York times reporter. Welcome to everybody. We have a lot to get to this morning. A strong rally in the market but shares of am in the green after getting upgraded to outperform. It comes as the stock officially exits bear market territory. Meantime, now that the government has hacked that iphone without apples help the company is trying to figure out exactly how to fix the flaw and what comes next. A report says apple could consider forcing the fbi to reveal how it did it as part of an on going case in new york. A lot to work with here but lets start with apple stock. We were watching it to exit bear market territory yesterday. Theres the Morgan Stanley note about iphones a couple of weeks ago. What do you think did it . People might have come to their senses. What was it doing below 95 anyway. Its not like that much has changed. They came out with the iphone se is that going to change the overall trajectory of the iphone. Were not sure what the Gross Margins will be on that. People have seen that am continues to have loyalty and continues from all the reports we have seen to gain share over android. Samsungs latest phones have a strong debut but not Strong Enough to change the overall dynamic in the Smartphone Market so in a way people have come back to the sense that they probably should have had all along about it. Its not back up at 135. Dont know when or if its going to get there. Its funny to talk about the upgrade because they had a 125 price target on apple and raised it to 135 where it had been before. What is fair value for apple here . The report mentioned a lot about how they would have evolutionary changes to the iphone 7 this year but then revolutionary in the sense of it on all the phones in 2017. That has a lot to do with the upgrade and the price target. I am not as convinced. I think apple is going to continue to do quite well. I dont think its necessarily the answer. Yes it helps battery life and yes its beautiful in terms of curved glass. But im not sure its going to win the day. Theres the fight between apple and the fbi and a lot of news reports said the stock has been rallying despite this distraction. I dont know if theyre talking about legal costs or having to die ve move resources to this fight. Is it that apple won in this case or lost because they dont have access to the technology here . Its a mixed blessing honestly. The big question before was if the fbi wins this case is it going to set a precedent that will require apple to hand over information and hack its phones in the future. Now the fbi is backing down but apple has no idea what theyre using to get into the phone. So the question is now does apple have a bigger security flaw or risk on its hands than it did before . And as of right now we dont know what it is. Apple doesnt know what it is. The big issue is the reputational damage. People havent talked about it yet. Its very possible that the fbi will come out and say they found information on the phone. Whether they found information or not and that unto itself to me would suggest if they were able to come out and say we found another terrorist cell or information that would have lead to an investigation or something then you start to say to yourself the thing was hackable anyway. The government now has the hack. I think it changes the dynamic of the whole conversation. Im on the other side of this one. Almost nothing but upside here from am because they dont have this immediate hit of the government continuing to press this case. They get a little time to perhaps try to figure out middle ground in dealing with the government on it. They got the message out that even the fbi didnt know how to get into not even a modern iphone, an iphone thats a couple of generations old and if youre apple youre already planning the next upgrade. Maybe theyre going to encrypt icloud and other things. Some reports are saying they had issues with their security personnel. Its the software people, a separate group of security engineers working on that. Those people are probably hard at work on it apple is in good shape. If it turns out this is a broad vulnerability it could give them a shortterm hit but theyll fix it quickly. The top intelligence agencies in the world figured out how to get into an old phone that people thought they could do anyway. The entire case has brought a huge number of hackers into the open. The company can clearly hack the phone. This has been made out in terms that its some huge vulnerability to the world had the hack been available. The only way is to physically have the phone. If you think people are going to run around taking everybodys phone, the whole thing is crazy. Exactly. Every quarter for apple is a record quarter thats bigger than the last and these security scares we had a bunch of different hacks of large companies. I dont think its going to be a giant hit in their sales next quarter. I could be wrong but i dont think so. Morgan stanley says their sales are actually going to be higher than expected but of course we wont get that for a few more weeks. Next up spotify is about to double its current financing. The money lets investors change their securities from debt into equity at a later date. When it goes public but by using this method they get funding without having to change its 8. 4 billion valuation but could put pressure on spotify to go public sooner. Without getting too into it for our viewers, what does this mean for a company thats basically setting terms against an ipo thats yet to happen because it needs the money now. A lot of folks thought spotify was going to ipo sooner than later. And the speculation is what is spotify going to buy. We have seen them dip their toes into the did owe realm with the release of the short form videos that you can watch on the go so the thing to look at is what deals could they have their eye on in the shortterm. Thats what i think this large amount of money gives them room for. Doesnt this create a short fuse in terms of the real time line on the need to go public . They have to pay off the debt if not create liquidity for the investors later. I think theyre probably within a year, the terms of the deal, theyll get a better discount on the shock if it goes public the longer they wait. It does create a shorter time line. I think they were planning to go public within a year anyway so this is just a larger cushion for them to again do some acquisitions in the meantime. How do you read this . Pandoras market cap is 2 billion. Do you do a real acquisition or save it for working capital . Were seeing it more and more as valuations come down to earth. We had uber and draft kings do similar deals. Having a billion dollar war chest when youre competing against apple music, Google Play Music its a very crowded market. To give them the ability to make the acquisition or a Meaningful Play makes sense preipo. We might be covering that spotify ipo fairly soon. Good for us. Good for the viewers that want more insight into how these Business Models work. For the meantime thank you for joining us today. Thanks for having me. More than 80 Companies Including facebook, apple and google writing a letter urging the governor of North Carolina to repeal a law they say allows for discrimination against lgbt people. Box and its ceo join us exclusively later this hour. Also we want to it and the nasdaq up better than that. Also a nice gain after earnings and revenue beat estimates. However its full year profit forecast was below estimates. Also shares in the green this morning and it actually hasnt seen since 2008 kayla. All right. Coming up, they wont rock your world but thats not the point. That is the headline of the review of the latest iphone and ipad. Walt will join us in just a moment. Plus from the white house to uber. Top uber advisor and president obamas former Campaign Manager will join us in a cnbc exclusive and a rate hike in april would be a surprise according to Charles Evans. Nor from his exclusive interview with steve when squawk alley returns. The pursuit of healthier. It begins from the second were born. Because, healthier doesnt happen all by itself. It needs to be earned every day. Using wellness to keep away illness. And believing a single life can be made better by millions of others. As a Health Services and Innovation Company optum powers modern healthcare by connecting every part of it. So while the world keeps searching for healthier were here to make healthier happen. A new review today he says he likes the smaller device but that it wont rock your world. Hes the editor at large at recode and executive editor at the verge and joins us now to explain. Does that mean im not supposed to run out and get it . You know, it depends on your preference in the size of phone they looked over their user base and you saw this very well and you saw increases in sales when they finally went in the minority, maybe 20 or so of people are not upgrading and really liked the smaller body and it is in the companies and war ran upgrading. So they took that exact same body with a couple of tiny changes and they jammed all of the new Necessary Technology from the current flagship phone in there. Can we talk about the ipad for a second . Thats the one i would be more inclined to buy. Is this going to replace my laptop . I have an air. I have been waiting for them to upgrade the air and i cant figure out if they ultimately want me to use a laptop or think everybody will be moving to some form of ipad . They write from the top of the company on down and looked me in the eye and said use the mack and iphone and well cannibalize ourselves and it will be fine. The answer is they think the ipad and particularly the new ipad pros. This is an impressive tablet. The screen, the speed, you know, the speakers, the whole package, its really impressive and given that it must be said that microsoft had first and they have a stencil for stylist for those people that want a pencil device. It can roadway place the laptop largely or its on its way there. I hedged my statement in my column because im not totally crazy about the keyboard but other people will come out with the keyboards and i want to see App Development along the lines of this can replace. Anybody that works in media has an sd card and wants to input things and want to be able to do fast motion video. Theres certain things they have not perfected. Even the Safari Browser isnt able to do some things that the mac can do. Im interested in their take because this potentially efforts apples margins. Is it just a fantastic value at 400 bucks despite the fact that you dont have the Higher Quality facing camera. This is one of the things the phone doesnt have if you dont mind the smaller screen size. Its a fantastic value at 399. I have no idea what the margin is but they did not have to pay for new tooling on the case and that has to cut their costs considerably. I dont know by how much and by the way they already had high volume on the processor and the gpu and other stuff that they took from the 6s. I dont usually get into caring very much about that stuff but it may be the case that its not bad. And i think its a great upgrade for four inch phone lovers. Will they ever get to where youre trying to do something thats so much harder and less efficient than a laptop . Andrew, they dont seem to want to put a track pad in the apple made keyboard. But this connector is open to third parties. And they can put a track pad in so youll have a variety of keyboards for this thing and im going to upgrade because i havent in awhile and just taken purely as a tablet its a fantastic upgrade but it has the connector and the possibility of doing so much more. The one and only, great to see you, sir. Thank you. And up next, stocks seeing a strong gain after fed chair yellen eased rate hike concerns and chicago fed president Charles Evans echoed yellens comments. Stocks off their highs and well bring you more of that conversation but theyre still higher, the stocks that is. Plus box more than 80 companies urging North Carolina to repeal a new law. Aaron levie is with us in a cnbc exclusive. Dont go away. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. And could save you in outofpocket medical costs. To me, relationships matter. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] with these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. So dont wait. Call now and request this free decision guide to help you better understand medicare. And which aarp Medicare Supplement plan might be best for you. Theres a wide range to choose from. We love to travel and theres so much more to see. So we found a plan that can travel with us. Anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Remember, all Medicare Supplement insurance plans help cover what medicare doesnt pay. And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Band a parade rained onr the sales teams parade. And they still made the meeting, without actually going to the meeting. Before any of this, cdw orchestrated a mobility solution, using the hp elite x2 1012 with intel core m vpro processors. Mobility by hp. Orchestration by cdw. Chicago fed president sharls evans echoing fed chair evans cautious message on rates this morning on squawk box but not ruling out a possible rate hike in june. Steve is here with more on that exclusive interview. Where you were andrew and exclusive cnbc interview but suggested the market maybe getting a little bit ahead of itself because inflation data would be the key. I would say that the threshold for having confidence that inflation is going to move up toward our 2 inflation target is pretty high. Moving in june would be on the basis of the labor market. A more dovish fed chair sparking a rally in stocks that continues to this day with comments that suggested fewer rate hikes and further out than wall street had previously forecast. Evans said that the fed was still in a rate hiking mode and two rate hikes this year were possible but like yesterday evans emphasized that Global Economic weakness is a reason for the fed to go slow. If you see all the Different Countries that are struggling to get away with low inflation rates we want to make sure that we avoid those circumstances. Its worth a little extra caution. Evans on the other hand pretty upbeat on growth seeing gdp at 2 to 2. 5 this year but down playing the chance of an april rate hike finding himself squarely in the camp of chair yellen. Thank you so much. It was a fantastic and fascinating interview. Thank you for bringing that to us today. All right. We have some break news. We have to get to sue back at headquaters. Thank you, kayla. This concerns General Motors. A u. S. Jury found General Motors liable for a defective ignition switch that prompted the recall of millions of vehicles but the jury declined to award any damages to the two people that said they were injured in the car accident caused by a defect. Its the first involving an accident blamed on the switch but the jury, although they found gm liable they did not award damages to the two people that brought the suit. Back to you. Ill see you for a news update in a morning. General motors shares moving into negative territory on the news. When we come back, an interview with the top uber advisor and former Campaign Manager for president obama. David plouffe is with us coming up next on squawk alley. [dad] i wear a dozen different hats doing small gigs,side gigs. Gig gigs. Quickbooks selfemployed helps me get ready for tax time. To separate expenses,i just swipe. Its one hat i dont mind wearing. [passenger] i work for me. And so does quickbooks. It estimates my taxes,so i know how much stays in my pocket. And thats how i own it. [announcer] stay in the flow with quickbooks selfemployed. Start your free thirtyday trial today at joinselfemployeddotcom. Here is your cnbc news update at this hour. Indian Prime Minister modi laying a wreath at the train station attacked by terrorists last week. He will also hold talks with belgian leaders and members of the european parliament. Phillip hammond says russia is a threat to everyone because of its disregard for international conduct and norms. He was visiting the soviet state of georgia when he made the comment. The drills between the u. S. And South Carolina are driving the korea peninsula to the brink of war and he defended the recent Nuclear Tests as selfdefense against a Nuclear Threat from the u. S. Are you ready for the angry hamburger . Starting tomorrow burger king will debut that. A newburger called the angriest wopper with a red hamburger bun and will include jalapenos and spicy angry sauce. It will be available for a limited time only. Well keep track of that one for you. Thats the cnbc news update at this hour. Back downtown