Transcripts For CNBC Squawk On The Street 20170505

The biggest mover when you get sort of adjustments, well, a little bit. But not really. 2. 35. Kind of hanging in there. Crude oil has been one of the bigger stories of the week of course with its significant drop over lets call it the last week or so. Oh, its a crash. Crash. I would put it when you have its almost one of the things that we have to talk about was there two hedge funds somebody didnt liquidate it. 53 or 54, straight line, i think it borders on a crash. Straight line. One of the stories were following this morning. Lets get to the others and our road map it starts with of course the u. S. Employer employment picture. U. S. Employers picking up the pace of hiring. The Unemployment Rate fell to the lowest level in nearly a decade. Plus oracle of omaha, is r ouring is osouring on ibm. Jim and i may wonder what took him so long. A warning to the Trump Administration. Ges jeff immelt calling on government to try harder to avoid the protectionist policies and to level the Playing Field for american companies. Job creation improving in april after what was disappointing growth in march. Nonfarm payrolls up better than expected. 211,000, that was spurred in part by strong hiring and professional and business services. The Unemployment Rate fell to 4. 4 . Average Hourly Earnings rose last month. Not bad. No. I think that this is one of those numbers that may counteract the notion that the economy got so weak that the fed was out of touch. When it was so hawkish on wednesday. Did the fed have the number, we can play that parlor game. But you did wonder it immediately. What did they know . Of course, lets play it out the other way. Lets say they said hey you know, what, we have to wait and see. Then we would have wondered what are they waiting and seeing for . Are they behind the curve . We had one person after one person say theyre behind the curve. Im glad for the number so we dont hear that chatter all day. You think that june is back on the table in a bigger way with the rate hike . Its not like we had a gigantic increase in wages, 7 cents. But something you care about this a lot. Discouraged workers were down to 455,000. Down 113,000. People coming back to the workforce. Some surprises here. Leisure and Hospitality Plus 55 . This jibes with what were hearing from priceline and the cruise lines. People are doing experienceal and that means we have to hire. Yeah. Say it again. Im encouraged. Lets be human for a second. Isnt it great . Its a great number go back to 2007 and start having jobs. Generally earnings, jim, which is important. Up 0. 3 month over month. That was more or less in line with what people expected. 2. 5 year over year rate of growth. Thats below where people are with regard to the consensus. We should talk about that. I know we were some of the discussion we had when we were obviously out in the west coast is the notion of what is technology doing . And its creating a lot of pressure on price. On wages. As opposed to eliminating jobs. Right now were only in the pressure on wage. Which means what . Well, youre not going to have the inflation that i think people keep expecting. So behind the curve chatter, i think the fed is very smart about this. The fed seems to recognize what you and i recognize which is that theres going to be jobs being taken out in retail. Theres going to be taken jobs being taken out by technology. So dont be dont put the you know, put the pedal down and do three, four. The people have to find a ways. Otherwise we should see the Wage Inflation line the 70s. Not happening. It is not. The larger issue we have talked a great deal about is automation, robotics, ai, all those buzz words we like to throw around, but how many jobs will be really lost over the last over the next decade. Right. I think the psychedelic call that elon musk led thats what you call it now . Thats what you have to call it now. Mushrooms. One time it was plastics, but now its mushrooms. But what i liked about it, how quickly the robots can move. Now, again, one of the things behind the scenes the terminator comes up endlessly in california. Yeah. Endlessly. Endlessly. Some people i know everybody is talking sky net. Well, because theyre talking there, sky net. What happens if the robots can make 500,000 cars by year end at tesla, what that says what happened at intel when i visited a plant in israel. They put a plant in israel. People arent allowed to work on saturday, how do you do 24 7 . Its not people, it was robots and that was in the 90s and now the robots converse, they play the game go, they beat each other. Yeah. So far, not having a huge impact on overall employment. Yeah. We should talk weinstein. Einstein versus watson because watson does not fare particularly overnight farewell. Lets move on to that big story. Ibm news, Warren Buffett telling our becky quick that he sold about a third of Berkshire Hathaways shares in big blue. Becky asked buffett if it was based on the revenue decline or its Cloud Business not growing as fast as expected. Here is buffetts response. Well, its based on a lot of different types of businesses but the earnings have been obviously disappointing. I mean, five or six years ago i think they were earning 20 plus billion pretax. And maybe its 13 billion now, i dont think the quality of earnings has improved so its you know, its been a period when it im sure that its been tougher than they thought, than i thought, i dont blame them. I get paid to make my own decisions just like an an apple or something of the sort. Sometimes im right, sometimes im wrong. I think ibm is a big, Strong Company but they have big, strong drm competitors too. Some he stays in some names for a long time and some he gets out of quickly. This is not a cocacola, but not one of the names where he was sort of in and out with relative speed. Right. When we saw him last, when he put out the report he was selling. Didnt really come up. If you remember when he put out his quarterly. Yeah. It will cause people to revise their thinking. I was not clear enough in the first hour when you were on squawk box. Ibm, people going to say he must think its going down. I actually think that he may be selling just about the point when ibm is about to tip. Ibm got mentioned a lot of times out west. It did . Not tipped, turn. Turn positive . Not tip over. Theres more artificial intelligence, thats more analytics but it didnt happen fast enough. Its kind of like for buffett i think its the river jordan and hes on the jordan side. Just looking over to the land of milk and honey, decided he has to cut his losses. Because it is you know, he would say look, we have some basis that its okay. Base us that its okay. I dont know what the overall performance is but it didnt perform well for them, no doubt. One of the things thats happened at ibm i think they felt if they kept returning capital in the form of buy backs and dividends very unusual for the Tech Companies unless you have huge cash flow and youre also growing, that frankly the nation i think they should rethink. They can keep raising the dividend. They can keep buying back stock. But i think what they should have done is the big acquisition now. Well talk about apple in the big acquisition later. But ibm has done a huge number of acquisitions that slowly move the needle. I heard a man say its not fast enough. That they were really catering both to the audience thats in the stadium, which is Warren Buffett. And the audience thats outside the stadium. Maybe they should have catered more to the outside. Should this make people feel that ibm is not worth as much, they will. I think the Growth Initiatives that they have undertaken over the last three to five years are performing fairly well. Yes. Yes, they are. But can the growth there outpace what has been the what we call the legacy businesses almost at this point. Which still comprise a larger overall component of the revenue. Almost every company that reported to be okay, lets use 3m, the stock went down and it came right down. The only one that hasnt come back in the dow was ibm. I wonder whether that wasnt persistent selling by buffett ahead of this move. Is ge still on the dow yeah. They had a quarter. Cut me to the quick. The larger issue about doing a large acquisition to change the complexion of the company is not without huge risk. When you do that as a company youre also saying to your investor base, all right. We dont think the old business works. You can get penalized for that. Youre kind of damned if you do, damned if you dont. Brian krzanich buys they have the best Autonomous Car intellectual property but the chips are expensive. Intel is the worlds greatest manufacturer. It has been for years. They bring down the price of the chip, suddenly they have the best autonomous chips even a waymo which is owned by alphabet was turned off. But making intel not the pc company that we still associate it with, but making it more like lebron james new ad campaign, yes. This may be the size of the acquisition that doesnt attract quite as much concern amongst the investor base. Its the transformational deals that you say that ibm should have done ala aol and time warner. What did Warren Buffett really say at the end . Well, theres a lot of competition. Theres not a lot of competition at burlingtoner on northern. And he talked about amazons Cloud Business and how long it took for the competition to come. Youre going with the with whats going on at ibm and he pivots to bezos. And hes the evil empire out there. Listen, dont worry. We have our flank protected. Who is the flank being protected against . Amazon. All right. When we come back, of course, a few minutes from now, ges Ceo Jeff Immelt has a message for trump when it comes to trade. Higher stock price . Okay. Oh, lets give you another look at the futures. Nice pictures of jeff. We have a lot more squawk on the street right after this. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound i wont. Now on the next page youll see a breakdowhat . Costs. Its just. We were going to ask about it but we werent sure when. So thanks. Being upfront is how edward jones makes sense of investing. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. General electric Ceo Jeff Immelt urging the white house to avoid protectionist policies and to level the Playing Field in tax reform and other policies. Yesterday he said that companies should try harder to compete and that public sentiment toward free trade has changed due to job losses, lower wages and chinas growing presence as an export power. Immelt said were not going back to the pure free trade world but is protectionism the answer . I guarantee you we have the most to lose through protectionism. Strong words from immelt. Not unexpected given ges place as a global company. One with business around the world. And obviously, a significant amount of its revenues derived from those businesses. Well, i have to tell you that the characterization of protectionism for what trump is doing is something that a lot of the that wilbur ross would disagree with. And hes pretty sophisticated like i want felt. If korea would treat us like we treat the old level Playing Field. He does refer to it in the speech. Look is protectionism when you manipulate the currency and make it so were not as competitor . Is it protectionism when we say to ourselves, nafta was created when the peso was 41 and now its 181. No. If as opposed to the erratic nature of what i see right now coming from the white house. I mean, we have partly canada, boom. The idea of the soft lwood lumbr had been kicked around for long time but its the surprise factor. You wake up and you find canada, australia, mexico, companies that have been line countries that have been lined up with us not just politically and economically, but in defense. Yeah. For a long time. Allies. Yeah. Theyre allies. I think the concern has been since a lot of the tough talk on trade that it will devolve into some sort of a tit for tat, otherwise known as a trade war. And that warning listen, the president reversed himself on calling china a currency manipulator. The president went back to the same old same old that surprised people. We have always been easy on china. We have always been pro south korea. We have a lot of troops in south korea. Why . Because were worried about north korea. Well, it turns out the president decided that he wasnt sophisticated enough with the chinese and north korea, so then he does exactly what all president s have done. Which is say, you know what . We need the china, maybe we shouldnt be so tough on them. So i mean, i think that immelt kind of got what he wanted already. Yeah. Doubling down. Perhaps hes still concerned. No, immelt by the way he can be very global. But you know what people are thinking about the stock . What . It needs focusing on. And now you can say you can focus on two things, not unlike what amazon is doing with jeff bezos, he can focus on the web services and the retail. But the problem is, david, i think theres a restless shareholder base. No doubt. Trying to keep protectionist policies at bay is a very focused area of concern when it comes to ge. Because the business how about cash flow. Understood. There wasnt a lot of cash flow in the First Quarter. The Fourth Quarter numbers were less than stellar. The key for the company is will it be able to execute on the cost cutting that it has set out which is what a couple bill over the next two years or less than that. The stock is we mentioned many times the press of trian which is not a large share owner, but on a psychological basis is an important share owner and one with connections to many other owners as well that will conceivably pressure management if it meets the goals. Do you think that he gets the heat of tim cook gets, and i find that tim cook in the Conference Calls theres an element of disrespect to him. I dont know. Youre closer to that in some ways than theres no rebellion on the ge call. No, i have talked to shareholders who have looked at the performance over the last 15 years versus the s p and they throw their hands up. Look, my Charitable Trust owns it, id like to make more money for the charity. When dave loeb from honeywell came on and he said it reminds me of the days that ge was trying to buy honeywell and he talked about the performance of the two stocks since then. Which stock is the activist in . Honeywell up hundreds of percent and ge not. Dave cote would tell you that the hand you have been dealt needed to reshuffled immediately. Jeff immelt reshuffled and it was more about finance. It was. They like their portfolio of industrial businesses. You know, when you go to the casino they shuffle from the six decks and in the end it confuses you. Well, okay. It speaks volumes. Okay. Well, its time. Time for ge to reverse that. Thats all im saying. I have to tell you, my most of my thinking comes from trian because trian was very much in league with jeff immelt. I thought they were in agreement with what to do. You get us started on globalism and we end up talking stocks. What can we do . I guess its not as msnbc as i thought. Up next well do that even more. We have cramers mad dash. Well count you down to the opening bell and heres a look at the futures on what was a strong employment report. Good news basically all around. Up 211,000. Were back right after this. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. The power of the nasdaq market. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. All right. We have an opening bell in six or so minutes from now on a friday. Lets get to the mad dash. Its not often that you have a restaurant that has minus comps, david. Im talking about minus comps where you have the ceo saying hes dissatisfied with the minus 2. 5 comps and yet the stock goes higher, but that happened with shake shack today. Buckingham a retail shop put out a a boutique, put out a report that when it was looking down. This is it. This could be the bottom. My problem is it sells at 40 times earnings but this is a company that we know has cachet. At a certain point even with minus comps people say theres a core value to it. I 40 times minus comps. Why shouldnt the stock go up when theyre down 2. 5 . Its wrong. Okay. Look, Steve Easterbrook come in, mcdonalds minus comps turns it around to positive comps. The stock goes like this. And ron shaich with panera the comps you cant just say yeah. Why are investors responding to Something Like this . People figure if it was negative comps that id get hammered and they have to clean it up. Theres a belief that the burgers taste better than the stock. They are delicious. They are. They take a very long time to actually get to you. Well, you know, through puts a problem there. Look, the ceo says no one should blame me. The ceo says im disappointed. So maybe theres this belief that once you realize hes disappointed that therefore he starts doing better. But they have big labor costs. Remember theyre in some places where you really have the minimum wage issue. Yeah. All right. Well, shake shack up unexpectedly perhaps. Well keep eye on that and other names. The opening bell coming right up. Hey, the future, whats her problem . Apparently, i kept her up all night. She said the future freaks her out. How come no one likes me, jim . Intel does just think of everything intels doing right now with artificial intelligence. And pretty soon ai is going to help executives like her see trends to stay ahead of her competition. No more sleepless nights. Were going to be friends im sorry about this. Dont be embarrassed of me, jim. Im getting excited about this we know the future. Were going to be friends because were building it. What . Pony neighing] hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. The opening bell is brought to you by brighthouse financial. Established by metlife. Youre watching cnbc squawk on the street. We are live from the Financial Capital of the world, the opening bell is going to ring in less than more than one minute from now. And its always nice for me when i get to turn to you, reminiscent of our conversations in the late 1990s and ask you, what is the key to this market today . David, at 2 45 a. M. Oil was down a dollar and change and the futures were down very badly and there was a big giveup out of europe and there was a sense that oil would cascade. At 6 00, oil was back up slightly. Im telling you the oil is the reason we didnt have a big run yesterday when repeal and replace came to care. Keep an eye on oil. If it doesnt, and people will say, hey, maybe we have seen a bottom. I dont know how that happens because david we must find out who got long and who got wrong. Yeah. Oil has been an important component of overall trading this week. Well be keeping a close eye on it. You hear of course the applause beginning to build here from the New York Stock Exchange. Maybe just because its friday. Also because, you know, weve got here at the big board, tpg celebrating an ipo, jim. They have occidental interesting. A great, great fiscal discipline, thats gone out the window since he retired. You were a big fan of his at ox sen dahl. Over at the nasdaq, Biopharmaceutical Company Radius Health did the honors. A lot of green on the realtime exchange back at hq than red at this point. Positive response i guess to the jobs number although you never know when youre getting a hot or not hot jobs number in terms of the equity market. Right. I think that oil coming back did matter. I think people were positioned for that not to happen. I think, david, that there is a story out there that we must talk about unless its a report, what is apple going to buy. That parlor game has taken on a new level of urgency, even though i can tell you when i spoke with tim cook this week its not urgent at all. Its not. No. Without tax reform you just table it. Yeah. Table it. Table it. Well everybody keeps coming out with the notes. Everybody likes to stir the notes. Its fun. The pen just fell. What will theyre putting percentages on Different Things. Yeah. 40 . Netflix. 25 chance for walt disney. 10 electronic arts. I mean, give me a break. David, when youre an analyst youre sitting around and saying, what will i do . Theyll play a parlor game. Well bring them on the tv too. The analyst the analyst is a good analyst. What happens is theres a real perception jason hes good. They have so much cash they could do something big, but tim cook was so adamant when he committed that 1 billion and then said he had to borrow it. Immediately, we need to talk about tax reform. If we got tax reform i think the parlor game has great relevance. Listen, i dont know that well get tax reform, but i still believe and we have said this many times and many others still think well get a repatriation deem deal regardless. If its the last thing they do to try to salvage some sort of something. You know, get repatriation. I dont know at what rate. So lets assume i think we can assume that money will come back at some very advantaged rate, jim. The question is if youre apple, do you really take the cultural leap and buy in our earlier conversation about ibm what does that say about your core business . Tim cook is adamant. Were looking at original content. They think the Service Revenue scream can continue to grow. Its organically grown 18 . Why mess with success, continue to let it grow organically which is what i think. The ideas leave me cold. Should they buy activision or take two, all great companies, electronic arts. You know what, if we put our mind to it, we can develop the best games in the world. So i have by the way, i think that the best gaming right now is by nintendo. Nintendo has some very, very good stuff in the pipe there. So i think that its fun to talk about because they have so much cash. But they are shareholder friendly and they are customer friendly and that this would not be either. They think about returning capital shareholders, they think of developing a better delivery system. They do not spend a huge amount of time talking about whats going to be in that delivery system. Thats not been their bailiwick. To me, this business is about trying to figure out how to make the best phones and best whatever could be next that could dazzle us. The idea that theyll buy netflix now versus when they could have, thats not their style. Right. Do they pursue something that is larger than their largest acquisition i can think of which is what they paid for beats . Its possible they go out on the size spectrum. Look, theyre always looking at things. What happens to all the cash then . What do they do with it . I think they want to return it. Return the excess free cash flow. I mean, sometimes companies generate a huge amount of cash and they want to do whats right for shareholders after they do whats right they have committed the largest buy back in history. They want more manufacturing jobs. I love the fact the cynicism, they only did 1 billion, what is everybody else doing . Yes, they could buy priceline, they could buy expedia. They could buy interactive, you know no. Lets focus on what they want to do, which is great products and theyll take their cut and thats a Good Business model. Generally speaking, the market is higher as you see. The s p up lets call it 0. 2 right now. Jim, the nasdaq up about a quarter of 1 . As we noted ibm is down. About 3 . Does that feel right to you . Yeah. I have to talk to ibm later today. They were close to turning and i think that, you know, if youre wrong about the go in, buying ibm, could you be wrong about the go out . Warren buffett is rarely challenged. Hes the greatest investor of our time and some people felt he was without his own mantra when he bought ibm. He bought a lot of apple which has a lot of competition. Even tim cook said were not seeing the switches back to samsung, but i counsel that ibm has tried mightily to change its hand and david, it was not a good hand. I wonder about the pressure on jenny. I think as long as you have Warren Buffetts backing whether it be a cocacola or American Express you have the ace in the hole. You wont get an activist in the stock going after you if you have Warren Buffett. American express thought about doing something about it, forget about it. Activists get involved everywhere these days. Believe me, all companies are aware of it and ready for it and waiting for that potential. But what do you do . I mean, what wouldnt you do what would you do differently if youre ranetti. You could have bought salesforce. It was once a Typewriter Company and they repositioned themselves. Could have bought adobe. That would have been such a great buy versus the other buys. Adobe is one of the companies that sub rosa is the creative net. Creative internet. And they have fantastic analytics. You could have done something that would have changed the cash flow. But then you would have irritated mr. Buffett. I think that Jenny Rometty should feel liberated after today. No, the best whats the matter with that . Has amazon has ever done a big deal . You dont need to. When you have to switch your hand, sometimes you have to have Different Things on the aircraft carrier. Sometimes you have to put jets on the aircraft carrier. You cant come in with the propeller plane on the aircraft carrier. They have to change whats on it and i think a buy of a salesforce, the buy of an adobe, i throw this out wide because they have been so forward thinking. Would they want it, you know adobe doesnt want them. Youre match making here again. You know . David, you may be a match. You make me a match. Im not going to make you a match. All right. Cant you find me catch me a catch. By the way youre a rich man. One staircase going up, another coming down. Lets listen to what buffett had to say about amazon specifically in part of that conversation about ibm and their Cloud Business. Whats really fascinating is that, you know, amazon, which i have never seen a guy succeed in two businesses almost simultaneously that are really quite divergent in terms of customers and, you know, all the operations. Youre talking about amazons shopping business and amazons cloud Cloud Business, yeah. I mean, jeff bezos i do think is the most remarkable person of our age. Ive said that before and to succeed in two different big businesses, you know, in a huge way is really i cant think of another example like it. Not bad praise there. No. Look, there have to be two jeff bezos, right . I mean, how much time does he spend on the Washington Post . Remember half hour a week i believe it was. Thats what i have heard when i was reporting the amazon, Something Like that. But its a good half hour, high quality and its working. He reads the Washington Post. Look, i have nothing but praise for them. But david, at the core level of this employment number are some people in retail who are not working at high price, high wages. I remember im sorry to continue to go back to your documentary, but a lot of when they hire people, they are not like hiring someone at gm or ford. They dont give them that kind of benefit. No. Do they pay them the average wage here, 26 . No, in a lot of communities they can end up being one of the key employers. Even 13 or 14 bucks an hour is going to be worthwhile. So i think that in and the technology is great. The robots great. Look jim, before we get to bob, real quickly, its a week we have facebook earnings, apple earnings. Got google last week, but were largely through the big names, tesla, which is up today, it was down yesterday. Give me a quick take here. I thought that facebook was so unbelievable and yet they because the cfo used the term meaningfully and some of the analysts seemed to buy that, i think this was the quarter that you said something when it was announced. David, you said how can they grow at 50 when they have their billions i mean, theyre growing like a small cap stock. So the money continues to go to facebook from the onlines. I mean, from the tv, from newspapers. Another one, alphabet is more than just search. They made that case to me very, very strong. Another one is that apple is just a cash generator. Overall, what i hear out there is this. What are the other guys doing in this country we cannot meet the demand that we have for our products. They cant meet it. I mean, what an incredible statement. As we say, a high class problem. Yes. I mean, facebook you know, look, they are a conservative company but you know think about it. Making the User Experience great. He puts the user first. Tim cook puts the user first. Adobe puts the user first. Alphabet. Thats what they think of. They think of what the customer wanted. A lot of the other companies are thinking what does wall street want . Well, thats a loser game. Now, the worst one about tesla. He doesnt care what wall street wants. He wants you to take some of that marijuana thats in so you can be on the call. All right. Well worry about our edibles over here and send it for now over to bob pisani for more on whats moving this morning. Good morning. Happy friday. We started off great. Every sector was up on the up side. Look at the energy. What a mess it has been all week, but its up slightly over 45 on oil. Consumers all up fractionally. We have been talking about ibm. The guys are talking about it. Down 3 . I want to point out something very important. Ibm is in the elite point of stocks who have been aggressively buying back stocks for years and years. Today they have 939 million, they have dropped the account by 60 . And even since buffett has been owning them in the early 2000, they had 1. 2 billion and dropped 25 in the last five or six years. What does that mean . It means all other things being equal, their earnings reduction, earnings look 25 better than five or six years ago and 60 better than in the mid or late 1990s. A lot of the arguments about various ways of changing your earnings to make them look better. Financial engineering here. Earnings are still looking good. Keith learner at suntrust had a cogent report saying we are seeing the most broad based earnings rebound and thats because things are happening. We have pointed out what is going on in europe. Earnings are rising in developed and marketing and emerging market companies. We have seen them moving up because theres higher Economic Growth. Some policy support. Theres more competitive currencies out there. Theres high correlation with forward earnings estimates for stocks so very important that the estimates have been rising globally in the last six to seven months overall. Of course were talking about the u. S. Earning market for a long time now. Q1 earnings here up 14 . Thats the best in six years. Revenues are growing too. So its not just Financial Engineering playing with the bottom line. And the guidance thats what we care about. 50 of the s p 500 companies are seeing earnings estimates raised by analysts. Also at suntrust. There are problems for earnings. We know what the Energy Situation is like. We are going to be seeing energy estimates coming down. Yesterday we had a number of companies that had 52 week lows. All of the companies yesterday, 52 week lows. You see them bouncing today. This is a major problem. We saw a casualty today in the ipo business. We were supposed to have a notable fracking company, Liberty Oil Field services was supposed to go public today, but that ipo was postponed. They had to cut the size of it to try to get that deal done. 12 to 13 now. But they still couldnt get done. Its been postponed because of Market Conditions. Look what happened to some other companies Fracking Companies that went public earlier this year. Keane is a good one. They went public in january. Look at this chart. 19 they went public at and it closed yesterday at a little over 12. Thats what you call Market Conditions when you want to postpone it. See if liberty can get out some time in the next few weeks. Speaking of energy we have the very unusual Investment Vehicle today. Thats going public at the New York Stock Exchange right behind me. Tpg pace energy holdings. Its a special Acquisition Company its essentially a blank check company. Its blind pool going public. Youre counting on the skills of them to buy assets. This is led by Stephen Chazen of occidental. Hell be out buying underperforming energy assets. He may have a chance to buy a lot if this continues. 60 million. Finally, i want to note, kkr also got a reit mortgage reit going public right at the bottom end of the range. Waiting for tpg to go public. Ill take it from there and talk about Something Else we have seen this week which of course is the well, the questions dealing with the media industry. Questions we have been talking about for years and it seemed to come in and out of concern. One of them one of the key ones the foremost one being how many consumers are saying no more to their video subscription overall . Just taking broadband and not subscribing to any of the new smaller packages that we call mmpds. The likes of hulu from yesterday, or sling which was the first one out there. Directv now. You know what im talking about. Some are taking those and a lot more are saying, see you later, video. Im fine with my broadband and maybe my netflix and amazon. Maybe ill get a separate scribetion to hbo and im done. We got the numbers as they piled from the distributors like dish and comcast and charter and so forth. Viacom was questioned because of something related to this. The changing makeup of the ecosystem and the fact that they told us for the first time that their networks for new subscribers to charter were being pushed up to the more expensive tier and only available there, making it less likely perhaps that they would be subscribed to. This is what bob bakish had to say on that viacom call which did really reverse the stock or bring it down a lot more than it had been earlier ending the day down about 7 . Take a listen. Our prince pal focus is on ensuring ongoing broad distribution of our flagships and the other widely distributed tier. Were missing that carriage in some places. And were in conversations about hopefully getting that back. But its not about a notion of being totally flexible per se, carry anything you want. But it is very much also about what you know, what we talked about before is finding the he went on to say that as well, listen, 100 plus average per user is a lot of money. We have to figure out how to play this game. Cbs reported after the bell yesterday. A lot of concerns about advertising in part because of that viacom quarter as well and others. But they came in fine. Heres Leslie Moonves on the conference call. We expect to do very well. We expect another terrific upfront where well once again lead the market with strong gains. Meanwhile, measurement is Getting Better and better all the time. Were getting paid for more viewing than ever before. Still, at this point, the Advertising Industry has not yet sufficiently caught up with the new ways people are consuming content. Thats been something hes been saying for quite some time, jim. You have to figure out the different ways we are being seen, digital networks. Delays. Everything else that goes into sort of figuring out how large your real audience is. Of course he continues to say it doesnt matter whether what ott play comes along were part of the package and they have been with hulu as well. Hes forward thinking. He has good content that people can shift it. One of the more revelatory moments in the interview with tim cook, he said, look, were in short supply with the apple plus. What is the apple plus, its the ultimate cord cutter. But its that form function that is just large enough between you know, remember you dont want to have both your ipad and your iphone if you want to watch. I see many people watching things on the i the 7 plus. And that is the ultimate fear. The 7 plus. And how fast it acts and how beautiful the screen is. Highdef, david, i look terrible on it. Thats my take away. All right. Mine is netflix is up 27 this year. Lets go to the bond pits. Rick santelli at the cme group in chicago. Good morning. If you look at the intraday of tens we had volatility at 8 30 when the jobs report came out. There was a lot of stochastic movement and we finished at 1. 35 unchanged. We did jump in the range a bit. If you change the range from kind of 2. 30 to 2. 50 we overextended on the upside and the downside. It looks like were kind of back in the range. If you look at whats going on with tens minus twos the spread this is important. This is starting mid april. A lot of talk that the fed was indeed the big catalyst. I think that waiting for the fed was important and when it was over, traders got back to the issues of the day where too many people are long treasuries, basically. Because this spread hasnt done anything. I mean, we can talk about it being on the flat side. But since mid april it really hasnt done much. One week on the dollar thats done a lot. Consider it closed last week at 108. 95. It doesnt look like a le pen trade. If you look at the cac, both year to date and the 20 year the french stock market, year to date its on fire. On a 20 year chart its not all time highs but all of this is probably a macron victory built in, even though the spread may be narrower than many people think. Back to you. Thank you very much, mr. Santelli. Coming up next, well have fed vice chairman alan blinder weighing in on the better than expected jobs report and what it can mean for fed policy. Squawk on the street will be right back. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Times up, insufficient were on prenatal care. Es. And administrative paperwork. Your days of drowning people are numbered. Same goes for you, budget overruns. And rising costs, wipe that smile off your face. Were coming for you, too. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. Its that time for stop trading with jim. Where are you headed . One of the best quarters was by universal display. I have to tell you this is a combination of both samsung orders and i believe apple obviously you cant talk about apple if youre a supplier. But this is organic light emitting diode. It is basically another way to be able to really have infrastructure for flat panel display. I think what people are saying maybe this is one of the keys that what can be very exciting in the 8. The apple iphone. Obviously samsung is playing well. I know that the Samsung Tim Cook basically said, look, i dont see switching. What doesnt matter. This company which is such a great Engineering Company is finally getting its due because people recognize they have a superior product and congratulations to them. I happen to love them. Theyre very nonpromotional. But they have a better mousetrap and people will use them for the new phones. I think that stock deserves to be up. Goldman sachs just, you know, said this morning hey listen, get involved and thats caused a second leg. I have been behind it for a long time. Because frankly i know some people at the company and they have been producing great stuff for years. But finally, the companies that they finally caught on. And i think that light emitting diodes, david, like plastics the place to be. Again, when it to it rate ibm 3. 8 . Thats never been my way how are you going to cap off whats been a great week of course for you now that youre back here . You know, ill be at bar san miguel for my must reserve dinner for 80. Im going to have the avion ceo on. Happy Cinco De Mayo. You know i dont like to sleep. So this was a great opportunity for me. The west coast. Yes, it is. Because the whole sleeping thing is so overrated by all these doctors and everybody. I mean, i like it. You should get seven hours. But they have got the wrong time frame. Its a week. I know. Thats more or less your program. You run on that program. Yeah. Yeah. The secret to it, david, how do you do it . Alarms. I think youre a simulation. Thats what im starting to think. Musk. I have to go back on the call in order to blow my mind. Coming up, more on Warren Buffett and his decision to cut that investment in ibm. A tough morning as you see for those shares. Off the lows this morning. We have got a lot more squawk on the street. Ace of mind and the security just like the marines did. At one point, i did change to a Different Company with car insurance, and i was not happy with the Customer Service. We have switched back over and we feel like were back home now. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children, and that they can be protected. Were the williams family, and were usaa members for life. Call usaa today to talk about your insurance needs. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. So what else is new . Humm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Good morning. Welcome back to squawk on the street. Im sara eisen here with david faber, live at post 9 from the New York Stock Exchange. Carl has the day off today. Lets take a look at how the markets are reacting to what was a better than expected jobs report. Its a mixed picture. The dow is down 21 points. S p is positive. Most Industry Groups within the s p are going strong and Wti Crude Oil turns back around, going higher. 45. 82 after dipping below 44 a barrel. One of the stories of this week. But our story today, well it starts with 211,000 jobs for the month of april. The Unemployment Rate falling to the lowest level in nearly a decade. Were going to talk about what that means for your money, the fed and a lot more. And Berkshire Hathaways Warren Buffett telling our becky quick hes backing out of big blue. Well tell you why and take you live to omaha. Plus, the people of france head to the polls in what is being deemed one of the most consequential elections for the country in recent history. Well get a live report from paris. At the euro at a sixmonth high. The jobs report is bouncing back from a disappointing rate in march. Nonfarm payrolls growing by 211,000 in april and Unemployment Rate falling to 4. 4 . The lowest level since back before the recession. May of 2007. Senior economics reporter Steve Liesman joins us now with some reaction. Good morning, steve. Hey, sara, do you hear the sound of the tequila glasses clinking on this Cinco De Mayo jobs report . And the reason i think is twofold. One is it shows that, you know, this weakness we had in the First Quarter heres the economy back on track and the fed is thinking, you know, this move we had last time that we said well look through the weakness, its transitory, well, that helped support this idea. Lets look at the numbers. 211, substantially better than the forecast that was out there which was 188. Minor revisions to the prior two months. Unemployment rate hitting that low, 4. 4 . The Labor Force Participation rate ticking down. The average hourly rage is 0. 3 , but we had revision down, so were doing 2 1 2 year on here. Here is some of the glass clicking thats going on. Bank rate. Com, they said that hiring got the groove back in april. A red hot labor market, the boss wont pay you any more and pantheon theyre concerned. The falling Unemployment Rate will scare the fed hawks. Heres the probability for the june rate hike around 74, 75 . 75 . Up just a little bit. Remember the big change came on wednesday when the fed said it would look low the economic weakness out there. Lets look at the jobs, good diffusion. Many industries were part of the gains here. Paced by leisure and hospitality. Up by 55. Health care. Thats right around the average pace of job growth for that industry. Government though has been kind of weak. Came back here 17,000. Manufacturing and construction, 65,000. I did note a pretty good gain in mining which seems to have come back, the oil and gas sector since oil prices came back. Lots of fed talk. Well be at the hoover institution, listening to stan fischer if in a little bit. Hes coming up. You have Charlie Evans here. Jim bullard. Speaking as well as eric rosengram. Janet yellen at 11 30. Well is see how they react to the jobs report but in general what im hearing is that the idea of the fed being on track for that june rate hike and the economy back on track after that nice jobs report this morning, guys. And that is a Cinco De Mayo celebration. Although central bankers. Thank you. Steve liesman breaking down the jobs report. A mixed picture for stocks and treasuries. Were looking ahead for cues on rate hike timing as steve mentioned from todays speeches from fed chairman yellen and from stanley fischer. Joining us to discuss this and more, former Federal Reserve vice chairman alan blinder. Welcome to you. Thank you. So do you think that the wage growth was a soft spot given were at a 4. 4 Unemployment Rate and job growth rebounded at a very healthy way in the month of april . Yeah, a soft spot and a surprising soft spot. I mean, i think if you asked any economist a year and half ago what wages would be doing if the Unemployment Rate was around 4. 5 for some months, we would have said more acceleration than were actually seeing. And were not getting it. How concerned do you think the Federal Reserve would be about that . You know, i think its sort of the opposite in the sense that it gives the fed a green light to go slow. You know, everybodys emphasizing that the feds going up in rates which of course they are. But theyre going very slowly. Theres no panic, theres no sense we have to clang the bells because inflation is on the horizon. Its a slow track. And this just enhances the reasoning behind the slow track and makes them not worried about it. Mr. Blinder, why are we not getting the acceleration in wages you might have expected given the Unemployment Rate we have . You know, i wish i knew. You know, what it suggests surprisingly and this is a point i wanted to make before is, maybe the labor markets not quite as tight as we think at 4. 4 unemployment. Which is another way of saying, maybe we could push lower. This is all reminding me of the late 90s where the Unemployment Rate went down to 3. 9 and still there was no acceleration of inflation. Now, nobody knows if we could do that again. But nobodies like this start suggesting that. Well, so what does that mean . If its not as tight are the are we not getting an appropriate sense of the labor market in a real way . What are we missing then if we look at this number but its not necessarily an accurate representation . Well, i think what we may be missing i dont want to say its an inaccurate representation. Those numbers are pretty good. But what we may be missing is that were not yet to the point where employers have to go out with a vacuum cleaner trying to scoop up labor wherever they can find it. Those days in 1999 were like that. You know . The joke was if you could show a breath in a mirror you got hired. Its not quite that tight yet. Now in other words, theres more hiring to be done . In other words, theres probably more hiring to be done. I want to clear. If you asked me a year and a half ago, i wouldnt be saying what i said now. We have been surprised at the moderation of both the Price Inflation and Wage Inflation. I wonder what you make of this sort of comedown on commodities that were seeing. Earlier, crude oil going back to november lows. Iron other has collapsed this week. Im not sure it speaks to the broader trend, but one of the fed mandates is inflation. What if we get the jobs and the Growth Without inflation do they have to slow down the hiking cycle . They might. Have to is a little strong. Remember, theyre still going back to neutral. The Monetary Policy is still in an accommodative stance, but a bit less accommodative than it was. I dont think thats well, maybe the most hawkish, but almost nobodys mind that the fed should go above what it believes to be the neutral Interest Rate and try applying the brakes. Theyre not thinking that. I wonder what you make of the tax plan or at least the proposal that we got from the trump team and this idea that Economic Growth is going to help pay for it. Now that we are expecting a rebound in growth, and i think the april jobs report bodes well for that, is there any chance they can get there . Get to 3 growth . Get to 3 growth to help pay for all those cuts. There is a chance for a while. The economy is doing very well. The standard forecasts are around 2 . Its barely imaginable that we could tick up for 3 for a brief period, but not imaginable we could have 3 for a decade which is what they need to pay for these tax cuts. You know, as you indicated, sara, that tax plan is not a plan. Its a press its even its even short for a press release. There was no forecast with it. There was no detail with it. But the notion that secretary mnuchin has been pushing around that this tax cut will substantially pay for itself by faster growth is just pie in the sky. I mean, its the worst sort of wishful thinking. We have seen it before. It used to be called supplyside economics but theyre not calling it by that name any longer but thats what it is. We have tried it several times and its not worked. We know where you come down on that one. Always good to check in with you. Especially on a jobs day. Alan blinder, the former vice chairman of the Federal Reserve. After months of campaigning and close first round voting a final vote is taking place this weekend in the french election. Our Michelle Carusocabrera tells us what we can expect from paris. Michelle . Hey, there, david. Im outside the headquarters of Marine Le Pen the controversial candidate here in france who wants france to leave the euro. Behind these green doors, theyre doing Everything Possible to try to convince people that all is not lost. Why . Because the polls that came out this morning suggests that her competitor Emmanuel Macron has the widest lead yet. The markets are complacent as a result. This ever been ever since the big debate we saw two nights ago where people were very worried that was a moment of high vulnerability for him. She seemed and it was a trump like surprise. I recalled the polls about donald trump against hillary clinton. So im still optimistic. You still think its possible she can win . Of course its still possible. Her position on the euro has it helped her or hurt her . You know, its better to be right sometimes. In the past election it did harm our election. Now we have been much clearer, it has been much easier for the French Public to understand what we want to do. Were going to know on sunday afternoon. Sunday new york 2 00 p. M. , 3 00 p. M. Is when well be certain about what the final outcome is. If it isnt macron on monday, the markets will be chaos. Back to you. All right. Doesnt look like well get chaos, but well be prepared for it. Thank you. Michelle carusocabrera live for us in paris. Of course well check in with without the day and the weekend. Shares of ibm are falling after Berkshire Hathaways Warren Buffett told our becky quick hes sold about a third of his holdings in the company. I dont value ibm the same way that i did six years ago when i started i mean, overall, i think in six years that i have revalued it somewhat downward and as a matter of fact when it got over 180 we actually sold a reasonable amount of stock. We have the details and we will take you live to omaha next. Berkshire hathaways Warren Buffett talking exclusively to our becky quick saying he sold about a third of his ibm holdings. This comes ahead of berkshires annual Shareholders Meeting which kicks off tomorrow in omaha. Becky quick is there again. I dont know how many years this has been, becky. Im curious, of course. But you have the highlights of that very important corporatinvn as well for us. I looked it up the other day this is the it was 12 years ago that i first came here. I guess this is about 13 times. Maybe i missed one or two meetings in there, but it has been a while. This was big news today because Berkshire Hathaway was the biggest holder of ibm shares and buffett has been the biggest defender of ibm as its continued to come in with quarter after quarter for 20 quarters in a row of declining revenue. In fact, that declining revenue is part of the reason that buffett decided to sell. Its based on a lot of different types of businesses but the earnings have been obviously disappointing. I mean, five or six years ago, i think they were earning 20 plus billion pretax and now its 13 billion and the quality of earnings hasnt improved. It has been a period when im sure that its been tougher than they thought and its been tougher than i thought. Now, if you check out ibm shares today i know you showed that before you went to break, the stock has been down. Off by 2. 5 and sometimes more than that. Thats because of the loss of the buffett premium in this stock. This comes even though berkshire owns more than 50 million shares of ibm and buffett said hed buy more if the shares fellow enough. Its not just buffett, but the street was disappointed with apple shares after they came out with iphone sales than a little lighter than the street had been expecting. The knee jerk reaction was to sell off a little bit and tim cook said that many are awaiting to upgrade their phones to the iphone 8 that is coming out later this year. Buffett said it fits with the research he has been doing and he talks to his grandkids, talks to all kinds of people about the iphone. I guess hes heard from plenty of people who said theyre waiting for the iphone 8. In the meantime, buffett said theres a lot that he likes about apple. I love the fact they repurchased shares. Theyre borrowing money in the United States figuring theyll get that money back at some point or another so theyre really buying in their stock, using borrowed money but with the knowledge if they had to, they could take it back it back and pay the big repatriation tax, but theyre hoping that tax comes down. My guess is at some point or another that money will end up back in the United States or most of it. Now, again, he talked about the taxes coming down. Potentially. Thats something he didnt necessarily say he expected to see happening soon, but just points back to how Business Leaders are looking to washington to see what the moves are going to be. Theyre making bets based on that. David, ill send it back to you. Becky, specific to the ibm position as you pointed out, he only sold a third of it. Whats his typical behavior in that . He spoke negatively about ibm. Talking about the 7 billion reduction in earnings since hes owned it. Sounds like hes got more to sell. Is that typical of what you might expect . You know, david, i asked him why he was telling us this, when you have the majority of the position, youre holding on to it. Im sure he knows saying Something Like this will put some pressure on the stock and will have people watching. He said the reason he told us is that the 13f filing has to come out next week. If you call it the one year chart of ibm, youll see where the stock was at 180. At that point he said hes constantsdzly looking at price, looking at what the company is doing and making a value judgment on that. At 180 he thought hed sell it. The reason he stopped selling it, selling the stock was because it fell below 160. Now that came after the earnings news. The reason he had to go ahead and make the filings public in the 13f hes no longer actively sell it off. He says right now hes not buying it or selling it. But if the stock fell too far down, he might buy it back. This is the constant value judgment based on where the price goes. It makes you wonder about some of the other portfolio holdings. I know you have an extended conversation with him coming up on monday. Which are are going to be the Big Questions for you. Coke is underperforming, kraft heinz is underperforming as well lately. Yeah. Well watch that. We havent talked to him about wells fargo either. This is the first time we have gotten to talk to him since february when we last were out here in omaha. So theres been so much activity around that situation. Well talk to him about that stock. Guys, frankly i want to talk about the airlines too. Because Berkshire Hathaway is the largest owner of many if not most of these Airline Stocks and theres been so much activity around the Customer Service disappointments and even with the ceos that have gone to capitol hill earlier this week to talk about what they are doing to change things. I want to talk to him about the proposition there. But youre right. Kraft heinz, cocacola, a lot of Different Things to talk to him about. So we have a chance to dig into things with him, but we have the entire weekend here. Hell be talking for six hours, 6 1 2 hours before 40,000 people that show up near this arena. Then well get the chance to sit down with him for three hours. Much more to come. Becky, one of the highlights of the year for us in terms of financial television. It hits every box. We always enjoy it. Becky, enjoy the weekend ahead. Thanks, david. As we mentioned of course it will be monday, 6 00 a. M. When beckys going to be there live for three hours. Its buffett, munger and gates and it is must watch tv. A remind their he does reminder that he doesnt hold stocks forever. When we come back, zillow reporting earnings. Beating on both the top and the bottom lines. Well hear from the ceo on the quarter. Plus, a bounce back in jobs for the month of april. Goldman sachss chief economist jan hatzius for jobs day tradition. Much more ahead on squawk on the street. Its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading Companies Lead with digital. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Rascoff. Zillow reporting earnings beating on both the top and bottom lines. The real estate website operator raising the full year revenue outlook. The stock is seeing the best day of the year and in fact, highest levels since back in 2014. Zillow ceo now joins us, spencer rascoff. Good morning. Well k. Welcome. Good morning. Thank you. So analysts are excited about the selfservice auction marketplace as a key revenue and profit driver for you. Explain what that is and why its driving the business here. Sure. We changed our premiere agent Business Model and thats the biggest line item from a fixed price model to the auction price model. What it does is it allows agents to buy impression advertising realtime based on what they want to pay for the impressions at this point in time. We are seeing good data from the transition. So for the consumer it allows consumers to connect with best agents in the area. Because those are the agents that tend to have the best lead conversion and paying for that exposure. So its great for the consumer. Great for advertisers and youre seeing it in our Business Results too. Yeah, the other sort of revenue stream for you is ads on some of your websites like zillow and what are you seeing in terms of demand and ad growth Going Forward . Well, i mean, general display advertising on the internet is very challenged because theres this glut of impressions available. And so you need sites to get ever better at targeting. So our display business does pretty well. Because of the ad targeting that we do inside the endemic category, but were transitioning away from generalized display advertising and more towards contacting with local professionals. So most of our revenue comes from Real Estate Agent advertising or mortgage hitsing or Apartment Building advertising. That works well on mobile. The consumer clicks to call the Real Estate Agent and clicks to call the apartment property manager. General display advertising, thats a tough business. Because theres too many impressions on the web. Yeah. Which is sort of why youre transitioning. You have a new site. Real estate. Com. Appealing to millennials. Whats the opportunity here in terms of millennials buying homes . Its significant. This is a big deal for us. This is our sixth consumer brand. It focuses of on the millennials and half of all home buyers are millennials. The insight here is that most millennials actually most home buyers, but certainly millennials, they dont think i want to buy a 250,000 home. They think to themselves, well, i have 20,000 saved up. I can borrow 30,000 from the bank of mom and dad and i can afford 1,000 a month towards a home because i know my rent is 1,000. So real estate. Com lets a home shopper shop based on that criteria. How much do they have for a down payment, how much can they afford per month. Its the first Spanish Language site and the first mandarin language site. Were off to a good start. Youre hitting all the right trends. I want to get a feel from you, home prices rose sharply at the last read but that was back in february. What have you seen . Home values are increasing about 7 year over year. Theyre almost at peak value. Were basically back to prerecession peak home values. Whats happening is theres just not enough inventory. This is a sellers market. If you have been thinking about maybe selling your home, this summer is going to be a really good time to do it. Constrained Inventory Means certain parts of the country are appreciating 10 year over year. Tampa, dallas, seattle, 10 plus percent. Meanwhile on the rental side, finally, rent growth is slowing. So our latest data shows rents are up 0. 7 . Compared with for sale homes up 0. 4 . The reason that rents arent growing so quickly, the buildings are finally coming online. Thankfully we now have more multifamily rental inventory. Thats putting a cap on rent appreciation. Does that mean it ways to rent versus buy right now . In some areas, absolutely. Really it depends on your particular circumstances. The way we look at it is we think of this concept of a break even horizon of how long will you be in that home for . So nationwide i think the break even horizon is around two to three years. If youre in the home for more than two to three years you should rent. In certain parts of the country its very, very short. In detroit you should buy not rent. In manhattan the break even is very long. Rent not buy. So there are big regional differences. Always good to check in with you with, spencer. Thank you. On the business and a day when your stock is up 5 and on the Housing Market in general. Spencer rascoff, ceo of zillow. When we come back well get reaction on todays job report. Goldman sachss chief economist jan hatzius will be with us. Plus, the probe into fox news deep ups. Well speak with Pulitzer Prize winning columnist jim stewart. Squawk on the street will be right back. Listen up, heart disease. you too, unnecessary er visits. And hey, unmanaged depression, dont get too comfortable. Were talking to you, cost inefficiencies and data without insights. And fragmented care stop getting in the way of patient recovery and pay attention. Every single one of you is on our list. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Good morning, everyone. Im sue herera. Here is your cnbc news update at this hour. A cargo plane contracted by u. P. S. Went off the runway and over a hillside at a West Virginia airport this morning. Killing the pilot and the copilot. The plane had flown in from louisville. The National Transportation safety board is investigating the accident. President trump praising australias government funded universal Health Care Program during a News Conference with the australian prime minister, Malcolm Turnbull last night. He called their system better than whats offered here in the u. S. Its going to be fantastic health care. Right now obamacare is failing. We have a Failing Health care i shouldnt say this to our great gentleman and my friend from australia because you have Better Health care than we do. But well have Great Health Care very soon. Obamacare is failing. The Insurance Companies are leaving. Environmental acts hung a banner on the eiffel tower to protest the last day of campaigning before the french president ial election. It urged the people not to vote for le pen in sundays runoff vote. And thats the news update this hour. Sara, back downtown to you. Well see what happens sunday. Sue, thank you. The big story is the payroll report. The Unemployment Rate sliding to 4. 4 the lowest since 2007. For more on the april report we are joined in a cnbc exclusive interview as always on jobs day by Goldman Sachs chief economist jan hatzius. Welcome back. You were expecting a strong number. 4. 4 Unemployment Rate, thats a wow number. That was a surprise, it takes back us to the low point of the prior expansion. 0. 3 below the feds latest estimate. So i think that and more broadly the strength in the Household Survey even beyond that is probably the key part of the report. And now theres this debate among economists, we got into it a little bit with alan blinder is how far that Unemployment Rate can go. You have to take your forecast even lower . I think it can still go down further. I mean, theres no hard limit inner close to this. But if you go much further, then the risk increases that eventually youll need to lift the Unemployment Rate again. That you have overshot your unemployment and that usually means a risk to the business cycle. The argument towards overshooting for employment is not just that innation might move up inflation might move up a lot. Thats not an imminent danger, but if you overshoot by a lot it creates risks that eventually its a harder landing. We keep getting this question as though, why isnt wage growth stronger because were at almost full employment. Why isnt it . Its streptsdzenned its up 2. 5 in there are a number of different wage indicators. We get 3 , thats not too far away from what i think is a reasonable long term expectation. I would put that at probably 3. 25 given the feds inflation target and given the current productivity. You dont believe its running lower that might be anticipated with the 4. 4 unemployment . I think its weaker, but i wouldnt say thats big of an overshoot. Especially if you go back a week and look at the cost index which was significantly stronger than expected. That generally the indicate their the fed puts the most weight on. I put some weight on all of these and were seeing moderate wage acceleration. Within the report you look for always where the jobs came. It was encouraging somewhat to see retail adding jobs after bleeding thousands over the last two months. But a measly 6,300 jobs. How are you adjusting the retail landscape, the changing landscape, Closing Stores all over the country and how will it impact this labor market . I do think that the retail Employment Trend has moved on. It used to be in the sort of 15 to 20,000 per month range if you average through now i think that trend is probably more in the 5 to 10,000 range. Todays number was kind of squarely in that range. There were some special factors in the prior couple of months. Some one off store closings that were probably a little bit beyond what youd expect over the long term. And then also bad weather probably had some impact too. But i do think that the Retail Sector is going to be less of a source of job growth in the future than it was maybe five or ten years ago. Can the other sectors make it up . Thats such a big area of this economy and such a big source of employment. Well, i dont think entirely. But of course we have been running at trend job growth rates over the last three to four years of 200,000 or so. Were not going to be able to generate that kind of job Growth Without, you know, really pushing down the Unemployment Rate a lot further. I mean, the break even payroll trend is ebl pro is probably less than 100,000 thousand. So we need a deceleration. Now comes the time in the interview that we ask about the fed. What are your expectations for the rest of the year particularly as it relates to june . June i think is very likely that we see a hike. We moved up our probability to 90 . So it could still be pushed off course, but i think its very likely they go in june. I expect a hike in september and then in the Fourth Quarter, im looking for a start to the Balance Sheet adjustment or the announcement and no rate hike and then the question in 2018 is, you know, how much of an impact on financial conditions do you get from Balance Sheet runoff . My expectation is its the not that big of an impact. I expect quarterly hikes in 2018 starting in march. What about the concerns about softness in the economy, auto sales. Were coming off an incredible year, but nonetheless theyre down. And other consumer indicators had people concerned. Yeah. Auto sales i think could actually continue to be fairly soft because the level is still quite high relative to the demographics. I think thats one sector of the economy that probably wont be doing that well. And there are, you know, some indications of somewhat tighter credit for consumers. But theres a lot of strength in other areas. For example, housing. I think still has a good amount of upside. Still relatively low levels. Overall, you know, we only need about you know, 80,000, 90,000 new jobs per month in order to keep the Unemployment Rate steady. Thats what we ought to be shooting for or what the fed should be shooting for. So im not too concerned about some of these indicators. Since youre the global chief economist, were heading into what the most consequencetial election in france. Macron is favored, hes priced into the markets. Given the turnout surprises and le pen has a victory, what do you contemplate that will mean for the european economy and the markets . You would need a huge surprise, a huge polling i mean, something much, much bigger than what youve got in the u. S. Or in the uk referendum. So its i think its very unlikely, but if you did get it, there would be a question about a return of the euro crisis. I dont think its that simple even if you had Marine Le Pen as french president. She cant just pull out of the eu our out of the euro. But that would be the market worry early next week so probably youd get significant widening of spreads. You may have the ecb back in the market in size in order to relieve those tensions. Bigger European Crisis than the previous one . I mean, relative to sort of 20112012 i wouldnt expect that, no. But were coming from tight spreads. If we move up, even if we dont go back to the levels that would be a shock for sure. It would. Jan, thank you. Thank you for joining us on jobs day. Jan hatzius, the chief economist of Goldman Sachs. When we come back, a big week for media stocks not necessarily in a good way. Disney is coming next week by the way in terms of earnings. Well hear from Pulitzer Prize Winning Economist jim stewart. And Warren Buffett is saying hes jealous of apple. Never a cash hoard of over a billion dollars. Are you gellous . Im very jealous. I thought i was okay until i look at their Balance Sheet. On the other hand, we have ours here in the United States. More from omaha coming up in the next hour. Squawk on the street will be right back. Ready or not, here i come. Anyone can dream. Making it a reality is the hard part. Northrop grumman command and control systems always let you see the complete picture. And were looking for a few dreamers to join us. After becoming one of the largest Broadband Companies in the country. After expanding our Fiber Network coast to coast. These are the places we call home. We are centurylink. We believe in the power of the digital world. The power to connect. And thats what drives us everyday. What does the dean of valuation think that tesla is really worth . Catch our interview on tradingnation. Cnbc. Com. More squawk on the street coming up. Federal investigators reportedly expanding their probe of Sexual Harassment settlements at fox news. The wall street journal says u. S. Prosecutors have interviewed on air talent and are examining intimidation tactics used against the females. Fox news and others such as wells fargo offer an example of a culture of retaliation against corporate whistleblowers. Joining us is Pulitzer Prize winning columnist jim stewart. You use wells fargo as a standard. I think theres a gaping hole and how did they treat the whistle blowers. I think this is so important because because in the rank and file look at how people are treated who try to call attention to wrongdoing and what do they see . They were disciplined, they were fired in many cases. And also equally important, they look at the people who mistreated the whistleblowers and what happened to them . They kept their jobs. They got promoted. You know, this is deeply embedded in most Corporate Cultures and no matter what lip Service People pay to the hotlines and we want you to report and to feel safe and wells fargo is saying all the right things, the bottom line is companies dont like whistleblowers. They want you to be a team they want you to be a team player and wells fargo insists on calling their employees team members. You know, right there theyre telling you we value loyalty and team work more important than speaking up when you see something wrong. And, you know, again, you see it at fox news. Thats an egregious example where obviously for many, many years the message from the top was what you see here that isnt good, keep your mouth shut or your career will be derailed. If you had been a victim well buy you off. Well end your career, send you off. Youre forbidden to ever speak about it. Well cover this up. Of course nobody wanted to talk about it. And now its all coming out. So this article is interesting that david referenced at the top. First of all, it was interesting that it was broken in the wall street journal which is another murdoch property. Second of all, the fact that theres a federal investigation now in the Trump Administration which is also very close to the Murdoch Family and rupert himself. Can you put all the pieces together for us and predict whats going to happen . One thing i would mention, yes, theres a criminal investigation at fox and a criminal investigation going on at wells fargo and under the Justice Department guidelines issued under the obama issue, but theyre still in effect, a factor to be considered in whether you bring criminal charges against a corporate defendant is how they treated whistleblowers. So thats now on the scale and nobody knows where thats going to go. But its a big deal for both of those companies to show how they treated them. Which i think is one reason why wells fargo has so dug in. There were over 800 calls to the ethic hotline over the relevant period and wells fargo says thus far they cant substantiate even one case of a whistleblower who was disciplined or improperly treated after that. Well, i gave them two cases in my column. I looked into. On the face of it, there are o ttwo glaring examples of mistreatment. So what happened . I mean, what is the typical experience of a whistleblower . Both of them got fired after they called the hotline. A woman documented, she showed the fake addresses on the client accounts. She was fired for allegedly excessive drinking. Now, her lawyer told her she had one drink at lunch with another employee. Now, you know, if a Company Wants to fire you, they can come up with something to put in the hr file. No matter what it is. Then they say well, we dont know, did that really happen, or whatever. They said thats not substantiated. The fact she was fired less than three weeks after firing the report with the hotline says speaks volumes. Then another example, egregious comments from the supervisor and in both of the cases the supervisors got promoted after doing it. That sends a powerful message. Back to fox, i should point out is undergoing review of the fit and proper test by the version of the uks fcc and that figures into that potentially. What do you think ends up happening there . They keep promoting people into the job at fox news and then but they seem to be potentially having been involved in previous bad behavior. How does it all shake out with the sons and rupert and the management of this very important property . Well, thats a huge question. And i really wouldnt want to go out on that limb because i think frankly a problem with the uk standard is its completely subjective. Who is fit or not fit . I know. I mean, thats a really not a rules base. It has to do i should point out with their purchase of sky y dont already own and james already had already been running sky previously in a previous life and deemed fit and proper so right, i mean, have they done enough . They have done a fair amount. I mean, i do think more recent steps have been impressive. But i think the political climate, you know, again this scandal for them could not be coming at a worse time. Mere fact theyre having one of the victims over there to discuss it with them, that is not a good sign. I wouldnt want to bet on fox in this thing. Jim, thank you. Jim stewart. Lets send it over to jon fortt, a look at whats coming up on squawk alley. We have got the zendesk ceo will join us. Well dig no what is going on into that Cloud Business. Also, youtubes got new shows. What does that mean for this chaotic media landscape . And we have the author of american kingpin, a new book out on silk road, cautionary tale here for all of silicon valley. All that and more coming up on squawk alley. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back to squawk on the street. Rick santelli here. Today, fuzzy is the topic. Fuzzy market signals and the fed. You know, ira harris, guest, legendary trader in chicago since the 70s. One of the big issues among lots of traders, especially seasoned veterans trading for decades, is whether it is the yield curve, whether it is volatility, whether it is interbank, intrabank relationships, intraspread relationships, our curve to the european curve, corporate issuance, all of these things are affected by managed rates. Theyre affected by managed markets, period, actually, because even though in the u. S. Technically our central bank hasnt purchased corporate securities, hasnt purchased stocks, other central banker are. And when you can move money, boom, that fast by hitting a button, whether it is the bank, European Central bank, and or others, uk, bank of england, what they do has the same effect no matter who does it. So really that is the point. Take this that traders have been discussing with me for years and transfer it to the people that caused it. Central banks created these waves. They will always define this as defending the market and rising to the occasion and having the courage to act after the great recession. Im not going to debate that. What im going to debate is that the fed currently by raising rates and talking about reduction of Balance Sheet is going to experience the same issues traders are. How do they know that the markets are happy about rates going up, how do they really know that the markets are going to be okay when we see Balance Sheet reduction move from the talking infomercial stage, probably for 2017, into the stage of actual put it in practice in 2018. How do we know there isnt going to be a taper tanantrumlike ise or contrary to that, more of a move in a positive light. It is impossible to tell. If the signals that help traders assess what future strategy ought to be by looking at those same relationships they see today in the context of history, why is it going to be any different for stan fisher, janet yellen. The issue is, is probably wont be. It should be a very interesting time, i dont think rate rises are going to be the issue. But i do think Balance Sheets have a variety of unintended consequences during the reduction, not the least which of is what maturities you to let run off first . Sarah, back to you. Thats a good question, rick. Thank you. Well wait to hear, see if any commentary from the fed speakers today. Much more ahead, the dow is down 29 points, bulk is ibm, biggest drive on the dow after Warren Buffett tells cnbc hes cutting his stake. More on that story when squawk alley returns. Its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading Companies Lead with digital. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back to squawk on the street. Im jackie deangelis. Crude oil reversed this morning, only after hitting a low overnight. The selling pressure on the trade coming from several factors, concerns about china, Global Growth and overall demand as evidence in the copper trade as well. Copper turned a corner this morning too. Also a desire for deeper cut from opec, the extension, the status quo may not be enough for this market. Meantime, Goldman Sachs out with a note this morning saying oil is nearing capitulation. They say the speed of the rebalance may be disappointing, but they do expect drawdowns to accelerate and demand to be robust. Back downtown for the start of squawk alley. Thank you, jackie. Good morning. It is 11 00 a. M. At ibm headquarters in new york. Also 11 00 a. M. Here on wall street and squawk alley is live