Transcripts For CNBC Squawk On The Street 20150430

Low. Our road map with stock futures in the red. Exxon and conocophillips moving some of those stocks. Sales force surging on the news it hired advisors to look at takeover offers. More of the apple watch dlis. A defective component to blame. Apple announcing another partnership with ibm. Well get to that in a minute. First up a lot for investors to digest on this final trading day of april. Consumer spending up 0. 4 last month. Claims down last week by 34,000 to 262,000. Thats a 15year low. Employment costs up 0. 7 . On the earnings front, exxonmobil did top estimates despite a 46 drop in First Quarter profit. Exxon revenue, i love these figures. Last year 106 billion. This quarter, 67 billion. You have to understand exxon had good production growth. People say no one got hurt buying the stock of exxon. This is why. Because exxon really hasnt done anything during this period. When oil was flying exxon did good not great. Oil goes down, exxon shows you the breadth of its products and why they are the most consistent player. Thats why this remains the stock people can buy without getting in trouble. They already cut capex. Is this too late for some of these names . I think its too late for Companies People are saying they are going to make a bid. Ritch dutch got hammered. The companies that want to sell themselves want too high a price. Its i game over on that take over deal. You had a chance. Bottom was when whiting did that successful secondary. When noble did the secondary. You realize they can raise money. Is energy the most important play . People are talking about nat gas needs to catch up . Nat gas is in total glut. The big rally in oil comes from the dollar. I think that dollars decline is breathtaking and incorrect, meaning people werent playing it. I think oil usually oil fluctuates. How much of its rally or decline is dollar . Right now im saying its a high correlation. We still are promoting a lot we are still putting out a lot of oil in this country. We are, though putting out less than we were. Yes. Actually we are putting out substantially less. Nat gas no. Nat gas, we cant find a place to put it. The marcellus has a dollar cost. Thats that pennsylvania. The northeast, new england still needs that nat gas. Nat gas, take it off the table. Not trading. Just not. Meantime pretty a lot of volume on the selling this morning in europe as the euro continues to come back. The german bund now to 33 basis points. These moves are happening too quickly. People are not in the right spot. People have been hiding in dividend stocks. They are being killed. Its not looking like a good trade. International company that does okay has the stock flying. Look at caterpillar. A Domestic Company like unitedhealth, oh man. No bottom. Amazing. How long does this go on mor . We wait three days and goat a takeover bid. Lets get to this news regarding sales force. Moving higher yet again. After surging yesterday. You might have heard the Software Provider reportedly working with Financial Advisors to field takeover offers. Cramer said sales force would not comment. Theyve been with us all week long. Yeah. Maybe mark got away for a second and made a phone call. You were trailing him. I went to the university of california childrens hospital. Its amazing. If anyone wants to spend time understanding what true donations do. Spent a lot of time at his Research Center and his house. Not talking about an 80 bid. A bloomberg story came out late yesterday and sent sales force stock up sharply. I havent gotten anywhere other than to tell you highly unlikely its oracle. Some people looked at their 10 billion bond deal. Dont read into that at all. People familiar with the situation indicate to me that had nothing to do with it. Oracle is not the name here. It wouldnt seem microsoft and dell has enough sway at this point, enough time under his belt to really do something of this magnitude. It is the only one that could do it. They went to get to 20 billion in cloud by 2017. I dont understand why mark who has a Good Relationship with satya he likes satya versus ballmer. I think what happened is he went to the microsoft meeting. There was a microsoft Analyst Meeting yesterday. He went there. He tweeted. People keep they put two and two together and get 438. We have no idea whether there is something, maybe it comes from an unexpected place. That could be. There are plenty of large foreign companies. You never know. That said also it is not uncommon to have advisors come in for any number of reasons. Certainly to be advised on activism, not that that would show up. When i said mark told me we never comment on rumors because we cant. Thank you for bringing this to my attention. People said, jim, obviously you are close to him. He would say its ridiculous. No he wouldnt. It wouldnt matter how close. This is his rule. I saw kessler at our party, too. 17 years at oracle. Very nice to have her there. Loves the show. Any deal at 50 billion would be three times this years largest tech deal. Freeport. It would be i think, five times oracles biggest deal ever. Peoplesoft at ten. Its almost inconceivable. Anybody who bought salesforce stock would get hurt badly. Its an incredibly high multiple. You are not going to do it to earnings. You can say cash flow. You have to make a real case to shareholders. You cant. The real case is hard to mark. Will marc benioff stay there or devote his life to his charitable causes which is what he is really about . The reason a story like that even gets traction is because of the environment we are. In we are setting records. We may set records in m a. No one gets fired reporting a takeover bid when it happens. We are in a new world. The market takes it and look whats going on. Accretion to market cap in sales force is significant. I think its interesting two days ago when i talked to recommend sales force, people said cramer it is ridiculously expensive. When will you stop with the benioff love . Two days later is it ibm, oracle . Where are those people telling me im all washed up because i like benioff. Now they are telling me im wrong because i say its not going to be for sale. Its tiresome. I dont know how you do it. Stock down on the premarket. Well keep an our eye on that. Marc benioff once was showing me his 60story building that he is doing the Boston Properties at the time he was selling the company and not building. There is some disconnect there anything can happen in the city of dreams. Messenger companies are valued at 10 billion. Using those pigeons is very effective. I told you about my tin can string. Digital pigeons. I put a couple of semiconductors in there. 2 billion second round. Another round. I tried to get in and couldnt. You kidding me . I would never let you in. Friends and family maybe . Perhaps. Keep your eye on apple down in the premarket. A key component of the watch has been reportedly found to be defective. The part involved is an engine designed to produce the sensation of being tapped on the wrist. Apple is limiting availability of the watch and no comment from apple whatsoever. 127 and change. A name thats been creeping above almost to 135 in recent days. Not unusual. A big event to see the stock really get hammered. Its getting hammered. This is ive been saying wait three days to flush out all these flippers. Then start thinking. I like this story. I think it is not the thing that should take the stock down. But you get it 125 maybe and then you can start with your own event, be dont trade it. That would be around the 50 day. Exactly right. Im not a chartist. I would tell you that that quarter was great. Remember they reported quarter . I do remember that. When was that . 33 rise in earnings, i recall. 60 million. China. Yeah. That was then. This is now. After twitter and yelp people are asking Big Questions about the ad market. 500. Best interview we ever had. Thats very nice of you, but weve done a lot of interviews. Hyperbole . Listen, it was great. It was great. It was great to by the way i give koslow credit for coming on, too. Always good to see them show up on a bad day as well as a good. Did you see the bromance . I did ill tweet that picture later on. One of things that is so hard hes nice. I want him to be like belichick. Stop bothering me. No. He was a nice guy. Its going to be hard to put him on the wall of shame later if you have to. Right . Youll youll find a way. Its business sonny. What dick costolo did say yesterday. And robert marcus. What is the companys next step . One more look at the premarket as claims come in 2. 62. Monthtodate s ps gain is more than it lost in march. More squawk on the street in a minute. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. We talked to twitter Ceo Dick Costolo on squawk alley after results disappointed the street. Let me sort of back up and set the stage for this. The great thing about running twitter is long before we were a public company, i have people telling me every day, youre a genius or a moron. I have isis announcing they should send lone wolfs to assistant me and me employees. You better have thick skin to want to do this and have confidence what you are doing will pay off over the long term. All that said the times makes the argument think are going through an awkward teenage phase where marketers dont know how to value their investment if they buy and ad. I think that is the correct response problem. I think they are charging too much for ads. Well talk about yelp later. This is one of those situations where you have a smaller Cable Company trying to get away with the same pricing forecast. Everyone wants to face like facebook. Twitter is a fire hose. Suntrust came the other day. Youve got to be careful. If you are procter, you could be advertising there against some tweet you wouldnt like. I dont know how you could stop isis from a note from isis being within the same page as a procter ad. That was the problem people said about youtube. You never know what you are ad is going to be up against. Will it be relevant to the viewer . When abc did winds of war didnt want ads for feminine products during the mini series. That goes back decades. I think you cant charge the same price or that much if that possibility is going to occur. You want to be next to if you are a Health Care Company you want to be next to isis pharma not isis. Facebook can give the advertiser a great deal of detail about who it is they are going after and when and why and hit them at moments that are even crucial in terms of a buying decision. Some think twitters worth nothing . Come on. Twitter and google together google buys the nfl rights for 20 whatever. You tweet while you are watching it that chip kelly was a genius to draft mariota. Next thing you know youre part of a conversation. Its fun. Mariota . Really . Arent you drafting 12th . We can trade you. I dont know your number but its not six. Stick with baseball. All right. Well. Well get cramers mad dash and count down to the opening bell in a minute. Well take a look at the premarket. Doug. Youve been staring at that for awhile, huh . Listen, Td Ameritrade has former floor traders to help walk you through that complex trade. So youll be confident enough to do what you want. Ill pull up their number. Blammo. Lets get those guys on the horn. Oooo looks like it is time to upgrade your phone, douglass. For all the confidence you need. Td ameritrade. You got this. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Weve got the mad dash. I dont know how you do it watching you workday after day, doing our show then mad money red eye and now our mad dash here. It is thursday. Lets start off with yelp. Yelp kept me away last night when i was trying to sleep on the plane. This was a terrible call. The ceo is reluctant to say, listen, it is decelerating. We know there is a problem. What happens is you get a very unreal world here. You have rbc, stern, bank of america, merrill going buy to hold. Negative deceleration. Like twitter, i think they cant charge as much as they thought they could. Comes back to this idea of monetization and what are you . I use the service. We are in San Francisco i wanted to find a smoothie. Let me see. I check my yelp reviews every day at bar san miguel. People think i dont need to place the ad. Customers come in they take pictures of my food. What do i need yelp for . This is a yellow pages they are not able to charge as much as we thought. Pricing is too high. Its just too high. Obviously, growing very quickly, but perhaps not fast enough to justify an infinity multiple. Are they billion . Yelp is a problematic situation. It would do better being folded into another company. Marissa meyer should own this vertical. She can buy yelp, grub hub and have the ultimate delivery. A lot of questions about celgenes quarter. The lung cancer drug braxine, what is looking for something in excess of what they did. This one is going to be in the dog house. The quarter was not exceptional. When gilead reports it will be exceptional. Regeneron will be exceptional. Biogen is an alzheimers story. Be careful, celgene, it can still come in. Other drugs i expect to kind of take the place of revelen some day. Some people think the patent is not as good as it is. I like celgene but not at this price. Well watch celgene. Down about 3 . Weve got the opening bell coming up about 6 1 2, six minutes from now. Female announcer sleep trains interest free for 3 event ends sunday. Its your last chance to get three years interestfree financing on beautyrest black, Stearns Foster Serta Icomfort even tempurpedic. Plus, get free delivery, and sleep trains 100day low price guarantee. But hurry sleep trains interest free for 3 event ends sunday. Guaranteed sleep train your ticket to a better nights sleep you are watching squawk on the street on cnbc. So much goes on as we close out the month of april. A bunch of data out of europe. German retail sales were above expectations. Spanish gdp best since 08. Makes we want to sell the dollar and buy the euro. Im not alone, obviously. This whole trade that the euro is going, the parity and 90 not happening. Just like oil didnt go to 30. A lot of people felt trajectories were going to be extended. They are not and its shocking people. They are saying why do i need to be in this Domestic Company when i can buy the stock of eaton, which i have on tonight. Classic International Industrial or dupont. Sandy cutler. Director of dupont. Yeah. Doesnt want to go over that. Doesnt want to talk dupont . Hes the director there. I figured you will talk dupont. We will talk dupont shortly. I need kevlar on that one. There are big decliners. We covered yelp which our viewer said should change their ticker to help. Harmon i have on tonight. I was surprised. It sounded like it was currency but obviously it was a big miss. Thats the company that makes the infotainment system in your car. Marriott beats by three cents. Revenue on the light side. They back the view but the stock is going to have trouble. The stock went up because the statement from starwood. Then people feel marriott will buy that. Marriott is doing quite well. The one that shocked people yesterday was spirit which some people are defending today. There is this hey, listen this travel situation is cooling. Im not seeing that. Spirit did have a weak texas number. Competition has come back into airways. Which i thought was shocking. Youll probably get to some of the Media Companies today. Time warner cable well talk about. Maybe hit viacom. Then claims we mentioned, jobless claims a 15year low. Spending and income again, not inspiring. That puts the fed on notice again. We dont know where, why. The only quarter i saw was mxpi. Bradesco and virginia tech. Well watch all of that. Cigna, 196. Well talk to david cordoni later on. Revenue up 11. 4. Humana going over that yesterday was one of the big disasters of the day. Humana didnt fit the pieces that unitedhealth had given. Now im concerned about that. That is a domestic group. Thats when people were hiding. Cigna was at 90 not that long ago. People want to take profits. Especially if they feel they can go buy. Conoco. Conoco was a good quarter. Whats happened is that group got oversold. If you look at them they are back to where they were when oil was at 90. They dont represent great bargains. They dont. Thats why i dont expect a flood of deals. The deals should have occurred when whiting was at 30, noble was at 40. Where were the deals . Why didnt they move . They raised primary equities. Some of the pe money was samsung at pkr is not a home run. How did sampson end in the bible . Got a bit of a haircut. Yes, it is. You may have some who played oil and gas who perhaps were a bit gun shy. Yes. Remember exxon did buy. They hate when you talk about this but they did buy xto. That made everyone think oil got crushed. They would have been better buying bmg which had a good quarter. Weed a ups and downs in housing. Beezer today. Orders up 22 which not everybody has been able to post. These are etf stories. Etf carried this whole group down. Some of these etfes are so powerful, they could crush lennar which is having a good quarter. Take anybody out. I did want to try to get to viacom and Time Warner Cable. I guess we can start off with the viacom. Dont forget they announced that re restructuring a couple weeks back. Writing down a number of shows they had on there. Networks, as well. Cutting jobs. They reported what was in line in terms of Cable Network results. Advertising declines. Currency did impact them. Overall you had that large restructure which did have that impact. They did seem to be ahead of some estimates. Looking here. They do appear to have been ahead there. Higher equity income. A number of other things. Generally not a bad quarter at viacom. Stock not doing much. Sumner redstone was on the call in listening mode. They tell you he is listening. As for Time Warner Cable, speaking of rob marcus about 40 minutes from now, the ceo how did you get in . I kind of didnt. That is a story for another day. We are happy to have him and he will be here at the new york stock exchange. They made a lot of progress in terms of at least getting their Physical Plant in order. When you are sort of off the radar because everybody thinks you are going away in terms of getting bought by comcast, they can allow you to pursue different things. Spoke to the cfo this morning. Getting their Residential Business to the right rate and volume. Getting their plant into better reliability. Call volumes are down 10 . So their subscriber numbers were very strong at Time Warner Cable. They did come in with a lower than expected operating number before depreciation and amortization. Higher capex, which brought higher depreciation. They hadnt been buying back stock. They suspended the buyback. Maybe analysts hadnt caught up with them because analyst just shoot it to the side. Youre worrying only about comcast. Now you have to worry about Time Warner Cable again. We are back in a world where there may not be any deals . As i reported, i expect next week, in fact charter will likely try and meet with or expect to meet with rutledge who runs charter will meet with mr. Marcus. I doubt mr. Marcus will discuss any of this when we have it on. Well see where it goes. The key question will be what price is charter willing to offer and are they going to offer a collar on their stock . Talking about a stock up dramatically over the last year. A deal that conceivably would take eight months nine months. My guess is time warner table, would want a collar on that stock. There are a lot of different things. Does charter low ball them or are they going to be willing to pay the big price . Wow. I would be very surprised if nothing came of it. Give it a shot. Thats news. Because who would want to buy that stock right now . Possibly but you dont know what the bid would be. Do you brief, if as you said the window for energy deals narrowing, if davids point about cable consolidation narrowing we talked to john legere. I dont hear a lot of telco deals. He is not for sale. No just dumb and dumber. That was geez. The seat belts off. That is a nohold bars thing. I called him petey and he didnt flinch. He came to play that man. He usually does. He loved being called steve prefontaine. I think at t should print out stop legere shirts. Magenta with a big x. Bob pisani is on the floor. Kind of a mixed quarter. Mostly to the down side. Tech, health care, industrials. We are seeing nice up side in energy again. Good earnings reports there financials modestly on the up side. We are ending april here. There are clear winners and losers. Energy has turned from a loser to a winner and health care is on the flat side. Energyloser going to april. Oil going to 48, 59. That will help you out. Tech materials did all right. Health care, remember, that was the big winner going into april. Its been a volatile month. Biotechs are flat. There are down moves in other subsectors in health care. I want to ignore biotech and show you some of these other big names in health care that have been having a tough time cvs health on the down side. Health net down. Molina down. Some of the device makers medtronic, thats down about 3 . You cant blame the problems in health care the last few weeks just on whats going on in biotech. Its a much broader decline. Some seems to be derisking going into the end of the month. Thats where the profits were. Some people are taking profits off the table. It makes some kind of sense here. Lets move on. You talked about exxon. I want to focus on conoco. Conoco reported a lot of 18 cents. That wasnt what was expected. How do you make sense of earnings for a company that has these kinds of earnings. 5. 70, 5. 30, 47 cents in 2015 and estimate of 2. 79 for 2016. How do you have an idea whats going on . 2 you you abandon that and go to cash levels. This is probably a trough of earning. 18 cents is the bottom for conoco. That is a good sign overall. The stock has been 50, 60. I want to note the effects of dollar. Ive been doing this two weeks. Here is colgate palmolive. Effect on revenues 15 lower. Europe sales were down noticeably. Almost 14 , 15 . Effect on revenues was 15 decline. These are enormous moves. Little bit on the mixed side. Nikkei down almost 3 . Bringing money into mckesson. And xpi which is a terrific semiconductor company. That stock is reacting attorneyings and bringing up the semiconductor companies. Semis and health care have been bad. These two blowouts are starting to turn. Xpi, watch those. If they stay strong thats going to lead the groups out in the wilderness. With that so much data today. Lets get to the bond pits. Rick santelli in chicago this morning. I know we had a nice drop in jobless, but many traders i talk to dont imagine the outcome where the markets are right now. Would have been any different no matter what the data said. You have rubber bands and they go and come back. They stretch, they come in. Mean reversion. We are moving to the up side and moving rather aggressively. Look at the chart weve been showing starting march 17th. You can see weve taken out 30 sessions of consolidation. In a rather big way. When you add in huge bond fund managers, private equity funds, all going into similar trades this is going to happen. If you look at a twoday bund also weve gone from 7. 50 to 37 basis points pretty quick. Bill gross is a smiling individual. If you look at the same chart starting march 1st you can see whats going on there. Look how similar that is with regard to the way euro has been moving and how it is exactly the opposite or indirectly correlated some of the trade going on in the decks. Granted its up today. You can see how that is a big one. Its all about policy and maybe policy bubbles. Well continue to talk about that throughout the rest of the day. David faber, back to you and moments from chicago purchasing manager survey. Well be back to you on that. Yesterday jim mentioned the idea of pigs flying. I used that as an opportunity to reference a memo put out by marty lipman the father of the m a bar, if you will. The man who created the poison pill known for advising company oftentimes to give a stiff arm not just takeover attempts but to activists. The current environment has become more important than ever. Noting in this memo and they write these from time to time. He seemed to be endorsing getting together with activists, something of a significant change. That was noted broadly in the merger and acquisition community. Most cases a corporation would be well advised to meet with the activists, discuss the activists criticisms and proposals. The activist recommendation are not unreasonable. Give careful consideration and avoid a public dispute. This is almost heresy in situations where the activist seeks board representation, maybe its the best course of action to consider. Mr. Lipton heard from clients of the company. I want to correct something i said yesterday, i know well i was a bit confused. They are not representing dupont Wachtel Lipton in the current course with trian. I listened to that. You did not say they are. I know people felt. I may have gotten a bit confused. We did get emails saying what are you talking about . I cant share the email correspondence with whom, i hold you in the highest regard and pains me i have to cause to send you this email, but i dont have any idea what happened here to make you change your mind. Mr. Lipton responds withes following, clarifying memo. Well share with you now. It does not, and i do not endorse nelson peltz. I have been battling with him for many years and do not approve of his proxy fight tactics. My memo does not endorse the iss recommendation nor intended to endorse mr. Peltz on his proxy fight. It solely reflects the fact iss took the position it took and they support peltz and john myhre to go on the board. More than 30 years ive been advising companies how to avoid and deal with corporate raiders and activist shareholders. Im not doing my job if i dont alert them to the current state of the world, even if i dont like it and dont agree with it. You heard from marty lipton in response to be a email where people were saying we dont quite understand what seems to be a dramatic change. Apparently not. Glass lewis supporting mr. Peltz. He could be an agent of change. This thing could end. All theyve got to do is sit in the seat. People can go back to work. Dupont needs to go back to work and get bigger in food. Dupont needs to focus more on its business. Put peltz on the board. A lot of us just might become nice. Chicago pmi is out. Lets get to santelli. Wow. We were looking for something around 50. Thats the magic line between expansion and contraction. We did. 52. 3 is the current read from a super spongy 46. 3 we received last month. So that is a better read. To put in perspective, we had 45. 8 in february 46. 3 last month and january at 59. 4. We had 60 levels towards the end of last year. In about an hour we are going to come back with alice from the organization to dig down. Back to you squawk on the street gang. Thank you very much. When we return, ford ceo mark fields as the automaker looks to wrap up its presence in silicon valley. An exclusive look inside the new apple and ibm partnership that was Just Announced earlier this morning in one of their largest markets. What it could signal about their relationship in the future. Dow, early session lose down 43. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Take a deeeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] apple and ibm announcing a Product Partnership in japan this morning and whether sales force could be involved in any future relationships, too. Morning, carl. Tim cook apple ceo was here this morning. Kicked off. I asked him a question about apples ipad performance in january, though revenue was down 15 in january year over year latest quarter. The ipad had a record march quarter. Here is what he had to say. The iphone and the ipad, both are doing extremely well in japan. The iphone is the top smart phone in japan. The ipad is the top tablet in japan. Weve seen a significant uptake in japan on both on the smart phone or people switching from another operating system. This partnership is interesting because japan is a very big market for apple. 33 million Senior Citizens in japan, now 1 4 of the population. Its the most aged developed population in the world. That is what apple and ibm are coming together trying to address with Japan Post Group which many of our viewers might not have heard of. Its the largest employer in japan and services the needs of a lot of the elderly through insurance and other services. They are going to deploy ipads to a number of seniors and hope to reach 4 million to 5 million seniors in the next few years. I spoke with the Senior Vice President of Global Business services here saying they expect the apple watch to be a part of that not only in health engagements, but industrial engagements where workers need to be aware of whats going on and alerts they need to look at right now. I asked about salesforce. Those rumors salesforce is in play and ibm could be a potential acquirer. Take a listen to the exchange. Ive got to ask directly do you want to buy salesforce . We do a lot of mergers and acquisitions as you know and we are approaching to take companies with unique assets so we can scale what they intend to do is complement our portfolio. Make of that what you will. Nice way to pose the question, john, on an important day for it. John fortt, well hear more from you this morning. Dow is down 83. Well get stop trading with jim in a moment. What if we finally had a backyard . Thatd be amazing. Hey, what if we took down this wall . What if this was my art studio . What if we were preapproved . Shut up. From finding, to financing. Howd you do that . Zillow. Female announcer sleep trains interest free for 3 event ends sunday. Its your last chance to get three years interestfree financing on beautyrest black, Stearns Foster Serta Icomfort even tempurpedic. Plus, get free delivery, and sleep trains 100day low price guarantee. But hurry sleep trains interest free for 3 event ends sunday. Guaranteed sleep train your ticket to a better nights sleep this new starbucks mod ole, this is right here its the wall street store. What happens is this is the small format. They can put up thousands of these. This is their new urban global format. They are doing high end reserve stores. This is going to be why people think, wait a second what its next leg . This. Small format stores. You can go in, get what you want and be right out. This is a way to add several thousand stores in the u. S. This is a gigantic urban opportunity. That is making its way through so many different companies. He said there is room for many more. This format is the way to go. I look to look at mcdonalds and starbucks. One day they are going to pass. Im not making a prediction. Quinoa burgers will make the difference. Is that it . I hope you go back there and see the new. One of us will be there. Whats on mad tonight . Hot ones. The weaker dollar means you should buy eaton. Radius. Ive been doing smaller cap stocks. Doctor on demand. You do it by video. Maybe he will explain why harman is down so much and maybe the weak dollar is the new theme. Get some rest somewhere, somehow. Im on tv. Sorry, im on tv. Get smart. When we come back interview with ford ceo mark fields. Time warner cable ceo robert marcus. The dow down 73. [ male announcer ] at northrop grumman, weve always been at the forefront of advanced electronics. Providing technology to get more detail. Detect hidden threats. See the whole picture. Process critical information and put it in the hands of our defenders. Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. Theres some facts about seaworld wed like you to know. We dont collect killer whales from the wild. And havent for 35 years. With the hightest standard of animal care in the world, our whales are healthy. Theyre thriving. I wouldnt work here if they werent. And Government Research shows they live just as long as whales in the wild. Caring for these whales, we have a great responsibility to get that right. And we take it very seriously. Because we love them. And we know you love them too. Good thursday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, simon hobbs and david faber back again at post nine. Dow down 120 points as the nasdaq is going for its fourth day in the red. S p back to 2093. A lot of things circulating including the dollar euro german bund. Good to have you guys back. Cigna reporting a big rise in revenue for the First Quarter. The stocks already up more than 20 this year. The ceo will join us live for an exclusive interview. Ford making moves in the tech industry. Mark fields the ceo of ford will weigh in on that in about a half hour. Virgin america out with its First Quarter results today. Well talk to david cush about what is next for the airline. Coming up lighter an exclusive with the ceo of Time Warner Cable. He will be live at post nine. Well talk about comcast, reports of a possible deal with charter and the companys quarterly results. The start of the last trading day of april overshadowed by now the fed conceding six years into the recovery the economy hit stalled speed. Its not news that winters are cold, points out an editorial in this mornings wall street journal. It goes on to question whether the fed will accept responsibility for what it calls nine years of growth below the historic norm of 3 . The great paradox of this expansion is that the Monetary Policy that is supposed to spur faster growth has not spurred faster growth. The fed has been able to lift asset prices. The fed should wonder if its policies havent become an impediment to faster growth. The editorial concludes, maybe markets should be allowed to set Interest Rates again to better allocate capital and create less economic uncertainty. Joining us now with reaction to that stern ags tv economist. Good morning. Do you have sympathy for that editorial . You know its very true we havent seen the typical response to zero Interest Rate policy. Normally the Federal Reserve lowers Interest Rates and that sparks small businesses, individuals going to banks, taking out investment. We see businesses develop and grow. As that occurs that draws down the pool of available labor. We start to see upward pressure in wages. This time around weve been sitting here over five years at 0 Interest Rates. It is atypical of the normal recovery we would see. I dont know if the fed is i didnt mean to interrupt you. The policy implication of the editorial is you get on raised Interest Rates and normalize whats going on. Savers over the last six years lost 750 billion because deposits in banks are not keeping up with inflation. This has real implications this abnormal experiment from the fed, surely. It certainly does. Remember, the feds dual mandate is to make sure we have full employment and stable prices. The labor market is under the level we need to see. Inflation, what inflation . Ppi, cpi in net negative territory. From the fed standpoint really they could pass the bar over to the federal government and say from a Monetary Policy standpoint, we are doing everything we can to get this economy back on track. We need fiscal policy to line up with Monetary Policy. Talking to businesses big and st. Paul around the country, they continue to point to health care costs, tax uncertainty and regulation is the primary three reasons they are not hiring and expanding, despite these near zero Interest Rates. There are many people who believe there is a bubble in the bond market. I dont know if thats your belief. We had a powerful second day selloff in europe which may be the eye of the storm if this turns around which lifted bunds from about five basis points to now 34 or 35 people suggesting there is a big short there. What do you make of that move . What does that mean for us in this country . Is it just profit taking or is it the crumbling of a bubble the beginning of something bigger . I think it is just profit taking. I dont see this as a bubble yet. I still am very bullish on bonds. I think the bond market has a lot of downward pressure on rates as the u. S. Economy is struggling to gain legs. As we saw in the First Quarter gdp number there was a general malaise across all sectors of the economy that cannot be discarded because of oneoff disruptions, and not because of unseasonably cold winter weather. I do see the u. S. Economy, as well as Global Economy still hobbling along for not only the Second Quarter but the remaining nine months of the year. What is going on with the u. S. Consumer and why are they saving that money they are getting extra in their pockets because of cheap gas prices instead of spending it . That is interesting. We did see the Consumer Spending mows gasoline windfalls early on. In october and november we did see a nice increase in retail sales. By december, the consumer did begin squirrelling back those cost savings. Something they do when they are concerned about their fiscal condition. Meaning consumers are increasingly concerned about financing todays spending with tomorrow s dollars. They are seeing stagnant average Hourly Earnings and are concerned about their future income opportunities. Do you see the economy rallying in the second and third quarters to make up for the first . Is that essentially what you are saying . Im getting mixed messages here. Where are we . I think the First Quarter set us up for a similar trend of what we saw last year in terms of weakness for the start of the year. Given the weakness we continue to see in march and april data i dont think we are going to see the same type of rebound we saw last year. I expect to see about a 1 pace across the First Six Months of the year followed by about a 2 pace in the latter six months of the year. Averaging that out on an annual pace i expect to see 2015 gdp well below that trend rate of 2. 3 . Good to see you, lindsey. Thank you for your time. Thanks very much. When we come back higher premiums and fees giving cigna a more than 11 boost in profit the First Quarter. David cords ani will join us live. Le. Some were worried about the space after humana talked about hospital utilization. Doesnt sound like thats what you are seeing. We operate a diverse portfolio. In excess of 5 billion of revenue outside the u. S. , in excess of 4 billion in our productivity and disability space. Then in the health care space, which is our largest, mostly Service Business for commercial and then within our medicare business, it continues to bes performing. We do not see an elevation in utilization. Operating revenue 9. 4 billion if you exclude investment gains versus 8. 4 a year ago. Is the environment Getting Better in an investment standpoint . Our revenue is up meaningfully. Most growth is driven by first adding new customers and clients. Second, expanding our relationships, the breadth of our services. Net net that is a positive. Investment environment more specifically, investment gains on our large reserve portfolio continues to be denuded because of the low Interest Rate environment. Net net high performing portfolio portfolio for us. Are you expecting that to change significantly . Your guess is probably better than mine. People have been waiting for that to move. We are able to operate our business actually quite effectively in the current environment. That is on the up side if and when that transpires. Judge, premiums and fees up 12 plus. How long can that be sustained . Where is the ceiling on that thing . The key is growing customers and expanding relationships. Our Customer Base continues to grow. Five years ago we had about 60 million customer relationships around the globe. Number one is adding more customers, which means retaining our existing base and adding to it. Two is expanding the breadth of services. Then rate increases. Its not a rate increase gain alone. Its a fundamental growth story here. Are you on the price of drugs, high price of drugs which hear so much about . Especially the new ones. Ive been making deals with biotech and drug makers. Where are we as a country and as an industry as the Insurance Industry making those deals and getting those prices down . The orals have been stable. The action has been in the speciality pharma space. Growing it the fastest rate. The key here is getting the right relationships with the manufacturers. Secondly coordinating the care with the practicing physicians. Thats key to longterm success. This will be a cost driver for the Company Going forward. The key is that clinical integration and working with managers to have performance based rewards as opposed to volume base rewards. The debate about Health Care Policy in this country, will it go away . A viewer writes isnt it fun to be a ceo of a company. The vast majority of our business sits in the service space. For example, the Public Exchange business that came out of aca is less than 3 of our overall revenue for our company. We position our products for employer government individuals to engage individuals, lower health risks, improve health outcomes. Thats the core of what we pivoted our company to be. We did that inside the United States as well as outside the United States. Lastly, the core message here is that the overall cost and Health Profile in the United States is not sustainable. We need to lower health risks and improve health and they get more value for our spending. Thats what we are trying to do with physician collaboratives. In the u. S. We have over 100 physician collaboratives in 29 states delivering better million costs and Better Service quality. If you are serious your guess is as good as mine on rates, we are in trouble, but well leave that another day. Good to see you. Thanks for having me. David cordani. Chairman and ceo of Time Warner Cable will join us for an exclusive interview here on post nine. Hell weigh in on First Quarter results. And take on the deal with comcast that fell through. The dow is down triple digits here. Second day in a row of decline. S p 500 down 0. 6 . A flurry of Economic Data this morning, a mixed batch. Better jobless claims but slower than expected pickup in consume other spending building on what was yesterday a very disappointing read on the economy for the First Quarter. There you have it. Declines across the board. Lets send it to dom chu. This is the Industrial Automation company that beat Second Quarter profit expectations earning 1. 50 a share. Expectations 1. 42. It was helped along by increased operating earnings. This is all coming despite a slight revenue miss for the company. On balance you can see the verdict is up about 7 early trade. Back to you. Lots of individual movers. Straight ahead, chairman and ceo of Time Warner Cable will join us live for an exclusive interview here at post nine. Plus ford making a big push in the tech world with things like virtual reality. Mark fields will also be joining us. If youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Take a look at the markets. Dows down 100 points. Its the last day of april. Generally the time we Start Talking about month end selling or month end buying. The dow has not had a down april since 2005. To keep that streak alive, its got to hold about 155 points. We closed march at 1776. Ten years without a down dow in april is a different story. May is a different story. Last week we were at record highs. One thing that changed notably has been whats going on in the tenyear treasury. Selling treasuries yields higher with ten year above 2 . Thats putting pressure in the market on stocks like utilities, which are the second worst performers right now right behind technology. There is the tenyear note. Thats been the change whether its what weve seen in europe or seen in terms of this idea that the fed isnt going to raise rates this year and perhaps Inflation Expectations will take higher pressuring the u. S. Dollar. Heard that earlier on squawk box. The growth coming through in europe is good today. The spanish economy is growing in the First Quarter, 2. 6 annualized. The euro zone will grow at almost 2 for the First Quarter. You just wonder whether some of those assumptions you made would be engaged on qe where currencies go, bonds go stocks go. This could be an Inflection Point on that. The equity market is up but earnings not so good. Crude oil has risen this month and the dollar has weakened. That is something we have not seen breaking an important trend. It could be a temporary pause in what a lot of people think is continued momentum in the u. S. Dollar going stronger. Based on the idea that the u. S. Is doing better. Argument is increasingly being made a lot of the majors being valued as if oil were higher. Jim cramer made the point nat gas had been the laggard. Volume up two, revenue 67 billion. Showing their breadth, as jim said earlier today. Profits were down 46 from First Quarter of the year ago. Im looking at the best performing group in the last month in terms of s p industry groups. It is energy. Telecom coming in second. They are getting bid on this idea crude oil is going higher. Its an open debate whether weve seen the bottom of crude oil and its going to be a straight shoot higher. Dont you think . Its funny when you hear so many people believing we are heading to 25. You wonder if we bottomed at that time. Same with the dollar. Overall, our Economic Growth is stronger than much of the rest of the world. Well see if this is an aberration. Jobless claims solid today. Well see. You time to be calling for a higher dollar dont you . Its not me. A lot of the big holders on the u. S. Dollar said it will resume its uptrend. John burbank yesterday, positioned his portfolio to benefit from the falling dollar but believes it will resume. It is an important question for companies, including ford. Ford is in the news making big moves when it comes to technology. Phil lebeau live with the ceo. Good morning. Thank you sara. We are out here in Palo Alto California and fords new tech center where you basically have a grand opening taking place. This is increasingly the focus for your company, is it not . One of our key priorities is driving innovation. Its every part of our business. Part is having a Research Center here in silicon valley. When we are done by the end of the year well have one of the largest Automotive Research teams here. We are staffed up about a 1 3. We added about 40 folks in areas of autonomy connected vehicles mobility, those type of things. We are excited about showing off the lab here. This is the future. Lets talk about the present. Economic numbers show the economy is slowing in some capacity. Gdp, Consumer Confidence numbers are not that great. Are you noticing any slowdown in demand for new vehicles . Not really. We have to put the gdp numbers we saw yesterday into perspective. Part of it is obviously a bit of a tough winter. Those may have had an impact on the gdp numbers. Consumer confidence is down. Still at a very healthy rate. As we look at the industry still relatively healthy. We report our sales tomorrow. We should see an industry in the mid 16 million to 17 million range. The rest of the year you expect the industry to go over 17 million. Our call is between 17 million and 16. 5 million units. Consumer confidence still relatively high. People feel good about their jobs. Interest rates relatively low. We think that is a good call for the year. You reported earnings earlier this week. Separate from the fact there was a miss most because of the way wall street looking at the tax scene versus what happened. Very strong numbers in north america. When you look at your stock over the last year its getting no love at all. What do you say to investors who look at ford and say, is this a company that has any growth in it . Because you are not being priced to have any growth. What we say to investors is we are going to focus on being responsible stewards of running a good growing company. Just look at our results. Thats what we are focusing on as a company. We are not focusing on what is the stock price . We are focusing on are we moving the business . Are we delivering the business. We grew our Global Market share last quarter to 7 . We had some good growth. As you look at the remainder of this year you look at the cadence of our product launches and some of the plants coming online in asia pacific, we expect to progressively grow this year revenues market share and financial performance. Sergio talked at length about consolidation in the industry. Is there any chance of that happening . Or is everybody strong Balance Sheets are strong its just not the right time for this industry to see mergers . You never know what is going to happen in the industry. For us we are focusing on ford. What we said a number of years ago when asked the question we said we are merging ford. Its about one ford. We are seeing a lot of great progress on it. You saw it for First Quarter results. Good start to the year as we grow for the year. We are going to stay focused on our business. Satisfying customers and let the industry be. Do you see consolidation amongst any of the Major Players in the next couple of years or is that off the table . You never know. When you look at the industry its relatively healthy. When you look at us we are very healthy, on a good foundation. Who knows . I dont think we are going to get distracted at ford wondering about whats going to happen with consolidation. We look at the Business Environment every week. Look at markets, competitors, those types of things. Understand what it means for our business. Be proactive. Take appropriate action and grow the business. That is what we are going to stay focused on. Part is growing the business out here in the silicon valley. Mark fields ceo of ford company. You like this. I love it. Lets do all our business interviews this way. I love that. Be. We are just heading towards the data we are expecting for the new york mercantile exchange. Lets hand it to jackie deangelis, nat Gas Industries and oil as well. Good morning to you simon. We are expecting those numbers to come out shortly. Last week we saw an injection of 90 billion cubic feet. Traders looking for 88 billion cubic feet. What is interesting about the nat gas trade, its come down more than 10 yeartodate based on the stock piles we recovered so far. Traders feel we are in a good spot in terms of the amount of inventory we have. Injection 81 billion cubic feet. Slightly less than traders were expecting here. As i was saying about the stock piles, they are looking for a catalyst, something to bring us down further from here. That could be a summer that is more on the mild side where people arent using as much air conditioning. Take a look at prices right now. We were trading negative before. Slightly higher now. 2. 66 is where we are trading at this point. Back to you. Melissa lee, i apologize. Here is the news update. Many survivors of the Nepal Earthquake are waiting to be evacuated. Hundreds of survivors are desperately trying to board a helicopter. More than 5,500 people have been killed with another 10,000 injured from the quake. Recent fighting between iraqi forces and isis militants left ramadi devastated. Police secured the center of town and pushed militants to the outskirts of the city but fighting continues. For the first time in a century, a bubbling lava lake in hawaii overflowed. Thousands of people are staying up into the wee hours to check it out. Vietnam celebrating the 40th anniversary of the end of the vietnam war with a colorful parade this morning held in ho chi minh city. Some 58,000 americans and estimated 3 million vietnamese were killed. Back to cnbc news update for this hour. Back to squawk on the street. Thanks, melissa. Rick santelli with the santelli exchange. Today will be digging down into the chicago ism we just hachltd of course for that we have alice. What jumps out at you on this number . When i first took a look at the numbers, i was glad we werent in contracts. We have a solid set of data here, new orders up 12. 8. I want to give credence to that because its rare we have a double digit increase. This is only one of eight since the year 2000. Its a pretty big jump. Let me stop you there viewers are interested in the next trade. You were telling me offcamera, this is normally the period you would point to the fact this is the time you build inventories. There is a seasonality here. Its not only something you see with the surveys, there will be this seasonality in all data points, but there is an issue. We saw it in gdp yesterday. From our standpoint we had a drawdown in inventories. Last month we were over inventoried. What im hearing is things are not flying off the shelves as fast as they thought. You had an historic runoff. Right. This is typically the time you start to accumulate your inventories and you peak in july and taper off. Im hearing trepidation from a lot of the purchasers. They say its too hard to manage what they call a saw tooth pattern. We talked about this. You have big spikes up and down. Too hard to plan and manage for. We know we had 52. 3. New orders up 12. 8. That is big. 55. 1. What im trying to draw a distinction on is new orders dont necessarily affect inventories. If you have big new orders youre going to see inventories leave and see inventory building. They will try to whittle down the inventories. Right. That was telegraphed through the purchasers. We would rather hoard cash. When we need to reorder, well build our inventories. They are not necessarily wanting to build inventories into a situation where they are not seeing orders. The real magic bullet here for traders looking for the next trade is that if you look at last year or several plus years as stan fisher pointed out, you get a weak First Quarter, then a strong second and third. If youre objective and looked at the data for march and april, i dont see terrific numbers. Right. What i am hearing from a lot of the purchasers is they are behind target. Forecasts were high going into 2015. Already with a soggy First Quarter, they are behind to maybe slightly on target. I think they are going to be cautious going forward. As you can see, alice and i boil this down to pretty good Chicago Manufacturing survey. Are we going to churn through the inventories we created that kept First Quarter gdp positive . That is the big question. Well continue to monitor. Thank you for taking the time today. Back to you. Thanks. When we come back the chairman and ceo of Time Warner Cable on what comes next after comcast dropped its bid for the company. The cofounder of air bnb speaks out. Way has to say about rentals in europe versus the u. S. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. 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With millions of reviews and the best hotel prices. Book your next trip at tripadvisor. Com today. I am never getting married. Were never having kids. Mmmmmm. We are never moving to the suburbs. We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life state farm is there. The dow is down more than 100 points at this hour. Have a look at technology also trading sharply lower today. Dom chu at headquarters with more on that. Watching the i. T. Sector currently the worst performing sector down by about a percent. Led lower by autodesk apple and salesforce. Com fielding takeover offers according to a bloomberg report. Its down more than 3 today. A big runup yesterday. Apple suffering after a report from dow jones about possible problems with one of the components of their new apple watch. The big winner in i. T. Equinix which yesterday raised its 2015 guidance on annual sales and earnings. Still tech stocks to the down side today. Back to you. Thanks dom chu. Shares of Time Warner Cable are roughly flat after the Company Reported profits and revenues that did come in a bit below wall street estimates but had very Strong Subscriber growth. As i reported yesterday, Charter Communications and Time Warner Cable will likely meet next week to discuss strategic opportunities between the two companies. Comcast dropping its bid for its deal to acquire Time Warner Cable almost one week ago. Joining us exclusively at post nine, chairman and ceo rob marcus. Want to bring in my colleague media reporter julia boarsston. She booked this interview and gets the first question. Thanks so much. Rob, thanks for joining us this morning. To kick things off about your earnings report, both revenue and earnings did fall short of expectations. How do you explain that shortfall . Julia because of the pendaicy of the merger its been a long time since people updated their models. Outside world has been focused whether or not the merger with close. By contrast everybody at Time Warner Cable all the while, was very focused on delivering very strong results and executing on our operating plan. In terms of your guidance though, it is looking like guidance is lower than it was when you put forth your last threeyear plan. Prior to the announcement of the comcast merger we articulated a threeyear operating plan. Overall, i would tell you i feel really great about how we are tracking against that plan. As with any multiyear plan theres always going to be puts and takes, some things that are ahead of where you expected you would be. Other things that fall behind. Overall on Subscriber Performance as david referenced we are feeling absolutely great. We really posted a blowout quarter on some performance, on various Customer Experience metrics. We are ahead of plan. Admittedly with respect to things like oibda we are short. We are setting ourselves up for what i expect to be a great 2016. Why were you in an investment cycle begin you would get acquired . The first day we announced the deal i instructed troops we needed to do two things. In the event the deal closed i wanted to deliver a Great Company to comcast. We would be a great part of what the combined company wants. The results mattered. We needed to be prepared for the eventuality maybe the deal didnt close and it turns out that instruction was actually wise advice. Here we are now, but i think prepared for a future on our own. To those who would say subscriber growth was strong but they are buying subscribers. Not so. Quality is improving as we are growing customers. The subs we are bringing on were coming in at higher tiers of service. The arpu of those customers are solid. Customers are sticking with us. The early life churn is down materially. To those who would say over the last 14 months, you lost key employees. People think i need other opportunities. Speak to that. In fact, one of the things im proudest about over the last 14 months is how well our team hung together, in spite of all the odds and distractions, our team has been incredibly resilient. Thats from top to bottom. The truth of the matter is when you are in a period like this people use that as an opportunity to band together and thats exactly whats happened. I feel fantastic about the team that we are operating with right now. Banded together. Absolutely. You are not getting an 80 million pay day on close. Does that make you sad . Look i think there are far worse things that can befall someone than being ceo of a Great Company. Im looking forward. Our prospects are bright. When we talk about prospects, the prospect was you were going to be part of a much larger organization. Does Time Warner Cable need to be larger . We never needed to be larger. Weve been guided in our m a approach by a single principle which is we are going to do whatever maximizes value for shareholders. That principle applies. I know and i have reported charter and tom rutledge have interest acquiring your company, trying to work a deal to acquire Time Warner Cable. If as i believe will be the case, they were to come forward with some proposal, what is going to be your attitude in terms of needing them and how you think about the value they may be able to bring. I hate to be a broken record but im guided by a single principle. That is maximizing shareholder value. Whether that takes the form running the company as well as we can or engaging an m a as buyer or seller the same principle applies. Maximumization of shareholder value. Bright house is out there again. Would you consider acquiring bryce house . You had right of first refusal . I hate to be boring. Their principles are the same. What matters is we are not going to pay a premium that exceeds the value we create doing it by acquisition. If there is synergy to be created by a combination where we are the seller the benefit has to accrue our shareholders. Thats the principle. How much takeover spec do you think is in your shares . Theyve gone up since the comcast deal broke. Unexpected to a certain extent. You are almost at 160 a share. The deal when you announced it was worth 159 at 2. 75 shares of comcast. The company is fundamentally stronger than in many years. Ill leave it at that and let you guys determine what the stock price ought to be. When you say fundamentally stronger, give me evidence of that. Subscriber performance we demonstrated this morning was the best Subscriber Performance ever. I dont mean best Subscriber Performance relative to a dismal 2013 or even better than last year. I mean ever. Its the first time weve grown video customers since First Quarter 2009. That in and of itself is impressive. Most customer relationships ever most triple plays ever. Those are pretty staggering results. I think todays subscriber growth is tomorrows revenue growth. Capital allocation is always a key question. During the course of the last 14 months have taken more cash on your balance sheet. Leverage has come down. You are around 2. 9 times. Are you going to return capital to Share Holders . Look we have a long tradition of i believe being Smart Capital allocators. Its driven our story many years. We have to sit with our board. Its only been a week since the comcast merger was terminated. We have to consider our approach to Capital Allocation different dividends, buybacks. The principles that guided us in the past havent vanished. When i show up 100 cash do you take it . Im not going to speculate. I will be guided by the same principles. As i sit here today, we are stronger today than we were a year ago. You say that quite a bit. Interesting. I want to get your take on something. Im a Time Warner Cable customer. My living Room Television lost its service. I called time warner. They were quick. They said you havent used it in 30 days. Of course we have. I realized we hadnt used the cable box. We were only watching netflix. Interesting. There is an increasing amount of video viewing online. Unlike others we embrace online video. It is the absolute killer app for the need for robust high speed data. What do you know we sell high speed data. The idea we are going to stop what is otherwise a natural trend in Customer Behavior is ridiculous. I would rather embrace it and give customers the best possible experience they have. Lets make sure online video and make sure our core video product is as robust as can be. If we are competitively better customers will choose us. If not, well increase their speeds on that front and ensure they have a great experience. Would comcast with Time Warner Cable at 57 of broadband households have too much market power . I thought when we anoupsnounced the deal it was an aprovable transaction. P obviously, regulators were not receptive to those arguments. My view is there is no point looking back. We are absolutely looking forward. Do you regret you didnt have a breakup fee . Its ironic. There is such a tendency to monday morning quarter any transaction in the aftermath of a termination. To pluck the breakup fee out of what was a myriad of different terms we negotiated feels wrong to me. In reality, when we were making trades between various elements of the deal the breakup fee was one component. In my mind i traded a reverse breakup fee which incidentally enough is rather unusual for a broad degree of latitude how we ran the business between signing and closing. Thought this was critical. As i sit here today, i think that was a great trade because irrespective of what the breakup fee was, we were more valuable the way we were able to run the business in the outcome would have been different in any respect. If there were a breakup fee, we would still be where we are today in terms of the deal getting done. Usually the breakup fee is there to incent the counterparty to take certain actions that they might not otherwise take. It turns out there was nothing we could have done. There was nothing you could have done. Is that i think thats a fair statement. All right. Rob marcus thank you for being here. Pleasure to be here. Well be watching and following closely, rob marcus chairman and ceo of Time Warner Cable. Back to you. David, especially love the tidbits about your personal viewing habits. Meantime busy day, the Treasury Department is hosting its annual women in finance symposium. I had a chance to talk to Valerie Jarrett about the weaker gdp report and if the white house is concerned about losing momentum and jobs. There were some shortterm challenges that we did face in the First Quarter. But i think youve got to look at it in the broader context of the last six years since we had the worst financial crisis certainly in our lifetime weve had now over 12 million jobs created over the last five years. Unemployment rate has gone from 10 down to 5. 5 . So we do believe that the United States is still doing far better than any other country that came out of this crisis. As the president has been talking about closing the gender gap. Equal pay, even pope francis weighed in this week calling it pure scandal, that there is is a disparity between men and women and earning equal pay. Where is the administration on getting more legislation in passed, Bipartisan Legislation through on this important issue . Well as secretary lew mentioned in his remarks, the president firmly supports paycheck fairness a bill thats currently introduced into congress. It would prohibit employers from discriminating against their workers who share compensation statistics with one another. One of the real barriers is that people dont know theyre being discriminated against and oftentimes employers dont look at the pay discrepancy. Right now women earn 78 cents on the dollar women of color even less and we need to close that gap and we need to look at all kinds of creative ways of keeping women in the workforce. Youre going hear a lot more about this issue from the administration. Also in the coming Campaign Secretary lew also cited google as an example of a company doing the right thing with paid maternity leave. And of course since we did discuss baltimore, had to ask Valerie Jarrett, front and center about the criticism surrounding the president s use of the word thugs in describing the violent protesters. I asked her if the criticism was fair. Law enforcement officers certainly deserve the right to go home at the end of the day. Just as protesters deserve the right to go home at the end of the day. And i think what we need to focus on is how do we forge that better relationship between the police and the communities that they serve. And hold up whats really wonderful peaceful demonstrations, where ordinary people are doing just extraordinary things. And that there are certainly people who have been taking advantage of the situation. And vandalism and theft, those are crimes and we need to call it what it is. Call it what it is. Is as close as she came guys and obviously there has been sort of a flurry she says dont get distracted by the semantics here on this issue. Have to get to some of the more important ones the soulsearching as president obama said of the police. Lets get back to the markets, Virgin America shares unable to make gains despite the facts it came through with the first profit for the seasonal week First Quarter. Were joined from our new headquarters one market San Francisco, david faber, good morning to you. Its interesting that youve been able to raise the operating margin now to 4 . This is a steady improvement, obviously you ipoed in november. How are you achieving that . Well you know there are ka couple of things that are working this quarter. The first one is that our unit revenue has improved by roughly 3 . Which is pretty close to the top of the industry. The other big thing that helped was a drop in the fuel prices which aided the entire industry. David weve wondered for a long time whether you would put the new planes to work as a growth airline. I see that five of them are going to hawaii correct me if im wrong. The flights start there, from november i was just online. I can book a flight from new york to maui round trip for under 700. Is that a wise move . Is that a too competitive market for you to be making such a big stake in . Well you know the interesting thing is were flying from the west coast of course, and if you look at new york to hawaii youve got multiple hubs to connect over so theres a lot of competition. You know flying nonstop connecting over hawaii, excuse me over chicago or dallas. There are no hubs between San Francisco and hawaii to connect on, so if you look at the average fares from the west coast to hawaii. Theyre about the same as from the west coast to the east coast. Were quite confident in this market. David the stock, youll know this better than anybody else. The stock hasnt done well this year after of course the ipo in november down about 30 . I think Richard Branson and some of your other investors had to pull back from offloading more shares. Why or how would you turn the share price around . There was a downgrade from crt recently that said look basically you need to trade at a lower multiple because youre in such a competitive market. Youve ended up in four of the most heated sections of the travel industry in this country. Fair comment . Well you know i think people need to look at our history. If you look at the first three routes that the airline started, they were jfk to l. A. X. Jfk to San Francisco and l. A. X. To San Francisco. So we started in the most competitive routes in the industry and thats how weve grown. Were not afraid of competition and we do well in these routes. So as far as the stock price goes, our stock is to run the company. To generate the highest returns we can. And to communicate our message, its really up to others to decide what the stock price should be. This isnt your first rodeo, david, you know that to offer a premium product in a lowcost part of the product, when there is the potential of predatory pricing from your rival who is can crosssubsidize what theyre doing in the rest of the country. Thats a real difficult task. Isnt it . How will you achieve it . It is. And we certainly see that we believe our rivals probably lose money in some of the transcom flying theyre doing. We earn most of our profits in transcon. So as far as the predatory pricing, we think were somewhat immune to it simply because of the cost structure. And the cost structure comes from a simple production model. The high utilization, the single fleet type. The high productivity and not from the product that we put out there. So weve competed well against these guys into most competitive markets, for seven years and well continue to do that. Busy morning for you, david, thank you for joining us. David cush the ceo of Virgin America joining us live from San Francisco. Have a great day. Coming up the air bnb cofounder talks about the companys Economic Impact around the globe. Introducing the new canam spyder f3. With a cruising riding position and the most advanced vehicle stability system in the industry. Youll ride with a feeling of complete freedom and confidence. 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