Transcripts For CNBC Squawk On The Street 20160420

S p reclaims 2100 a lot to look at including coke and yahoo. Europes relatively mixed, oil is lower as the kuwaiti oil strike has now ended. But first up intel announcing plans to cut up to 12,000 jobs, about 11 of the work force, weaker demand for pcs ask that exclusive coming up in just a couple of moments. As we said we brought in jon fortt to lead this interesting quarter and interesting plans now for the future. Its really interesting, carl, because we just saw ibm report a quarter where they talked about weakness in latin america, particularly brazil doing some cuts overseas. Now intel coming in saying the pc market is weak, but also the Data Center Enterprise demand was weak, its cloud demand thats stronger. Makes you wonder overall when it comes to the end user whether that end user is sitting at home or in a business or even at a data center that the business controls, what really is happening to demand for devices that run on intel chips. Of course stacy smith, cfo is going to lead a lot of this charge in manufacturing, operations and now this cost cutting, jim, theyre looking at saving 750 million this year. We really got to go over this because stacy smiths in charge of leading sales, leading manufacturing in the operations, what does that leave . I mean, whats brian doing . Sounds like a ceo job. Right. Now look, this was the quarter where people say why isnt the stock down bigger . The answer is if you take out this many costs and the revenue is good, were still up. Its a very profitable company. And we cant forget that its profitable. But at the same time, jon, you got to be wondering how do they not know pcs were going to go from mid single down to high single down when i think the average viewer knew that . Yeah, what they said was that oems were drawing down inventories, they were more bullish than intel was and the inventory drawdown was therefore more severe. But the shift intel is making through this restructuring suggests that they dont expect big growth to come back. But lets ask the man himself, intel Ceo Brian Krzanich joins us now from intel headquarters in santa clara. Brian, always great to have you. Thanks for joining us. Thank you very much, jon. Good to see you guys. Let me start off with a question about the move with stacey smith who wall street knows very well as cfo for a long time. This looks like the sort of move thats grooming somebody for a move higher, but theres not much higher one can go, especially after what we saw at disney just a couple weeks ago. I think this is an important point to hit, you came into the ceo role with a number two, renay james, shes now left the company, is stacey smith now the number two . I know youre not going anywhere from board perspective, but is this sort of lining him up next in line . This wasnt so much about succession planning as in whos number two and number three, anything like that. This is you know, at intel look at my own career. We really pride ourselves on giving them really wide exposure. He and i had been working for several quarters on what does he do next. And the next natural role was Something Like this. Hed worked in sales earlier in his career. He had been in the finance side of manufacturing earlier in his career. And so actually going in and running those operations made a lot of sense just in his career development. And also gives those segments of the business exposure to his leadership style. So this is just part of the natural how do we develop better leaders, leaders with more scope and more capability. All right. Brian, youre a plain spoken guy, so maybe you can make it clear for me what exactly this restructuring signals about the pc market. It sounds like with the extent of this cut talking 12,000 people relatively quickly, youre looking for an annualized revenue run rate to come down 1. 4 billion, i believe, by next year. Are you now in effect saying youre not expecting growth to come back to the pc market at all . Not expecting it to tank. Its going to continue to help fuel areas that you do expect to grow. But intel even more than youd said before away from being a pc company . You know, you actually captured the main point of this, jon. This is about accelerating that change. And actually taking the pc and being realistic about, hey, its, you know, going to be down in that mid to high Single Digits yeartoyear. It will bottom out at some point, but what we really need to do is operate efficiently and maximize the profitability in that time. And so this is about doing that while shifting and accelerating faster into those growth areas. Now, weve talked about the data center, the internet of things, memory and fpgas. Those were all great quarters. Those were all quarters where they all grew this quarter, quite nicely. Iot up 22 year over year, data center up almost 10 year over year, thats a great result. And thats a growth company. So were going to accelerate in those areas. Actually invest more as a part of this. Brian, jim cramer, i actually hear you on the iot, 22 growth, thats great. But its only 651 million revenues. I understand completely the acquisition but its only 359 million in revenues for this quarter. I look at what annex pi did, i look at what ivago did and now broadcom. I know you like the connected core, i know you like internet of things, is it not time to do one more acquisition . You did that deal when your stock was at 34, your stock is now at 31. Evago their stock is now up 30 points. A lot of people thought they paid too much, must you make with additional money another acquisition to build up internet of things and build up programmable . Well, i think on programmable and fpga we bought the best asset in the industry. And i think weve done a great job of integrating that in. Jim, i want to make a very clear point, not only did they beat their quarter, but weve really started to accelerate their products for this year. And we actually have shipping now the first zion and fpga copackaged part into sampling customers now. We do need to continue to grow. Data centers about a 2. 5 to 3 billion a year business. Growing at double digits. We will probably go in and make more acquisitions. What those will be were still trying to figure out exactly what they are. But remember the data center is a 16 billion business. And thats growing double digits as well. So i believe the growth engines are there. We have the right structure. Well grow both organic and, yes, there will be some inorganic. Is this kind of a moment like what andy grove had to do in the 80s and said we need to be number one, were not going to be number one in d rams, were going to shutter, move all the way, everyone laughed and turned out to be a brilliant move. So you have stacey smith, maybe he runs old intel, new intel, internet of things, new intel auto, new intel the super computer of cars. We get this logic, one grows slow but a lot of cash, another grows really fast and where you put the assets. Well, i dont know if stacey smith is old intel. Still the core of the business but you are right in theres becoming two segments of intel. There is the segment around the client that is tending to be a bit more stable but has a lot of profitability and a lot of ability to fuel growth for the other segments. And theres the new segments that were going to move into and accelerate at a faster rate. And those are the data center, memory, iot, fpgas, i believe those can become as big or bigger than the pc over the next few years. In the size of their businesses. And equally as profitable. Brian, you talk about pcs eventually bottoming out, but how much pain is between there and here . And is there any argument that holds water that pcs face some kind of existential threat where they are truly going away so to speak . You know, where theyll bottom out im not exactly sure. That would be a great ability to predict that. I dont think theyre going to go away. I mean, all of us including all of you guys right there onset are using pcs and i think will continue to use pcs. Pcs will continue to transform. We have a lot of Great Innovation still yet to come on the pc. But i do think that what youre going to see is, you know, kind of a transformation of intel as a business in that theres a lot of profitability. You know, even in a declining pc market we grew profitability over the last couple of years in the pc segment. So this effort is to continue that profit blgt while bringing the right innovations. While we shift that spending over into these growth areas, data center, iot, memory, the other areas. Mr. Krzanich, youre going to be roughly doing away with some 11 of your employees, can you give us an awe assurance as to why thats first let me say thats a difficult decision. Those are friends ive worked with for many, many years. So its a difficult decision to make. But what we did was look at the programs we wanted to implement, and theyre really broken into a few segments. Theres performance related and choice related voluntary separations and involuntary separations, theres some site closures, we have acquired a lot of buildings and a lot of locations all over the world, a lot of them through acquisitions that have now become isolated and were going to try teams that are colocated work much more efficiently. And then theres projects that were going to become more efficient on and or they have not had a return or show a return in the future and so were going to close those down. When we added all those up, when we looked at it and then we subtracted the investments we wanted to make in those growth areas, the number came out around that 12,000 number. So it was really a mixture of what actions do we want to do to drive the company to be more efficient balanced against where do we want to spend money and how do we want to accelerate the change and the growth areas. And when we did that it came out to that 12,000ish number. You know, there are any number of companies in the past in your market that do a series of layoffs that identify a number as you have but then come back to it a year and a half later and say, you know, weve got to do more. Do you expect this is going to be it in terms of the layoffs that take place at intel . You know, thats certainly the plan. You know, if we take a look at this at the end of this effort intel will have, if you measure by say revenue per employee, the most efficient or the highest revenue per employee in the history of the company. And so weve really tried to look at this as how do we become the most efficient we are, how do we be realistic as we said about where the pc is going, still keep investments in the pc and the right locations, places like two in one, the thin and light devices, theyre growing at a good rate, gaming pcs are growing at a fantastic rate. We are continuing to gain share in the set top box market and those are more and more same technology as a pc. Were going to invest in those areas. But we are going to manage investments in the other segments that maybe arent growing or actually shrinking. Weve tried to scale this such that this is the one time that we need to do to really push this acceleration over. You know, you mentioned is this like the grove effort when we really went from memory to the cpu. It is in that we are making the shift. We are going to push over the edge. But whats different and actually better here is were not having to exit. We still have a very profitable engine in the pc. And were going to actually make it more profitable while we fuel the growth in those other areas. Brian, it sounds like youre saying on pcs you mentioned two in ones, thin and light gaming pcs, those are the higher end models that really its the lower end and maybe the bottom of the mid range thats not performing that shrinking. Amd used to really operate in that area. You guys have largely dominated them in that category as well. Whats going to happen to the low end pc if you guys arent going to invest there . And does this also mean that the marketing dollars that you guys had been contributing to oems in that area that those are going to either go away or be dramatically depleted . So a bit of your comment is spoton. The growth areas interestingly enough are tending to be those higher end pcs, the gaming pcs, the high end enterprise and consumer pcs are doing quite well. The thin and light devices that people want to use on the go. Youre right in that the areas that are flat to down are tending to be those mid to lower level systems, both laptops and desktops. That doesnt mean that were not going to continue to support them or bring in new innovations. Its were going to scale that innovation relative to the growth. So well slow it down. Well as far as the amount of innovation going into those segments, but were still going to support them absolutely. And just be realistic about where those are headed. Tell me again about data center. We hadnt talked that much about that. It seemed like you were saying that the strength in data center was more on the cloud end, your amazons, your facebooks, your microsofts, big buyers that have come to define this era in data center. Enterprise was actually weaker. Is this something thats just a blip . Or is it indicative of this larger trend of enterprises not buying their own hardware and shifting their focus to the cloud . So, jon, i think its a bit of both. Theres definitely a correlation between the enterprise and gdp and, you know, overall macro economics. So we see when gdp is slowed we see the enterprise segment of all of the data center be the one most effected. Theres a certain amount of it thats tied to macrmacroeconomi and gdp. But youre right theres also a move to the cloud and the public cloud thats going on. So you are seeing that although the enterprise is still the largest segment of the Data Center Business for us, its growth has slowed down quite a bit. Its still growing though. So i always want to be careful. Its not that this is not a growth business, its just slowed down. The data center has the cloud portion of the data center is growing at more than 20 though. And it is one of the but i want to remind people there are other areas, there are other parts of the footprint of the data center. Theres networking, theres storage. Networking is now the Fastest Growing segment as a percentage of our Data Center Business. And were still a relatively small market share percentage in that space. So theres a lot of headwind for us to continue to grow. And its lined very nicely with the strategy that we have in the data center. Brian, jim you take all of those, we think theres a lot of growth in the data center. You know, i get confused sometimes. I mean, for instance, security up 5 , 12 year or yooef over, thats a great part and you dont mention it. And then chinas weak and thinking maybe chinas more important than i thought. Just these little nuggets you put in the call. Now im really worried about china. Maybe china is falling off a cliff. Well, china if you take a look you got to kind of look at it by segments, jim. Pc, china was definitely the area of the largest part of the weakness that we saw in the pc segment. But if you look at the data center, china was right on target and did very well. So, again, you see this by segment how are things being effected. And i think its the difference between what areas are growing and even with the existing devices did people want to store more data, go to more cloud environments. Thats going to grow no matter what versus people going out and buying new devices. And whether those devices are phones, pcs, tablets, whatever, you know, we saw that china was a bit weaker than the rest of the world. Youre right, security was a great business for us. Fpgas were a great business for us. We try and mention all of those. It was in my statement on earnings about the growth of the security business. Weve done a great job there, jim, really focusing down, focusing on where were good at security and getting that business back to growth. All right. Brian krzanich, you covered a lot of ground for us going through the pc market, data center, those other segments and of course those layoffs that are going to come with the restructuring that you hope to execute over the next year saving 1. 4 billion annually. Thanks so much for joining us exclusively on squawk on the street. Thank you guys. Thanks to you, jon, for bringing it to us. When we come back, shares of coke falling despite an earnings beat. Stay tuned for a live interview with their c. O. O. 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Man 2 [ gasps ] porous. Woman porous . Man 2 the Old Solutions arent working. Man 2 the world has changed. Man 1 meaning . Man 2 its not just security. Its defense. Its not just security. Its defense. Bae systems. Cocacola reporting better than expected First Quarter operating numbers, but a 2 increase in worldwide case volume is below forecast. Sales were hurt by a stronger dollar, weaker european demand. Sarahs going to have a live interview with coke c. O. O. James quincey in the next hour. The trend is really worldwide and north america. Flat soda and noncarb either up 5 and 7 around the world. Look, cocacola you look at it and say, wow, they just do a ton of business. The case volume is up huge. But that doesnt what people look at is a horse race betwe between and this quarter this was american pharaoh did 3 organic volume growth and he did 2. I do point always concerned about diet drinks, coke zero up, plus four. Water is up, you dont make a lot of money with water. But i think in the end cocacola could go down. Just because pepsi did better, you want to own pepsico over coke, but no ones going to dump coke. They make fortunes. And the small form coke, they make a lot more on that. That was a genius idea. Hes an innovator. Hes a modern day diplomat. The countries he goes to and markets he opens up hes truly the equivalent of secretary of state. He is a diplomat. Hes a worldwide ambassador for our country. I like that. A lot of ambassadors in that business, you know what i mean . Yes. Ambassador of coke. And Howard Schultz is a bit of an ambassador. Yes, he is. They make money for shareholders and ambassadors, you could do worse than that. What are you an ambassador for . Love, baby. Love. Baseball and love. Yes, baseball and love. Swimming. Look at all those things. When we come back well get cramers mad dash, count down to the opening bell. More squawk on the street from post nine in just a moment. You shouldnt have to go far to get the help youre looking for. Thats why at xfinity were opening up more stores closer to you. Where you can use all of our latest products and technology. And find out how to get the most out of your service. So when you get home, all you have to do is enjoy it. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. I could get used to this. Now you can, with the luxuriously transformed 2016 lexus es and es hybrid. Got about two and a half minutes before the opening bell here on hump day, wednesday. You want to get to abbott labs for our mad dash. Abbott labs had milestones in innovation this quarter. Why do i point that out . Because miles white is the driving force behind milestones. It was a remarkable quarter. Hitting on all division cylin r cylinde cylinders. Remember only 30 of this company is from the United States. This is the weak dollar play. I like nutrition. I like diagnostics. Am i to place in the pantheon with alex gorski, that would be asking too much right now even though miles has been around for a lot longer for jnj, but this was a fantastic quarter and he is what i called money. Remember when i said Johnson Johnson had mojo . Yes. Abbott has money. Is that better than mojo . The change guys are happy with mojo. You got to love, when you do branding, criticized the drug the bank branding on their notes oh, no, their press release. Okay. Found that very frustrating, yes. This is you need better eyes than i have. But this is miles white with miles stone. Do you think thats a coincidence . No, thats brilliant marketing. Miles stones no. Oh, sorry. No. No . Understood. I got it. I got it the first time, but i went for the joke. You went for the long ball. 111 you went against me last night. New york mets prevail 111. Thats a milestone victory. Hes money. Money. Yeah. Mojo and money. Youre so money. Well get the opening bell here in just about 30 seconds. Meanwhile, as you know by now dows back above 18,000 for the First Time Since july. 2,100 on the s p, First Time Since december. Dow and s p up four out of five. And were actually on track for three months higher of the dow. We havent done that since the spring of 2014. At the big board today Mgm Growth Properties spun out of mgm resorts celebrating its ipo. Well talk to the companys ceo when the stocks open. Developer of lighting and display technologies. Very Smart Company by the way. Really . Yeah. Really Smart Company. I love to have them on some time. They do a lot of smart guys. Very exciting day. Weve had these endless rotations, positive rotations. Yeah, i mean, what do you make of these new cycle multiple highs . Geez, i dont know. I was looking at ge selling 20 times earning. Nobody has any problem buying that. Im looking at United Technologies well above where they did where honeywell did that. Look at freeport and say what does it take to stop that stock. Has weak dollar stuff too. Weak dollar. Got to be. And talk to ed garden yesterday of trian, going to be talking even more about ge, thats what he went to. Because that multiple that gets your attention. 20 times. Come on. It was a 13 multiple when they bought that stock, 14. I dont think you can expect much expansion from here, jim, unless somehow youre going to have earnings expansion. And they get to the 16 margin target that theyre talking about. Couldnt agree more. But i just think this rush into those companies now, the marring number today will be boeing. And the note that i saw on boeing today struck fear into my heart. The bank of americamerrill disappointing cash earnings from 787, 29 billion problem. They cant make the 30 million per plane, maybe 16 million. That caught my eye as something that didnt fit the thesis of Big Industrial manufacturers doing well. Its out of sync with the thesis, not money. No mojo. Speaking of something out of sync, dish, the satellite company. What was out of sync was its earnings. It reported them this morning. They still have no idea many of the people that follow the company why they did that when it was expected weeks later. We werent expecting to hear from dish for weeks. They reported earnings and we have a Conference Call at noon. Yesterday you may recall we got news that prior to midnight tonight dish seems likely to shut viacom and all of its networks all because that will have expired, that being the programming contract that the two have. Viacom shares were down sharply yesterday. You can see viacom down yet again today. Listen, viacom, the ebitda derived from dish subscribers is not significant to them when you look at the models. Im sure were going to hear Charlie Ergan damage the brand yet again, talk about how nobody needs it, nobody wants it and all the Different Things hes talked about. At the very least these comments hes making sort of add to that overall ka calfty that doesnt do much for viacom as it tries to make the case that it is much needed amongst the cable content. This is bad blood, right . Bad blood. This is bad blood. Taylor swift. He does this often. He takes things to the brink. He will often go further than others. Remember when he gave out mels home number. I called that. Mel was not happy about that. As for the numbers at dish show, jim, they were okay. They beat due to on ebitda due to 67 million other gain. But when you look at the satellite numbers, they were down 158,000 subscribers, down 4. 5 overall over the years in terms of subscribers losses on satellite. This is still a key part of the business. Yes, theyve got all the spectrum. Yes, they have the slim tv offer going. Well get a better idea just how quickly and theyre also introducing this new bundle on sling that doesnt include disney channels. But satellites going away and kind of quickly. But so good, the stock has soared. A lot of people feel they brought in new customers with it. With direct, yeah. The package, nfl, nfl can do no wrong. You mention nfl you immediately raise your status. They won that concussion suit by the way, did you see . Yeah, they did. I dont know, this was disturbing this battle. And it did make you feel like after a couple of days where time warners moving up, cbs moving up, could we do without viacom . Thats the question, isnt it . Can you do without viacom . Do you need mtv, nickalodeon, b. E. T. The argument is failure to reinvest in those franchises has caused longterm problems. Kind of what theyre saying about yahoo today. I got so much to say about yahoo. The section of the companys troubles on the front page of the Washington Post saying all that. We can talk hours about yahoo and we typically have. There are a couple things pat comes out with 40, 49, obviously theres bidding. I thought it was interesting these guys remember when she came back and talked about the boomeran boomerangs . A boomerang is a boomerang because the number of people that theyre firing, i mean, theyre very proud that they only well, they obviously feel badly for firing people, but down 22 in head count year over year, down 42 since 2012. You know, a lot of times they have this maifens mobile video native social that slowed dramatically. The growth in it slowed dramatically. 390 million versus 365 million. Last time we had her on in an interview she said well its slowing off a larger base, my argument would be its not that large a base. No, search down 9 . But you keep thinking what went on at yahoo they closed offices. I thought this was noteworthy in burbank, mexico city, milan, can i ask other than really great suits what were they doing in milan . I mean honestly. Mexico city, a city known for fabulous, fabulous artwork, what were they doing . Madr madrid, is that because of barcelona, madrid and some tiein to soccer . Football. The cities that they have, where else are they . I dont know. Are they in philadelphia . They may be. Whos next to be closed . They may have gotten to a lot of it. Stock by the way is up 2. 5 in part because the numbers were ahead of at least what analysts had estimated and because there continues to be a lot of reporting on the sales process for the core business and the idea that verizon perhaps will pay a big number. Well see. Well, david, theyre fully committed. Theyre completely alive. Theyre expeditious and diligent. Yes. They said those many times. Theyre all those things. And finally reference to my interview yesterday with jeff smith from starboard, they are seeking nine seats on the board of directors, but of course that vote wont come until after the sales process has concluded leaving many to believe wouldnt it make sense to get somebody on the board from starboard sooner rather than later to be a part of the process. I think you would expect hill. You hearing hill . No. I dont know. Im just hearing you might get a settlement sooner rath r than later. Given the numbers were not off in estimates, in fact were a bit better. You know, maybe they get something done there and get rid of another distraction in their proxy fight. Whats left is worth something. I mean, they do have customers. People go there. Yahoo finance does well. Yahoos sports does well. That do have some growth. I mean, its worth something, is what im saying. Yes. And verizon seems willing to pay something. 8 billion . Is that what its woth . Search a tad disappointing. Suboptimal. Suboptimal. But they are diligent, david, they are expeditious. I got to tell you something, they indeed again i want to emphasize as they did on the call, they are fully committed. Yes. Just not sure what they are committed to, they are fully committed to being fully committed. A lot of times restaurants are fully committed when you cant get an open table. Ask for open table. Were never fully committed for you sfwl in our marriages were all fully committed. Thats true too. Full commitment. Yes. Intels not moving a whole lot, but you might have seen our interview earlier this hour with kproe Brian Krzanich with the job cuts and about 11 of the company. What do we wapt to do to be more efficient balanced with the growth areas and accelerate the change and when we did that it came out to that 12,000ish number. Trying to make an argument this was hard to do. Especially in a political year. But also that pcs although weaker are still growing, still profitable for them. And theyre going to grow both organically and through acquisition in the future. But why didnt he throw cold water on my grand Conspiracy Theory thats going to divide the company into two . Why didnt he say, no, stacey smith is not being groomed for ceo . Why didnt he say pointblank were better as one not two . Why did he not just stop me in my tracks like my two companies or abbott labs talk about a milestone, why didnt he . Why didnt he stop me . I dont have an answer for you, jim. I would ask you why didnt he . Because theyre going to do it. Thats my supposition. I think thats when you should have just said, jim, youre flat out wrong. That is ridiculous. Thats when you do that. You do a united technologietech fabled interview on squawk on the street, what did he say . Aint going to happen. He should have had a haze moment. He should have had a haze moment where he said jim that aint going to happen. And that is the benchmark when you want to stick a fork, a knife and a spoon into something thats outlandish. It aint going to happen. Right . Yeah. The knife and fork in. Were going to get to a little favor report here. Oscar munez, a man who has a new heart and a new job has one less thing to worry about and that is dealing with a proxy fight. There was a settlement, United Airlines which hasnt reported earnings, im not sure when theyre reporting, settle with par and altimeter. These were shareholders that dont usually get included in the list of activists, but they did. They got out of the settlement two board seats and the mutual agreement on a third seat to be named later. Right. Wouldnt it be great to talk to oscar about this . Yes, it would be. Ive invited him on. Hes on tomorrow morning . Oh, he is . I nailed it down. You did . While you were doing the intel thing i nailed it down. So even though youre talking to us youre booking shows . Of course. Do you think i just sit here and listen to david . I listen to david and i take action. I booked him while youre talking. And you dont listen to yourself. Its goipg to be great. Im finding, im booking. Did they get the right guys . Yes. Well, he also chose to defer because he had the right to become chairman much sooner, defer taking over the chairmanship until 18, Robert Milton will become the nonexecutive chair of the board of directors. A lot of this makes sense. Settlement makes sense, eliminates a distraction of course. There might have been a success on the united part if theyd chosen to fight. Interestingly only one of the original six people proposed by par and altimeter is actually going to take a seat on the board, that man right there, barney harford. Smart fellow. And in fact schapiro from par will also take a seat, but he wasnt part of the original conversation. And remember my day one interview with Gordon Bethune . He was nowhere to be found after that interview. We have to get exclusive at 9 00. They seemed to cut their ties with mr. Bethune quickly and abandon that whole idea of him becoming chairman. Again though it makes some sense. By the way yesterday of course i was at that big conference on activism. I did have an opportunity to sit down with a leading attorney who deals with defense excuse me. Adel . Yes, adele. I love adele too from latham and watkins, what he had to say about the universe when it comes to settlements. I think the popular myth maybe here might be that people are settling simply to avoid the fight because they just dont want the public embarrassment. But they may in fact be a board may be considering exactly what the activists. They may be in the throes of negotiating a major transaction or something transformative for the company and they dont want that distraction to take away from what theyre doing so theyll settle in order to get past it. There you go. My apologies to adel for not getting his name right initially. But its a lot to think about here. You created an ag bull market yesterday. An ag co. No, you moved deere, you moved i didnt. That was cliff robins really . There were a bunch of downgrades and you ignited it. Martin ag co very, very good, finally someone recognized it. David, its the faberer ag bull market. There hasnt been a bull market in activism recently. And i got a chance to talk to ken squire, the person who put on yesterdays conference. Also runs a mutual fund focused on the stocks that activists pick. And i said, hey, come on, things arent so good. Are they ever going to get better . Some people say activism has peaked and that the best years are behind it. For any number of reasons do you agree . I do not agree. I think the pendulum went too far. It was too much media attention, too much new activist, everybody wanted to be an activist and that had to come baa and i think thats what weve seen. I think the activists had a really bad year last year and i think well see a good year from them this year. We shall see. But at least on the case of united they have settled. Who oscar proposed is the best. Delta, red hat, really understands a lot of technology. A young board, i really like it. You can see mr. Gerstner not an addition to the board will be a guest with scott. High water mark for activism. They went too far. They went too far. That bell in the background is Mgm Properties opening over at one of the posts. Bob pisanis watching that. Bob. Got a very spirited auction preopen for it. Here it is. Mgm opened at 22. 75. Wow, remember this is a big deal. They raised a billion dollars here, big property in las vegas here. The important thing 50 million shares, 18 to 21 was the price talk. Price at 21 well above and opened at 22. 75. Good sign for the ipo market. Remember batts is still trading well after the friday ipo around 23. Well have american renal up this week, as well as secure works, the Dell Security spinoff also pricing, but two very well priced ipos in the last few days now. Elsewhere on the Global Markets in whats been going on a lot of talk about china. China was weak overnight here. I think the concern here the markets have been more stable and theres less talk about stimulus. And i think thats part of the problem. Shanghais had a great runup in the last six weeks or so. Here in the u. S. You know what was going on with crude prices a little bit lower after that kuwait strike ended, but Energy Stocks not down nearly as much as people anticipate. And some of the big names are actually positive right now. So were seeing the markets decouple a little bit from crude. About time on that one. On earnings two big global industrials reported earnings, a little bit better than expected. Illinois tool works big in construction, automotive, food equipment all over the world, half in the u. S. , half elsewhere, they beat on the top and bottom line. They raised their full year guidance by a nickel. And they reaffirmed their organic growth of 1 to 3 . Illinois tool works has been a monster since bottoming in late january. Its one of the big movers on the year. You see it down a little bit. Thats because it was at a historic high recently. Very tough to push it forward. Trading 19 times earnings, same with textron, great report overall. They reaffirm their full year guidance. They beat on the top and bottom line. They had very good reports in their commercial aviation line, the beach craft and cessna line did very well for them overall. And, again, the bottom line these are the first two Big Industrials to report. And generally just a little bit better than expected, which is the same thing that happened with the banks. Remember whats been behind the market rally in the past four months. The feds put a floor under the market. The perception is the dollars weakened, oils off the lows and china has quieted down. Whats been missing has been earnings. Yesterday we had better than expected numbers from some of the companies as well. If we continue to get modest upgrades or at least companies affirming their full year guidance and not cutting guidance, this is how you slowly but surely move towards new highs. The important thing were only 300 points away on the Dow Jones Industrial average for a new high. Well hear more from ge and caterpillar on friday. Theres mgm opening at 22. 75. Now trading at 22. 65. Back to you. Bob, thanks very much. Well come back to you. Lets get to the bond pits as well. Rick santelli at the cme in chicago. Good morning, rick. Good morning, carl. You know, if argentina was one of the auctions that i handicap at 1 00 eastern every other week with regard to degrading demand, it would have been an a, one of the main reasons is the bidtocover, well talk about that throughout the day. You know, 70 billion out there for, you know, 16 billion in securities over 4 to 1, the junk appetite is back. Pass the twinkies, is it a good thing, bad thing . Thats not for me to decide, but its a huge driver of different sectors of the market. Look at a one week of tens. Going nowhere quickly. Many suspected it would go higher in yield given that its a riskon mode. If you look at it since february, very contained. Obviously left side and right side of that kind of head and shoulders looking issue shows us were a bit stuck. And maybe heres the culprit or one of them, look at a one month chart of jgbs, again, a new low negative yield. Negative yields make everything look better minus 13 basis points. Lets look at yeartodate of hyg, the thermometer for how many twin kis investors seem to want to engorge themselves on and its moving much higher. Maybe we should instead of looking at the relative value trade against bunds start sharing that with the pulldown of negative rates throughout the world, especially japan. Hey, the dollar index is basically testing and breaking below important levels before tomorrows ecb meeting. Look at a couple year chart you can clearly see the move under 94. Carl, back to you. Rick santelli in chicago. Thanks. When we come back, former wells fargo ceo Dick Kovacevich with the dow up about 18 points. Dont go away. Its intelligent enough to warn of danger from virtually anywhere. Its been smashed and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. And dragged through the mud. The 2016 gle. Its where brains meet brawn. Lease the gle350 for 599 a month at your local mercedesbenz dealer. Billionaire investor carl icahn was on hand last night to celebrate Donald Trumps win in the new york primary. Thanks so scott wapner for that photo. Pretty decisive victory not just for trump but for Hillary Clinton as these frontrunners gain some confidence, jim. Can we stop talking about the horse race youll see the drug stocks rally because thats the end. Senator sanders is done. Trump obviously won a horse race there. But hillary is in. Okay. So lets just end that. Enough said. We dont have to talk about it again. Love you at 90 tax bracket. Im going to stop working the moment i got to the 90 . Well get stop trading with jim in just a moment. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. We rise above our differences. The right amount of garlic reigns supreme, and what separates us is mostly whether were chopping or frying. Food is a language we all speak. When we cook together, we find harmony in the kitchen. We make more than a meal. Enjoy fresh ingredients and healthy recipes, delivered to your door each week. Subscribe today, at hellofresh. Com and casuper food . Is that recommend sya real thing . Cedar . Its a great school, but is it the right one for her . Is this really any better than the one you got last year . If we consolidate suppliers, whats the savings there . So should we go with the 467 horsepower . Or is a 423 enough . Good question. You ask a lot of good questions. I think we should move you into our new fund. Sure. Ok. But are you asking enough about how your wealth is managed . Wealth management at charles schwab. Youto get the help yourefar looking for. Thats why at xfinity were opening up more stores closer to you. Where you can use all of our latest products and technology. And find out how to get the most out of your service. So when you get home, all you have to do is enjoy it. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Time for cramer and stop trading. Lexmark, nice premium there. I think this is two bits of bad news for hpq which is one that the mid single to high single digit decline in pcs that Brian Krzanich shared with us and the fact hp should have bought lexmark. I dont want to be in that hp. I like the meg whitman hp, the enterprise. And dividing the company up is a prelude to what i think intel will do. Im pushing that. No banking business. Bold call. Whats on mad tonight . Weve got biomarrin with spectacular news about hemophilia and then bill pulte. Unhappy with current management. Heck of a fight there. It is. A house divided by the way will not stand. Thats not bill pulte, its linco lincoln. See you tonight, jim. Nice show. Mad money tonight at 6 00. When we come back, former wells fargo ceo Dick Kovacevich and cokes ceo James Quincey. Dont go anywhere. Good wednesday morning. Welcome back to squawk on the street. Im carl quintanilla, david faber, markets tepid after yesterdays climb. Oil continues to get buffeted. Coming up shortly on the program. Former chairman and ceo of wells fargo Dick Kovacevich, his views on the economy, on politics and on the health of the banking sector, post earnings also ahead were going to speak to cocacolas chief operating officer number two James Quincey. Coke now down 5 , but first breaking news on existing home sales. Diana olick has the numbers for us. Dian diana, how do they look . Existing home sales up 5. 1 to a seasonally adjusted annual rate of 5. 33 million units. That is right along expectations. We did have a slight downward revision for february. Remember we had a big drop in february, so we made up for this nicely in march. But were still only up 1. 5 year over year. Sales strong in the northeast and midwest, sales up nearly 11 and 10 respectively, those two areas of the country had been trailing the recovery. So were seeing strong gains there. Thats the good news. Not so good news on inventory 1. 98 million homes for sale, that is down 1. 5 year over year. Were just at a 4. 5 month supply and days on the market at 47. The realtors calling that quite quick. That low supply is pushing prices ever higher. The median price of an existing home sold in march 222,000 up 5. 7 year over year. And interesting in the different price ranges. Were seeing very weak sales on the very low end where theres really no supply. But were also seeing weakening in the Million Dollar home range. We had been seeing gains of 20 now up just 4. 6 year over year. The realtors saying perhaps the volatility in the stock market spooking the high end. Also First Time Buyers at 30 , no meaningful pickup there. We should see them around 40 . Back to you guys. Diana olick, thank you for that. Sort of brings us to the banks which have seen big drops in revenue this quarter. As we watch the financial sectors impact joining us from San Francisco is richard kes vi kovacevich. Good to see you, welcome back. Good morning. We have a few earnings under our belts. Were trying to draw some big narratives not just on loan growth as diana was talking about but trading and weather as it improving as it appeared to do in march. What do you think . Im not that familiar with the trading parts of the industry, but everything i hear it has improved. But from a very low base. And how bad loan growth . Loan growth is good. I think it will continue to be good as theres a lot of activity going on in terms of mergers and acquisitions. And i think we will see good loan growth over the next few years. Are you worried at all the consumers releveraging to a dangerous point here after years of putting those Balance Sheets back in order . I think im more worried about what would happen if indeed we do have a recession, which i dont expect there will be one. But i think as long as people are employed at this level, i think the leverage is fine. Because we have seen some climbing numbers on revolving credit, on credit cards, things like that. We do have some i mean, they would argue that theyre alarmists, but it would be dangerous to go into a recession with Balance Sheets at these levels. Well, of course. But i think thats always the case. I dont think this is an extreme problem however. But certainly when you have a recession and people lose their jobs, youre going to have more writeoffs, more credit losses and more delinquencies. But i dont think were in any kind of a significant danger zone as a result of the lemplg we have today. You know, banks traded higher on the back of results last week despite the fact there were numerous challenges across the revenue line especially on trading. Do you think its a symbol that the worst is over when it comes to the banking results, dick . Well, the most important thing about the Banking Industry is weve had two record years of earnings. The only way that earnings are going to improve from these record levels is if revenue increases. And the Banking Industry has not had much if any Revenue Growth in the past few years. And in the First Quarter for many banks, particularly the pure plays, they were negative. So we have to have more Revenue Growth. And the only way were going to have more Revenue Growth is if the economy does well and if the Federal Reserve normalizes Interest Rates. Until that happens i think were going to have relatively flat and maybe even slightly reduced earnings this year. Richard, what is your journey been through the First Quarter . Obviously the market sold off very heavily and then we came back. Right at the beginning of january you did an interview on squawk box where you thought that the fed would raise rates four times this year. And you did speak about bubbles, bubbles in bonds, commercial real estate and parts of the stock market. Now that weve worked our way through that period of time, what is your belief set now . I think the fed will increase Interest Rates at least twice. And hopefully three times. And i think that the first rate increase for this year will occur in june. And what about whether there are bubbles in parts of the asset markets from what you believe . What you believed before was easy Monetary Policy arguably for way too long. Well, i think the potential for bubbles are still there. But i think we got through it, as you mentioned in the First Quarter. And that reduced some of the high, high levels of leverage, the high yield bond got back more to normal, and even commercial real estate has slowed down somewhat. So i think that as long as the economy is growing at around the 2 that it is, i dont see, you know, ridiculous bubbles. But it is at a high level. I mean, it could potentially be a problem, but i think were okay at the moment if we continue at least 2 economic gdp growth. Mr. Kovacevich, back to the banks themselves. At this quarter we saw return on equity that was really pretty pitiful for many of them. Theyre all it would seem trading below book value. Is this something we should simply become accustom to given the Regulatory Framework and the low rate environment you talk about . Yes, i think if the low rate environment continues, its almost impossible for many banks to earn their cost of capital. But i think the thing that you should be focused on about the First Quarter is the value of a diversified financial a diversified banks. The most diversified bank of the big banks is wells fargo. Their revenue is up 4 . The least diversified Financial Institution is goldman sachs, and their revenue was down 40 . Why analysts are talking about the value of these pure plays and spitting up the banks, the First Quarter illustrates that it is a diversified Financial Institution that can get through the ups and downs of the market and the swings that occur from different Asset Classes and so on. Its the pure plays that have the volatility. And thats why you want diversified Financial Institutions. Dick, on theranos, you did discuss it in january. Simon mentioned your interview from squawk box. At the time you said you thought it was unfortunate what was happening to the company. You thought it was unfair. You believed in elizabeth and what she was doing. Are you embarrassed by what happened since . No, im not. I still feel that its unfair. And i think there will be some information coming out soon that will show that indeed there was misinformation that was put out in the public domain. And i still have a great confidence in elizabeth. Can you elaborate at all on what kind of information . Is this stuff that bled through the journal . Can you be more specific at all . I cannot. I think thats up to the company to disclose what they want to disclose and when. But i am confident that indeed the company is in proprietary technology is good and that the company will indeed be a benefit to the entire Health Care System and deliver great diagnostics at a far lower price than the existing prices today. But, mr. Kovacevich, as a board member, im curious, is the board prepared for the possibility that ms. Holmes may actually have to step away from the company if in fact these reports that the government is considering banning her prove correct . Do you have a plan . Well, i again dont want to discuss what our confidential internal plans are, but i would just state again that im confident that the company is a good company and will survive and will achieve its objectives. And your plan is to stay with the board for now . Yes. Mr. Kovacevich, its good to talk to you. Thanks for covering a lot of ground for us. Former wells fargo ceo joining us from one market. Ahead on the show, Mgm Growth Properties, a new reach opening higher on big board debut. Mgm trying to optimize its real estate portfolio by spinning off Ten Properties in all. Its the biggest ipo so far this year. The ceo will join us next. At mfs investment management, we believe in the power of active management. By debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Fresh from the opening bell first on cnbc celebrating its initial Public Offering today is Mgm Growth Properties. Thats the Real Estate Investment trust spun off partially from mgm resorts international. You can see having quite a nice open priced at 21, the ticker mgp. Were now joined by james stewart, the ceo of Mgm Growth Properties. Thanks for being here, as your name would apply growth is supposed to be a part of your strategy. I guess my first question is simply what are the Growth Opportunities for this ring . We have a number of different Growth Opportunities, first would be contractual growth built right into our lease. We have a 2 escalator on 90 of the rent, and that goes on until 2022 for its first test. Secondly, we have the right of first offer on two spectacular projects in development from mgm resorts right now. One is in national harbor, maryland, and one is in springfield, massachusetts, which i think will be just gorgeous developments. Are they going to happen those developments . I mean, theyre not are they set . National harbor, maryland is going to open in december of this year if things all go to plan and cost 1. 3 billion. And is very, very close obviously. Springfields a little further out, a couple of years from now. I think targeting right now is something in the mid 18 zone. So you mention of course do you have triple net leases with mgm i think grow 2 a year to your point for quite some time. How much would mgms cash flows have to fall for them not to be able to make a lease payment . One of the great strengths of the company from my own view is that exact point, which is we are on a 2015 basis 3. 7 times covered before theyd be unable to pay the lease. And we went back over ten years and back tested this into the depths of the recession. And we were still covered 2. 2 times. So i think its something that i took a lot of comfort in. On the upside of course youre in probably one of the best launching markets in the world. We just showed figures 22,000 hotel rooms, 2. 5 million square feet of convention space. Very little supply coming on certainly in vegas until the end of next year, i think im right in saying. I mean, what sort of growth for those that are interested in lodging rates, what sort of growth can you boast here . I think that the las vegas growth story has still got a lot of legs. If you look at any statistic in las vegas versus other major cities such as the one we are in right now in new york city, the supply outlook is very, very limited. And the amount of amenities and so on that have been put into these spectacular resorts over the past number of years should really drive increased visitation. Obviously the Parent Company wants to pay down some of its debt. Had too much debt 4 billion is what you absorbed there. In the launching sector you know better than i one of the reasons that people go asset light is so that they offload the risk. In other words, youre taking the risk owning the properties, reduced margins, maybe losses on the hotel rooms when we go into recession. David asks you effectively whether youd stay afloat on your models. Im asking you what sort of value you would present to investors if we go into a recession and you have to bare those sort of depressed areas . Well, i would say the least that we have with mgm is a 30year lease. It is one which comprises a very significant component of their portfolio. When we looked back over the past decade and looked at the pro forma coverage and saw it was 2. 2 x, gave me the coverage that the least would be paid and we would continue to be covered financially. In addition our leverage out of the box is going to be approximately in the mid 5s which gives me a lot of confidence. What interest have you had from the chinese . The chinese are buying in europe. We know blackstone has been floating off other back to the chinese. What sort of discussions have you had could it emerge . Well, weve only had our stock trading for an hour and raised our debt last week, so i cant comment. Well see what the future brings. A lot of people are looking at this offering as a sign the ipo market is finally starting to thaw. Why now . Did you see an opening in the market . I guess we thought that the company had a number of positives and would be well received. And that the market backdrop seemed to be improving. And as we went out and started to talk to potential investors that thesis i think was validated. And so we decided to do it now. Finally, we should point out mgm will still own 75 roughly of this. And did not include the bellagio or mgm grand. Will you consider other entertainment assets, ski resorts or golf courses or is it solely casinos . Were going to focus on casinos obviously just given the dna of the company. However, were also going to focus on what i would call entertainment, hospitality, leisure. Were not going to have a broad focus on those types of activities. I would think of it more as on the Las Vegas Strip the revenues that underlie an mgp property are less than 30 casino based. So theres 72 roughly of revenues that come from other activities that go on inside one of these resorts to the extent that a great deal comes across our desk that our board likes, that we like, that we think really makes sense for the company, we dont want to have our mandate defined so narrowly that we miss out on that opportunity. All right. Well, a very good start for Mgm Properties. We appreciate you joining us james stewart, the ceo of mgp. This morning cocacola is the biggest loser on the s p after Quarterly Results showed some weaker sales. Worst day for the stock since 2014. Coo James Quincey who some see as a possible successor to kent well talk with him next. And tomorrow oscar munoz 9 00 a. M. Eastern time. You do not want to miss that. Welcome back to squawk on the street. Im here at post five where shares of cocacola trade. And as you can see they are down sharply lower down 5 all the way at the bottom of the spite of s p 500. Reporting declined revenues amid weaker demand for soda and currency pressures abroad. Joining us now straight off the call first on cnbc is James Quincey, he is the c. O. O. And number two at cocacola. James, welcome back to the show. Thank you. Nice to be back. Cokes having a rough day, worst day since back in 2014 at the bottom of the s p as i mentioned. Are you surprised to see the sharp reaction . There was a high bar going in with the stock outperforming, but this is a pretty brutal reaction here. Look, no one wants to see their stock go down, as you say weve had a runup over the recent months. I think whats important about this quarterly announcement is its another step forward in a journey we set out on at the end of 2014 with the five priorities muhtar announced. We delivered the results we said we were going to deliver. We provided some guidance on stated projection. So this year we said we think our actions will get us in that envelope. And the First Quarter was another step in meeting that objective. Of course volume is a key metric for you as always. Impressive 7 volume growth instills bottled water, teas, juices, but zero percent growth in soda. Isnt that a concern when your top two brands, cocacola and diet coke are in soda and theyre actually weakening . Look, i think theres a couple of things going on here. I think, one, the really good news is we gained value market share in every category we participate in. And the one we didnt we held share. So were building a portfolio of brands of cocacola that come across the Broad Spectrum of beverages. Only six of our 27 brands are sparkling. Were getting a perfoortfolio ts working. Theres more in the developed word and developing word and little pressure mark sparkling orr yiented part of this effect strong growth in stills and a flatter number for sparkling. But we see that as part of the ongoing rebalancing the economies. And we think both will grow in the longterm. The big response, the big strategic shift here to the weakening demand for soda from muhtar kent has been smaller packages. You definitely squeeze more revenue out of the smaller packaging. Part of our strategic shift is segmenting in revenues to talk more about the growth of our categories in revenue terms and in transaction terms. And you can see within our business that smaller packaged immediate consumption package growth is outpacing the growth of the larger bottles. Thats true in north america, which has had a good run for the last few years. We see more opportunity to bring both affordable small akages and premium small packages to the market in north america. And that is also playing out in some of the emerging markets especially in the macro pressures bringing the package size down, making it more affordable will help us regenerate growth and create a healthier franchise for the sales of sparkling beverages. You mentioned the pain in emerging markets and muhtar referred to the challenging mac macroenvironment. Are the economics in places like china and brazil actually getting worse, or are they stabilizing . Look, theres a pan plea of problems out there in macro terms. I think were seeing a number of countries going through a recession. We dont see it accelerating in terms of getting worse. Were looking for some sort of bottoming and then hopefully improving towards the end of the year. We dont have a crystal ball on the economics, but we do think were hitting the bottom in terms of that combination of devaluation and decline Economic Growth and hopefully well start to see some rays of light towards the end of the year in some of these markets. Just a quick question about those new packages which have gone viral all over the internet. You gave us a sneak peek. I know its part of the one brand new coke marketing platform. And you havent decided what to do about the u. S. , but i just wonder, i mean, diet coke fans, yes, diet coke is declining, but they are a loyal group. How do you make sure that as you roll out a complete refresh and look you dont pull another major marketing misstep ayla ne coke in the 80s. Clearly we dont want to misstep. We know from our graphicing look that this actually does help to grow the overall brand. It grows our store presence. It brings people into the zero and the light versions. Of course were going to look very carefully exactly how we implement this in those diet coke markets like the u. S. , like the uk. But this is part of a strategic shift. We will evolve and learn and make sure we get the packaging right. The implementations could change, but the strategy is clear. And we think this will help stabilize and grow cocacola. All right. James, thanks for joining us with some color on those results. James quincy from coke headquarters where he is the c. O. O. Simon. Thank you very much. Intel cutting 12,000 jobs amid weak results and weak outlook. Can the chip giant turn the business to growth . Ceo Brian Krzanich spoke to us in an exclusive interview. The highlights next on cnbc. You shouldnt have to go far to get the help youre looking for. Thats why at xfinity were opening up more stores closer to you. Where you can use all of our latest products and technology. And find out how to get the most out of your service. So when you get home, all you have to do is enjoy it. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Good morning everybody. Im sue herera. Here is your cnbc news update this hour. President Obama Meeting with Saudi King Salman in riyadh. The visit comes amid increasingly strained relations between the two countries. The president will spend a day in the saudi capital before heading onto london and then hanover, germany. The death toll from the ecuadoran earthquake rising to 525. More than 200 are still missing. Aerial images showing the scope of the wide destruction that left more than 4,000 injured and thousands homeless. Women in support of Embattled Brazilian president rousseff took flowers last night. The Brazilian Senate will vote to impeach her for using illegal accounting measures. And new step commemorating the queens 90th birthday has been released. Shows toddler Prince George alongside his father prince william, grandfather Prince Charles and greatgrandmother queen elizabeth. The queens 90th birthday is tomorrow. And that is the cnbc news update this hour. Lets go to Jackie Deangelis at the nymex. Good morning. Of course if its wednesday its the department of energy day to release crude oil report. We got a build in crude Oil Inventories of 2. 1 million barrels. Gasoline draw of 110,000 and a distillate draw of 3. 6 million. Crude Oil Prices Trading just over 40 right now. At one point in the session we did head under that mark dipping into the 39 territory. I will say this, the kuwaiti oil strike is over, so thats one reason for crude to go down. No production freeze in doha, the fundamental side of this of course another reason for it. But the dollar right now is plaguing traders. They do think theres not going to be a change in fed policy and that oil will see some support because the dollar has been weaker on a relative basis. So thats certainly something to watch for. And i will say the drawdown in gasoline, the drawdown in distillates a little bit supportive as well. The build we saw in crude in line with expectations. Back over to you, sarah. All right, ja ki, thank you. Meantime, the frontrunners donald trump and Hillary Clinton both had big wins in new york yesterday. Our eamon javers is in d. C. With the latest on the delegate math, morning. Good morning, sarah, a pair of absolutely monster wins on the democratic and republican side in new york state primary voting last night. Look at these numbers donald trump with a huge margin of victory 61 over john kasich at 25 . And ted cruz back there at just 15 . Thats for the republicans. On the democratic side Hillary Clinton also with a commanding win. Hillary clinton 58 to Bernie Sanders 42 . Look at this exit poll result. This is in wall streets home state of new york state. And wall street not polling very well. If you asked voters yesterday whether wall street helps the u. S. Economy or hurts it, hurts the u. S. Economy, 64 of democrats say wall street is hurting the u. S. Economy. Republicans 51 helps the u. S. Economy just 29 of democrats say that and only 46 of republicans say that wall street helps the u. S. Economy. So wall street under water in both parties here. Maybe not that much of a surprise given that were just a few years after the 2008 crash, but wall street has some work to do in its home state, guys. The upshot of yesterdays voting here is its going to make it much harder for anybody other than donald trump or Hillary Clinton to clinch the nominations for their party. And much harder on the democratic side now for Bernie Sanders. Were going to have to wait and see what he decides to do going forward. Although clearly its still not clear trump will get enough votes as cruzs actions now will testify to. Thats now the race. Yeah. Absolutely the race. And the question is could donald trump somehow emerge with this nomination if he gets below the magic number of delegates going into the convention would Party Leaders be able to take it from him. Donald trumps been out there on the campaign trail with rhetoric saying this is a rigged process, a fixed process. That could cause a lot of consternation among the voters that voted for donald trump. You see that huge margin in new york state just yesterday. Thank you, eamon javers, big night for new york. Intel shares under pressure this morning after the Company Announced massive layoffs and slashed outlook. The ceo joined us in the last hour courtesy of jon fortt whos back onset with us. Jon. Yeah, its interesting. Intel shares actually trading a bit higher now. Couple takeaways from what Brian Krzanich shared with us, first of all, stacy smith, theres a move to make him a bigger part of the leadership team. He had been the chief Financial Officer and is now taking on more of an operational role. They havent defined what his title is going to be. And given the impression that when they name a new cfo they will define stacey smiths title. Listen to how krzanich himself talked about that. Stacey had been cfo for nine years. And he and i had been working for several quarters on what does he go do next. And the next natural role was Something Like this. He had worked in sales earlier in his career. He had been in the finance side of manufacturing earlier in his career. So actually going in and running those operations made a lot of sense just in his career development. Also gives those segments of the business exposure to his leadership style. So this is just part of the natural how do we develop better leaders with more scope and more capability. So intel not saying that stacey smith is the number two, but come on, it looks like hes the number two now. Also the big point about this shift, this restructuring, the low end of the pc market even a big chunk of the mid range intel not seeing growth from that. Theyre just looking basically to maintain that and invest the cash flow from that into other areas that they do see growing including memory, including data center. Also on the data center front asked them about the fact that enterprise hasnt been growing as much as cloud and said part of that is related to gdp. But part of that is that shift toward, you know, companies not buying their own servers as much, farming out that to the amazon, to microsoft, google hopes to google them a lot. I do want to mention there are 12,000 job losses here. Yes. I mean, are they on the right track now . I mean, are they still a legacy Big Tech Company in some senses . Or are they now aligned with where the growth is in the industry . Or is this a journey they now go on for several years more. I think we have to use the euphemism and say its a journey. Any time youre cutting this number of people, 11 of the work force doing it this quickly, you know you have to make some quick moves. They missed the smartphone revolution. This was a Company Associated with the pc, theyre trying to shift into data center and internet of things. Its so poorly defined were still calling it internet of things. A bunch of stuff. But thats a cheap end of the market, isnt it . The internet of things, thats small rather thick chips. It is, but what intel will point out and krzanich will point out every rung when you go down the chips are cheaper but ten times more of them. So if you can get that volume and command that volume, you do pretty well. Same thing with internet of things. They expect that theyre going to be ten times as many iot chips as there are smartphone chips if intel can corner the market on those they will do quite well. Part of the reason why they want to shift this investment is so they get far enough ahead in technology that qualcomm, amd to some extent, all of these other chip makers dont get enough of a foothold in that still undefined market. Thanks, jon. When we come back, google charged with breaking europes antitrust rules but the company denying its done anything wrong. Well get you that story after a break. Man, im glad aflac pays cash. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr analysts are usually bullish on the companies they cover, but there are five stocks that make analysts say stay away. Catch that story and more on tradingnation. Cnbc. Com. More squawk on the street coming up. Welcome back to squawk on the street. Health care financials among the best performing sectors in the s p 500 and gains in the Health Care Space shares of intuitive surgical, st. Jude medical, Endo International and ill illumina up 4 . Another big mover United Health up for a second straight day and good for more than 20 points on the dow as the index is struggling to hold positive territory. For the Year Health Care is one of two sectors that are still negative down around 1 right after financials. Susan, thank you very much. Susan lee. Lets get to Rick Santelli at the cme. Good morning, carl. I like to welcome my special wednesday guest and i like picking wednesdays because wednesdays and weekends are when youll find. Hi, rick. Im going to read you something. This was from the president s 2008 victory speech. Americans have sent a message to the world that we will that we have never been just a collection of individuals or a collection of red states and blue states. We are and always be the United States of america. Homan, it was all about hope, change and transparency. Many voters voted for president obama because of that quote and how he represented how his presidency would evolve through the prism of uniting. How do you think it turned out . Yeah, you know, he got 50 more republican votes than john kerry did four years earlier because he ran on a platform of bipartisanship. And he was a huge symbolic figure the perfect symbolic figure to unite people and bring democrats along in a reform platform that would bring in republicans too. And he just didnt do it. He had all the cards in his hands the first two years and he went totally to the left and thats not what people expected or voted for. Now lets fast forward in time. Just yes or no to these, do you think theres many out there that dont pretty much understand what makes hillary tick . Yes or no. I would say no, nobody really knows what hillary makes heretic, you cant even understand what her platform is. But the other two candidates out there, Bernie Sanders and donald trump, Everybody Knows exactly what they stand for. Okay. And i guess thats my point. With regard to hillary, i think people are kind of familiar with her, not necessarily in the ways that you describe. But when she was first lady, she went right into the closed door meetings on health care. I guess my point is is that the old adage that people always elect the government they deserve didnt hold true in 2008 in many of peoples opinions. There was a lot of voters remorse. But no matter if you think Donald Trumps a loose cannon or hillary is questionable in terms of her ethics or bernies at least admitted socialist in certain regards there really is going to be there are no surprises as to the who these people are in certain ways. But yet you seem to write many of your pieces that the peoples choice is ultimately going to be wrong. At least dont you think were better off that we have a familiarity with these candidates that we didnt have in 2008 . Yeah, you got a very clear choice. You got socialism from bernie. Youve got trade wars and expelling 12 million Illegal Immigrants which would require a police state from donald trump. I think people would be very unhappy, even people who voted for these guys would be very unhappy with the actual consequences as they turned out. But they certainly have no reason not to expect what theyre going to get from both of those guys. Okay. So in this instance i would say that this election if theres nothing strange that happens at either Convention Even though its always the Republican Convention under the microscope, these are going to be the peoples choice. And i think in certain ways theres a real positive to that. Now, i dont know the outcomes, but i certainly dont think theyre going to have the same surprise a couple years into the administration they did in 2008, president first term. Your final comments, sir. Theres one choice missing. Most people want growth and prosperity and better times ahead for themselves and their children. I dont see anybody promsing that in a realistic sense. You have angry candidates, no candidates promising hope and growth. Well, you know what, i see the anger there. You saw it in many different forms over the past seven, eight, nine years whether it was the tea party, occupy wall street, but at least in this instance the people have a feeling that the person that theyre electing is going to govern in a way that he or she is speaking to. And i personally dont think that happened in 08. One other point i would like to make, do you think theres any chance in your opinion that one of the fore leaders in terms of delegates right now wont be the representative of either party . Your final answer again. I think anything can happen in the republican party. The closer cruz gets the harder its going to be for him and his backers who defer to trump at the convention which means it has to be a third person if thats the way it goes. I think the republican thing is still way up in the air. Thank you for your insights. Always appreciate it. Sarah, back to you. Rick santelli, thank you. Joining us after the break, the star of bravos Million Dollar listing brian serhant back. And oscar munoz on squawk on the street 9 00 a. M. Eastern time tomorrow. Well be right back. Wildcaught alaskan salmon. From icy ocean waters. To your kitchen counter. Pure. Pristine. Each one its own delicious arctic prize. When you cook with incredible ingredients. You make incredible meals. Fresh ingredients. Stepbysteprecipes. Delivered to your door. Get your first two meals free blueapron. Com cook. Whats that . The number of units well make next month to maximize earnings. Thats a projection. No, its a fact. Based on hundreds of proprietary and open data sets folded into a realtime, actionable analytics model. Nine. Eight. Three. Five. Two. Youre not gonna round that up . You dont round up facts. Powerful analytics driving decisions for the worlds most valuable brands. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Czars are back for the season five of the brau ceos popular show, and what can be learned about where manhattans Real Estate Market is headed. Joining us now is ryan serhant from the show. Good morning. Thank you for having me. So, how is it . Congratulations. Season five. Yes, five years, and it is totally crazy. Crazy. We come back tomorrow at 9 00 p. M. For brau ceo, it is a special 90minute premier, and every year, it is more and more dramatic, which is weird. I hear it is all in the editing. I think. So because a lot of it is going to be left out of the editing, and what you see is simple, because we have opack it in. And what can we expect this year . Well, the market has been crazy especially last year while we have been filming, and the pricing is craze zishgs and the sellouts, and you will see the penthouses from 40 million the sell out to 60 million, and then the three of us are like three lions trapped in a cage, and you will see what happens. How indicative of the overall market is that . Well, i mean, there is things that will be in the season that i wish werent to be honest which is probably why the show is so interesting to watch, because it is real. There are things that like what . There are things that we dont sell. Above 5 million and above 10 million in new york city, and the average days on market is 150 days where compared a year ago it was like 60 days, so you have all of the excess supply. That is important thing for a broker to say. And we had a report in the journal that january and february, the volumes fell from 20 from january to febway, and the lowest since 2009. Yes. And you are seeing that people are slightly worryied an they have a right to believe it . Yes. And the people who believe their apartments are worth and more and more money, and it is supply and demand, but there are beautiful apartments selling everyday. But it isnt, because the brokers will attempt to get the highest price, and arguably slowing down the market if they are pitch iing too high. Well, it is hard to blame the broker, but sometimes it is the sellers, because it is difficult in a listing pitch to say your home is worth x and they say 2x and you try tole come to the deal, and the market is going to do dictate the price, and we can do everything we can to get the most amount of money possible but when you say the amount of time that they are on the market is extending, what is happening in that time . How many price cuts per average . Over 5 million, it is about three. Three price cuts . Yes, it is ripping the bandaid off three times, and where the people price aggressively on the low end, the average price is 20 even for a 10 million apartment, and everybody is out there, and everybody wants to feel like they have a deal, and they have the access on the phone, so everyone is a genius. And what has changed in the market that has led to the weakness, because the Mortgage Rates are back to lows of the year. Do they have mortgage lows at that level . Yes, wealthy people are refinancing as much as you can, because the Interest Rates are incredibly low, but you have a lot of supply, and people coming in, and everybody believes that there is a mystical foreign buyer, but it is 15 to 19 . And a lot of it went away, the chinese and the brazilians were not there. And 7 billion people in the world, and many in new york city alone well, the dollar went up. And it has hurt us for sure. Looking forward to the series. Thank you. Thank you for having me. Ryan serhant from the Million Dollar listings, and that is going to return tomorrow night, of course, on bravo. And meantime, google has been hit again with forle mall charges from europe. The antitrust company is going to be filed with the alphabet portion saying that they are preloading their services to be the exclusive operating services. According to the vestager on goog google, she remarked this is coming a week and a half ago when she appeared on this show when she talked what about she has been dig up on an droid. Take a listen. The thing that is concerning us is that in some markets, android has become very, very big, and people are coming to us with concern saying that the risk of only having the operating system if you have a full suite of google apps, and therefore it becomes a oneway street. That we are investigating, and of course, making it a high priority, because tease are the fastmoving market, and therefore of course, the antitrust have to keep up the momentum with the market as it is moving forward. And so now google has 12 weeks to respond to the charge, and in a blog post kent walker, the general counsel said that android has helped foster a remarkable and importantly sustainable ecosystem based on Opensource Software and open innovation. We look forward to working with the eu to demonstrate that android is good for competition and good for the consumers, and keep in mind that this is up to the annual sales of 75 billion annual sales for google, and so it is too soon to judge the size of the fine, and that is a to be continued story, and much more analysis on the google charges coming up on squawk alley and that is next. Owen hey kevin. Hey, fancy seeing you here. Uh, i live right over there actually. Youve been to my place. No, i wasnt. Oh look, you dropped something. Its your resume with a 20 dollar bill taped to it. Thats weird. You want to work for ge too. Hahaha, what . Well were always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. Why dont you check your new watch and tell me what time i should be there. Oh, i dont hire people. Im a developer. Im gonna need monday off. Again, not my call. When they come, they come for three weeks. In our apartment they slept on our couch, and it was okay. But theyre getting older, and. I wanted them to have a space for themselves. Every time i come home, im just like, wow. This is. There couldnt have been a better home for us. Whatever home means to you, well help you find it. Zillow. Will Oil Prices Take airlines on a turbulent ride or are blue skies ahead . We will have American Airlines ceo tomorrow. Good morning, it is 8 00 a. M. At intel headquarters in santa clara, california, and it is 11 00 a. M. On the streets of new york, and it is squawk alley live. Start spreading the news im leaving today i want to be a a part of it new york, new york thank you for joining us at post 9 and joining us is guy kawasa kawasaki, and thank you for joining us, and now, intel shares coming back into the green after