Transcripts For CNBC Squawk Box 20140425 : vimarsana.com

I finally figured out why were playing pearl jam. Amazon, microsoft, seattle. Are they a grunge band . Are they from up there. I finally figured it out. I love the quizzes they give us. I think of nirvana. Pearl jam, seattle. I have that programmed in. I dont listen to it a lot. The pearl jam station . Is it 42 . No, is that the joint . I dont know because i have it programmed in. I think it should be myself i think it should be the pink floyd channel. No, no, no, i like pearl jam. No comparison. Youre right. There is no comparison. Amazon, you get up to 20 billion a quarter and you are able to make money, pay everyone, keep expanding. I dont see anything wrong by that. I was surprised by the decline in the stock price, too. Its just a little. The reason, they continue to invest. Thats why the numbers are lower. Its not even margin based. On 19 billion, you should make more than 100 million. This is supposed to be the year amazon went from not making money to making money. I get it, dont you . I give them my money, too. Theyre paying everyones salary. Revenue, you get pilloried when all you do is grow your bottom line, you dont get Revenue Growth. That big with a market cap like that, its grown 23 in year over year. Thats a long way for investors who are waiting. You grow and harvest. There will be growth in the spring. Theyre building video content, all of these are ways to be future players. Theyve gone from being a book store to being the everything store, even getting into the cloud and video content. Logistically, do you know what goes on at that company . You have to have Distribution Centers, you have to have everything stocked. I go online and order something in three clicks, its on my way to its house. I already paid for prime, it doesnt charge me for delivery. He wont come on the show. We played his laugh a few times. Sorry. You have a good laugh. For me, it would be a badge of honor. [ laughter ] its endearing. Its intoxicating. It is. Me, too. He should be happy with all the nice things we said about him. Theres a lot of doubters. I dont think hes listening. Its 3 00 in the morning there. Been doubters all along. What do we do with seattle, seahawks, pearl jam. Pearl jam. I loved it. Hes laughing at you, too. Hes laughing at you. The idea you would compare pink floyd to that was a silly comparison. Its iconic. Iconic. Pink floyd makes me want to blow my brains out. No, no, no. Pearl jam makes me happy. They have three songs and they all sound the same. No, i dont. I dont know the words to any of them. Theyre all different. I know the melodies. Okay. Microsoft is rolling out its first Quarterly Results under its new chief executive. Reporting profits of 5. 66 billion, that translated into 68 cents a share, a nickel ahead of estimates. Sales fell slightly to 20. 4 billion that met expectations. The shares are up about 8 since the new ceo took over in early february, up about 19 since ballmer announced plans to retire. I have to look. A four handle on microsoft. Weve had people a lot of people said id buy microsoft before google or id buy this before id buy microsoft before apple. Whats the yield on microsoft . Thats been you had to be content with the yield only, 2. 8 . Let me see when the last time we saw 40 on microsoft. Looks like november. I mean, it might have traded there earlier this year. But prior to that, it was all the way back in there you see. Yes. Theres a chart for you. Yes, yes. It was all the way back in 2007 where it might have let me see if it hit 40 back then. No, it didnt. Didnt even get there then. No. You have to go back further than that. No yes. There you see it. All the way back there. People have been maybe people will finally right that had all that patience with microsoft. Starbucks, profits at the mega coffee house chain rose 9 to 427 million or 56 cents a share. That was in line with estimates. Revenue missed the mark combing in at 3. 8 billion. Starbucks raised its fiscal 2014 earnings forecast. Looking at a range of 2. 62 to 2. 68, up from 2. 59 to 2. 67. Global sales open at least 13 months were up 6 for the quarter. Shares of starbucks on all of this news up by 1. 5 , a gain of better then a dollar a share to 72. 18. A programming note, starbucks founder, chairman and Ceo Howard Schultz willing on squawk on the street, coming up at 9 00 a. M. Eastern time. What a genius. 54 million, market cap now. Remember the baristas were rude to alec baldwin. I dont remember that. One of the baristas was rude to alec baldwin. I still like him. You like him because of what he said about the Huffington Post recently. Yes, thats why i like him. I know you too well. New york times, i saw it, trying to bring baldwins complex voice back to the classroom. Yes, lets do that. Some guy named james baldwin. No, just kidding. I read another country. He clues you in when youre younger, walking in someone elses shoes for a while. Secretary of state john kerry issuing another warning to russia, take strong measures to deescalate the crisis in ukraine or face further sanctions. The window to change course is closing. President putin and russia face a choice. If russia chooses the path of deescalation, the international community, all of us be with will welcome it. If russia does not, the world will make sure that the costs for russia will only grow. Let me be clear. If russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake. All right. You dont see this very often. But obama suffers setbacks in japan and the mideast as the lead story in what would normally be pretty good pr. Times will play that straight. Oh, please. They had to walk away without a trade agreement. They had to play this straight. You cannot mention whats happening in the middle east without saying its an absolute unmitigated disaster. The latest story comes as russia starts up new military drills near ukraines border. Increased tensions between moscow and kiev is causing a financial impact, Standard Poors cut russias foreign currency, its sovereign ratings. There are some that think the country could be in recession, in bt fact. That decision pushed russias already battered assets down even further. This is the european market. Its starting to have a ripple effect, not just russia but also in europe. Turning now to u. S. Markets. The dow did something it hasnt done in 12 years. Finishing unchanged for the day. It was 0. 00. I thought it was a mistake, too. I had to look in three locations. I looked at Everything Else 0. 07. No, 0. 00. Not every dow component no, that would be more insane. Its still weird. Really weird. Did some of those close unchanged . I dont think so. It was all added up. Right. Its almost like 000. Do you know her, yolanda vega . I dont know who youre talking about. Shes done the lottery in new york for the last 50 years. You dont watch the lottery results. They break in. Its on tv. Every night they break into the programming. You say youre not a journalist. Youre somebody who so pays attention to every little detail. I cant Pay Attention to it. I cant avoid it. It comes on, its yolanda vega. They do four balls, then three balls. You dont know that . You Pay Attention to everything. I Pay Attention to Different Things. It goes into my consciousness. People write in on twitter. Do you know who yolanda vega is . I see one head nodding. Shes an institution. Id let her guest host if i could ever come in here. Yolanda vega, the greatest job in tv she has to call three numbers except the 9 and the 6. Because they flip. They have a way of doing it. I would mess it up. You do not want to mess it up, too. People are waiting at home. Youre right. We digress. The lacht time the dow finished even, the index today at 10,035 in town. Lets take a look at the futures this morning. Red arrows today. The s p indicated down a little, the dow down 32 points. Maybe we can make this up. I didnt like the mortgage story on the cover of the wall street journal at all. Why . Because it depresses me. We need after all this we have a problem again with housing after all the work weve done . After the fed has done what its done for the past five years, were still not fixed . 14year low in mortgages . 14year low in mortgages and mortgage refinancing. Everybody who needed to refinance their home has done that. New mortgages . Theyre there but theyre not roling out quite as quickly. The biggest thing with refinancing, everybody who needed to refinance has done it. If you cant figure out 4. 5 , you have to be stupid not to think thats still low. Five years from now youre going to look back and say if only i could get that. I think the whole thing is skewed by the mortgage refinancings. Look, little lady, a strong housing rebound is an important component of hitting your 3 that youre so sure were going to do. Im just trying to help you on this one. I think 3 . Ill call you big girl, big woman. You better step back, baby. Little lady was okay. Big woman. That was prerferable. The pc police would say big woman is better than little lady. Ill take little lady. Lets talk about the justice department. It is repeatedly seeking a multibillion dollar mortgage settlement with bank of america. It could pay more than 10 billion to settle. Discussions are said to be in early stages. Bank of america would like to have a settle by this this summer. Check out shares of bank america. This comes after major settlements that have been paid. Again, all of the major banks looking to get all of the stuff behind them. As we mentioned earlier, amazon reporting Quarterly Results. Revenue rose 23 , 19. 74 billion on accelerated growth of north american sales. Earning per share is matching estimates. Tom, what did you think of the numbers . Were you unimpressed by the bottom line . If you look at the rules for amazon for the First Quarter, it had something for everybody. People who are bullish in the symptom, revenue is ahead of expectations. We saw acceleration. And their guidance for sales for the Second Quarter was the high end was above where consensus is. For those who are bearish on the stock, they indicated there was a sequential deceleration in unit growth. Theyre forecasting for the Second Quarter a pretty significant operating profit loss which suggests that theyre going to pretty significantly ramp their investment spend in the Second Quarter. Little something for everybody from amazon. Is this the year, though, that amazon starts making money or not . No. I would have thought going into the quarter, given all the changes amazons made on shipping, raising the hurdle rate to 35 from 25, taking prime up 20 to 99, that this would have been a better margin year but clearly theyre going to ramp their investment spend in a lot of different categories. So thats good news if youre a longterm investor. How long term of an investor do you have to be . I do think the average investor in amazon has a much longer horizon than others and has a lot more patience. Theyre willing to take market share and consumer wallet share for longterm profits. Do you need to wait two years for that, five years . What are we talking about . If you look at the nearterm appreciate your, a lot has to do with their international margin. Theyre ramping their spend in choon that and italy and in spine. I think in the u. S. , theyre generating a 4, 4. 5 margin which is decent for amazon. A lot of it is International Investment growth. You think this is the right way to do it, eventually by continuing to build like this, this is going to be the place where you see massive profits come down the road . Our view is longterm they return to the 7 cso margin from 2004 and they get there by managing their shipping costs and by having a larger portion of Third Party Sales on the platform. Today thats 40 . Is the cloud working . Is that a business where you can get profit out of it. 42 price cuts since they initiated the service in 2006. But for amazon, id say its relatively accretive from a margin standpoint, given that their margins are low. Google and others, you could say its dilutive. What do you think about the plan for building additional video content . I think basically now they have a set top box device to win the battle in the war of the living room and clearly that hbo exclusive content was one of their most significant investments to date. You think that when you look around the world, its hard to find competitors. Maybe you put apple in the world of competitors at this point . You look at who will be the most influential Tech Companies today and into the future. Amazon, apple, google and facebook are at the top of the list. Thank you very much for joining us. Whats your price target for the year. 460 is our 12month price target for amazon. Thank you. My pleasure. It didnt take long for the french government to raise concerns about a deal that hasnt even been announced yet. That will be next. Welcome back, everybody. Great moments this week. Ackman in studio, huge pharmaceutical and biotech mergers. Little squawkers invading the set right here. If you missed any of it or if you would like to see what joe would look like with bill ackmans hair, check out the squawk box blog, squawk. Cnbc. Com. I wish i had his eyelashes. He knows that. I messaged him. He never answered you . No. Nice guy. Thats all right. You need constant reassurance . Do i. Its common courtesy. Its okay. Its okay. There are people that get insulted you can handle your life your way. If i want to be miffed, ill be miffed. I heard from bill daly yesterday. You did. He thought you were talking about him not fitting in in the hedge fund world. I set him straight. He was like, why was he talking about me that way . Which proves my point, hes not your average democrat. Most democrats would not want to think. They wouldnt want someone saying they fit into the hedge fund. He was happy when i cleared it up. They wouldnt want to be characterized as a forprofit private sector job creator. He was happy when i clarified. Redistribution. We like him, too. You explained . I did. I said, no, no, no, you didnt fit in with the administration because of all your work in the private sector. Hes like, oh, okay. He knew way too much about the private sector. Four Major Technology Companies Including apple and google agreed to settle a large antitrust lawsuit over nohire agreements in Silicon Valley. Workers filed a classaction lawsuit against google, apple, intel and adobe. That the companies conspired not to poach each others employees to avoid a salary war. By settling they dont have to release the email that was going back and forth between steve jobs at that point, eric schmidt, sergei brenn. They ge out of it at least. Thats a tough story. It is. You can see how when things are cozy and people get mad when you poach and steal each others employees. You can see a conversation taking place. Wait a second, as an employee thats not necessarily something i would like to see either. Think about if that was done at contract time for us. Yes. Assuming theres anyone that would want us. We are niche were happy here. We are. Cable Business News with a ticker. Were really in demand. The french government is concerned about the future of industrial conglomerate alstom, rumored to be in talks to be taken over by general electric. However, now i wonder what was really going on all along. You see this, b1 in the wall street journal, just the energy assets. Its the Energy Operations of the company. The talks havent been confirmed. Frances economy minister says the government is working on alternatives to a sale. And frances economy minister, look at that, no one knows him. Nobody knows him. He told lemond he was concerned about the turbine and trainmakers future. After that report surfaced, he pl plans a meeting with ge executives. Bloomberg, not the former mayor but his company, initially said it was for the whole company but now now pursues ailing friendship. Is in talks to buy the energy business. People familiar with that matter said. I dont know whether its the whole company or not. The Energy Operations generated 14 billion in revenue between april and december. 71 . 71 of the companys total revenue. It would be buying more than twothirds of the company, depending on who has the story higt here. You could see how a reporter would talk about sources and if it was buying 71 versus buying the company. They go with it, their editor says okay. You havent nailed it down yet. The talks could be moving pieces, too. Tesla is getting support from the ftc officials in its effort to maintain its direct sales model that bypasses dealers and sells cars directly to consumers and a lot of people love it. Its currently that model is banned in five states but three top ftc Officials Say the laws are bad policy and are outdated. Those views come from policy planning director here we go again, andrew gavel. Bureau of competition director, of course, you know who im talking about, debra feinstein. You know, the bureau of economics record, martin gainer, those are the three in the ftc i thought might, then, you know, the others. The officials made their statement in a blog post and emphasized their views were of their own and not those of the commission. Theyre not the commissions. You cant say these are three commissioners saying this. None of them owns a tesla vehicle. No ones ever heard of any of the three and dealers have argued the existence is good are for consumers. They have now. Now everyone knows. Our viewers are wealthier for knowing those three games. Now everyone knows because you announced it. We are halfway through earnings season. Well get an update on the strength of quarterly profits in the next half hour. Ford numbers are expected at 7 00 eastern. As we head to a break, take a look at yesterdays winners and losers. That was wonderful, bravo i loved that. It was great. Pretty good. It wasnt bad. It could have been a lot better. I did like it. It was terrible. It was bad. It was awful. Terrible boo boo if i told you that a free tensecond test could mean less waiting for things like security backups and file downloads youd take that test, right . What are you waiting for . You could literally be done with the test by now. Now you could have done it twice. This is awkward. Go to comcastbusiness. Com checkyourspeed. If we cant offer faster speeds or save you money well give you 150. Comcast business built for business. Drivers, tgo our marks. Its chaos out there. But the mclass sees in your blind spot. Pulls you back into your lane. Even brakes all by itself. Its almost like it couldnt crash. Even if it tried. The 2014 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Just want to say, i bundled home and auto with state farm, saved 760 bucks. Love this guy. So sorry. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] savings worth talking about. State farm. Heaven heaven who was that . Maybe stp. Are they from seattle. I think. Stp is. Part of the grunge scene. Who is that, you guys . These guys are. What is it called, pebble of the dog. Temple of the dog. I saw them the other day. I didnt know that very well. These guys both corrected me on it. Good morning. Welcome back to squawk box here on cnbc. You can just tell. Im joe kernen along with becky quick. Andrew is off today. In the headlines this morning, we are finishing up a busy earnings week with about a third of the s p 500 reporting quarterly numbers. Among those already out this morning, whirlpool reported First Quarter profit of 2. 20 a share, below expectations. Revenue came in above estimates. Whirlpool, the earnings improved from a year earlier on higher sales and cost cutting measures. At the top of the hour well be getting the latest number from automaker ford. Its expected to report. Jetbl jetblue, flight attendants are working with the transport borkers union of america on getting the necessary authorizations for a vote. Jetblue currently has about 4,000 flight attendants. Lets take a look at the markets this morning. If youll check out the futures, youll see they are indicated lower. Dow futures down about 31. 5 points. Nasdaq futures are down by 2. Yesterday, the dow changed, unchanged, 0. 00 for the first time in 12 years. And heres a statistic for you. It was the 166th time in history that the dow has done that. Maybe it used to be more common than it is lately. Those are statistics brought to you, thanks to robert humm. Youll see the dax is the biggest decliner, down by 0. 8 . The ftse and the cac are moderately lower. In asia overnight as the president was leaving or ending his trip in japan, the nikkei was up by 24 points. The hang seng was down by 1. 5 . The shanghai composite was down by 1 . Oil prices this morning look like they are down another 46 cents, 101. 48. Still sitting stubbornly above 100 a barrel. The tenyear note at this point looks to be yielding 2. 668 . Back below 2. 7 for the yield. Lets check out the dollar this morning. Youll see right now the dollar is down across the board. Euro is trading at 138. 42 and the yen is at 102. 18. Gold prices look at this point to be up by 5. 1,295. 77 an ounce. The dow closed flat yesterday after a handful of strong earnings offset some of the other bad news. With us now on set is hans olsen, cio for the wealth and Investment Management division of barclays in the americas and darryl kronk is an original coo at wells Fargo Private bank. We talked to you recently. Hans, i said to becky this morning, this housing news might mean we dont do 3 . Still think well do 3 for the overall year. I think theres a pretty good chance of that. I though housing was half of what were counting on. The other portion of the economy has you fire, is the durable goods, capital expend tours. Th that has been running on where companies spend a percentage of their profits on capex. If that comes online, thats the piston that will get us to that 3 thats durable at that point. That takes ceos and corporations ramping up because of demand from consumers, though. Why would that happen . Its not only demand from consumers but the Capital Stock ages, right, when you dont replace it. If you, for example, if you look at trucking in the United States, the Rolling Stock of trucking in this country is, i think, on average above eight years, you get above eight years, it gets expensive to maintain those rigs. There needs to be capex there. I think that is emblem atic of what were seeing across the board. The other thing to keep in mind, theres generally an acquisition between employment acquisition and capex. The jobs growth has been much slower than a lot of people would have expected after the steepness of the decline we saw. Indeed. If you look at those two data series, that break is pretty apparent. But you think that at this point the market does head up Single Digits for the year i think is what youre saying. Single digits for the year. We need more earnings. Gosh we need a lot more revenue to help faster earnings. Darryl, people are calling you about ukraine . Well, lately i think a lot of people have gotten concerned about things like ukraine, the style rotation weve seen. The mixed message you have talked about on set before of what the stock market is telling us, versus what the tenyear treasury and the bond market is telling us. Right know we dont see signs of stress. The telltale markers to see signs of stress would be the dollar rising, emerging markets selling off. It would be credit swaps and spreads widening out. None of those things are happening right now. As a matter of fact, if there were signs of stress, correlations would be moving closer to one and actually theyre breaking down. Things are becoming less coordinated. All of that indicates that the signs of stress arent there in the marketplace right now, which i think is healthy as we move back. Even to hans point, when you look at the High Frequency data, the trucking data this week just came in at an 80year high on its index. 63. 1. The shipping data is also very high. Unemployment claims are almost at a sixyear low. That High Frequency Economic Data is suggesting there is a pickup thats happening in q2 and probably in the back half of the year. All right. Yesterday we fixed a lot of things in the country. Do you think infrastructure is something that well eventually address . Wouldnt that help . Wouldnt that help employment . Wouldnt that be a nice complement with the energy boom that were seeing . Isnt this a time to think about doing this . It would be nice to have that keystone pipeline. Thats shovel ready. The Shovel Ready Projects were all helping bolster Union Pension plans, werent they . Yes, yes. Imagine an infrastructure where you get your natural gas liquids to the coast to export them. What happens . You change the entire calculus of not only the geopolitics. This is a sore spot. You dont want to go there. She doesnt want to export natural gas. They wont even build this thing in maryland now. I think the pipeline should be built. I still have concerns about the export of natural gas but, yes, i think we have so much at this point. Its challenging my the natural gas here, natural gas there. Particularly were going to export it, why not have the pipeline go here. Corporate taxation would be the other thing. Its tough to get the infrastructure in the short term. We have to get past the midterm elections politically. 2015 and 2016, politically i think you can get it done. You know whats coming up in 2016 . I know, i know. You have a window of time there. I dont think washington will want to put heading into the summer months and into the fall theyre not going to want to come to the table, i doubt, and do a big infrastructure spend bill. I hope they would. I would love to see it but i dont, politically, see that being in the offing. I think we turned our attention away from washington. Were focused on business and earnings. Thats good. Youre seeing ceo confidence rise, Small Business confidence rising as well. Right. Thats all moving in the right direction. All right, gentlemen. Thank you. He says Single Digits for the end of the year. How about you . Single but we might be low double. Low double . Yes. Neither one think were lower by the end of the year . No. Not with an improving economy, earnings acceleration in the back half of the year. Low Interest Rates, low inflation. All those set up to nice markets. Valuations, where do you peg the s p right now . On forward numbers, its probably about 15 to 15. 5. Valuations, people get hung up on that mean or median valuation. Valuations are moving from cheap to expensive or expensive to cheap. They spend very little time at a 15 multiple. I hope the earnings numbers catch up and drive, keep the valuation there or bring it down. But i would not be surprised to see us trade at a 16, 17 multiple on the s p. All right. Thank you. Youve heard of avery, ever heard of him . Ecm . No. How about charlie parker, peterson . They were the first guys. Right. You look like euro avantgarde. Hes telling you you look cool. Really . In a retro way . Youre on my Christmas Card list. Am i . Because i didnt get one last year. You will this year. You and tim cook. When we come back, where profits stand halfway through earnings season. Look at apple tv and roku. Netflix making a few deals, that next on squawk box. As we head to break, a look at whats happening in european markets right now. Well all seattle all day today. Great. And our price match guarantee. Whos this little guy . Thats birney. Oh, i bet that cone gives him supersonic hearing. Watch what you say around him. Ive been talking a lot about his procedure. whispering what . Get our everyday price match guarantee plus a 100 rebate on 4 select tires from your tire experts. Chevy certified service. [ chainsaw buzzing ] humans. Sometimes, life trips us up. Sometimes, we trip ourselves up. And although the mistakes may seem to just keep coming at you, so do the solutions. Like multipolicy discounts from Liberty Mutual insurance. Save up to 10 just for combining your auto and home insurance. Call Liberty Mutual insurance at. To speak with an Insurance Expert and ask about all the personalized savings available for when you get married, move into a new house, or add a car to your policy. Personalized coverage and savings all the things humans need to make our world a little less imperfect. Call. And ask about all the ways you could save. Liberty Mutual Insurance responsibility. Whats your policy . [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Welcome back to squawk box, everybody. The u. S. Equity futures on this friday morning look like they are indicated lower this morning. Youll see right now in fact, picking up steam to the down side. Dow futures are down by 350 points below fair value, s p off by 3. 5, the nasdaq down by 6. 5 points. Netflix will be inipt grated into tivo set top boxes for customers of three of the smaller cable operators. The deals with atlantic broadband, Grande Communications and rc telecommunications are the first to bring the app to settop boxes. They dont have to switch to another device like an apple tv or roku box, so it makes it easier to access netflix. I dont like that. I dont quite get it. Dont put it on my comcast box. I have xfiniti. I can get movies already. Youll show them. You can get movies on your play station 3 but it takes more work. Netflix, the stock looked like it was last down by a dollar, 243 a share. The fcc came around big time on agreeing with what the court said. Yes. You have to pay. If you want to play, you have to pay. Its a toll road. What do you want from me . I dont have to build and build and build to make sure i can accommodate. The whole idea, the way people push net neutrality. Are they living in a not for profit country. I understood neutrality years ago when you wanted to see innovation. Theres a time where you are still looking at free and fair competition. Youre a giant, too, stop explaining about it. When we come back, it may have felt like all the companies on the s p 500 reported in the last few days. It did here on set. Guess what, were only halfway through earnings season. Well get the score card right after this. On squawk box. Allis allison chains. You can hear her. She has a horrible, we rough voice on that alice. Allison. Allison chains. I get it. Didnt fall for it, thank you. The talking squawk blog by the way if you want convenient it yet, check out things like this. This would be joe with bill ackmans hair. We cant figure out why bill ackman hasnt gotten back to us. Gee, go figure. That and more at squawk. Cnbc. Com. Come and save me if you wear a denture, take this simple test. Press your tongue against it, like this. It moves do you feel it . It can happen with every denture. These movements may irritate your gums. But you dont have to bear with it. You can try fixodent plus gum care. Thanks to its formula, your gums become one with your denture. This helps stop movement and helps prevent gum irritation so you can keep enjoying life. [ apple crunches ] fixodent. And forget it. So, whatd you think of the house . Did you see the School Rating . Oh, youre right. Hey, babe, i got to go. Bye, daddy. Have a good day at school, okay . [ man ] but what about when my parents visit . Okay. Just love this one. Its next to a park. [ man ] i love it. I love it, too. Heres your new house. Daddy [ male announcer ] youre not just looking for a house. Youre looking for a place for your life to happen. Zillow. You had a 300page commercial. You write a book. Im trying to figure out what is going on in the stock market. Great to see bill doing all this to promote a business model. Hes outrageous. Hes part of the problem. Welcome back, everybody. As of this morning, we are officially hatch way through the First Quarter earnings season. Okay. Were getting there. Joining us right now for a score card for the reports we have gotten so far is mike thompson. Global head of market intelligence. Michael, we knew this was going to be a little bit of a rough one with the weather but how would you grade it overall . As we said, its lack lalust. What i would say is that you have the consumer doing what they are supposed to be doing. Growth is up over 7 . Financials missing by 9 . Information technology. The third pillar of a good earnings season is not doing enough at just under 3. 5 to do what it needs to do. So its a lackluster earnings story. More broadly wait a second. I want to challenge that. I get that if you are looking at this quarter versus last quarter. I think when you look at some of the guidance sphrbgs of the color we have gotten, some of the commentary from the ceos who say a lot was the weather and picking up from here, i would give a slightly better grade. I have been pleasantly surprised by a lot of what we have heard particularly with some of the ceos who talked about picking up their Capital Expenditures this year. Thats interesting. If you decompose, whats interesting is when were ripping through the man scripts and what the company is saying, you cant miss the fact that a lot of profitability is a function of streamlining and efficiencies. Theres an absence of pervasive growth. I wouldnt say its skyrocketing. After all the way we talked things down and thought things were really scary for a while and thought potentially we were looking at scrapping any type of decent growth for the year, i would feel better after the last week or two after earnings. Maybe i was too pessimistic coming into it. Maybe they are picking up and moving along. We are not in negative earnings. But still under 1 . Historic average, 7 . Revenues, the last time i was on, we were thinking about 4 . Thats come in a little bit. Thats now 3 . About 68 of the Companies Reported beat by an average of 4. 4 . Underpromising, overdelivering. You probably are just under 3 . Ill tell you what, earnings would probably come out 3 . Revenue, just about 3 . But that the to me is like Corporate America sort of living paycheck to paycheck. I agree with that. Im more interested what are they telling us about the Current Quarter and the rest of this year . Are numbers coming up or down or too soon for the analysts to Pay Attention . Heres the deal. Full year calendar year expectations 7 . Thats in line with historic norms. If we come can up in at 3 , we had already factored double digit Earnings Growth for q 2, 3, 4. You think the numbers have to come down . They cant come down too much. You have to be pretty robust. You have to figure out whats the catalyst to having a massive amount of growth compared to this quarter. How do you get to 12 , 13 to get where you need to get. Lets just take a look at valuations. Were trading at above historic average. Were now just under 16 times next years earnings. So thats not a bad multiple. So i think thats a market that says, you know, its kind of i i dont want to say risk on, risk off. But its a grading market. Its a market where you have bad news out of china. Or you get something that comes out outside of housing origination. This market will be prone to stumble. Some people might like that. A little bit of volatility. I think this might make sense because this is the kind of economy we have. I think thats the why investors are looking at this. Thanks for coming on. Coming up, another Company Heading for earnings central. Ford about ready to report. I like when boeing reports and when the automakers report. I do too. This is his birthday present. He gets to tell us the numbers. Green flag from ford. And he will have to do the results while we sit back. That and much more when squawk box returns. Just about do it. Hat should excuse me, what are you doing . Uh, well we are fine tuning these small cells that improve coverage, capacity and quality of the network. It means youll be able t post from the breakroom. Great did it hurt . When you fell from heaven awkward laugh . A little. laughs im sorry, i have to go. At t is building you a better network. [ dog barks ] [ male announcer ] imagine the cars we drive. Being able to see so clearly. To respond so intelligently and so quickly, they can help protect us from a world of unseen danger. Its the stuff of science fiction. Minus the fiction. And it is mercedesbenz. Today. See your authorized dealer for exceptional offers through mercedesbenz financial services. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Lets make a deal. Over a trillion in deals announced so far this year. What is sparking this urge to merge . And cnbcs first 25. Rebels icons, leaders. The list wont be revealed until next week. A sneak peek at one of the exclusive members today. Squawk box begins right now. Good morning, everybody. Welcome back to squawk box on cnbc. Andrew is off today. We have breaking news out from ford. Our phil lebeau is covering that for us. Phil . This is a miss on the top and bottom line from ford. Interesting notes in the quarter that we will talk about in just a little bit. Run down the earnings. Earning 25 cents a share. 6 cents shy of analyst estimates of 31 cents a share. Revenue at 33. 9 billion. The street was expecting a little more than 34 billion. Why is ford falling shy of at least what analysts were expecting and what many others were expecting . 17 cents worth of onetime factors. The company attributes to taking a hit in the First Quarter. You take that 17 cents and it comes down to 900 million. Three factors. 400 million in terms of venezuela, south american exchange. And another thing, warranty costs. Basically these are reserve adjustments that based on the recent pattern the last couple of years of warranties for new vehicles, fords expectation is that it will need another 400 million in terms of warranty costs and reserves. So they are going to be taking that in the First Quarter. Also, 100 Million Dollars due to weather in the First Quarter. Ford had to pay premium freight to ensure components and parts arrived at their Assembly Plants on time. Put that altogether, thats the 900 million and the 17 cents. Onetime impact. One other note that the stands out, ford is not changing its Guidance Full Year but it expects the second, third, and fourth to be substantially better. Theyre not changing guidance at this point. But they are very bullish on the underlying run rate. In asia in particular, they had a record First Quarter. They are raising guidance the first year. Bottom line from ford. The street was expecting 31. Say that again in terms of the guidance for the full year, theyre not change something. Theyre not changing the number. They are keeping the expectation 7 billion, 8 billion in terms of profit. But they are saying we expect the second, third, fourth to be substantially stronger. They were bullish about the underlying run rate in terms of the automotive business. You say thats typical because of asia. They are raising guidance. They had a record First Quarter of 291 million. Thats an all time record for asia. Last year in asia they made 327 for the entire year. You can see they are taking off when it comes to asia. Its weird, phil. If you were trying to gauge as an investor whether they were missing expectations or something, i cant decide whether higher than expected warranty costs really is like not operating a company as well as you expect. Its hard for me to figure out. Theres going to be a lot of questions about that. Heres the way it works. Its an accounting thing almost. Almost. This is the way it looks. They look at their track record, their history. Based on what they have seen the last couple years as they sold more vehicles, they have had more Field Service requirements for those vehicles, they said, look, we expect we will need 400 million as we project out the next few years. Yes, a lot of questions on the Conference Call today in terms of, okay, why are you taking this 400 million and why did you decide to take it now . They are saying we looked at the run rate in terms of warranties and this is the expectation. I dont know if the company would say this or not but i wondered if all the Car Companies have been happening with gm and thinking they need to be more aggressive. They are, becky. Nobody will say it. If you go back and look at what happened after toyota, they were aggressive right away. They knew the government was watching them. Theyre aggressive after these types of major events happen. Its not just ford or domestic automakers, its all automakers. More warranties being issued right now. Phil, thats great. By the way, happy birthday. Thank you. Thank you for joining us today on your big day. There you go. Play the music. What sign are you . Taurus. Dont mess with the bull. Youll get the horns, brother. Ford taurus. Youre not 50 yet, are you . No. Im still on the front side, joe. Still on the front nine. You know, 40 i like that. The new 30something. He said the front nine. That means youre going 100. Sthaupbg. Thanks, guys. Amazon in line with estimates. Revenue up 23 . And so it was like 16 billion and change last year. That told expectations. So any selling you see in the stock, i dont know. Amazon making large Investments Overseas while expanding its lineup of devices and Services Including developing its own original shows. Though the ones i heard they were developing sounded horrific. The nerdy Silicon Valley guys is not going to work. Until i see it, i wont write it off. Theres weird scripts. There were two that i read that i liked. Game of throne . Game of thrones. The mets and rangers. Im looking forward to it. Which are you looking forward to . This beard is all about the rangers. Its not going off until they win the stanley cup well, thats the only option, really. Are you keeping it for next year . If theyre out of the playoffs, im sure i will be forced to getting rid of this beard. Every expectation i wont have to get rid of it until after the stanley cup. From columbus, ohio. Columbus has a team . Yes, they do. The bluejackets. And theres even a canadian team. I know that. Theyre in the playoffs. Oh, okay. Right. They will probably face the bruins, which is rough. You know what, im even watching the nets. Im more interested now. The raptors gm used the f word about brooklyn. They won the first game. I like watching them. I like watching the anyway. Plenty of major headlines crossing the waters all week long. Here to talk about them our bearded host the next two hours, rob cox. Editor, cofounder of reuters breaking news. Are you allowed to be on squawk box from reuters . Absolutely. Sure. So its not like youre the question is am i allowed to have a beard on squawk box . You are. You definitely are. So its not a problem with reuters . Youre not incognito. I will be back to my desk by 9 15 and do everything i need to do. As you have watched numbers roll well talk. As you watched these roll, earnings did pretty good. Probably good enough to at least justify where the dow and s p are right now. Its the other way around. If you look at your previous guest with earnings, there isnt a whole lot of torch line growth. A few exceptions like the 23 wers increase net sales at amazon. Basically what we have is gdp if youre lucky kind of growth across the board. So this plains what you were talking about before, the 1. 1 trillion of year to date mma were seeing. I think they put out numbers saying this is only the third time since 1980 they kept the date that we have gone over the threshold this year. Interestingly, 34 deals over 30 billion have been done. Threequarters of the acquired stocks have gone up. Thats so weird. Thats not usual. 9. 5 . So you see companies out there trying to find opportunities to get they dont get the Revenue Growth but they can get the synergies through these details. These are good deals. Not deals you have to go back and break up later because they are rewarded out of the gate. And like some of the the net present value of the synergies are greater than the premium theyre paying for the company. This is generally good corporate finance. It is not is nutty stuff i mean, there is a lot of that. But, you know, buying biomet. Zimmer. Theyre in the same business. 270 million of redundant costs. So that helps. Put that on a net present value. Its more or less what they are paying for the premium. It kind of makes sense. So i think youre seeing sensible deal making. It has to be the response. Were bumping along. So theres nothing driving revenues apart from these extraordinary numbers like facebook or amazon. They have other things going on. That is Tax Implications of some of these deals too given our messed up Corporate Tax structure. Long term its hurting some of our competitiveness. People can come here because they have lower tax rates in their own countries. It makes sense for companies to sell here. Right. And then you just move headquarters via canada to bermuda. It doesnt actually change the business at all. But it does change the financial profile so you have, yeah, you basically get a synergy is what it amounts to. Long term, there will be a question whether that is going to remain. Theres a whole a lot of efforts around the world to hormanize to reduce this arbitrage. Theres a whole big initiative. But then again it always has whole big initiatives. We had the argument yesterday. At this point we have had it for years now. Is the economy so good we dont need any help from washington, or was washington really not that bad . I think they could do great things if they just get out of the way. People are moving on. But i think you could do a lot better. I do too. Extraordinary monetary policy. They have done everything they could examine probably things they shouldnt have done. Or at least they have gone and tried experiments. We havent done the anything on fiscal policy. Not anywhere in the west. Certainly the United States. You are seeing the treats of some policy consolidation and pro Growth Initiatives in europe. Starting to see rebirth there. Pro growth is another persons tax and spends. They have done quite a bit. We have had reverse labor reforms. It is getting more potent, wouldnt you say . More regulations. You were just talking about immunization. Were going to have were going to talk about whats going on at northwestern today. If players vote, im almost positive theyre going to reject it. The appeal has to go through the national mlrb first. Just the vote will have an impact. But we wont know what it is. We can have a vote. This isnt necessarily the most Important Team to have this vote. Well talk a lot more about this. Up next, checking under the hood at ford. The automaker rolling out results just moments ago. Is this a good buy now . More squawk right after this. If you wear a denture, take this simple test. Press your tongue against it, like this. It moves do you feel it . It can happen with every denture. These movements may irritate your gums. But you dont have to bear with it. You can try fixodent plus gum care. Thanks to its formula, your gums become one with your denture. This helps stop movement and helps prevent gum irritation so you can keep enjoying life. [ apple crunches ] fixodent. And forget it. Welcome back, everybody. Take a look at the futures. The red arrows are continuing to pick up steam. S p futures off by 5. 5 points. Ford out with quarterly earnings. They fell short of expectations. James aberdeen is auto analyst who joins us on the squawk news line. He has a whole writing on the stock. I know this was a miss, but the company is maintaining its guidance for full year because they think the second, third, and fourth will be better than analysts were expecting. How does that break out for you . What do you think . Good morning. Thanks for having me first off. I explained the whole grading is predicated on a oneyear outlook. We entered with temporary expectations. Eu was stabilizing but not quite growing. I think what has change said here is even though they missed, europe looked a lot better than we expected. It could change the dynamics. Were incementally positive here. The Company Comes out and misses six cents. But you like what you see. Does this mean you might potentially change your rate to go buy . Im not going to do that on air. But it is something we set up. The eu is not only stabilizing but now starting to grow. Ford is the best position in that market. We will look closely at the market share numbers and try to get a sense. If break even is this year, we thought it might be next year or 2015, that changes the earnings dynamics in a big, big way. Break even in europe . Correct. They might be gaining more shares than we even thought. What would help clear things up for you . Theyre not going to be as transparent. If they talk about how their products are doing relative to the key group. Uk has been strong. Thats helping the market over there. Thats what we would be looking for. What do you think about whats happening here in the United States . It is stronger than people would have thought last year. Concerns around auto lending were premature. James, im cohosting today. I have a question for you. What company is mulally potentially leaving for mark fields, assuming he takes the ranks . Were getting a good sense of guidance for the rest of the year. Theres been a lot of talk that mark would take over or alan would leave sooner than expected. I think when he came in its competely different. Whats your sense of the Bigger Picture . They made quite frankly the biggest stride relative to gm. Chrysler has done a phenomenal job. They turned it around in a way i dont think they thought they could. He sort of retrained, if you will, the culture. It sort of unified the global effort as it relates to production rationalization. And now they demonstrated that they got the joke on designing the f150. The six cylinder pickup truck did very well. Thats a legacy that mulally will be leaving his successor . Yes, sir. I dont want to say it is idiot proof. Its not as much about the ceo Going Forward as perhaps it was once before. Thanks so much for joining us today. Thank you again. Coming up, well reveal another member of the cnbc 25 with an exclusive sneak peek the next half hour. And ceo of Waste Management David Steiner. 36 jump in profits. Squawk box will be right back. Financial noise financial noise financial noise so, whatd you think of the house . Did you see the School Rating . Oh, youre right. Hey, babe, i got to go. Bye, daddy. Have a good day at school, okay . [ man ] but what about when my parents visit . Okay. Just love this one. Its next to a park. [ man ] i love it. I love it, too. Heres your new house. Daddy [ male announcer ] youre not just looking for a house. Youre looking for a place for your life to happen. Zillow. Some big moments on squawk box this week. Bill ackman was in studio. Little squawkers invaded the set. If you want to see any of it or see what i would look like with ackmans hair. If i was gray and high and tight on the sides. Check out the latest. The address squawk cnbc. Com. Four major tpebg companies have agreed to settle a large antitrust. The terms of the deal werent disclosed but tech workers filed a class action against apple. Back in 2011 alleging that the companies conspired to not poach one anothers employees no order to avoid a salary. By settling the Companies Get to avoid some of the mails that had gone back and forth between steve jobs, sergei brynn talking about how they were not going to poach. It really did expose them as being more business as usual than think different. Dont be evil. There were massive bidding wars. Now they just buy the engineers companies. I dont think we were really talking about senior, senior guys either. No. Engineers and software guys, stuff like that. All right. Next, one of the driving forces behind the urge to put companies together and merge would be Corporate Tax policy. David walker taxes ranger. Why we need reform right now. Tdd 18886282419 searching for trade ideas that spark your curiosity tdd 18886282419 n take you in many directions. D 18886282419 you read this. Watch that. Tdd 18886282419 you look for whats next. Tdd 18886282419 at schwab, we can help turn inspiration into action tdd 18886282419 boost your trading iq with the help of tdd 18886282419 our live online workshops tdd 18886282419 like identifying market trends. Tdd 18886282419 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. Tdd 18886282419 sharpen your instincts with Market Insight from schwab tdd 18886282419 experts like Liz Ann Sonders and randy frederick. Tdd 18886282419 get support and talk through your ideas with our tdd 18886282419 trading specialists. Tdd 18886282419 all with no trade minimum. And only 8. 95 a trade. D 18886282419 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. Tdd 18886282419 so you can take charge of your trading. Welcome back to squawk box, everybody. Ford shares have been down in the premarket after the automaker reported 25 cents a share. That was six cents below estimates. An analyst just walked through this. He has a hold rating on the stock. He said he is considering upgrading based on the numbers in this report, though, because the underlying were quite a bit stronger than expected, particularly ford. He thought that would not be a break even until next year. He said ford is showing a turn in europe. It is their best position to be there. Third quarter proof of 68 cents a share. It is up 1. 5 . And tivo hooking up with netflix. The first u. S. Cable companies to include netflix in the top box. Is u. S. Tax policy prompting recent mma activity . Austan goolsbee. Complicated and deeply messed up Corporate Tax system in the u. S. , which really we could do on a bipartisan basis. People in both parties would say we should fix it. Just to have transactions. Even if they didnt make economic sense because they can use this tax wedge. Flip where the headquarters is. Joining us to talk about this and what we can do to fix it or whether it really is a negative, ill tell you what i mean in a second. Former u. S. Controller general and former c can eo of the Comeback America Initiative and rob cox of reuters breaking news. And dave walker is the only guy you should think about for connecticut lieutenant governor. Theres no question that we need to broaden the base, lower the top marginal rate. We also need to recognize were not an island. We need to deal with the situation where people dont want to repatriote. So broaden the base, lower the rate, go towards territorial taxation rather than global. Goolsbee said there are trillions on Balance Sheets and its not being used. Im glad you said that. It is trillions. Its not billions. It is trillions. Add three more zeros there. Look, what we need to recognize is some people talk about lets have a special tax period to bring it back at a lower rate. Do it based on growth and job creation. Thats really the shortterm. We need to engage to address the disease. It has to be conditional. We end up changing the tax system. Move towards comprehensive tax reform. Amnesty is a bandaid. Thats right. Their behavior then changes. It would be better to change the behavior on tax policy. Remove the funnies. At least most of them. Its fundamentally unfair. Hundreds of lawyers are focused on. Other companies cant afford to do that. They will pay the marginal tax rate. This is fundamentally a problem for a free market system, isnt it . It is. You have legal accidents to do trfrp pricing schemes to attribute earnings to the lowest tax. They cant take advantage of the screwed up laws that washington. We have an overly complex, competitive tax system. It is time to get to work. We talked infrastructure yesterday with austan. Bring back some of the money thats over there. Have the conditional on the repairing some of the horrible infrastructure. All these jobs. People manufacturing stuff. Airports, bridges. Four flat tires. You have a low profile porsche 911. Thats something i go campaigning in. I have a chevy. Dont make it amnesty. Bring it back. Use it for infrastructure. Owe bottom ma could do this. Hes not going to. The republicans wouldnt let them do it. The government has grown too big, promised too much. Needs to restructure. Spends way too much on consumption. Not enough on investment, not enough on young people. But theres not an appetite in washington for this. How do you make them . The answer is at the federal level, were not going to make any Real Progress until we have a new president. And were not going to make any Real Progress until both parties start treating each other with respect. One of the reasons im focused at the state level is because states have huge problems, especially connecticut. They cant print money. Bad news flows downhill. What you just said im leaving. What does that mean . George clooney. Your mike is off. Steve win said about obama care and George Clooney walked out. Its in all the tabloids. He walked out. Hes a friend of mine. Now im leaving because you said that about him. I am not speaking personally. Im speaking reality. Right now do you need new blood all the way across . The biggest deficit this country has today in government is a leadership deficit. If youre going to take on these issues, you have to have a president no matter what it is and what party theyre associated with that will use the bully pulpit to tell the truth, the whole truth, nothing but the truth. And to bring people together on comprehensive solutions that deal with the disease. Dave kemp had his proposals. Yeah. Which probably says something. It says things like getting rid of the income. Thats right. They are difficult nettles to grasp. Everybody i think recognizes that. You are going to get a change of leadership. Youre going to get it in two years. Thats right. How do you keep the pressure up . How do you make sure in the meantime, all the companies are selling out to better mu daybased, irishbased subsidiary countries . Only one way you get things done and thats a crisis. Two ways. The first three words the constitution come alive. We the people. Unfortunately most americans are turned out, tuned out and turned off. With the current state of affairs. You can see that with the polling if you will. We will get a new president. We dont know who that is. Its not just the president. They are disproportionately responsible. They need to treat each other with respect. We need to recognize we are losing ground rather than gaining ground. And they know it to children and grandchildren. Caroline kennedy was funny watching chuck yesterday. They pulled the rug out from under hilly and supported obama. She said she would definitely support her. Would hillary do some of this stuff . To move left of where we are i can only think of one guy, de blas blasio. Shes leading everybody. Im not endorsing everybody. Do you think we would have a better chance with her . My view is that george h. W. Bush 41 and bill clinton were fiscally responsible president s who got it. And they made tough choices that cost them politically. They did the right thing for the country, worked on a bipartisan basis. I think that hillary would do that. I think there are republicans that would do that too. You have to go to the people. You have to build relationships on both sides of the ill. Pull them together on principalbased compromise. That doesnt mean in the middle. Thats what we have at the state level as well. Okay. Jeff got a standing ovation in new york city just for considering it. I dont know. Talk to you again soon. Thank you. Appreciate it. When we come back, cnbcs first 25. We have a profile of one of the members of the exclusive list. Heres a quick hint for you. When she was 10 she worked as a babysitter for mickey mantle. The rest after the break. There is no substitute for experience. For what reality teaches you. Firsthand. In the face of danger, and under the most demanding circumstances. Experience builds character. Experience builds confidence. And experience. Has built this. The 2014 glk. The engineering, and the experience, of mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. For 175 dollars a month . So our business can be on at ts network yup. All five of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line anytime for 15 bucks a month. Low dues. Great terms. Lets close. New at t mobile share value plans. Our best value plans ever for business. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Next week we will unveil the top 25 list. The first on the list, Martha Stewart. More than three decades on tv millions have turned to Martha Stewart to learn how to make the perfect pie. Groom a garden or trim a tree. Affixing ornaments. It has been a good thing for the selfmade domestic god else who created a billion dollar empire. Martha stewart living. A true business were pioneer. She turned domecticity into an industry. She does it better than anyone else. So whether its cooking pancakes or crafting or sewing or quilting or any of the things that one would think about martha as the expert, shes actually the expert. Charles worked as executive chairman of Martha Stewart living only knonly my media. She has the ability to object soccer, understand it and use it to her advantage. Stewart grew up in new jersey, the second of six children. By age 13 she was already making it big in front of the camera as a fashion model. Her career moved from the run way to wall street where she worked as a stockbroker and developed a deep understanding of the business world. Always passionate about cooking, stewart eventually turned her focus to food. In the late 1970s she started a catering business out of her familys farm house. Again, she is as good as she is. She became that person that people would want to use. Those people included a number of corporate and celebrity clients. Within a decade, her company, haar that stewart, incorporated, had grown into a Million Dollar business. She made being a home maker fun, profitable, enjoyable, and acceptable for a whole generation of women that thought that you had to choose between being a homemaker or being a woman who worked outside the home. Bestselling books, a popular tv show, and a magazine would follow. In the mid1990s, Martha Stewart, inc. Became Martha Stewart omnimedia. Whatever it is that she is doing or her business is doing, the public has understood that it is about excellence. So they trust that. That trust was shaken when she was embroiled in inside trader scandal. She was indicted, convicted in 2004 of impeding the investigation, and went to prison in West Virginia for five months later that year. To her detractors she was disgraced. To her defenders, something very different indeed. Martha stewart did the most heroic thing you can imagine. She actually went to jail when she could have waited a couple of years for her appeal to work itself through. I dont know anyone that could make that decision and do it with your head held high, do it, finish it, come out and not skip a beat. She walked up the plank of that airplane, waved at everybody in a poncho that the inmates had knitted and went back to being Martha Stewart. I think her setbacks made her stronger. And i do think she channeled some of that energy into her business. Shes fearless. She does not mind taking risk. And a number of risks that she had a has taken on have not worked. However, she gets up, dusts herself up and starts all over again. Barred for a time from an executive role with the company, she returned as its creative director and the engineer of a personal and professional renaissance. I think, again, the power of the brand, the pure power of martha and strength as an individual, she is able to ride through this again because of the iconic nature of who she is. Martha stewart, queen of the home, queen of home making as business empire. Queen of the comeback. Americans like a pushy broad. They really do. They like strong, out front people. The amazing thing about the United States is you can always reinvent yourself. Theres always a second, third story, fourth story, fifth story. It doesnt matter. Americans will give you a Second Chance always. Im with koppelman. I dont think she needs a Second Chance. The way she handled that was vintage martha, bigger and better than ever. She said im going to do it, ill suck it up. She is bigger and better than ever. I dont think its a Second Chance. I dont have to forgive her for anything. They say sam sold all the stocks. Shes not supposed to sold all her stock . She got dinged. Whether or not it was deserved she got dinged. But she did the come back stronger. Just because you would agree. Im sure she looked at it and said lets get this out of the way and be done with it. If i were her, i would be like, youre kidding me. I would think probably thats what she was saying. Well talk a lot more about this next week. Thats just a sneak preview whats to come next week. North western Football Players getting ready to vote today on whether they should join a union. Implications for College Sports are huge. Well talk about that ahead. Squawk box will be right back. Is that true . I like it. They went from that would be wrong if you think the animals are from theyre guest hosting. Macklemore is from seattle . I guess. Microsoft, amazon, starbucks all reported last night. Big seattle morning for us. Our producers like to give us quizzes. We appreciate it. Trying to make this interesting. Give us some help. Its not easy every day. Baidu forecasting better than expected revenue. The core Online Search business strengthened. And plug power sells 27. 6 million. 5. 50. Broad couple earned 51 cents a share for its First Quarter, excluding certain items. Beating estimates by 5 cents. Revenue essentially in line. The top and the bottom were below year ago figures. Chipmaker with increased competition. You heard me say oh, my god. Stein berg is here. We talked about his murse last week. He calls it a satchel. Wearing his murse. A selfconfident guy. This is how i work. These are my papers. Thats how you roll, with the murse. This is how i would normally be traveling. Lots to cover. Were going to talk about that. Indiana zones carried a murse. All right. We have to go. Big vote for northwestern Football Players. Possible outcome. Waste management and ceo to talk earnings when we return. N we re. You, my friend are a master of diversification. Who would have thought three cheese lasagna would go with chocolate cake and ceviche . The same guy who thought that small caps and bond funds would go with a merging markets. Its a masterpiece. Thanks. Clearly you are type e. You made it phil. Welcome home. Now whats our strategy with the fondue . Diversifying your portfolio . E trade gives you the tools and resources to get it right. Are you type e . Earnings news is good news. With rising tensions over russia, will the markets focus change . What you need to watch in the final trading day of the week. Will the players form a union and what could it mean for College Football . Let the streaming wars begin. Why a rock legend is teaming up with the founder of skype to change the way we listen to music. Its all about quality as the final hour of squawk box begins right now. Is he from seattle . You cant do that . We totally broke format. Welcome back to squawk box. Im joe kernen along with becky quick. Andrew ross sore win will be back next week. Weakness in asia. Angst about what we will tell new a second after we talk about ford. Russia and ukraine, i dont know how this finally plays out. Nobody knows. Thats one of the reasons were down today. A few corporate headlines. We are watching shares of ford today. The company missed expectations on both the top and bottom lines. Earnings per share off six cents by what analysts had been expecting. Ford cited a number of onetime factors. Weather, currency, warranty costs for a reason why the it was impacted. He now says based on what he sees in the numbers he likes what he sees. He wouldnt upgrade on air but says he is thinking about it in particular because the business in so much better than he anticipated. Moodys among the companies reporting. Beating estimates by nine cents. 16 jump in revenue from a year earlier. Stock looks unchanged now. Nokia completed the 7. 5 billion sale to microsoft. A deal first announced last year. It was completed after the two sides agreed to leave factories in india and korea out of the sale. Secretary of state john kerry issuing a warning to russia. Take strong measures to deescalate the crisis in ukraine or face further sanctions. The window to change course is closing. President putin and russia face a choice. If russia chooses the path of deescalation, the international community, all of us will welcome it. If russia does not, the world will make sure that the costs for russia will only grow. Let me be clear. If russia continues in this direction, it knoll the be a grave mistake. It will be an expensive mistake. All this after russia started up new military drills near the border of ukraine after several prorussian militants were killed. Increased tensions between moscow and kiev causing a financial impact. There has been some speculation russia could be in a recession. They cut the foreign currency sovereign ratings. Central bank raised Interest Rates from 7 to 7. 5 . It hurt some of the other overseas markets. Its having an effect on where we are today. Planes flying full force right at the border and then turn. It unsettled the whole region. Thats been his intent from the gettkpwho. You can watch and see what hes done with it. In technology, everything earnings from microsoft, amazon after the bell. John steinberg is president and chief operating officer and cnbc contributor. And reuters breaking news. Joe, you want to go first on this . We can either do substance or can i see that just a little bit . When we talked about the murse last week, you didnt go out and buy this . No. You can ask any witness. Ive been carrying it two years. Maybe even three years. This is what i carry when i need my laptop. Is it cross your shoulder . Depending on the outfit. It pulls the suit a little bit s. So i might do one suit. If i wear a sweeter, i might go across. You can see it is a satchel. Indiana jones. This is actually very similar to what indy wore. If you want to raid a temple. If youre doing any archeological work, this is perfect. Very similar to what indy wears. I would rather look like him i think than zach. But they didnt do that. You know what, i feel good about my body. This is a form factor for the ipod. If youre a modern work based professional with an ipod, you carry a satchel. Heres your bag. Thank you very much. Where were we . Cap earnings. Now we will talk technology. Lets talk first amazon. People have been saying they make money. What they do is took down the the operating income a little bit below what people expected. They expected 2. 8 . They came in 2. 5 . They had the 20 top line. And Amazon Web Services at 58 growth to 1. 2 billion. Now they are putting out their own delivery trucks. They just keep spending it. Is that good . The stack down 3 today. Holders of the stock tend to be those who are longterm holders. People with a lot of patience. When you look at it, they can use the money to get profitable or invest in more and more growth. They are able to turn them profitable. When you look on a segment by segment basis, they go into the phone business. They have the Cloud Service business which powers the whole internet. But, you know, they could get back to the 6 to 8 operating income they had between 2003 and 2010. Thats a point some of the analysts have made. Take this to its logical conclusion. It required extraordinary investment. Yeah. Its working very well in the cities or the areas where they piloted it. They havent yet done it in new york. I was out in seattle last week. I spoke to people at amazon. Its pretty clear this city, getting it right here, will be a huge case for the ability to make that happen. New york is kind of a nightmare, right . Its tough. Heres the question, the closer you get, the more you think about having these Distribution Centers closer and closer to the home, at what point do you say the hell with it. Theres like a million supermarkets, bed, bath beyond types. All sorts of retailers struggling. Why not take their infrastructu infrastructure, buy the businesses, which by the way have higher operating margins so you get the leverage effect in a sense already so you could potentially make it more profitable from the start. Is that just going to happen . Shipping costs up in the quarter. The way they are doing it at u. P. S. And fedex is not efficient. It is costing them too much money. They have lockers in all Different Stores where they can drop off overnight. The other thing the journal pointed out, they are going to do the it very late at night, which should actually be more efficient. U. P. S. And fedex deliver to your home during normal business hours. Amazon will do it 3 00, 4 00 in the morning when no one is on the road. Coming out at 2 00 in the morning to your house is not my guess is that would be a limited number of places where it would actually work. But my question is, will the company have unlimited patience from investors . Can they get to global domination before they have to turn a profit . Theres all sorts of analysis you can do because it is so complex. You can compare them to target or walmart. You can see the Grocery Store margins that the retailers have, amazon has a better version. So as long as you can get them in, get them in volume. The cable industry you have to build out infrastructure over many decades. Then you are in position to harvest it. For 20 years you had to always use ebitda. There was no discussion about net income. And they have continual improvements in the gross manager eups of the business as a result of all of these efficiencies with the warehouses. It has gone up to high 20 percentages. So they are showing all sorts of efficiencies. Its not the bottom line everybody wants to have. They keep using it for all google type things. The stock is back at 40, which it hasnt seen for a sustained period of time for years and years and years. Is this a few day for microsoft . They showed they can be in the cloud and internet business. That is when you pay for your word and excel and things like that on a cloud basis. So that was a significant improvement for them. Their competitor to amazon showed north of 100 growth year over year. Essentially the business was flat. When you strip out the onetime rebate charge which caused it to go down, the business was up 8 top line. I feel like while investors thought it stabilized, pc sales didnt hit them as hard as thought. Theres the one time upgrade cycle. Windows xp they ended. They had to finally upgrade whether they wanted to or not. What about the new ceos. What is the task ahead of him . He was Pretty Amazing on the call talking about how its a new era. They need to get in and be bold and take risks and things like that. He comes from the cloud and computing side of the business as opposed to coming from the operating side of the business. I think he gets all growth will come from the new things. Do you think that means no growing pains, no adjustment. The challenge is they are Strong Revenue lines. It doesnt really move the needle that much. Will they have the patience to pivot the entire business into this. The other issue is tablets now have a problem. The form factor would be the surface, the tablet. We saw with apple they are basically saturated at selling 16 million units, 15 million a quarter. Theres no growth in ipads. Is the growth going to be in phones and decreasing growth in computers. Microsoft has no position with phones. Windows mobile is really, really tiny. So thats a huge issue. Is he going to get rid of some of this consumer stuff . Is he juiced up by all that business, the cloud computing, the enterprise. The xbox business is very much tied to the cloudbased business. It does all the processing for the games and the movies and all those Different Things in the cloud. Sit a good and strong growing business. It is definitely laggy the sony next generation playstation. I think those are the businesses he will leg into. If anything, he will pull back from operating systems and traditional Package Software as we know it and move into a sales force for these subscriptions to these productivity suites. They will both be with us the rest of the show. You have your Samsung Phone in there too . I have it here. You would carry that in your satchel . Because i started thinking about apple and how they did. Because i was worried more people would be buying those. Apples total beef was based on oh, there, look at you. They got a shot of you too. That jacket hides that the stomach. A lot internationally and the later generation phones. They did great but there was no growth in the quarter. How can the stock not go up . All right. Coming up next, North Western Football Players huddling up today to vote on whether they want to form a union. And as we head to break, check out the squawk box market indicator. R. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Make a my financial priorities appointment today. North winner Football Players expected to vote on whether they want a union. Dave, you just have a ballpark percentage number that you think will vote on this . I mean, were not going to know. Just in your heart of hearts, how many guys do you think would vote for the union out of 75, 76. 76 players. Yeah. To your point, we wont know the results for several months. What do you think 12k34r if i were to put a ballpark, 15 , 20 vote in favor of it. I took my own nonscientific poll of a few players who were college Football Players before this. Should they vote yes. They all said no with a varying degree of fourletter words. They think they would be voting against their coach, their quarterback. Their wide receiver. They want to win football games. They go to North Western. Not exactly the best place to be. One of the best educations you can get anywhere in this country. I dont think many of them will go yes. Love their coach. He has been on like a mission. Its not illegal. Its not illegal to make the case this is not in your best interest. Yeah. And i have a lot of empathy for these guys. I dont know what we should do. In a selfish way, please dont screw up the ncaa. Please. Dont screw up College Sports. What i think is good, it raises the level of concern how some of the players are getting advantage of. I dont know if they should be employees. Wouldnt they have to pay taxes on the scholarships . If the ncaa moves as a result there are questions whether or not they are being exploited. It is fundamentally a good debate to have. The pressure is already on the ncaa. Everybody is having this conversation. The media is having it. Just having this vote puts more pressure on the ncaa. Changes are coming. Opening up the food policy. The five conferences will have more flexibility to make changes. I think you will see the overall value of a scholarship increase to allow for the cost of living, the cost of being there, not just the books and the education. But youre going to see changes made in the next couple of years. These kids at northwestern, they are kids, they want to win football games. They want to go to a bowl game. They know they probably wont see any benefit from the union. But if they do vote to unionize, they will certainly see the distractions. Will it cause the season to fall apart . It could easily happen. They are voting against their coach who supports coulter, who supports their rights saying they need some changes. But youre voting against your coach if youre doing this, and they love this guy. Right. Now, what do you think happens on the appeal . Look, the appeal is that that is anyones guess. I think in a couple of months we will probably here. . Include include all private colleges. Boston college, notre dame. You could see it widened. They will probably take a look at this case and say, no, North Western is actually right. These are just legal people i have spoken to saying this ruling may not have been spot on and they may reverse it. Regardless of what happens, the decision supersedes anything that happens this morning. This vote, while historic in nature, is superseded by whatever the appeals process says in a couple of months. All right. Dave, thank you. When i knew it was today, i was excited about it until i realized were going to find out. Its a big election. Youll know in a couple of years. You have to figure, joe, something has leaked out if the players vote yes. Its a secret ballot. But if they vote yes we would all be shocked if somebody doesnt leak it out. Three guys will vote yes out of 76. You might have 10 or so. Number one Graduation Rate in the country. 97 . Some of the smartest kids. They go there to get a great education not just play football. If it were somewhere else, they might have a better shot. Dont mention any names. Like colorado. Were both buffs. We did, we won a championship. Took us five downs. Remember that one . It took us five downs. Well be back. Just give us a decade. When we return, turning trash into profits. The ceo of Waste Management will join us to talk about the companys clean technology, Global Economy and of course results. Is and then a rock legend hooking up with new technology to change the way people listen to music. Its about quality not quantity. Steve liesman has that story in just a bit. Squawk box will be right back. Cars are driven by people. Theyre why we innovate. Theyre who we protect. Theyre why we make life less complicated. Its about people. We are volvo of sweden. E financial noise financial noise financial noise financial noise and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. We are already back. 32 was way too late. Welcome back. Nothing like cutting it to the last second. Unbelievable. Great moments this week on squawk Box Including bill ackman on with the guy from valeant. A great conversation. It was. Huge farm set cal and biotech merger announcements. And the little squawkers. You get a better look if you go on our website. They were here for take your kids to workday. And you can see what i would like like with bills hair. You saw what i would look like with zach galifianakiss stomach. That was you . Yeah. I was never quite that bad. Anyway, check out the squawking talk blog. When we come back, turning trash into profits. Waste management ceo will be commenting on the companys quarter. As we head to break, look at u. S. Equities futures. Dow looks like they would open 60 points behind fair value. Nasdaq close to 15. There is no substitute for experience. For what reality teaches you. Firsthand. In the face of danger, and under the most demanding circumstances. Experience builds character. Experience builds confidence. And experience. Has built this. The 2014 glk. The engineering, and the experience, of mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. We got a fair price. Ruecar. Com,. My feeling is that. Ing. And youre like. Iyou know, the salesman icomes over. , theres no buyers remorse, you know. Im happy with my purchase. Its the truth. When youre ready to buy a car, save time, save money, and never overpay. Visit truecar. Com welcome back to squawk box, everybody. Abbvie reporting 71 cents a share, 3 cents better than expected. Results were by an increase through the bestselling drug in the world myra. It is up 1. 9 . Chipmaker synaptics with better than reported stocks. It is used in apple iphone 5s. Uggs maker Deckers Outdoor lost for the fiscal quarter. It was 6 cents narrower than expected. Revenue above estimates as is the companys Revenue Growth for the Current Quarter. Up 6. 3 . Waste management, 36 spike in First Quarter earnings saying cost controls improve yields. Talking about the quarter and more is David Steiner of Waste Management. What does that mean improved yields in your business, dan . For us, joe, its price and volume, right . So when we look at yield, were looking at the best price in volume. You can get a lot of volume at low margins or less volume, higher margins. Thats what we have been doing. Getting what i would call not the most volumes but the best volumes. So there was more garbage because the economy is better . Theres always more garbage because the economy is better. When you look at our business, were a pretty good proxy for whats going on throughout all areas of the economy. So were seeing i wouldnt call it robust growth but i would call it stability with more up side potential to down side potential. We just expect you guys to keep coming to the dumpsters when theres a strike in france with the garbage workers. Its like three days. Then we realize how it is we need you. Our guys are out there doing it every day are the backbone of america. It keeps america running. I know things have changed in our house probably the last three or four years. We ordered so many online. Everything from groceries to am zone. I rarely leave the house. I know that means we have a huge amount of cardboard going out we never did before. Is that growth for you . Cardboard really is great growth for us. It really is interesting when you say that. That is the changing economy, right . For us, we have always said were not really a garbage company. Were a materials company. How can we find value in the various streams of material . Cardboard for us is a great stream. When you look at ecommerce, all commerce, what happens . Get it shipped in a box. We take it, recycle and it can make another box to bring materials back. Accord aborted is our most profitable stream is in recycling. What kind of money do you make on that . If you recycle a box. As you know, Commodity Prices have been down because of weaker demand from china. What you have seen in the fiveyear markets is the fiveyear average around about 100 to 110 a ton. They have been running at or slightly below that fiveyear average. Three years ago when we had a spectacular year with recycling they were running 150 to 180 a ton. Thats the problem with recycling. Its more difficult to make money with lower prices, which means we will not make much investment, which means we will not be able to do much recycling. Our customers want it. We want to do more. We want a Sustainable Business model where we can continue. Is that why it was down 3 sequentially year over year . Demand . Absolutely correct. What you see is with less infrastructure you will be able to get less materials. So we actually had seen our materials up a little bit. Its more through acquisitions than whats this other line. It looks small but its a big grower. 33 . What is that . For this quarter, that was probably our landfill gas to energy business. So we have 260, 270 landfills throughout the United States. What we do is take the the methane thats created there, 22 times worse than Carbon Dioxide and capture it and create energy out of it. With garbage we create more energy than the entire Solar Industry in the United States. What . Thats just one thing. Absolutely. Can i ask a philosophical question about the industry. Dont consider this loaded in any way. As the Environmental Movement the past 20 years and increasing towards environmental awareness as it were, it sounds like its been great for your business overall . Yeah. When you think about it from our perspective, there is no one in the world people dont understand what we do, the landfills we have, the recycling facilities are huge models. That is Collateral Damage for us. We have the engineering capability like nobody else in the world to manage materials. As regulations get promulgated that say were going to have to do Different Things to manage materials, absolutely. Thats an opportunity. Each is an opportunity for us, absolutely. For us, our number one job is protecting the environment. How do we do that . We can do it by recycling, by reusing the material or putting it into a landfill that helps to protect the environment. From our perspective, were really the only company that can offer the broad array of solutions for a customer that says i want to reuse it, i want to recycle it. Or with some things i want to dispose of it. I suppose plates like china, behind in their sense of the environment are going to be great opportunities or very difficult . We had a joint venture to do waste energy. Look, china may be a little bit behind, but they are catching up very seriously. By the way its a strategic. Absolutely. Theyre doing a fantastic year. We had a wonderful partner over there. The problem is not growth. Theres plenty of growth in china. The problem in china was the margins were low so return on capital was low. We decide to work by investing expertise. Like i said, were the best in the world. Were going to lend our expertise to them to help them build out the waste to energy infrastructure. Will they say thank you very much and so long . Well, look, they are fast learners. And i want them to be able to say thank you very much. Dont want them to say so long. We want to maintain our presence there. But absolutely. We expect that they absolutely will learn. They will catch up. Theres absolutely no doubt. They are at the very good, very technically capable. So we want to help them grow. Look, the rising tieds will lift all the boats. I think that will ultimately benefit both of us. Good. All right. David, thank you. Appreciate it. Thanks for coming in today. Thank you. Nice green tie. Is he back here to play golf . You know, i wish i was back here to play golf. Thats the ceo answer. With your 40 handicap. Youll never see me show up in the golf digest low handicap. You have seen me play. Im not showing up there. Thank you. Good to see you. An old School Rocker trying to change the way people listen to music by teaming up with some new technology. Steve liesman another opportunity to show himself playing the guitar. Thats not me, joe. Bob weir with the preview. Joe, bob weir wants to improve the quality of what you ingest musically. Well talk about Higher Quality streaming when squawk box comes back. Comes back. Netflix will be integrated into tivo on three of the smaller cable operators. Grande communications and rcn sell Couple Services are the first in the United States to bring netflix as an app to a cable set top box. This is like putting fluoride in the water. This is like some kind of communist plot. The arrangements make it easier to access tphret flicks movies. We work for comcast. Its fine. I love tom rogers. Do what youve got to do. You can now get it on your Television Sets because you dont have to switch to an apple tv or a roku box. Shares with netflix have been moving on Different Things this week. Down about 4 a share. We have xfinity on comcast. Apple was supposed to be doing a deal. Bite your tongue. Okay. Go slow now. How does this for cnbc. With a cnbc app you can get on these systems. The content will be worth more . The content will come over the top. All the content creators will have a bountiful harvest. From streaming video to music. Grateful dead founder bob weir announces a partnership with stott phi rival rdo. Owned by skype founder janice freeze to unite musicians in a campaign to upgrade the quality of streaming music. Steve liesman is all over this story breaking the news for us. Its an interesting story. Listen carefully. What talk this would understand saying. So youre doing another one of your reports i see. That jock. I can do it without the prompter if you want. Thats what music experts say is mp3 music when it is streaming. Your brain is really hearing that and putting it together when you stream mp3. Weir trying to change that with spotify, owner of skype, heading an effort called musicians or audio quality. The idea, making people aware that mp3 is low quality and that there is a better way. Ive heard that. It is tiring to listen to digital music. When i was a kid we used to go on a friday, saturday night and put on a couple of records, turn the lights down and listen to them all the way through. You cant do that anymore. Were trying to get it so you can. I sat down with weir yesterday and mccutchen. Their efforts on the cutting edge of a movement to upgrade the quality of what people listen to digitally. He is optimistic people will hear the difference. One by one people will go ding, click, oh. I never heard that. Ive been listening to this song for five years. I never heard that high hat figure. Thats where the groove is. Oh, my god. I never heard that quality on the vocal. Rdo is in the process of upgrading its entire catalog of 25 million songs to aac instead of mp3. It will all be 320 kilobits. Better quality will cost more. Rock star neil young is on the idea. He launched a new downloading service pono that will only offer high quality music. Jim cramer is a backer of neil youngs pono. Until that, cramer is only listen to go vinyl, which his daughter turned him on to. I asked if quality can sell. I think quality can definitely sell or i wouldnt be backing pono. This is so for real. The sound is great. We have lots of people who understand quality like they never have. But they have to hear it. If you hear it, this is one of those honestly, hearing is believing. So once people hear the difference, weir thinks music could regain its more prominent place. One more thing from me here. Almost all music is background music. People dont focus on music ike they youd to. You cant embody it because it is offputting. Were trying to change that. Did you do that when you were younger, sit around and listen with your friends . Kids do other things collectively, musically. I remember specifically the birth column. I got with my three friends. I remember the guys name and who was there. It was 1971. When did that come out . 71, 72. You remember in mars hotel, unbroken chain. The sound of that thing. It was the creature, wasnt it . I dont know what it was. That was phil singing on that. Whether or not theres a quality issue here. We had a big debate yesterday. Kids these days. Even adults these days, they dont know to care. The question is if theyre made aware. I will tell you, i think im the least liking person to care about this. Im on your side with the quality on this one. I didnt used to sit around and listen to music like that. The quality thing, you dont know it until you see it. This is the thing with the ipad retina display. Nobody knew how bad it was until you saw the hd. I dont know what these whipper snappers are listening to today the. I dont need quality. It drives me crazy. I would pay to have better quality. Do kids say let me pay for streaming music. I stream stuff now on my mp3. They put on the pulse on sirius. I dont know who these people are. Its horrible. You look at pandoras numbers. This is a super saturated space. It is dreaming. Its probably lower quality. They do offer like spotify offers a 320 kb. It wont be the first. A minimum of 320. They plan to go higher, by the way. Yeah. 76 million active users in q4. Now 75 million active in q1. We have something of a dog in this you could say. But these guys are all going at each other for a finite amount of users that are not growing. How about vinyl . How much better is vinyl quality . I remember having this with my audiophile friends in high school who were arguing about in or whatever it might be. How much better is vinyl than the 96kb . The vinyl is way, way better. But you can get close vinyl oregon analog with digital sound. We used to talk about speakers all the time. I was going to get enough money to get a bose or nakamichi tape deck. They use 4,000 guitars, 50,000 mixing boards to go into a 99 cent mp3 download and a pair of 12 earbuds. Theres all kinds of work we can do. We talk about net neutrality. Nobody will take Hd Television now. But the question is will music sort of stand up and claim a piece of the pipe . Net neutrality is selling the fast lane. You would want the fast lane for sending that much data. Have you mentioned to bobby, who is its cool to be around him. Thats like being around paul or dylan or something. I know why you do it. But my concerns that we dont want to hear donna on the tapes in high quality. So youre saying madonna its like porn in hd. There are certain things you dont want. I dont like to insult any of the music. Its all out there. It is what it is. What if you said that to bobby . He would laugh. He knows what youre talking about. He knows. Theres great madonna stuff. Great madonna stuff. Well be right back with jim pono cramer. Mer. So she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Lets head down to the new york stock exchange. Jim cramer joins us now. Jim pono cramer. They ask us for our favorite band and whenever its hard to mention it but i always put neil young in there because hes there, he represents my crosby, stills, nash and young, but did you meet him to do this . Yeah. Ive met him several times and i and like you i go to see neil young when he comes to town. I was not able it to go apparently the show in canada people are still raving about. Joe, we have scottys, i live in summit, new jersey, scottys has the best final collection in the world. We listened to vinyl because it sounds so good. You have a local record store that is not amazon. You can go buy albums. And they sound great. And its the only thing is, that, you know, with the needle and the they get scratched. We got to find a way to deliver vinyl thats what youre doing with pono . Yes, i am. I did contribute to pono. They raised a lot of money and i did contribute, i contributed enough to hope to see neil again because i think this is an important movement. You can say this is like breaking up the Rural Electrification grid or the interstate highway system because your idealing with an eta fis that has been created that everyone accepts. When you listen it sounds great. Im listening to hendrix, im listening to the dead, they sound fabulous. Joanie mitchell. I will send you some. Were all pining for something, im not sure what it is. Everybody knows its nowhere that digital music. Do you play this when youre serving people at your bed and breakfast . You are a true renaissance man, more irons in the fire, cramer, its unbelievable. We do use pandora at the restaurant. Very low music at the inn. People dont like it and they want to come and have the breakfast and leave. The restaurant. You asked about the bed and breakfast. You have to put it in the restaurant. That would be amazing. I should. I really should. My problem there is that, you know, people come in and its like i want to play some mexican music and they want grateful dead and jimi hendrix. Come on, man, we have to be a little cinco de mayo. I will not give limes anymore. Request lime. We have the squawk apocalypse, my food costs have gone up maybe 15 since i started the place. See you in a couple minutes. Thank you. The hamptons Real Estate Market heating up before the summer season. Robert frank with the state of the Housing Market. Squawk box will be right back. Financial noise financial noise financial noise today is friday today, we greet you. Treat you. 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I and i got the tools ira to do it my way i got a lock on equities thats why im type e thats why im tyyyyype eeeee, i can do it all from my mobile phone thats why im tyyyyype eeeee, if i need some help im not alone were all tyyyyype eeeee, weve got a place that we call home were all type e for what reality teaches you. Firsthand. E. In the face of danger, and under the most demanding circumstances. Experience builds character. Experience builds confidence. And experience. Has built this. The 2014 glk. The engineering, and the experience, of mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. The weather is heating up and so is the hamptons Real Estate Market. It was on fire in the First Quarter driven by the top end. Robert frank joins us with more. You know, this week is really the story of two Housing Markets. The broader Housing Market kind of slowing down but the top end especially second homes right now, really on fire. Average sale prices in the hamptons were up 40 in the First Quarter to 1. 7. Thats one of the biggest jumps in recent history. The number of sales was up 52 . Now its the very top of the top of the market thats driving the top 10 . Now prices jumped 56 . Thats year over year . Thats year over year. Thats huge. The top seller were going to show you, the waterfront manor in north haven sold for 31. 5 million. The average sale price in north haven is now 17 million. Thats the average. Whats driving it . Were going to show you a chart. Its really stocks as always. Look at this correlation. Stocks in the hamptons. This has been one of the tightest, diverged a little bit because the hamptons is becoming more diversified, less wall street, more entrepreneurs, tech and foreign buyers. If youre still in the market we have one for you, 18,000 square feet, got a grass tennis court, indoor pool, outdoor pool, the indoor pool has a water slide. Check that out. The price is 45 million but you can rent it for the season for 950,000. Thats for the season. So just under a million just for the season. We found something thats actually affordable. We looked for the cheapest house in the hamptons. Here it is, we think. 49 fan eny avenue, one bath, one bedroom, 440 square feet, yours for only 169,000. See i think, you know, us and andrew, we can go in and get a squawk box house in the hamptons, do a hamptons maybe for the summer. 169, thats like 40 grand apiece. Wow. And we can all stay there together. At the same time. 440 camp in the front yard. We he each get 100 square feet. Shouldnt you wait it out, until the last minute. Miss being early, shouldnt you wait until like june. Yeah. Thats a good point. The rental market has been a little slow this year because of the winter and so many buyers, so the rental market is where you get deals. Whats with the bedroom communities not participating as much . New york city bedroom communities . Its thats not the prime beach front so you want to be in manhattan or the hamptons. Thank you. Thank you both for being with us today. Pleasure. Is this me . I have five seconds. Im going to choke. I cant make it. Joins us tomorrow. Squawk on the street is next. Monday. Good friday morning and welcome to squawk on the street. Im carl quintanilla, jim cramer, david faber at the new york stock exchange. You made it to friday but there is one more wave of earnings to get through before the weekend. Were combing through amazon, microsoft, starbucks, ford. S p futures actually approaching the lows of the week, right around 1863. The 10year has turned lower, 2. 67, more tensions in ukraine, the ruble at a 10day low, russia a notch above junk. One reason europe is in the red today