thank you. Im not being mean. I just dont want to be around when you have leggings on. All right, fine. And thank you to todd gordon for being here, as well. Coming up reaction to new reports that President Trump disclosed highly classified information to the russians. Well talk chad sweet, former cia director and cofounder of the Chertoff Group. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Were like a sports team here at ally. If a sports team had over 7. Im in. 7,000 players. Our plays are a little unorthodox. But to beat the big boys, you need smarter ways to save people money. We know what you want from a Financial Company and well stop at. Nothing to make sure you get it. One, two. And we mean nothing. Im on it. Ar does weathertech go to protect your vehicle . Weathertech. Made right, in america 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. A developing story. The white house denying a report that the president revealed classified information to russia. Details straight ahead. Plus reaction from former National Security and cia official chad sweet. Is the Health Care System falling off a cliff . The ceo of Permanente Medical Group joins us to talk about the future of the medical business. And new market highs. The future is mixed this morning after a rally in tech and oil. Sent the s p and nasdaq to new records. But what about now . What should you do . Where to put your money. Thats just minutes away as the second hour of squawk box begins right now. Live from the beating heart of business, new york city. This is squawk box. Good morning welcome back to squawk box here on cnbc. Were live from the Nasdaq Marketsite in times square im melissa lee along with joe kernen and wilfred frost has joined us. A record setting day yesterday for the s p and nasdaq. The s p 500 closing above 2400 for the very first time. Looks like it can hold onto that level. Were up by just a fraction of a point here. Dow looking at about 20 points at the open, nasdaq looking at about 3. 25. Heres whats making headlines. Dow component home depot with a rare positive retail Earnings Report for its First Quarter. Home depot earning 1. 67 a share for the quarter. Thats five cents above estimates. The Home Improvement retailer saw revenue and Comp Store Sales beating forecasts. Ford is planning to cut about 10 of its global workforce. The wall street journal says its part of a move to slash 3 billion in costs. Ford telling cnbc it does not comment on speculation and that its not announced any employee related moves to increase efficiency. The Justice Department has until the end of today to decide whether to sue United Health group. The doj has said it intended to do so following allegations against the company and others by a whistleblower. And former United Health employee. That employee benjamin polling told the New York Times Big Insurance Companies have been bilking the Medicare Advantage plan for billions by gaming the payment system. United health says it rejects the allegations, and will contest them vigorously. Disney ceo bob iger says hackers claimed to have stolen an upcoming disney mover. Iger made the comments to abc employees during a Company Meeting in new york. He says the hackers are threatening to release the film in segments online unless a ransom is paid in bitcoin. Iger did not name the film but says disney has refused to pay and is working with federal investigators. Deadline reports the movie is pirates of the caribbean, dead men tell no tales. This is just the latest cyber attack targeting a Media Company demanding ransom. Last month a hacker stole ten episodes of netflixs orange is the new black and leaked them ahead of the release. Shares of disney this morning down just a fraction, of course, tough week over the last week or so. The impact of this whole ransomware outbreak with wanna cry, et cetera is in the price of bitcoin. It is down about 200 or so because its seen as a negative sentiment on bitcoin. So thats something to watch. Traders will be looking at fresh data while they adjust to news that u. S. President donald trump has revealed classified information to russian authorities. The nasdaq closing at record highs yesterday. For more on the markets, dom chu joins us here on set. All right, so guys as we talk about the bullish move higher for the markets, record highs overall for the nasdaq composite, were looking at the s p 500 as well, there are at least a handful of reasons why the feeling of being bullish is still one that you want to kind of keep at least for the time being. There are a ton of them out there but ive highlighted three that seem to be getting some attention in todays market. First of all the idea that Technology Stocks and the s p, mega cap ones continue to help lead the way. May not be a great thing if its not broad based but still large mega cap tech is doing a lot of the heavy lifting. For the first time in ages a bounce in oil and Energy Stocks as well helping to gauge that sentiment higher as well. You dont know whether or not thats going to have a little bit of lasting power. Oil prices, obviously a big play there. And small cap stocks standing out yesterday, especially breaking that losing streak or at least shortterm one out there. However lets take a look at the charts for a couple of these moves. Because, if you take a look at the Energy Sector overall, versus the s p, theres still a long way to go for those Energy Stocks to get back to where theyre supposed to be. We know that Telecom Stocks are the biggest laggers right now. With that move in energy we recovered some ground. Oil is still going to be a big deal here to watch. And if oil prices can move higher consistently, maybe energy picks up. It could be the next bank stock trade you never know. The underperformance in small caps still on a yeartoday basis, as well. Thats going to be one to watch. Small caps always seen as the leading indicator for the overall market. Yes theyre still positive but can they start to really play catchup here with the s p 500 . Its been an underperformer, guys, well see if that kind of plays out for the rest of trading. All right, dom, youre important. You are. But the president is tweeting. I would like to sit here and talk about everything youve just said but i think im going to do this instead. I would agree with you. Well, good. Because whether you do or not youre going to do it anyway. I think i only have half of the full tweet. But it starts really . As president i wanted to share with russia at an openly scheduled white house meeting, which i have the right, absolute right to do, facts pertaining to and you have the rest . No, no, no. Im on his twitter account. It looks like hes about to tweet the next one. So i mean, its half sometimes he does take quite a long time to finish the tweets. And who knows, you know. Sometimes i try to post, you know, i hate twitter. But sometimes when i do finally do something i watch it, and its the lines trying its trying to post and it doesnt. The characters. And it finally comes in. Cant find the right gift. So annoying. Anyway, so we will. Well talk about that. But lets talk as soon as we get to the other half of this. But, we did point that out with eamon. Hes absolutely he decides whats classified and what isnt classified. So joining us now to talk about the markets, fund manager of Needham Small Cap Growth Fund and Richard Bernstein ceo of Richard Bernstein advisers which has nearly four billion dollars in assets under management. 4. 5. 4. 5 fing Million Dollars . Hes a great man but hes wearing a terrible tie today. Its a tottenham hotspurs. Is that what that is . I could have had a thousand guesses. What is it . Toe Tottenham Tottenham hotspurs. Can you spell it . Arsenal. Oh, arsenal. Keep it clean here, man. Im trying. Im trying. Hes the one taking a downturn. Yes, you have. Rich . Welcome, dude. Thank you. How you been . Whats new . Great. So you, at this point, complacency, the vix, 25 year low. Should we just sit here and just love 2400 on the s p . Or are there cracks . Joe, the number one issue that affects the vix is liquidity. Okay. And people have been complaining for years how much liquidity there was. The Central Banks were just pumping like kratz zi. Right. And the end result has been a vix that has been lower than anybody ever expected. And that will go on for some time. You know, Warren Buffett likes to talk about the tide going out and you can tell when people arent wearing bathing suits. Trying to keep this very clean for you again. First the tie, now youre talking about naked swimmers. Exactly. But what is tide going out . That tide going out is the removal of liquidity from the Financial Markets and thats not happening. Not happening. So as long as we have this backdrop of a lot of liquidity, its going to be very hard for the vix to go up for any extended period of time. But if the markets did go down the vix would go up . Oh, of course, okay. So this is a round about way of saying that theres still a lot of liquidity so its going to be tough for the market to to have a bear market with so much liquidity would be unheard of. And it it goes along the same vein theres not a whole lot of alternatives yet. I mean youre not going to buy a german bond, are you . For 40 basis points or whatever it is . Exactly. Well i think the fact that people are still looking at very esoteric investments and not just looking at plain oldfashioned stocks, i think its still very telling about the sentiment surrounding the stock market, that people are still very scared. Theyre still worried about whats going to happen. I mean, look how were getting distracted about, you know, whats going on in washington or whats going on in korea or whats going on we get distracted but the market were not getting distracted. The market is not. Thats right. But im just saying if you look at peoples asset allocation, the way people are positioning portfolios, theyre still very, very scared. We had a record alltime high for both the dax and the ftse 100 yesterday. The ftse hitting a fresh one again today. Its not just highs here that weve got. No, no, no. Markets have now played catchup around the rest of the world as well. Absolutely. Thats a great point. What people have forgotten is that maybe fundamentals here in the United States are weakening a little bit. I mean we could make that argument. But what people are missing is around the world things are getting stronger. And, you know, its a real global story. I think when you dom was talking about oil before. I think thats part of why youre starting to find the footing in oil. If you look at the demand. Global demand for oil. Its not falling off the table. In fact its getting stronger. Thats one of the reasons youre seeing that. Agree with rich . I do. I mean, we look at the volatility. And it is certainly elevated, its been compressed. But we also look at the high yield market which supports a lot of Small Cap Companies and that still is pretty resilient. So, people are inching out on the risk curve, and moving in to small caps. I know dominic mentioned, you know, the outperformance theyre catching up a little bit. They had a great year last year. They underperformed in the First Quarter. Will that continue . We think so in certain areas. You have to look at companies that are market share gainers, technological moats very defendable on a global basis. But we are moving into the seasonally slower time of the year where liquidity will dry up in some of these names. So well be looking for those, you know, price volatility over the summer where we can put some money to work. You folk otherwised a lot on the smaller caps. Do they stand to benefit more, disproportionately more if we do get things like tax reform and deregulation . I think so. Because what youre going to see is if theres repatriation, m a is going to come alive. A lot of Big Companies have a lot of cash overseas. They need to buy growth. And so if you can find these emerging growth companies, theyre providing 30 , 40 topline growth, theyre going to be really additive to the big guys. Which sectors are you talking about for that . For the m a sort of target small cap sector . Theres a big refresh in hardware going on outthere. You know, next gen Storage Company servers. We also like security. Yesterday was a big name for security names. Weve been on that theme now for about a year. You know, you had fireeye on last week. Fantastic ceo. Thats the type of management you want to get behind. Somebody who really believes in his company. Is going to make it work. So those rt type of investments you go for and youre more concentrated on them. Weve been saying Earnings Seasons been pretty strong for q1. Has it been strong on the smaller cap level, as well . The small cap guys have you know certainly been more volatile with, you know, dollars flowing out, money flowing to europe a little bit. But again you really have to get behind the stories, and put money there. All right, chris, thanks. Thank you. Great to be here. Look up just in new york city how many Richard Bernsteins there are. Its like jim smith. I know but what were your parents thinking . They did not give you they did not give you a middle name. No, they didnt. But you have not actually formally changed your name to the moniker that ive bestowed upon you, have you . Ive been toying with the middle name kernen. Evan is cooler than soda. Its cooler than seven, remember the sign field . Richard effen just sounds like youre a player when you say it that way. Take it before i use it on somebody else. Im not going to put it on my business card. Why dont you adopt it . Ive got a middle name. Maybe harry kane. Could start. Thats a good middle name. You already got a good one. What is it . Its more of a youll laugh at it. Its paradigm. What is it . There we go. Its a company, chris just mentioned it. It is a great Small Cap Company as well. What sit . Paradigm. Its my fathers middle name. Cant be too rude about that. It was his father, the reverend wilfred pair are dime its not a middle name. He was the first to have it and its carried on. You are so british. I knew you were going to say that. A revelation by joe kernen. Wow. And were so not. Anyway true. Im definitely not. Coming up Washington Post report claiming the president revealed classified information to russian officials in the oval office has a beltway buzzing this morning. Well speak to a former cia official and cofounder of the Chertoff Group chad sweet. And later medicine and your Health Care Coverage with ceo of the Permanente Medical Group. Hes out with a new book on the topic. Youre watching squawk box on cnbc. 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We told you about this President Trump tweet a few minutes ago. Now we have the second part. Lets start with the first one again. As president , i wanted to share with russia, at an openly scheduled white house meeting, which i have the absolute right to do, facts pertaining to. Now heres the other part. Terrorism and Airline Flight safety. Humanitarian reasons. Plus i wanted russia or i want russia to greatly step up the fight against isis and terrorism. So thats theres the president tweeting this morning, which we, i guess, thought he would at some point. Is that a denial, though, of a point that he shared classified information . I understand how he said i did not at any time share highly classified information with the russians . What . Hes sort of making it clear that it was up to him. Exactly. And that the press shouldnt be worrying about this. The other issue on his side of this that raised the question is everyone was saying last week how so few people were allowed in to the room for that meeting. Talk about this. So who is i know. Not someone who started the story in the first place. Exactly. Not someone that had any, you know, positive opinions about President Trump. I mean this was done purely as another way to undermine trump. And someones in there that, you know, if you really want a conspiracy theory, i mean state department, youve heard about the deep state, obama holdovers. I mean, but, but, you would think theres few enough people in the inner circle at this point to where it wouldnt be happening. Right. But i think the worrying thing, and if it is absolutely his prerogative to do it and he can declassify stuff then so be it. The worrying thing from the article what it suggests the motivations behind it were was this sort of boast, oh, look i get this great intel. Which clearly is a little bit worrying. But we werent in there and dont know how this was sourced. We watched the campaign and we watched we know that hes, you know, youve seen when hell talk about how hell bring up the election again and wow we won wisconsin. Hes been known to right. But you dont want him to do that on classified information. He is what he is. For the sake of bravado. But you would say that. But i think at this point the end result is hes trying to get russia more involved with what happens with isis. And thats been in the campaign all the way right through where we are right now. Right. And whether that actually does happen. Its so complicated over there because youve got assad. And sometimes isis is on the other side its a quagmire, isnt it . Indeed. A riddle and a conundrum all in one. In the meantime, president Trumps National security adviser h. R. Mcmaster denied the reports yesterday. Theres nothing that the president takes more seriously than the security of the american people. The story that came out tonight as reported is false. At no time were intelligence sources or methods discussed. And the president did not disclose any military operations that were not already publicly known. Joining us now is chad sweet the cofounder of the Chertoff Group. He also formerly worked for the department of Homeland Security and the cia. Chad, thanks very much for joining us. We can get onto the wider security hack, the cyber attack, in a couple of minutes. But lets just react to the story weve just been talking about. I mean, is this a major revelation to you, the possibility that the president revealed more than he should have done in a private meeting . Or is that sort of par for the course and really down to him to decide whether or not to do that . Well, again, we dont know all the facts, i think. General mcmaster made it clear that no sources or methods were discussed. I do think its important to honor and respect information thats shared with us from foreign allies, otherwise we risk losing access to that information. The key point the American Public wants to know is its not irrational for the president to be thinking a Strategic Alliance with russia against isis. In the same way that the Trump Administration is clearly aligning itself with china to counter the threat from north korea, its absolutely in our interests to have the russians aline with us, and theyve suffered one of the worst Civil Aviation terror threats a couple years ago which took down one of our airliners over egypt. So it is entirely appropriate for the president to be discussing this Common Threat against both of our countries. Chad, what about the way, at the moment, that stories are emanating from the white house . Whichever one you want to point your finger at, the latest one is another example of it. Can a White House Administration continue as it is with this sort of level of leakage . The leaks are very disturbing. I think as a former cia official, as well as homeland, i think its completely inappropriate that leaks are coming out from clearly someone in the white house. There were transcripts potentially made of this meeting, thats a common practice in diplomatic circles. So even if they werent in the room, its likely that those transcripts were shared with members of the staff, and a limited list of other officials. But the characterization of his comments as bravado or things like that are completely inappropriate. And i hope that these leeks stop. Chad, just switching gears, what do you make of wanna cry and the spread of wanna cry and how bad could it actually get . I mean right now were sort of looking at a spread thats diminished a bit over the past 24 hours or so, but are there, you know, is there a certain amount of time where something can pass and there could actually be another outbreak . Its incredibly disturbing when you look at it. Ransomware is not new. But when you look at the level of automation that is in this particular ransomware source code, its achieving a level of scaleability that we havent seen before. If you hit 150 countries in over 300,000 victims in such a short time frame, so but it is encouraging in that seeing the Trump Administration sign the cyber executive order right before this last week, weve seen tom bossert, the assistant to the president for homeland and counterterrorism specifically go up to the podium and speak at the White House Press briefing on this. The fbi and our allies are all globally aligning against this, and theyre seeking those who perpetrated it. So i think from the perspective of a teachable moment, this is the most high profile Cyber Ransomware attack weve seen. And i think its helping to elevate Public Awareness on the need for fighting this type of threat through management and advanced cybersecurity. Chad, clearly theres an issue whether youre pointing at the government, or individual companies, at detecting these types of attacks. But more broadly, should there be a bigger discussion about more severe punishments for those that carry it out, such that theres a bigger disincentive for people to ever kind of start to think about doing these things in the first place . Absolutely. I mean right now were living in what i would call the wild, wild net. Meaning, its in many ways lawless. And you see these types of acts carried out, and youre right, its a slap on the wrist in terms of the penalties that have been implemented today. I think we need a global norm set forward to actually go after these folks with, you know, very heavy hand. And secondly, we really need the United States to step forward and declare what we consider to be out of bounds. I think we saw in the case of the russian interfere nens our elections and the hacking of the dnc, we need to be very clear and have a stated doctrine of attribution and retribution. Thats the only way were going to have deterrence against these types of attacks. Given the tensions with north korea, digital fingerprints indicate it would be north korean hackers who caused this . Yeah, theyve done this before. A group called the Lazarus Group that has been hitting other financial institutions. Weve seen that previously. North korea, though, is, you know, a second or third tier player in using these kind of more simplistic approaches, where they take other peoples code, slightly tweak it, and then try to use it at scale, as a signature of the north koreans. So, in light of the tensions that weve had recently over their missile tests, and the tightening of the diplomatic noose around their neck it isnt surprising that theyre certainly a prime suspect in this incident. Chad, thanks very much for joining us. Chad sweet. Thank you. All right coming up, another successful launch by spacex. This time it was the largest payload ever. Details after the break. And then later the man who brought beyonce to watermelon water. Watermelon water. Also known as the brand father has a knack for pairing celebrities with rising brands. Were going to talk about the building of successful brands in two areas of the snack market that already seem saturated but maybe not. Squawk box will be right back. She cant become a guitar legend just by playing air guitar. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Good morning. Welcome back to squawk box here on cnbc live from the Nasdaq Marketsite in times square. Among the stories front and center, jeffrey ubin is stepping aside as chief Investment Officer at valueact capital management. Morfit has served on microsoft and valeant pharmaceuticals. Were about an hour away from april data on Housing Starts. Economists are looking for an increase of 3. 7 partially reversing marchs 6. 8 decline. And Chicago Tribune owner wants to buy the newspaper that was its biggest rival, the chicago suntimes. Its signed a nonbinding agreement to buy suntimes Parent Company but still negotiating financial terms. Both Companies Say the suntimes newsroom would continue to be run independently. Trunk. I might be that a pantheon of terrible corporate names. Trunk . When is that one i thought trunk was like a little green animated monster. I havent seen these films. Not really a film. But its not really a corporate name either. No, exactly. I didnt know how to pronounce it. Sounds like i got it right. My god, its one syllable. But i still managed to pronounce lots of one syllable words wro s wrong. I didnt know if it was tronc, its such a stupid name. It could be it could be kronk, i better be careful. I dont know. But thats what i mean. Its like who let that get past the the person that decided that, didnt they run that by anyone . We should ask the brand father about it. Youre right. Youre right. Very good. Were getting a peek into what some of the worlds most powerful investors are buying and selling. Many filings were released today. Paulson and Company Holding stakes steady. The firm also trimming its position in aller again. Carl icahns Icahn Enterprises reported a 19. 8 million share stake in conduent. That was not a new purchase but shares he received from his prior investment in xerox and conduent was spun off from xerox back in january. Also increased position in navistar and herbaliff. Warren buffett sold stake in 21st century fox and doubled investment in apple. George soros firm bought snap inc. While selling positions in amazon, abbott, delta and ebay. His firm took new positions in Conoco Phillips and fireeye and added positions in facebook, hp, and mondolee. And greenlight hiked its stake in gm and yahoo, dropped its position in yelp and took a new position in micron. Spacex successfully launched a rocket from floridas Cape Canaveral last night carrying the companys largest payload yet. The falcon 9 rocket deployed a Communication Satellite weighing more than 13,000 pounds into orbit. The satellite is intended to deliver high Speed Broadband as well as mobile communications for ships, airplanes and government agencies. This is the sixth rocket launch for spacex this year. Still to come, we talk health care, and the misperceptions of modern medicine with the ceo of the Permanente Medical Group. As we head to the break, lets take a look at u. S. Equity futures. They were fractionally lower a couple hours ago. Were now higher by 30 points. Coming off about 0. 4 of gains. Back in a couple of minutes. A , the senate is now taking on the issue of health care reform. Our next guest says americas Health Care System is heading towards a cliff. Joining us from washington is dr. Robert pearl, executive director and ceo of the Permanente Medical Group out with a new book intitled mistreated which focusing on solving Health Care Issues by first challenging our diagnosis of the problem. Dr. Pearl, great to have you with us. Good morning. You say we should have an integrated, prepaid, technological health care service. Does that require starting from scratch, which is basically impossible . Yeah, the doctors of this nation could come together, the hospitals of this country could come together. We could achieve integration. I think were moving in that direction, were just not moving fast enough. Were walking towards a cliff. If we dont change direction we are simply going to step off the edge. Not only threaten the medical health of this nation, its going to threaten the Economic Health of this nation. The costs of health care certainly rises more rapidly than we can pay as a nation, as individuals, or as a government. Youre saying that we need integration. We need technology to help us do that. So what are the main friction points right now in our Health Care System thats preventing care from being the best it can be for americans . I think just the question of our deciding were going to do it. We know we can accomplish it. The technology, every industry of the United States is modern. Health care still uses Information Technology from the last century. Weve paid doctors on a basis of fee for service. A piecemeal basis. We could be paying doctors on a capitated basis. A prepaid basis so physicians have an incentive to do the right thing. Think about it this way, every year in the United States, hundreds of thousands of people die from errors in medical care, from failures of prevention, including my father. Thats what i write about in the book mistreated. We dont have the same conveniences in the health care that we get that we would want in every other part of our life, from travel, to finance, to retail, the opportunities that we have right, i think that you raise a very interesting notion and that is paying doctors effectively by salary, as opposed to paying them per patient visit, or paying them per procedure. Is that the model right now for the Permanente Medical Group . And whats your absolutely. Every one of our physicians is fulltime for the year. Every one of the physicians is paid on a basis of value, high quality, high service, the ability to use technology, to offer patients the opportunity to have a video visit. The opportunity to be able to have an email to their physician. The Permanente Medical Group today leads the country in quality. The National Committee for Quality Assurance survey 1,000 programs, and the only once received five starts. A rating of five for both commercial and medicare was the Permanente Medical Group Kaiser Permanente in northern california. We offer patients the opportunity to email the doctor. To have a video visit with physician. To come in if they want. We provide 60 of the care same day or next day for even the most routine problems. You think this should be the 340dle for the u. S. Health care system. This sounds like something that would be done on the private level, not necessarily on the government level. Nowhere in any Health Care Plan have i read about changes for instance on how doctors are compensated nor could there be a policy or law regarding how doctors are compensated. So are you really saying that the change to the Health Care System has to take place at the Grassroots Level . Well, Medicare Advantage, which is a federal program, is a great example of that. In the Medicare Advantage Program Physicians are paid or Health Care Systems, including physicians, are paid on a single premium based on the age of the patient, and the severity of the problems that they have. The Medicare Advantage program also has the opportunity to be able to pay integrated delivery systems, large medical groups, based upon the excellence and the quality thats produced. Its a fivestar rating. And the fivestar programs are paid at a higher level than at the one, two and three which are not paid any of the additional dollars. The fee for Service System is simply broken. I talk in the book about the last days of my father. My father, after his preventable medical error, ended up with a bleed into mice brain. My brother and i fly out there from california. He is in florida, in a hospital. We arrive. Theres a line of doctors out the door. Theres the emt doctor with the trach yostmy, the gi doctor, the neurosurgeon to take a piece of his bone. We explain that my dad does not want to go on and live like this. For the next two days we dont even see a physician. There is no way in the american Health Care System to bill for compassion to take care of families in their most difficult times. The american Health Care System is simply broken. In mistreated i talk about that. Youre absolutely right. The opportunity to have care integrated. Doctors working to the with the specialties, vertically between specialties. The opportunity to be able to have care that is paid in a prepaid or capitated type way. Technology that is modern. Technology that allows you to have the ability to schedule a visit online, check all your data. The ability to communicate with your physician in the way thats most convenient and to have a physician led. This is the model for the future. If we do it now we can save American Health care. If not all were going see is quality going down, costs going up, hundreds of thousands of people dying unnecessarily, we can do better. This is the time to do better. Dr. Pearl, thank you very much. Appreciate it. Thank you so much. Dr. Pearl with the book called mistreated. And coming up, one private jet company is using a parachute system as a major selling point for customers. And theyre booking hundreds of orders. Phil lebeau will join us with that story after the break. Thats a pretty good tease. A pretty good tease. Checking out the futures at this hour. We have been improving throughout the session up 34 now on the dow. Up 6 on the nasdaq. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Welcome back to squawk box. Futures right now, dow looking at about 35 points at the open, s p 500 looking like it can hold onto the 2400 level up by about two points. Delta airlines will begin Testing Facial Recognition Technology this summer. The test is to start at a newly installed selfservice baggage drop station at the minneapolisst. Paul international airport. The airline says the 600,000 Dollar Initiative will make the First Airline to try biometric based selfservice bag drop in the u. S. Well, imagine you could make sure your private jet would land safely if it ran into some problems midflight. Its become a reality. And a major selling point for cirrus aircraft. Phil lebeau joins us now with more. Joe, this is an interesting story because cirrus, which has been making planes for a number of years out of duluth, minnesota, and now has its first personal jet, we had a chance yesterday outside of new york to see what this jet is all about. You might be saying, well, personal jet, whats so interesting about it . It seats up to five adults, the cost is 2 million. They already have 600 reservations. One of the big selling points is the fact that this plane, the plane, not the passengers inside, but the plane, comes with a parachute. Cirrus planes have been built for sometimes with a parachute for some time with a parachute inside the aircraft. It the vision jet parachute has a diameter of 90 feet. And when these have been deployed, its been deployed 71 times, not first on the cirrus jet because thats just coming out, but on previous planes. 71 times. You might remember that back in 2015, remember this home video . This was a plane being flown by a walmart executive, they ran into engine problems, and the parachute helped them land safely. To be quite candid, theres 146 people that have been returned to their families over the wilifetime of these airplan. They speak loudly and clearly that it is a reason, and the key reason that they bought a cirrus aircraft. Last year in las vegas, we had a chance to go up in one of the cirrus planes. One of the single piston planes that has a parachute inside of it. It did not deploy when we went up there. We should point out that the cirrus planes are built in duluth, minnesota, 1100 people are employed by this company. Guys, the personal jet market is one of those markets that eilat of people believe it could eventually take off in a bigger fashion than it already has. Cirrus believes this parachute is a selling point because people will say look i have an extra line of safety in case we run into some problems while were flying. Phil, any instances where the parachute has deployed but it hasnt done enough . Well, whats your term by having done enough . Has somebody passed away . To our knowledge, no. But there are certainly going to be look any time you come down with a parachute, its not going to be a perfectly soft landing. It depends on where you come down. So youre going to have some people who are going to have some bumps and scrapes and bruises. But certainly thats far different than what a lot of people might be facing if they ran into some engine failure, and they have to look around around say, okay, where can i land . Is there an airstrip nearby . Or am i going to have to try to improvise Something Else . Phil, is it a jet or a prop plane . You were on a prop plane, werent you . We were on the single engine piston last year in las vegas. Those planes have had parachutes. Now theyre coming out with their first personal jet. Single engine personal jet. Had a chance to fly single engine jet but two pilots or single pilot jet . Single pilot. Thats good to have a parachute. It can, you know, but 2 million. 2 million is gulf stream. Personal jet. Gulf stream is 60 million. A citation youre talking much more than 2 million. Oh, gosh yes. Yes, absolutely. Absolutely. And the personal jet market, this is sort of on the lower end of what you might be able to find out there but they believe that parachute is the big selling point. For that. But thats kind of weird. Thats kind of weird. Youre not going to see gulfstream 550s advertising that you got a parachute. Its like youre when youve got a gulfstream 550 youre hoping youre not going to need like the last thing. But those arent personal jets. Youve got a pilot who is flying those. Okay. Yeah. Two pilots. Two engines. Everything. All right. Im scared, phil. I dont know. Dont be scared. Okay. Cant help it. Thank you. Phil lebeau thank you very of. Still to come, hollywoods grandfather is jumping into the shark tank we hear from rohan oza in a couple of Companies Featured in his portfolio. Plus the leak of classified information to russian officials last week. All the latest details on that story and much more here on squawk box. Finding time to get things done isnt easy. But weve got the Digital 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 grandfather i guess . You listening to this rohan . That was the music . I guess. I wasnt sure why the godfather. I think. I think, because the word father is in there somewhere. The grandfather . The godfather would match . Creative is i guess thats a subjective term. Our guest host this morning is known as hollywoods brand father. Was Just Announced yesterday as one of the incoming guest judges on shark tank. Joining us now is rohan oza. Were also joined by two of his portfolio companies, jody leave very is cofounder and creative director of watermelon water and burns ceo of one brand maker of the one bar. And i think the reason i peter burns, i think that was a jack wagner character on Melrose Place or something, wasnt it . I get that all the time. I get that a lot. Youve gotten that before . Several times. Im really embarrassed that i knew that. I just like to be on the record saying that im really, really embarrassed. I wish i hadnt brought that up. Welcome. Thank you. Thanks for having us. Where we going to start . I mean, i need protein bars. Can we start with a taste of both . A taste of both. And watermelon water, theres its more than just flavorful. Theres like antioxidants in it. Tell us about it. Okay, great. So let me first of all hand you guys one. Thank you. This is an original you have ginger. All right, ginger for you. Ooh. Did you see beverages. That wasnt bad one hand. Watermelon water is exactly that. Its we take fresh watermelon. Yeah. Specifically ugly watermelons, there are hundreds of millions of pounds of unused watermelons in america every year that we actually take and we cold press. So we use the flesh, which is the pink part. We use the rind, which is the white part, and in the rind of watermelon water are functional benefits that none of us ever knew about. There is lycopene. Which is why we eat tomatoes, but importantly theres tons of electrolytes. Significantly more than sports drinks. But theres an amino acid that only exists in the rind of watermelon that is really helpful pre and post workout. Helps prevent muscle fatigue and helps with recovery. Its a sports drink primarily . Its the cleanest hydration by nature. In the war of man versus nature and nature is undefeated. So if nature would have created a sports drink it would be watermelon water. Thats why youre the brand father. That was not an answer to this question. That was a brand what was that . We need the music. Nature wow, that was amazing. Natures hydrator. How much water goes in to growing a watermelon versus how much you get out of it . Well is it efficient use . Yeah the whole concept behind our company is the concept of growing water. Actually. What people dont know is that watermelons grow in dry, arid climates. You can grow 18 to 25 pounds of water in a watermelon without very much water. So its watermelon water is that a branding technique as opposed to i mean, isnt it watermelon juice . But juice gets a bad rap so i call it watermelon water . The lady created we talk about these bars, too. Okay, now, proteins great. But i worry, you know, if andrew were here hed worried about the carb, and how much sugar are in these to make them taste good. Because you want to get as much protein and few carbs. How do these theres no sacrifice here. 20 grams of protein and one gram of sugar. So think about permissible indulgence, permissible guilt. Everyone likes brand father again here. What was that . Did you make that up the whole team. But its permissible guilt. Okay. All right. So instead of eating a candy bar you get high protein, low sugar. And the benefits yeah. And one are those all different colors for different flavors . Different colors for different flavors. I need those. Im coming your way. Heres one. This targeted also for fitness as well or actually meant to be a treat at the end of the day thats more healthy . The usage is great. You can have a cinnamon roll in the morning, a birthday cake in the afternoon. A Peanut Butter pie as a meal replacement. Weve got 15 seconds. But maple glazed doughnut and birthday cake. You got it going on. Thats the whole thing. Its permissible guilt. Youre going to be here. Were going to talk to you. But thank you. Im sorry thats okay. Thanks for having us. Well be back right back. David ortiz next hour. 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. Hello, my name is watson. I am helping 8 million taxpayers get the largest refund they deserve. One Million People can benefit from precision cancer care. 197 million passengers can fly with less turbulence. I am on my way to working with one billion people. I look forward to working with you. Breaking overnight. The white house shuts down reports that President Trump leaked classified information to russian officials. The story that came out tonight as reported is false. I was in the room. It didnt happen. A live report from washington, straight ahead. The cyber threat. New clues about the culprit behind the global hack attack. Well talk to the ceo of Cybersecurity Company proof point. Plus, big papi steps up to the squawk plate. Retired red sox star david ortiz tells a story, and hes not holding back. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Good morning. And welcome back to squawk box here on cnbc. Live from the Nasdaq Marketsite in times square im joe kernen, along with wilfred frost and melissa lee. Becky and andrew are off today. The futures have been improving throughout the morning now. Up 30 points on the dow. And we had some new records recently. The s p could add to those. Up 1. 5. The nasdaq up 6. So far this morning. The dollar has been weaker, and the euro stronger. 1. 10 now for the euro. And you can see, you know, it was really cheap to go to your your home country wilf, not quite as cheap anymore. Still on a longterm basis. The pound rose earlier off the back of strong inflation data but its just slipped back down a little bit. There you go, 1. 28. Among todays top stories, shares of Dicks Sporting Goods under pressure. Earnings matched estimates but revenue came in below forecast. Samestore sales rise 2g. 4 . Thats smaller than the consensus of 3. 5 . Dicks did predict street instruments. Ford is apparently planning to cut about 10 of its global workforce. The wall street journal saying its part of a move to slash 3 billion of costs. Ford told cnbc it doesnt comment on speculation and that its not announced any employee related moves to increase efficiency. President trump taking to twitter to address reports that he leaked classified information to russian officials. I dont even like that terminology, eamon, because a president cant leak classified information, since he decides whether to declassify it or not. But anyway eamon javers. Thats right, joe. Thats kind of the terminology and thats not quite right. Bring us up to date especially in light of the newest info, and that are those two tweets that the president had earlier this morning. Yeah, thats right, joe. The correct terminology here should probably be sharing classified information with the russians. Were getting now the first reaction from donald trump to this story that broke in the Washington Post at about 5 00 yesterday and has rattled much of official washington. Heres what the president is saying on twitter this morning in a series of two tweets. He said, as president , i wanted to share with russia, at an openly scheduled white house meeting, which i have the absolute right to do, facts pertaining to terrorism, and Airline Flight safety. Humanitarian reasons. Plus, i want russia to greatly step up their fight against isis, and terrorism. The president there appearing to argue that his sharing of classified information with the russians was intentional, and strategic, but it also appears to contradict something that his National Security adviser h. R. Mcmaster said to reporters on the white house driveway last night, issuing a flat denial of the Washington Post story. Heres what mcmaster said. The story that came out tonight as reported is false. I was in the room. It didnt happen. Mcmaster there saying i was in the room, it didnt happen, but the president s tweets appearing to indicate that some intelligence sharing did happen in that room. The president saying that he wanted to share information because he views it as strategically important. Bob corker, however, the chairman of the Senate Foreign relations committee, is frustrated with this white house. Heres what he said in reaction to the story last night. Obviously theyre, you know, downward spiral right now and theyve got to figure out a way to come to grips with all thats happening. And to review, heres what the Washington Post reported last night. The key point of their story, they said that President Trump revealed highly classified information to the Russian Foreign minister and ambassador in their Oval Office Meeting yesterday. Also saying that Officials Say that trumps disclosures yep diesed a critical source of intelligence on the Islamic State. The intel at issue here was provided by a u. S. Partner and considered so sensitive that details have been withheld from u. S. Allies. And according to the Washington Post, the president said to the russians, i get great intel. I have people brief me on great intel every day. The official suggesting to the Washington Post that the president was simply boasting about the level of information that he had access to in his meeting with the two russian officials, and a number of other russians. We dont know exactly who was in the room for that meeting. The white house wouldnt let American Media into that meeting. A russian photographer was there, and the russian government released pictures of the Oval Office Meeting. So we know some of the russian officials but not a full cast of characters of who tlfs on the u. S. Side, joe. Its not all out yet. And you know when it came out yesterday i saw some some hyperbole and i saw some reasoned analysis. It depends on what you watch. I give you kudos, eamon, because you mentioned that i mean were talking about russia that in terms of some type of a laptop that explodes. They could benefit from that knowledge, because they were very affected by that already. So, when i think you know, i think sometimes i try to recuse myself, because sometimes i give him the benefit of the doubt. But i think the average american probably looks at this and thinks that it was probably good intentions in trying to share that type of information with the soviet union or with russia, former soviet union. Right. When were talking about isis. And im just not sure what i saw from the democrats was just, i thought just typical and over the top, and you know, they take the political football, and they run with it, and they ask questions later about whether its going to stick. Theyre going to run with it. Corker, unhelpful. I think hes been around the beltway so long now that he reads the Washington Post and gets hammered with it, and hammered with questions from reporters, and you know, i dont know if he he maybe needs to get out more. Out of the beltway more. Because thats not helpful. A yawnward spiral . This indicates its a downward spiral . Corker clearly lumping this in with the firing of fbi director comey. Is he at risk . Whens ee up . Good question. I dont know off the top of my head. Not two years from now . The ones who are up in the next cycle are going to be the ones who are getting most nervous and theyre the ones to watch here in terms of their reaction. I think two things to watch here, two things to think about here in this story. One is the president is the ultimate declassifying authority in our system. So the president can decide to take any classified information that he wants and share it with anybody he wants if its his judgment that thats in the best interest of the United States. So, you know, the president could have shared secret of the atom bomb with the russians back in world war ii if he wanted to. If he thought that was important. In this case, though, it seems clear that whoever leaked this information to the Washington Post felt that what the president had done was wrong and dangerous and clearly there are some intelligence officials who feel like this could bring into threat this could jeopardize the relationship with the foreign intelligence partners. Thats one thing to look at. I got it. But the other reason could be just to you know, more undermining. More making it, you know we dont know what was in the source. We dont know which state Department Employee got a hold of it, either. It could be holdover. You know. I dont know. We dont know everything yet i dont think. Right. Theres a narrow circle of people theres a narrow circle of people who would have been aware of this and would have had transcripts of the president s actual remarks inside the oval office which are quoted from in the story. The important thing here is that the Washington Post, in their story, noted that the white house was so concerned about the president s comments that they had them stricken from the transcript and then limited the circulation of those transcripts to just a very few people. Clearly, or possibly, somebody who had access to those transcripts was also talking to the Washington Post. The Washington Post. Yeah. I know. Anonymous sources always. Eamon, thank you. Appreciate it. You bet. North korea linked hackers could be behind the global cyber breach that hit more than 150 countries and 200,000 computers. Joining us now gary steele, ceo of Cybersecurity Company proof point. Proof point found and activated a kill switch in the software. The stock got a boost along with all the cyber stocks yesterday on the news of at tack. Gary, great to have you with us. Great to be here. You know wanna cry has certainly garnered a lot of attention around the world. How long do you expect till we see sort of copycat attacks . Because i would think that this would embolden hackers to figure out variants on wanna cry and send out another attack. Absolutely. We actually saw a couple attacks, variant attacks over the weekend. They for a variety of reasons didnt have any impact. But weve already seen it. Weve also released yesterday through our Threat Research team that we saw a different form of malware leveraging these particular nsa vulnerabilities. And this is a crypto currency minor. So something totally different. But it takes over a computer and uses the power of an individual system. So they hijacked that system effectively to mine the crypto currency . Thats exactly right. And so this is much harder to detect. Because oh, my gosh, my computers just running slower. Right. Slow. But, it has wide impact and this actually started before wanna cry. So we tries it back to early part of may, may 2nd. It may have gone all the way back closer to the date when the nsa exploits were released. You know whats so amazing is that the gateway into most peoples computers, for these hackers, are phishing emails. And phish me says that 97 of phishing emails actually contain ransomware. Are you finding theres more awareness, especially amongst corporations and the government that its a simple email. Its that worker in the cube next to you who happens to open up an email that says hey i met you at this celebration, here are pictures attached, and you open it and there you go the malware is on your computer . You know, thats absolutely right. So we see a new form of ransomware every two to three days. So while wanna cry had broad impact in the way it was spread through a worm, ransomware is really common. And so customers today, our customers are large enterprises. They understand the fact that what is most vulnerable today is their individual employee clicking on some link, opening some document. So, i want to get to your stock. Your stock is up 60 in the past twelve months. Its one of two stocks, two cyber stocks that have outperformed the nasdaq over the past two years, proof point as well as symantec. And you specifically have a product called targeted attack protection, or t. A. P. Have you seen in the past few days an increased amount of interest in t. A. P. Or in other products of yours . Have you seen an increase in business . You know we saw the Large Companies dont buy overnight. But were engaged with prospects and customers. I think it just simply speaks to the fact that these events create broad awareness. It takes people out of complacency. It gets them engaged in thinking about how do they put modern defense in place to ensure theyre well protected. So i dont view this as a shortterm catalyst for us, i do view it as continued longterm interest in the technology that were delivering, and the opportunity for us to better help them defend against these kind of attacks. Gary, i spoke to the ceo of symantec yesterday and i asked him about that, whether or not hes seen an uptick. He said the pipeline is increasing. This morning, said effectively theyll be interested to see in a Second Quarter Earnings Release if you guys see an uptick. There seems to be an expectation in the stock price. Theres an expectation that business will, in fact, pick up. Youre telling me that theres not necessarily a connection . Well, if you go back in time, we as a company and as a stock have not had sort of episodic movements in our stock. And so i have just a very different view that this is yet another indicator for a great longterm demand. And if you go back to our earnings, we posted Revenue Growth over 40 last quarter. Weve had a phenomenal longterm track record and i just view this as a longterm catalyst for the company. Gary, thanks so much for joining us, appreciate it. Its a pleasure. Thanks so much. Ceo of proof point. In real life pirates have pit disney. The media empire ceo bob iger says hackers claim to have stolen an upcoming disney movie. Iger made the comments to abc employees during a Company Meeting in new york. Says the hackers are threatening to release the film in segments online unless a ransom is paid in bitcoin. Iger didnt name the film, but says disney has refused to pay, and is working with federal investigators. Meantime, deadline reports that the movie is pirates of the caribbean dead men tell no tales. And speaking of leaks, Prime Minister President Trump just tweeting ive been asking former director comey and others from the beginning of my administration to find the leakers in the intelligence community, dot, dot, dot, and expecting another tweet that we will bring you. And coming up, the big bucks behind branding. A lot of alliteration from anxious anchors placed in powerful posts. Well get to our best rohan oza. He is the brand father. Hes going to make us an offer we cant refuse. He has a partner, cavu ventures. His partner brett thomas will join us next. And later cnbc taking the wraps off the 2017 i need to put cotton in here. The only way that you can really do a decent brando. The 2017 disruptor list. The ceo of uptake nabbed one of the top spots. Well explain how hes taking on industry giants like general electric. Plus yesterday we spoke to yankee great alex rodriguez. Today retired Boston Red Sox player david ortiz steps up to the plate. Hell join us on set at 8 40 a. M. Eastern time. Youre watching squawk box on cnbc. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box. Dow component home depot out with earnings. Home improvement retailer beat on the top and bottom line. Global Comp Store Sales up, wow, 5. 5 beating the consensus of a 4 increase. And u. S. Comps up 6 above estimates of a 4. 3 rise. Home depot also raised its fullyear earnings forecast. New highs, new highs, new highs. Thats the thing, melissa, every night you talk about these things. Stocks that hit new highs, hit new highs. Did you notice that . Yes. Stocks that hit new lows, its like wow, its cheap, lets buy it. They hit more new lows. They could be value drops. Jcpenney, lows, lows, lows. Stocks that hit new highs. I cant buy that. Its at a new high. Hits another new high. Keeps working. Lets get back to our guest host. Hes probably got some type of expression that describes what i was just talking about. Just pops into your mind like almost like zen, right . A little bit. Its like a toy. I couldnt comment on everything. I stick to what i know. Eat it and drink it, im good. I want to talk about how you even thought about this. He is hollywoods brand father. Rohan, you know make me an offer. Works for us. Weve beat it to death. Rohan oza is here. Also brett thomas, cofounder of cavu ventures. How did this whole how did you guys decide lets do consumer branding . Did you know he had a talent for this . Is it you . Who is the brains behind the operation . Im pretty much the brains. Hes the guy that comes in hes got the looks. Hes got the looks and the twoword permissible guilt natures hydrator. Listen, health and wellness is not just a trend. It is a Secular Movement like weve never seen before. Right . Our food system is completely being turned upside down. And so you know, seeing this kind of vision of what was going on in the marketplace with food. I had reached out to rohan early on, as a fan of his marketing work. And his work. And weve really wanted to come disrupt the kind of consumer investing space, growth equity. Just how, you know, food is being disrupted currently. Its nice to get something that, you know, deserves the marketing. You know what i mean . Theres nothing worse than having a great marketing idea and just slapping it on some average product. Thats the entire philosophy we have. I mean, cpg companies are getting very smart now. Theyre going in earlier and earlier in the companies. Actually three cpg companies the last six months have asked to partner with cavu early on early stage brands because of value add we bring. We can bring marketing, sales, packaging, design. Big Companies Want to come in early with us, help build it so that the brand has more sustainability when they ultimately put into their system. Thats a fundamental philosophy. And so theyve gotten very smart before they were way too afraid to get too big or miss the boat. Theyre coming in earlier now and partnering with us. And some of these Healthy Products like the watermelon water we were discussing earlier, they kind of often have this celebrity backing. This one does with beyonce, is that right . Yeah. How important is that celebrity backing . I think the celebrity backing is important if celebrity believes in the product and consumers believe celebrity believes in the product. So whether its on watermelon water where beyonce truly does love the product. She invested in the brand. Shes a big fan of jodys. She loves the female and empowerment angle that jody brings. The sustainability of the sort of watermelons angle that jody brings. It was a true bonding and i think weve seen that in the feedback on tweets, online, consumers understand why shes into it and why the product works. Terms of having a big Consumer Products Company Partner with you early on that removes some of your risk as well and doesnt that guarantee some sort of exit strategy when the brand is more developed . I think having a celebrity investor helps. Its one piece that helps. I think theres a lot more that goes into building a cpg brand. I think if you bring a celebrity in, or product kip was talking about. You have a cocacola, emerging brands unit for instance, invest along with you. Doesnt that short of ensure exit strategy . 100 , yes. What about valuations across these companieses . Seems entrepreneurs have way easier access to capital than perhaps they did decades ago. So are valuations pretty stretched when you enter into some of these new brands . Were still in the early stages of this movement, right . Unlike tech which i think has seen froth think valuations. Five, ten years ago you had to go to friends and family to start a brand and pass the hat around. Today there are so many options for brands to get funded earlier on. So i think entrepreneurs do have expectations when they see Success Stories like buy which sells for 1. 7 billion at a nice multiple. Its a balance between finding a valuation thats proper. And rohan your plan for distribution of things has that been totally transformed by the area of amazon and the like . Or do you still have to crack the kind of traditional retail models . You have to crack the traditional retail models. Costco is now the number one per have aer of Natural Organic food in the country. Five ten years ago youd have never thought that. Just bulk buy my gillette razor blades there. Now theyve changed. Kroger sells more Natural Products than whole foods combined. So retailers like amazon, kroger, even whole foods, are actually not looking to report the news anymore. Theyre actually looking to make the news. Theyre changing their resets and stores. Theyre bringing in earlier brands, whether its watermelon water, one bar, and giving them space because they know consumers are looking for those brands. Guys, thanks very much. Brett thank you for joining us. Rohan is going to stick around. Coming up, todays top stories and then tomorrow on squawk box, jack welch will be our guest host starting at 7 00 a. M. Eastern time. Stay tuned. Well be right back. Predictable. The comfort in knowing where things are headed. 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. 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. Coming up, key housing report. Later cnbc unveiling the 2017 class of disruptors. Well talk to number five on the list. A startup taking on ibm and general electric. Squawk box will be right back. Whether youre after supreme performance. Advanced intelligence. Or breathtaking style. Theres a cclass just for you. Decisions, decisions, decisions. Lease the c300 sedan for 399 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Mobility is very important to me. Thats why i use e trade mobile. Its on all my mobile devices, so it suits my mobile lifestyle. And it keeps my investments fully mobile. Even when im on the move. Sign up at etrade. Com and get up to six hundred dollars. 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. A used car,g this information. Read it carefully. Welcome back to squawk box. Breaking news in a few seconds. Our april reads on Housing Starts and permits later on today. Industrial production, down a little over 2. 5 is the starts head line number, 1. 172 million seasonally adjusted and annualized. Definitely much lower than we anticipated. And when you look at last month, it did get a bit of a positive revision. But it only took you 0. 2, less than negative territory originally reported minus 6. 8, now 6. 6. Permits. Whats down the road . Its also down. Starts was down, actually 2. 6 . Permits is down exactly 2. 5 . 1. 229 million seasonally adjusted units. Thats also far from the 1. 27 expectations. And last month, the revision was 0. 2. So from 3. 6 to 3. 4. So that gets a little smaller. Starts got a little less negative. All in all, you know, theyre not horrible numbers. They just missed a bit. And if we look at yields, surprise. Shocking. Were back into the mid 230s, which is sort of the bottom of a 30, 32 basis point trading range. 230 to 260. Dollar index is off about a half a cent. We do have more data. The equity markets seem to be putting a couple of backtoback historic tests of previous highs. So its going to be somewhat exciting. So, while many are concentrating on some of the kind of strange news of the day, and the year, seems like markets are pretty much even keel with a slight drift higher. Joe, back to you. Thank you, rick. Lets bring in Steve Liesman for more on the data. Anyone said its weird to be at full employment at 2. 3 on the 10year . Whats wrong with this picture . Well, i think the idea of this secular stagnation story, or the idea that Interest Rates are going to be lower for longer because we just need less capital than we have in the past youre making its different this time well it sure seems to be different. You know, were down to i mean, definitely the case and the idea that the skernly the fed has some effect here. Still has a big Balance Sheet. Still, has rates very low. But the market to the extent that it can and does express itself through open markets right now does not seem to be clamoring for higher rates. You have a number like this, which by the way is a real head scratcher. I came on here all to tell you about how housing was going to rebound. You had a great february because of weather. You had a weather related bounce off in march and this was supposed to be the big rebound. Were down 2. 6. They did revise up february a little bit so that was a little bit stronger. Huge decline in the northeast, minus 37 . Big numbers in the midwest. Plus 41. Down in the south. And modest in the west. The story is that weve had this very, very slow bounceback in housing. You have, joe mentioned, low unemployment. Decently rising wages. Consumers have relatively low debt levels, except for if you count cars and Student Loans which might be important. But theres the housing rebound. Look at where we were over 2 Million Units. 2. 4 Million Units and then we bottomed out below 600,000 which was below levels in the 1950s. And weve come slowly back and weve been waiting for this pop. You have the population is so has risen in the sense that people should need houses but its just not happening. We dont know why. It could be the lending restrictions in doddfrank. Thats one possibility. Other possibilities include the idea that you just dont have this Housing Stock available. Steve when we talk about the potential for a rate hike given this data, this softer cpi data, a lot of people are now saying that actually what really matters is what the fed expectation number is, simply because what the fed wants to do is not surprise the market. I. E. The data is now less and its actually whats priced in and i think its a whole reflective situation where the data comes out and the fed sets its reaction function and the market bounces off of that. The fed wont go without the market. Whats interesting to me is i follow this closely, too closely, obviously. But you know, theres 17 guys out there and we read every speech. And everybody talks about the cacophony of all of the people speaking. It doesnt really work that badly. A lousy number comes out, the fed expectations are reset. And theyre not too far off what the fed wants to do. And so it seems to work reasonably well in that right now were talking about, it just came down, 70 possibility of a june rate hike. A lot of questions about december. Does the fed stop raising rates and do the Balance Sheet instead . Thats a question, up above 50 of dose rate hike. Now youre running below it looks like about 45 , 46 right now. I happen to know that every word i say is one that subtracts from the time that big papi, david ortiz, has on this air so im just going to stop right now. Right there. Steve, thank you. Thank you, steve. Cnbcs fifth annual disruptor 50 list revealed earlier this morning kicking off our week of disruptors, number five on the list, uptake technologies. Uptake uses Predictive Analysis Software to solve problems for the Worlds Largest industries, including railroads, mining construction and energy. Joining us is cofounder and ceo of uptake brad keywell. Welcome to the show. Thank you very much. Can you explain and give us an example in laymans terms to what uptake does . Sure, uptake delivers results, and we do that through predictive insights in Major Industries. What that looks like is results in increased up time. Increased productivity. And increased safety. What that looks like in terms of real results, last time i was here, we talked about locomotives. Today well talk about wind turbines. Another example of what we do. So for Berkshire Hathaway energy we deliver insights. And so an example is in iowa, they have a fleet of wind turbines, a couple weeks ago we delivered an insight, they sent a crew out to a turbine and something that would not have been able to be perceived by a person, we perceived through insight and analytics, from data that comes off the sensors on the turbine. And so you install the sensors on the turbine . Or are the sensors already there and youre the one interpreting the data coming off the sensors . In most cases the sensors are there. But when needed we can advise and install our soft ware as part of the device on the asset. But, whats interesting is that through delivering insight, we were able to spend 5,000 to fix the problem, instead of up to a quarter Million Dollars for a more catastrophic problem. So youre talking about actual results. Actual more profit, less expense. And when you say that in many of the situations, the data centers are already there, how sensors the sensors are already there. So how much, are we the tip of the iceberg in terms of the data thats out there available for Companies Like yourself to analyze, but Companies Just arent yet doing the analysis . Yes, we are. Were at the tip in my opinion of really the fourth revolution in major industry. Which is focusing on what a person, an operator, or engineering can achieve. And that is a combination of the data that comes off of the thing, and then a person seeing what that data is telling them, and acting in a certain way. And what we do as uptake is that we deliver through our software that insight which almost makes the people superhuman. Youre not replacing people. You are making People Better in Major Industries through insight. So theres the example of the fur bien. Theres also the example of the railroad which could prevent derailments or other safety issues. How do you make money . Is it a Subscription Service . Do you sell the software and also the analysis that follows . It is software as a service. That, too is somewhat disruptive, speaking of the disruptor 50 because rather than one or two year implementation period and changing everything, we plug in to the way things are right now. And we deliver results in days of implementation once we go live. This is somewhat radical. And, you know, the sense that a customer, that a ceo can expect results from a software provider, results that increase productivity, that increase reliability or safety, as you said melissa, those are powerful opportunities delivered from a Software Company in major global industries. I mean were in rail, construction, mining, aviation, energy, these are industries where we are moving the needle. So its a pretty incredible, extraordinary time. I think in industry in general. And its all balls of technology that is now available and can be deployed. Brad, thanks a lot for joining us. Uptake technologies. Coming up on squawk on the street. Julia boorstin will interview airbnb. Big papi is in the house. Red Sox David Ortiz will join us with details about his new book and a lot of his ventures right after the break. Stay tuned. Squawk box will be right back. Hey dad, come meet the new guy. The new guy . What new guy . I hired some help. He really knows his wine. This is the new guy . Hello, my name is watson. You know wine, huh . I know that you should check vineyard block 12. Block 12 . My analysis of satellite imagery shows it would benefit from decreased irrigation. I was wondering about that. Easy boy. Nice doggy. What do you think . Not bad. 1975, carlton fisk. Oh, were back. Three time world series champion david ortiz gives his fans a view of the biggest hits on and off the field in his new memoir titled pappy my story. Joining us big papi himself, david ortiz. Thanks for joining us. How you doing . Im good. I knew you were going to talk a little bit about this jerksy stuff. I have had this stuff. I almost feel guilty eating it. Why dont you feel guilty . Permissible its permissible guilt. But its the best jerky product out there i think, right . Very nice. I love it. It really is good. If you cant eat anything except 3r0e teen it helps to have that when youre hungry. You know, sometime when im at home, now that im more than usual, you know, i go into the pantry, and all of a sudden i bump into this and i realize, okay, because my wifes always complaining about me eating, you know, the right things. So, i think you know, the calorie that you can imagine in pretty much everything that comes with this is perfect. Perfect. Yeah, but hes underplaying his savviness as an investor. David invested with me back in the day on a brand no one knew of called vitamin water. Wow. He didnt take cash he took equity and worked out well. And he invested in pop strips, and then had some of those recently. And he loved it, because he was snacking on a protein product, he loved chefs cut, didnt take cash, invested. I think hell do well out of it. Yep. I could give him credit. Hes a savvy investor. You are. And you got you have more time now but are you youre not less busy . Well i feel busy. But my career was going on, i definitely learned about the investment side of it. And it has been unbelievable. You know, i got my adviser who pretty much, you know, let me know how to work around it. And i love it. I love it. I like to play with once in awhile how do you decide what to invest in . Is it based on what you like . No. Actually its based on what you think you know, that it can be successful. You know, i mean, i have a group of guys i work with me who is always theyre always searching for things and getting to know ways. You know, out there i know rohan for how long . 15, 20 years now. You know, this guy, hes a genius. Business ventures. We need an out. Big papis kitchen. Big papi productions, dugout ventures, big papi cigars. You know what his runs through all of this, i remember god a loved arnold palmer, i loved him. But for years he hadnt even played golf, but people loved him so much. He had this, i dont know, it was who he was that allowed him its the same with you. Everybody say your name and people like, they like you. Even if theyre not a red sox fan. But im not. There you go. 1975. I mean, carlton fisk, that was his sixth game. It didnt even matter. Giant ventures. Why do we talk about that stupid anyway. Never mind. Thats it, right . Thats the goodwill you built up over all the years nationally. The internationally. Well, its a learning process. Its something you get educated about it and all of a sudden you came to be part of it. You start investing here and there. I mean, my career, as a baseball player doesnt matter how long i play, its short. You know, like im 41 years old right now and i dont play baseball anymore. So i start i kind of started like building that up because my retirement, before, you know, we made money, weve had liquid money, we try to play around with sometime, a lot of us, as an athlete, get caught into the situation where your money goes away, because you dont know where you were putting your money at. Talked about that yesterday with alex rodriguez. Yeah. Arod is a good investor. Hes really good. Alex invested with me, as well. Take advantage of athletes because we dont know. Most of us, we dont really know. How did you know he wasnt, you know, kind of, i dont know you come to me ill tell you why i loved him. I signed a number of athletes over the years and a lot of times athletes are very regional, theyre loved in new york, or boston or l. A. David is one of the few athletes who is beloved across the country. Even though he stuck a dagger in the heart of almost all those people. People still love him. He has. Its still crazy. I hate the red sox but i love big papi and hes got this thing that transcends. When he signed to chefs cut. He loved the product. Everyone we spoke to loved him and very few athletes transcend like that. Arnie. Exactly. I mean, you know, no bias or bias but i think david does that. Also, you know, i dont know how you got more things going on. The latest thing, the retirement idea. Since youre retiring, you had an Insurance Company decided, this is a good way to get people to think about that. To think about taking care of themselves in retirement. Yeah, ive been working with the retirement side of it. And it has been unbelievable. I mean, we are going around, asking people, hey, what should i do. You know, people having a lot of fun with what did you do . You did some i was swimming with swimming with aerobics . Yeah. Are you graceful in the pool . You got to see the video. Theres a video going around out there. Youve got to see it to believe it. But it was fun. You know, i mean like, working with rohan has been unbelievable. Weve been able to do a lot of good things. Wow. To my broadcast idol. So his english is not good i went from the new generation of players it says to andrew. David ortiz. He already sent me my copy. I know, right . That was you bring the wine and the cigars. I mean the chefs cut looks great but i just think next time we could mix it up a little. I got some if you want a combination of dominican, and nicaragua cigars, i mean if you want to have it go down to davids charity event. There you go. Thank you. When we return, jim cramer live from the new york stock exchange. Well get his take on todays stop stories. Does look like well be adding to the records we set in yesterdays session on the s p and nasdaq. Higher open across the board. Be right back. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box. Check out shares of t. J. Max. Tjx. Did beat on the bottom line. They have an increase of 1 with shy investments of 1. 6. Its down 5 in the free market. Lets get down to the new york stock exchange. Jim cramer joins us. Another retailer missing. Yeah, got to listen to the Conference Call because that is quite a surprise. They will be the beneficiary of a lot of the retailers that are in trouble. They come in and buy their merchandise and then thats something will be in this quarter next. They travel back. Dicks in the same way. Dicks kind of made you feel like things were pretty good. The only one thats good so far is home depot, and that would, again, be something that is hard to beat if youre amazon. Lets listen to the calls. Dicks was a very negative guy. Its a challenge. Its amazing. Still the earnings thats driving this market. Youre not worried about Something Else . Im no really not because the rest of the world seems to be doing quite well. We have eurozone numbers. We know asias been better. I feel quite confident that the companies that are based here that do industrials over seas are doing quite well. Then its really tech. The Tech Companies have frankly every day each one of them shines because of particular things, whether it be artificial intelligence, new games, virtual reality. Social media. Look at snap. So i think that tech has a very rosie yield. Jim, great stuff. Thanks very much. Thank you. Well see you at the top of the hour. Tomorrow on squawk box well talk to industry titan jack welch will be our guest host starting at 7 00 a. M. Eastern time. Dont want to miss that. Future higher by more than 40 points and the dow. Well be back in a couple of minutes. Markets and gold markets. Okay. 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. 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Ask your doctor about cialis. And get medical help right away. Tired of paying hundreds more a year in taxes and fees for your unlimited plan . Only tmobile gives you unlimited data with taxes and fees included. Thatll save you hundreds. Get two lines for a hundred dollars. Thats right. Two lines of unlimited data. A hundred bucks. All in. And right now, were giving you even more. For a limited time, get a free Samsung Galaxy s8 when you buy one. Thats two galaxy s8s for the price one plus, two lines of unlimited data for a hundred bucks. Taxes and fees included. Only at tmobile. Welcome back to squawk box. Typically the dollar does look like the dollar has weakened off the back of the disappointing housing data for the month of april. So we have the euro 110. 80 or so up by a percent. Euro and gdp came in this morning. That was in line as well. The trade data was a little better than expected. Pushing 111. Cofounder, jack welch, i heard against him gets papi to come back. The red sox need him badly. Theyre one game above he would never do that. Hes done. Got too many business ventures. Youve upgraded from me to jack welch tomorrow. I was a filler. He was unavailable. Thank you. I was thinking about something earlier. How many of these brands are out there . Its a 1 trillion plus market of food and beverages. You can always launch something to take market share away from the established. Go to the stores today. We know that protein is king. We know that sugar is public enemy number one and everything in the store today is fundamentally wrong. Everything is high sugar, everybody is high carbs and low protein. What people are looking for doesnt actually exist as much in stores as it should. Thats why its getting changed up. Pepsi, for example, 2025 they want 2 3 of the beverage portfolio to have less than 100 calories per 12 ounce serving of added sugar. Whats a big Consumer Products company develop their own brands. What is it about having an entrepreneur doing it and you investing into it as opposed to a big company knowing what they need in their own portfolio . Three things. One, entrepreneurs generally are a source of original ideas, better than corporations. And americans value the original ideas. Two, Big Companies squash brands too early and they know that. Theyve decided to invest in partners like us, cavu, instead of squash. Theres a reason google cant come out of microsoft or facebook doesnt come out of ibm. Theres an ingenuity at this and a culture and energy. Its not their job to. They can scale brands. And they are focused on cost cutting and things like that like kraft heinz does. You dont hit the numbers if your numbers but unilever went aboard with a brand i was involved in. Theyre taking an entrepreneurial brand to the next level. Just like with my ties, you wait around, pretty soon protein is going to be found to kill you and carbs are what you need and you can start all over again. I dont think next week everyones going to say, lets bring sugar back. Really . Remember salt, how bad that supposedly was, red meat . Who knows. Good for you. Is that in or out . The tie . My stomach . In. Definitely in. Make sure you join us tomorrow. Appreciate it. Thank you, melissa. Squawk on the street is next