Transcripts For CNBC Squawk Box 20150312 : vimarsana.com

S p was off by close to four points. You could see this morning theres green arrows but we saw this yesterday at this time. Right now the dow futures are up by 53 points by fair value and the nasdaq up by close to 13 points. We had a couple of big stories were watching this morning. We had a flood of economic data. We have import export prices and in global news. Lowering a key rate to 1. 75 and then a Business Update Conference Call coming up at 10 00 a. M. Eastern time. The company has come under a lot of fire. It doesnt meet californias admission standards. Shares got a boost though yesterday after he made his case for the stock right here on cnbc. A number of stocks to watch this morning. Its going to explore spinning off its helicopter unit. This is the first big move. He will join us on set. Well talk about all kinds of Different Things. Exactly. Well ask him about it and he probably you saw what happened back in the fall and the notion was he was detached. Hes been in the trenches for years and years. They said lets just do this. He was the guy probably running the company. He has a good idea right now. He probably knows exactly what he wants to do at the company. It will be interesting to hear what do you do with the mix and how do you go forward with either buying or they made big acquisitions in the past and supposedly looking at other acquisitions but the dollar most of their sales are outside the United States. There will be a lot to talk about at 7 00. I met him before and hes funny and quick. So should be good when he comes on. Anyway General Electric who is also trying to figure things out is considering making deeper cuts in its banking business. The wall street journal reports they decided that returns from lending are no longer worth the anger it provokes among investors investors. Shares of General Electric. Shares pause of the large presence in the financial area and then shares of shake shack, we just talked about this under pressure this morning. Its a small Market Cap Company but had a pretty high valuation. Its a wellknown name. This is the first report after going public in the big ipo and posted a larger than expected loss. But i think they talked about food costs more than anything else didnt they . You see that down almost 6 . You got the point and time. Take your victory lap and run. Did we have it on tape that i made the comments . I want to make sure that which way hes coming. Exactly. Why dont we check on the other markets this morning. Right now it looks like ftse up by. 7 . The dax and germany are both slightly weaker this morning and increased the market up by. 6 . In asia the nikkei was up by 1. 5 . Shanghai up sharply. Oil prices was the big story yesterday. Crude oil fell to a one month low. We got some Inventory Data that showed the supplies continued to keep building. It settled down at 4817. You can see this morning its up but slightly by 37 cents for wti. It looks like the ten year note is yielding 2. 079 . Take a look at whats happening in the currency markets. Yesterday the dollar continued to strengthen against the euro. Its still there today at 1. 092. Thats strength to the euro relative to what we saw yesterday but euro trading at below 106 its at 121, 13. They settled at the lowest close this morning up by 9. 10. Kayla is here to break down it for us this morning. Its something theyre still trying to digest the morning after. What implications they mean for shares. The Federal Reserve did approve the capital plans for 29 of the banks that in year 5 are undergoing the stress testing process. The reason the results are americamerky is they got conditional approval. Ultimately the cap pal levels of the bank are strong. They will resubmit the plan in q3. He is committed to the fed timing and in the meantime they did get green lighted for a 4 billion buy back. Other big banks barely squeezed by when you included the pay out. Extra stress was placed on Capital Markets businesses in this years test by assuming in the next crisis more companies could go bankrupt. That had implications for goldman sachs, jp morgan and Morgan Stanley that had to revise what they planned to pay out to shareholders because they would have received failing grades and now each was able to raise dividends. Morgan stanley put a 3. 1 billion buy back in place. Most notably citi group sailed through and getting to raise its dividend to a nickel from a penny and authorizing a 7. 8 billion buy back but the foreign bairngs didntnks didnt fair so well. There were widespread and significant revenue and loss projection capital planning. It is failing for a second year. Now next month, examiners will give these banks more detailed feedback on where they can improve but if youre a shareholder youre not going to be happy with the fact that the Parent Companies wont be receiving dividends this year. How much harder is it year after year after year. Its interesting because the fed i would imagine is under political pressure to not have every single bank pass in any year because you want to look like youre making it hard enough that banks are not necessarily preparing for a certain exam. That it doesnt get so easy that they know how to well their assets how to build their books. If you want them to keep a certain level of assets or capital, tell them what to model it on. Tell them do it on the 100 year plan or assuming theres a 10 decline in housing. I dont understand the idea that were not going to tell you what the standards are but you have to figure out the rest yourself. Theres some nuts and bolts very similar so this years test indicated it would contract 6. 1 . Housing prices would decline 6. 1 . The dow would fall below 8600 so some of those you would figure out what happened ifs the market depreciates quite a bit . What happens if home equity falls that much . So you can predict some of that but they said what if corporate default rates fall in a big way or rise in a big way and bankruptcy also rises. What happens to equity prices and spreads in the bond market . But the commentary is were still fighting the last battle. We have come out of that already. Theyre now you know still affected and almost still wounded by what happened so that theyre setting everything too high. That hurts what a banks ability is to lend money. Causes the velocity of money to be low. Makes the economy grow for the 6th Straight Year at 2 . Theyre saying this is typical overshoot after a crisis and were preparing for things not likely to happen. You could argue that banks capital levels doubled in the last three years. It isnt really that coupled with keeping leverage low. Arent those the two most important things in keeping that Financial System capitalized. They should do what theyre there to do. Be there to fund an economic expansion. Steve went further on closing bell. He wanted less regulation. You should go back and watch it tnchts guy that works here . One in the same. He said he disagreed with the fed getting to call the shots. Wait a second, disagreed with the fed here. Yes. When was this on supposedly . Ill go dvr. It was between 4 30 and 5 00 and it was a pretty interesting comment. It was a discussion about what to extent should they be main gaining banks capital levels but green lighting raises and buy backs. It wasnt a doppleganger. Lets bring in another voice to this conversation. To be honest with you, i saw it when i was channelling it. You did . It made since to me and he knows this better than anyone else. Lets bring in the Vice President of he equity research. Your thoughts on this whole issue. Clearly theres a massive change in the industry in the United States. We have nationalized the banks and i can give examples of why that happened. The nation seems to want socialism in the industry and what were trying to do at the same point in time is shift, if you will risk in lending to the private sector and thats happening because we have stimulated the growth of business developments partnership, peer to peer lending companies, all the way down to pawnshops so were looking at a Financial System which is going to be significantly different than the one weve been accustomed to in the 1930s. Im not sure its a better Financial System but thats where were going. What joe just said what he said yesterday, the idea that by setting these incredibly conservative standards and not letting them know what the standards are going to be at any point, does that set it up so that we in effect are crimping any particular growth . Is that why were seeing 2 gdp when people are expecting a much bigger bounce back . Basically steve was correct. Essentially they claim this is a hypothetical test. Hypothetically this that or the other thing is supposed to happen to the economy but its not hypothetical if you force the Banking Companies to restructure their Balance Sheets to adjust to that hypothetical. So if you tell the banks were going to have 10 unploilt or the gdp is going to drop 6 theyre going to structure their Balance Sheet differently than if you say unemployment is going to be 5 and the economy is going to be 2 a year. But the govern lt has gone way beyond these hypotheticals. The government has stepped in and said look we dont want certain banks to be too big. Were going to penalize them if they get too big. The government has gone into the Balance Sheets and said we want a certain percentage of your assets in securities and then they go into the securities portfolio and says a certain per percentage of those is high quality assets. We like you to make these loans. Dont make these other loans. If you make the other loans well penalize you and we have gotten to the other point of creating operation choke point where the Justice Department goes to the banks and says you cant lend money to these Industries Even though theyre legal industries. We have taken a look at the liability size of the Balance Sheet and said we dont want you to borrow in the shortterm markets because we think thats a systemic risk. We want you to borrow longterm. So the government puts lets say 100 people into a company like city group or bank or america thats paid for by city group or bank of america and their job is to make sure that the banks do what the government tells them to do. Thats the question i want to ask you. The fed doesnt want to be seen holding the banks hand through this process but when you have so many examiners living within a bank and you still have them coming up with deficiencies its like failing the sat when you live with a tutor. What obligation does the fed have to make sure that the banks are doing enough to meet the standards or do you think the way theyre doing it is fine . No i think they have gone way overboard to the point of absurdity. Theres no system in the world anywhere as absurd as the system set up in the United States to control the Banking Industry but the fed is committed. Janet yellen said many times to answer questions were going to do what you want us to do et cetera, et cetera. The bottom line is every year they tighten it a little bit more because theyre operating under a theory that says we want to take risk out of the Banking System and the way to take risk out of the Banking System is to force the banks to have more capital and more liquidity. In doing so theyre removing the banks from assisting the economy but theyre doing it because they want the private sector to replace the banks because the banks are no longer private. Real quick, your views. Do you look at a bank like that given your views on the border policy and say theyre doing a great job or say not so much. Unfortunately i dont follow them so i cant answer the question. But approximate youre looking for what are Bank Stocks Going to do over the next 12 months since they got them down to two variables, one are they going to make a lot more loans, two is our Interest Rates going to go up . Youre going to see that the bank stocks will do well over the next 12 months because theres also evaluation gap. If you go to the end of march in 2014 versus the end of march this year the s p bank etf is down 4 while the market is up 9. 5 . So you have Bank Stocks Going down when the book values their earnings their dividends are going up all through 2014 and it will happen again so theres a clear valuation gap thats going to be closed this year so even though i think the Banking Industry is headed in the strong direction from regulatory or government control standpoint the stocks are cheap and going to do well this year. Thank you for joining us today today. Thank you. When we come back hes called the wiz kid of the gop. Louisiana governor in his own words. Thats coming up next. But first as we head to a break, heres a look back at this date in history. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. The governor wants to become the face of the Republican Party ahead of the 2016 election. Cnbcs chief washington correspondent caught up with the louisiana governor was it a 60 minutes piece i saw too . Incredibly impressive i thought when watching the governor speak. Were you impressed as well . Or youre too objective for that. Ive always been impressed with his intelligence and basic skills since i saw him as a young congressman elected to congress at age 33. Hes still the youngest and hes been the most aggressive lately in trying to show everyone that he is a full spectrum conservative. When he was criticized for saying president obama din love his country he said im not going to con testimony him. When they signed that open letter to iran he stood up and said im going to sign that too. I asked him if he was trying too hard. Everything has gone at warp speed for you ran for governor very westerly. You burst into everyones consciousness and now nobody is further right than you. Some people think that youre now playing a role in order to advance in republican president ial politics. This goes back to the arrogance of the left and you can either be smart or con tefsh tif conservative. You cant be both. You have to be the only person against same sex marriage and say he doesnt believe in evolution. Sure but i got to hear very smart positions from people i disagreed with and it forces you to think about why you believe what you believe because the social pressure is in another direction but this is nothing new for me. He is also criticizing fellow republicans saying theyre not being aggressive enough about trying to repeal obamacare. He said we dont need two liberal parties. A lot of republicans try to be cheap democrats and forget to fight for their principles. One of the challenges hell face if he decides to enter the race is he has a big 1. 6 billion budget deficit. He says thats because of Falling Oil Prices but you can bet that his rivals joe, if he gets into this race are going to criticize his economic management. The piece i saw im pretty sure there are some issues in his home state now that he had some trouble just selling to the point where he would say look what i have been able to do here. Is that still the case . Any improvements done in his home state. Theyre still wrestling with the budget deficits. Hes been so aggressive about things that may have given a little bit of fatigue theyre tired with the pace of change. This is a guy thats not stopping to get older before he runs. If hes elected hell be the third youngest president in history. I asked him about that and he said jfk is one. Who is the other . Teddy roosevelt is the other. Really . Unfortunately theres not much traction that we see in the numbers usually. No we have a big field, joe. You have your wellknown candidates like Chris Christie and jeb bush their poll numbers as we saw in our nbc wall street journal poll the other day are not good. You have people like scott walker, less wellknown but people are open to him. You have a wide range of targets for him and same is true for rubio and the same is also true of bobby. Hes not wellknown at this point and the question is whether he ultimately decides like other people that are looking at it rick perry, others on the second tier of the race whether they decided to take that step. Any late thinking on your part . Hrc is like hrh, isnt it . But this is hilary clinton, right . But interesting piece in the post. Washington post and in the New York Times saying that Democratic Party and the majority says were sticking with her and as a result they didnt even look that closely at whether that was a great performance or he has tanlt performance or whatever. They dont care. This is going to be who theyre with anyway. I think thats right, joe. I think its basically a judgment of thats good enough for us. I saw it a couple of times. Theres a lot of criticism including from former colleagues in the administration, the choice she made to comingle the private and official emails but people are not taking that extra step and saying huge problem, you know think twice about running running. 86 of democrats say theyre open to embracing hilary clinton. They believe she is on track to win the presidency. Thats why people arent taking seriously the idea of Elizabeth Warren or whatever. The one other point to make was that some are saying that not only it may be that shes not Campaign Ready but also maybe her organization. Theres concerns that its not ready for primetime. So maybe thats part of it. That is the question. People are saying you need to get your team up and running so youre more skilled, more agile, more quick to respond to problems like this and she may get into the race next month. Many will say about time. Thanks. You can catch the entire conversation online at cnbc. Com. Still to come this morning, snap chat getting another big investment and the Company Behind it might surprise you. Well have the details and the eye popping valuation, next. First as we head to a break, take a look at yesterdays s p 500 winners and losers. So whats going on today . News alert message email calendar update most of us admit to being overwhelmed by information at work. Thats why ibm created verse. It uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. It continuously learns how you work. And helps you prioritize the people and projects you need to focus on. Theres a new way to work and its made with ibm. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. In new york state, were reinventing how we do business so businesses can reinvent the world. From pharmaceuticals to 3d prototyping, biotech to clean energy. Whether your business is moving, expanding or just getting started. Only new york offers you zero taxes for 10 years with startup ny business incubators that Partner Companies with universities, and Venture Capital funding for high growth industries. See how new york can grow your business and create jobs. Visit ny. Gov business welcome back to squawk. We are in the chairs and i know you guys give me a hard time for not driving. This is a hard story to talk about. Were going to talk about texting while driving. A new study says that 87 of respondents think we shouldnt be texting and driving and yet so many of us cant resist the urge. 87 say they agree its dangerous to text yet 18 said they cannot resist the urge. Heres the issue. The response varies by age. So 45 of millennials agree it should be banned while driving but if youre older than 55 years old, 62 of you say theyre more likely to keep texting even though they knew they shouldnt be. I know im not supposed to do it. How do you feel about doing it at a light. If youre at a stoplight its fine. But do you need to be texts or can you be checking an email . Does that count as texting . Yes. If youre eyes are elsewhere. If your eyes are elsewhere while the vehicle is moving. I havent been driving lately because i now come in in a car but its pothole season so that has got me i barely have time to look down at the radio. 50th and 51st streets are like wagon trails coming in and out of here. All around jersey too and if you have low profile tires, im scared. At 3 00 in the morning and not the greatest of you know youre in the middle. Do you think its okay to look while youre driving . Im saying for whatever reason im not doing it now. Okay. But if i hear it go off i cant see who its from . Not even that . But a lot of new cars will have it so theyll tell you about it or put it up on the screen or something thats supposed to be better. If you dictate. Thats okay. They say that being on the phone while youre driving is supposedly like being drunk while youre driving. Just as bad. All right. Something that we always talk about that just it really scares me at times. Do you remember in the past with sars scary and bird flu is scary. Ebola was scary. We wonder is this the time its going to become a pandemic . Number one, yesterday in arkansas which is the last place you need to find bird flu but they did find some in america. So all of those stocks they were all down yesterday. It was h5n2. Meanwhile in china, h7n9 that will be transferred to humans is starting to come around again. Back in march of 2013 it started and 579 people got it. 212 died but then they got a handle on it and now its back again and its starting to increase again. And its china, hong kong malaysia and canada. Theres a couple of cases in canada but they have studied this one, h7n9 and theyre finding a lot of genetic variance. No one is saying if its easily transmittable between humans but were going to be talking about bird flu and the potential for the pandemic which its like every three months were worried about another pandemic. And you say we overplayed the ebola situation. Yeah. It wiped out Something Like 20 of the population. 20 or 25 of a certain age. Millions. When it swept the globe. And you can go back further. But this was right after world war i. This was 1917 and 1918. It was something that you probably have relatives who know people who were involved in system of this stuff. So its not as far away as we think. Chickens and yeah ill tell you about a story that caught my eye in a special segment of the New York Times and it caught my attention because this author is turning 58. He said he never really paid too much attention to his retirement. He said im an idiot but hes describing a phenomenon that effects a massive amount of our population. People that go into these 401k saving plans but they never think about how much im going to need. So he decided to buckle down finally. I need to figure this out. Hisvanguard. They tell you to fill out a survey that will take 45 minutes. The first question is how old are you going to be when you retire . How many people know the answer to that question and if thats not bad enough question number two is how old will you be when you die . This is the reason people never get their heads around how much money they need for retirement because answer those questions are close to impossible. Thats why most of us say save as much as you can and throw it aside. You cant answer those questions. Particularly the when are you going to die and what medical costs do you have along the way . I cancel them separately but ive been told its going to be the same day by my wife. Ive already been told. You dont know when but its going to be the same day. We all know how important it is to save for retirement. 45 of american households dont have any savings and the average savings is close to 3,000 which we know is not nearly enough but i think of my own thoughts and plans on this and i check it frequently and try to figure out how much were going to need and have but i cant answer those two questions. If you dont use it you lose it. You should not retire. Have you ever noticed people yeah they lose it. You have plenty of time to think about it. Im going to try to work until they take me out. Mike wallace, those guys. Keeps you on your toes. Keeps you thinking. But anyway something to think about. Save a lot of money but i understand why people cant answer these ridiculous questions. And plus if were going to live to 500 years old. Right. Well if youre answering that question right. Right. So maybe ill retire at 300. 350. Something like that. Not so bad. 375. Take up golf. Do you think you might pass . No retire. Okay. A couple of more years. Coming up when we return, what do the following people have in common . The answer and why you should be following their lead. Were going to talk about that next. And later you dont want to miss the ceo of u tech. And harold hamm will be joining us and mike mayo. A busy morning. Be back in a moment. Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Welcome back to squawk box everyone. Among the stories front and center this morning alibaba is investing 200 million in photo messaging app snap chat. This is the latest Silicon Valley deal and could help alibaba connect u. S. And chinese merchants and customers. The investment values snap chat at 15 million. Box is the stock to watch this morning. They posted a bigger than expected loss in the first Quarterly Report as a Public Company but it was hit by higher operating expenses and one unusual note some analysts erroneously based estimates on an inaccurate share count. What . If you fix that the Company Posted a smaller than expected loss. Kind of a key number. Except it could be thats how many options. Yeah. Were going to talk a little bit about medicationtationmeditation. I did meditation on the airplane yesterday. Is it possible to do that. I needed to do it. Were going to talk about what its all about. Meditation at work is a booming trend among fortune 100 giants across america. Ford aetna, google and Green Mountain coffee incorporating it into the work place. Also people like dan doing it. And aetna one quarter of employees that took one class reported a 28 reduction in stress level and 20 improvement in sleep quality and 19 reduction in pain. With us is david and the author of a new book out this week. Mindful work. How meditation is changing business from the inside out. I dont know if its going to change all of business. I dont know if its going to change all of business but if it can change individuals on the margins and maybe make some employees a little healthier and less stressed and make them ceos less stressed and put the interest of their employees a bit further first, thats a good thing. You were saying not only do they do all the meditation but the decision on pay came from his meditation. He he told me when he decided in january to give his lowest paid employees a 33 raise from 12 an hour to 16 an hour that decision was inspired by his meditation practice. You think he comes to this idea. No, i think what happened is he through meditation started realizing his impact on the world. Started realizing how decisions he made impacted his own life and when he thought about what he could do for his employees and the fact that as a ceo he effects the lives of tens of thousands of people he was inspired to do this. Instead of making 60 million one year he meditated and said im only going to make 30. Right and only 20 million to do it for his employees. The nicks are on some meditation plan that phil jackson has them on. He he brought meditation. But its important to know this doesnt make everything better. It might be working. Doesnt mean youre going to win. Is that what it was for . Its part of their training. On the meditation path. They have a mindfulness coach side by side with their weight coach. For people that dont do it. What is it again . Is this really just a relax and reflect sort of moment . Well mindfulness meditation is paying attention in the present moment on purpose, nonjudgmentally and with an accepting attitude and i know that sounds what does that mean . Instead of letting your thoughts race into the future or get stuck in beating yourself about what happened in the past its being right here right now instead of its quite time. Its like actual focused time. Are you being mindful this minute . Im doing my best but you guys are beating up on me. Its focus in the molt. Because people think of meditation and they think of going inside maybe close your doors, shut the lights down low and you think and some people compare it almost to prayer. This is different. This is something that is po cussing while youre in the middle of doing something. Its focused attention but trying to be accepting of what is happening. How did you get into it. I was a confused teenager. I went off to india. I spent my 21st birthday in the buddhist monastery and its been a part of my life ever since. Do you do it every day . Try but i have an 11 month old daughter. So its not easy. I have done the 20 minute twice a day which is too much to be honest with you. Its a lot. But you do it for a minute or two here and there . How does it manifest itself. I have done ten day silent retreats and i have gone through period where is the most i can find is a minute or two a day throughout the day and whats not important is that we sit on a cushion for an hour with our legs crossed its important that in the fall moments throughout the day, if you can find a moment to pause before you make a ash decision. Thats a helpful thing at work. Before you hit send on the email. Exactly. Its finding the purposeful pauses. Is there one company doing it better than everybody else . Google has been a pioneer. They were out there. And maybe its typical of them in silicon value but they developed this search inside yourself program and they have incorporated mindfulness and they have done a good job. The book mindful work. Thanks for coming in. I was going to do it right now but if i i dont know. Have to go to break. I cant do it. I get the pause before. That makes sense to me. I dont know if meditation is good on tv. On live tv. Lets meditate on break. Coming up shake shack under pressure this morning. The chain warning slowing sales. The streets take on that, next. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Over 20 million kids everyday in our country lack access to healthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy affordable, kidinspired chefcrafted food. We looked at what are the aspects of food that will help set up kids for success . Making sure foods are made with high Quality Ingredients and prepared fresh everyday. Our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. Working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. We are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. Until every kid has built those lifelong eating habits, well keep working. Shake shack if youve been watching you know the same store sales growth will slow this year. Joining us Fortune Magazine food and beverage reporter. There were other things in here john were there not, other than just maybe sales not being up to par . Werent food costs part of a problem . High beef prices which they say their menu price increases havent fully offset. And they say beef prices will stay high until 2017. Its not a way to do things, to have a hot ipo and have everyone say wow that valuation is high. But people are underestimating the potential. And to confirm the skeptics. The other concerning thing was average volume at the stores. Why would that happen . They dont make as much at the stores that arent in manhattan. If you look at restaurants outside of that market theyre making less money. Then as they expand youve got a low ratchet plan. And why is that . Why are those Stores Coming under pressure . Their operations just arent at the same level . They cant get the same kind of foot traffic, what is it . Part of it. Same foot traffic is part of it. Noodles company has talked about how they faced pressure when they enter new markets. People dont know the brand as well. They have to spend more on marketing. Theres a lot of fast casual chains entering these neighborhoods, these cities. So you have to compete with the potbellies of the world. Panera. All these other companies. You cant count on the regional success theyve had translating in austin or philadelphia. Plus in manhattan, they have iconic locations. Places that people know really well. Not every city is going to have a times square or Madison Square park and so you they do concentrate on good real estate, but they cant count on that all the time. Do you want them spending more money on marketing . I think its important for all newer fast casual chains to spend more on marketing. It gets people to think about your restaurant when they go out for lunch or dinner. They have some competitive advantages. Shake shack sells beer at some locations. Thats helpful to get people to come out at night. But what do you do in the morning . Maybe a disadvantage on that end. I think that the experience of buying a panera or a chipotle had people excited about this. But then it doubles. You look another either a potbelly or there was another one that was the other noodles. Noodles. They both doubled but theyre both below the actual offering price. Right . That would be a bad experience. Fast casual chains the average is 95 return on their first day on the ipo in the last decade. But not everybody can be the next chipotle. Will this be more like chipotle when its done or more like noodles and potbelly when its done . I would say in the middle. They want to get to 415 restaurant locations. Theyre still under 40 in the u. S. So its kind of you have to wait a little bit longer. Ive heard great shakes or something. Great shakes. Great burgers. Drivethrus or no . No drivethrus. Never. Never will have a drivethru. They havent said. But i dont think that thats their thing. Dont you think if mcdonalds is struggling theyre going to struggle. Its arguably a Better Burger. The fries at mcdonalds are still better i must say. Why is it a Better Burger . Theres more meat. And also in a lot of these fast casual pizza is another thing thats happening. A lot of chains are trying to do this. Same with shake shack. Theyre in the market but theres a ton of other burger chains that are trying. Their competitors. Really its low barrier entry when you think about it. Thank you for coming in today. Thanks. When we come back this morning, our news maker of the morning. Upxs greg hayes shares the component trieding near all time highs. Well get his plan when we come right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Help brazil reduce its overall reliance on foreign imports with the launch of the countrys largest petrochemical operations. When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. In our house, we do just about everything online. And our old internet just wasnt cutting it. So i switched us from uverse to xfinity. They have the fastest, most reliable internet. Which is perfect for me, because i think everything should just work. Works . Works. Works works . Works. Works. The new ceo of United Technologies mapping a course for the company. Well ask him about a possible spinoff. Let us export oil. Thats the cry from harold hamm. Asking the u. S. Government to level the global Playing Field. And its time to get up to speed on 3d printing. Companies that dont adapt could soon be left behind. The second hour of squawk box begins right now. Sfwlmplts live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box, everybody. This is cnbc first in business worldwide. And we are reunited. Im becky quick with joe kernen and andrew ross sorkin. Lets start with the markets this morning. After closing slightly lower yesterday, the futures are indicated higher once again this morning. Of course, they were doing this yesterday and that didnt really last for the rest of the trading session. But right now the dow futures indicated up about 60 points above fair value. S p up by 5. 5 and nasdaq 14. And Interest Rate cut in south korea overnight. Lowering a key rate to a record low of 1. 75 . Asian markets closed higher. Also take a look at whats been happening with the euro. This has been driving things for quite a while here. This morning the euro is indicated a little higher. Trading about 1. 0615. Among the other stories were watching at this hour good news for apple fans. After an unusually long 12hour Service Outage the app store has everything back online. A technical error blamed for the problems. And alibaba now investing 200 million in photo messaging company snapchat. The messaging service is currently blocked in china. Remember when he had that billiondollar offer and he didnt take it and we thought he was crazy . Now its 15 billion. Setback for uber and lyft. Failing to show their drivers are independent contractors instead of employees. Those cases will proceed to jury trials. A ruling for the company could force them to pay Social Security workers comp and reimburse drivers for their expenses. And were going to talk about banks right now. Results from the feds latest round of stress tests released late yesterday. Kayla tausche is here to break it down. Good morning. 29 out of 31 did receive no objection from the fed. But in reality most big banks barely squeezed by. Goldman sachs, jpmorgan, and Morgan Stanley all had to lower their planned returns to shareholders. Otherwise they wouldnt have met requirements. The culprit was a shock to the six biggest banks that included a sharp rise in corporate bankruptcies. Bank of america had enough capital on hand but the fed found deficiencies. B of a was to initiate a 4 billion buyback. But the fed could freeze that. Citigroup citigroup, the only bank that had no issues. Citi had committed 180 million to the stress test process after failing last year. Shareholders are now rewarded with a 5 cent dividend and a 7. 8 billion buyback. Two did fail. Deutsche bank on its first time taking the test. And santander. Examiners plan to give more details on what they need to improve. Andrew . Appreciate it. United technologies set in just a few hours. Investors and analysts will be listening closely for changes in strategy now that the new ceo of greg hayes has a bit under his belt. Joining us now for his first tv interview ahead of the meeting today is gregory hayes. President and ceo of United Technologies. Thank you for joining us. Its great to have you sitting with us here. Thanks. Ive already said the what sort of shocked people back in the fall with the exit of the last ceo, there was nothing really going on there other than maybe he was ready to go and maybe the company saw he was a bit detached. No accounting nothing that people worry about. There was nothing here. He decided to retire. God bless him. Meanwhile youve been at a Company Acquired for 25 years. And been cfo for five years. You probably knew more about the inner workings. You were intimately involved with the operations of the company for the past five years. Absolutely. As cfo, really chief operating officer the last five or six years. I know the people the products the business the customers. So its easy. Call louie and greg and this is done. The key is we have a process. If somebody gets hit by a bus, youve got an envelope you open the envelope and its seamless. Where im going with all this is for five years youre running the company and youre like if i was really in charge i would do this. Or if i was really if this was my company, i would do this. This is how i would set up the company for the future. Youve had time to think about that. Now were starting to see some of it. One thing is maybe sikorsky might not fit into your view for where the company goes in the future. Look there was no disagreement on strategy between louis and myself. I think what we have been doing the last five or six years we agreed were good things. We bought goodrich. We spent 18 billion. We also bout out our partner rollsroyce. Again, betting on the future of commercial aerospace. We also did 8 billion of devesttures. Sikorsky is a great helicopter business. If we think about the portfolio, how do you position yourself for above gdp growth or higher margin into the future . Were looking at the next ten years. While its a difficult decision to spin off sikorsky the fact is we think its the right thing to do because it creates value. Because we have the choice now. You own the helicopter business and this remaining focus on aerospace and commercial buildings. And if you dont want to own a helicopter business, you dont have to. When you look at the helicopter business, what headwinds is it facing that you think the is going to make it difficult . Excuse the pun on the headwinds. Sikorsky has about a 16 billion backlog. They won a bunch last year. The combat rescue helicopter. The multirole. Theyve got a great future. But defense spending is going to be the governor on growth for them. 2 3 of their sales go to the d. O. D. Today. As much as i like doing business with d. O. D. , theres huge uncertainty. Rest of my business is doing 16 with about 5 or 6 growth. So again, solid future but a very different future because of the d. O. D. Youve been very honest about activism and activists. Theyre going to look at companies whether i think at this point theres so much money, andrew they see the way to pick a company you look at a stock, you look at the stock of an industry that has performed the least and they might come into it whether they have good ideas or not because they have so much money. Was this part of the idea we should do something preemptively before we get raided or whatever . Were not afraid of the activists. I think again we get lots of good ideas from all of our investors. Were always listening to our investors. The idea here when i took over and i told investors, were going to do a dispassionate review of the portfolio. And we have done exactly that. Weve started a process looking at each piece of the portfolio. This is the first step in that. I think what we have left will be about a 60 billion business that is poised for high Earnings Growth for the next decade. So, look. Theres always going to be activists out there in the stock. As i told both our board and shareholders, i want to be the activist within opposed to worrying from the outside. You can make a huge acquisition and have made comments that thats something you will consider. Right . Look weve got plenty of fire power out there. Weve paid down about 10 billion of debt since we did the goodrich deal two years ago. Our Credit Rating is solid today. Weve got the ability to go out there and borrow money. The problem we have as much as id like to do a bigger deal is valuations. Valuations are sky high today. So were going to wait. You think about the euro coming down i was telling folks yesterday. Theres an opportunity over there with the euro at 1. 05 1. 06. Where properties that may have seemed out of reach six months ago are manageable. Can you give us an idea of what part of the portfolio youd be adding to . Whats the most attractive businesses youd be thinking about now . Look, were really in two businesses. Commercial aerospace and commercial buildings. And i think either of those spaces would be ideal to add into. But its got to be in the core. The other thing is weve laid out specific guidelines for acquisition. Its got to have a 10 plus irr. Got to be roic within four years. Got to be earnings within two years. So theres businesses out there in area space. Theres businesses out there in commercial buildings. Its about actionability and affordability. You know, the one of the first things that new ceos usually do is get everything out on the table. I dont know whether that had to do with lowering guidance for 2015. But most of it was forbes. The last Earnings Report it was really obvious that multinationals are not going to make as much money. I know you can blame it on its foreign currency but you dont make as much money do you . I call it stunningly simple math. Youre translating earnings from europe with a stronger dollar. Look, im never going to be a currency prognosticator. We started out in december. We thought lets be conservative. Lets set the euro at 125 to the dollar. Six weeks later im at 1. 10. Now i look like an idiot because its at 1. 05. So were planning for euro parity with the dollar. The longterm we think its good for the eurozone. This is a huge stimulus. Its got to be good for the european economy. While its painful of the translation side fundamentally the businesses are doing well. Were going to grow 8 baseline across all of our businesses this year. Thats pretty solid growth. Currency, its cost us 33 cents. All that is just kind of noise in my mind. The basic business is still doing very well. I was going to ask about m a. We were talking about spinoffs on one side. What are you looking at on the other side . Theres a lot of properties out there. We can do big deals, small deals. Then weve got a couple of small deals in the pipeline right now really just expanding on the core business on the commercial building side. But really we want to do bigger deals. If you think about it utc at 16 billion. You dont move the buildneedle with 1 billion. You do a 5 billion deal youve got to put the team in place, do the hard work to drive the synergies. So i would much prefer to do bigger deals than smaller deals. And were out there looking. Can you give us direction . Are there holes in your portfolio you want to fill or bolt on things you want to add . I think its more bolt on. I think its going to be in the core. Youre going to see us look at things. Its a segment we can certainly grow in. Weve got a 30 billion buildings systems business between otis and our firearm securities business. Making all of those systems talk to one another is key to delivering value to our customers. So i think opportunities are there. Youre going to talk about dividends and buybacks too, today . Can you tell us no . Actually i said it in january. We started out the year with a 2 billion buyback plan. Were going to continue to look at that as an opportunity. We got good solid cash flow this year. The only problem ive got is half my cash is overseas. Little difficult to bring the cash back. Not going to talk about tax reform . Go ahead, becky. If we have time we should. We hear the same and nothing gets done. It looks less likely than two months ago that nothing will get done. You might as well buy something over there. Although if you buy something over there, youre still talking about saying that you expect the euro at parity with the dollar and so those will still be affected by the currency headwinds. You think that is a longterm i think its actually good news. Ive got the cash overseas. Ive got 5 billion of cash sitting overseas sitting there waiting to do something. And as the euro continues to decline, again, things become less expensive. I believe longterm europe is still going to be a dynamic economy. Youve got 400 Million Consumers over there. Its not going to go back to 80 cents to the dollar we dont think. Whats it feel like here to you . A 2 gdp or 3 gdp . Better. Could be better than 3 . Orders are up right . Orders are up and very strong growth in the commercial construction markets. And we saw this starting last year. Otis new equipment orders in the u. S. Were up almost 50 last year. But the fact is orders are up and we continue to see that trend as we go into the first part of the year. Some people are putting elevators in their houses now, im told. I didnt know we were going to have too bad you werent here yesterday. Im not quite to that level yet. You dont have to be old to have an elevator. We figured that out yesterday. I havent heard anyone else say it could be better than 3 . I think again it feels pretty good. Think about the stimulus of oil prices. We havent really seen it in retail spending yet, but if Oil Prices Stay low, its a huge huge benefit to the u. S. Economy. 70 of our spending or gdp growth comes from Consumer Spending. Is this the first time you felt that since the Great Recession . Well we talked about it in 2010 and 2011. The first part of each year seemed to be good. Then we always got disappointed. I think the difference here is you have sustainability. Youre actually seeing people going back to work, unemployment is coming down people are spending money. It feels better overall. Can you find the people you need to hire . You know its tough. I think were continuing to expand in all of our businesses. Were spending money on rnd this year. We need a lot of engineers. So far weve been a i believe to fill the pipeline. But it is a continuing challenge. Have you increased your Wage Inflation estimates for what you have to pay people . Weve continued to see kind of 2 to 3 wage growth across our businesses. We pay a competitive wage. I dont have anybody making minimum wage but there is pressure. Good job at utc. Great jobs. Unfortunately you have to go to school and take engineering. Its hard. When youre not going out at night if youre an engineer. My son just graduated with a Mechanical Engineering degree. Did he have any fun . Well apparently. Hes going to have fun. Im excited about villanova. Theyll be the number two seed. Ive seen them. They start slow. By the end of the game its like 40 points. Starting today in earnest. Not the march madness but all the tournaments. All right. Great a to have you. Thank you. Appreciate it. Come on back. Now you go to this its going to be easy. This is like a dress rehearsal rehearsal. Thank you, guys. Appreciate it. Coming up when we get back, David Bernstein will join us on why he thinks cooler heads will prevail. And then harold hamm with his call to allow oil exports. And why 3d printing will change the world. Wooem talk to a tech futurist. They will tell us why 3d printing will matter for your money. Squawk box returns in just a moment. Really came about because, not because i was selfish and wanted one for myself, which i did. Its because i had, had a passion. My whole life i wanted to teach myself to build computers. I wanted to build these things for free. I just wanted to do it for the world and you know when you want something, thats what you do the best. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Welcome back, arve. Richard bernstein is here right now. He is the ceo of Richard Bernstein advisers and also a cnbc contributor. Good to see you. Thanks for having me. We havent talked to you in quite a while about whats happening with the dollar. But it is something that has captivated the markets attention. Does the fed Pay Attention to this too and would they potentially put off a rate hike because they are worried about a stronger dollar . One would hope so. If the fed is looking at employment, the fed is looking at inflation. There are massive Deflationary Forces that are still resulting from the credit bubble. So what youre seeing is you see that reflected in the dollar. The dy index actually troughed in 2008. Right. So were up now seven years on the dollar. This is nothing new. Its just been gradual. But it is pretty rapid. Correct. Its almost a penny a day when you start watching this. It is. And that leads to massive disruptions. It does. And i think the fed you know the question is with these Deflationary Forces and the dollars reflecting those Deflationary Forces, the question weve asked is when was the last time the Federal Reserve considered raising rates when the headline cpi was minus. 1 . When was the last time they didnt think of raising rates when unemployment was 5. 5 . The dual mandate allows both of you to be right. The point being, why would we care if unemployment is zero . If its zero and we have no inflation, why do you care . We dont know what we dont know about moving money where it shouldnt go to get a return. But what in the economy is overheating . It can go like this. It can go like that. The only thing that overheated in the u. S. Economy was the energy sector. Right . And now thats deflating too. So when people say that we have all these disruptions in the economy, where exactly are those disruptions . What is so overheated . Were going to taper in all the emerging markets. Thats a different story. Were all connected now. I dont know. There are free lunches. Just print money forever and well all get rich . Remember printing money isnt the only part. Its to using credit. Its not like we have a credit boom going. The fed can print all the money they want if we shove it in our mattresses which is whats happening theyve got to keep it to pass a stress test. Your prior guest says he has this cash on the Balance Sheet. Although greg lace out an argument this morning. I like it, i think, but im still trying to understand it. Its not a currency war if everybody wins. We may be in a different situation than the 1930s. Because the bad point, the bad news about a currency war is when you get into a bigger than neighbor situation like in the 1930s. He says this time might be different. Can everybody win . Im not sure everybody can win around the world. Again, the currency war if you want to use that term is a symptom. The problem is the bubble left us with massive overcapacity. If theres no value added, how do you compete . You compete on price. And if youre a country you want to compete on price, you have to devalue your currency. Thats whats going on. Thats why japan started devaluing. Thats why korea is starting to devalue. Thats whats going on. Everybody has to fight for market share. And the point that i think the fed doesnt some members dont understand is theres a global fight for market share, how do you get inflation . Market share gains are not inflationary. Its deflationary. When do they raise rates . I dont know when they do. Im hoping thats kind of a silly word to use, but im hoping as you said that cooler heads prevail and they dont rush to raise rates. Because we dont have an inflation problem. Yes, employment has improved. But thats not so bad. If you dont get the inflation side with it, whats the big deal . And the United States is benefitting from the rest of the worlds problems. So i would hope that they would be very gradual in their rush to raise rates. I mean even to have some ammo or dried powder the next time something happens that causes a slowdown when youre at zero how can you be arguing to stay at zero . And like the idea that at 5. 5 unemployment and a 3 gdp which we just heard from uti. Why not go to 2 . Why not normalize it to some extent . How much more bang are you getting for your buck . Maybe not even normalized. Why not go to a quarter point . How do we know the rate we have right now isnt a normalized rate . How do we know historically i dont think paying no interest on money is but look at nominal gdp. Whats nominal gdp right now . 2. 5, 3 . Thats what were talking about, right. So if nominal gdp so you want dry powder next time theres a slowdown. No. Next time theres a slowdown, we will well go back to qe. No. What will happen is the economy will pick up through time. Well start getting the economy vempblly. The fed will have inflation reasons to tighten. Theyll invert the curve and have a recession. But that could be years away. That usually happens at about 12 on Interest Rates. Not at 0 . Volcker. That was 19 . But think about the inflation. No, i know. Yp. I know. But youre not going to tighten to 3 and cause a recession. Weve got plenty of well you dont know. Thats the point. Deflation is still the overriding principle in the global economy. Rich thank you for coming in. Coming up squawk booze news. Why you might be spiking your Independence Day punch with powdered alcohol. Can you just snort it . Why even dissolve it. Stick around. Reath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim before i knew it. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] e financial noise financial noise financial noise financial noise welcome back to squawk box. Lumberly ly Lumber Liquidators holding a Conference Call coming up. It says it stands behind its products and offering free air quality testing. They say their total sales are down now about nearly 8 after the damaging report on 60 minutes. Comp sales off almost 13 since then. A Government Agency giving the okay to labels for a powdered alcohol called powcohol. Get it . That clears the way for the product by the summer. Powdered alcohol will be sold in foil pouchs that hold the equivalent of one shot of alcohol and are designed to be mixed with around six ounces of liquid. The faa has already weighed in and found no reason to block it. Some states have already moved to Ban Powdered Alcohol saying it could be sprinkled on footd. Holy cow. That was my idea. Snorted. Or abused by kids. Or dumped into somebodys drink theyre not expecting. Right. Well, who are you saying might do Something Like that . No one i can think of. Its scary for kids. Hopefully it doesnt look like sugar. The only reason i can think is people are trying to sneak it into Football Games or other places youre not supposed to be bringing alcohol into the place. The only reason to have powdered alcohol is because you have some surreptitious use for it. Whatever that is its probably not a good thing. I could see youd want to lets say you really like hawaiian punch or something. So you want to have an alcoholic drink. You add a little powder. Because you would use vodka now instead because it has no taste basically. And i bet this is also lower calories. I dont think so. Really . Alcohol itself is high in calories. But you think in the powdered form . The reason that alcohol is when you rehydrate it. You put it into sugar. You mix it with something. Or wine by definition has i dont know. Im told the guy who invented it was a backpacker. He didnt want to carry the heavy alcohol. But most of the uses i would think of for it would be probably not a good idea. What does can you they say people might abuse it and snort it. I wonder what happens. Does it go right to thats scary. Main lining it. Right. When we come back this morning, harold hamm is doubling down on his call to open up crude exports. Hell tell us how to level the Playing Field. But right now look at the price of crude. Still below 50 bucks at 48. 59 a barrel. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Welcome back to squawk box. Rex tillerson joined us last week. We asked him about the biggest determining factors for oil prices in the near future. Heres what he had to say. Year after year theres another millionplus barrels a day coming out of north america. And it just keeps coming regardless of whether theres a real demand or not. Ceo harold hamm joins us now. Hes coming to us from the forbes reinventing america summit. Hes doubling down on his call that now is the time to let American Companies export the oil and level the energy Playing Field. Thank you for joining us this morning. Hey, good morning, joe. Im glad to be with you. Its andrew but joe is right here as is becky. Let me ask you this. The Oil Rebalance will be a blood bath to get there. And there is no reason to have a blood bath. What did you mean by blood bath . What are you talking about . Well we have one situation that stands in the way of the progress of the American Energy renaissance. And that is lack of refinery space in the u. S. Basically theres 18 Million Barrels a day refinery space and 12 Million Barrels a day has been set up for crude. That doesnt do us any good. Were producing live, sweet crude, the best in the world. And were all that can handle it. Theres men plenty of them out there. South korea, eastern and western Europe South America for that could handle this. High quality grade crude oil. We need to get it to them. One of the questions you raced last time this issue of exporting and trying to level the Playing Field. The unfairness, if you will, that American Companies cant export by Foreign Companies can. Were out here trying to compete, you know at a discounted price. West texas intermediate is right now about 9. 50 a barrel less than brent prices. So were not on a level Playing Field at all. You know we need to be able to access those other refineries of the world and sell to our friends. I need to be able to deliver my oil to my partners in south korea. But i cant do it. So thats the situation and american consumers, hes paying for that. You know right now the refineries are theyre getting brent prices rural prices. You look at the spreads and its up 600 . Those guys get 30 a barrel a huge windfall going to the refiners. Most refiners support lifting the ban that was placed on us in the mid70s under price come enforcement, if you will during president Richard Nixon era. You need to get rid of that scrap it and we reinvented america, we reinvent the world with this product. So, you know thats what needs to be done. The president could do it by executive order. That was my question. I know the oklahoma governor met we the president just a week ago, asked him to pursue an executive order. Handicap it for us. What do you think are the chances washington moves on this . Well, i think its good. You know National Governors association. And she asked the president about that and he said it was open to discuss. So it needs to be done. I think administration will do it. If not, youd have to pass a bill. And its widely supported. Both sides of the aisle that would do that. So you know its an issue that needs to be done. Its easily explained. I think it could happen. Harold when you look at how many rigs right now do you think are being shut down and how many of those are unproductive . Well, right now theres a lot of rigs being shut down. Weve got from 1929 rigs in november last part of november down to well see a thousand still working. Already been about 700 laid down. About 75 a week. And these are middle class americans. A lot of native americans. A lot of mexican americans. Newly created middle class americans out there thats been laid off. A lot of people focusing on me. The focus shouldnt be on me. It ought to be to the middle class americans losing their jobs. Right. And what do you think of this new idea i guess this new concept called frac log. Thats where people are still drilling but not putting the water and chemicals down to get the stuff up . Well a lot of people are deferring completions until some of these rigs were under contract need to finish the wells they were on or whatever. But you dont have to complete those wells. About 60 of the cost of drilling is a completion cost. So people are deferring that and putting it off until they can afford it later on. Conserving cash to get through this low spot were in. Okay. Harold, thank you for joining us this morning. Great to see. Are you in chicago this morning . Is that where the conference is taking place . Yeah it is. Were in chicago. Beautiful day here. A lot of people here reinventing america. This is part of it. So were glad to be here in chicago this morning. Harold hamm thank you. Coming up volkswagen gearing up to be a stronger competitor in china and the u. S. Phil lebeau still over there in germany. Hes talking to the companys chairman next. And later, the worst might be over for europe. That is according to roger altman who will join us at the top of the hour. Help join a continent with nearly 3 million rugged square miles with a single broadband connection. When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. Volkswagen driving closer to becoming the Worlds Largest automaker and in the process reshaping the global Auto Industry. Phil lebeau joins us now from the vw annual meeting and that is in berlin germany, with more. Hey, phil. Hey joe. A couple of pieces of news coming out of the meeting this morning and from our interview with dr. Martin vinterkorn. Lets start off with the primary driver of growth for this country. It remains china. Thats part of the focus. When they factor in their Equity Holdings with their joint ventures, their annual profit last year was a record 17. 9 billion euros. That was the record annual profit for volkswagen last year and in china they continue to invest. Their current production of 3. 7 million vehicles remember volkswagen is number one in china. Thap that is expected to grow to 5 million in annual production by 2019. Heres part of our interview earlier this morning. Translator if we had 1 3 in western europe 1 3 in china, and 1 3 in the u. S. We would be well balanced. Which is why our growth plans go to the u. S. And the u. S. Remains the one area where volkswagen continues to struggle because they have not made enough of an investment in suvs. Thats going to change next year and in the future they plan to add even more suvs as they expand in chattanooga. Their sales this year up 2. 3 . Look at volkswagens under dr. Winterkorn. If you go back to 2007 annual sales worldwide of just over 6 million vehicles last year it was all the way up to 10. 14 million. They are on the cusp of catching and passing toyota this year. When you ask mr. Winterkorn about that hes very quick to down play whether or not they will actually pass toyota. Translator this could be but i keep reiterating that we have four big targets. We want to be the volume number one, but also we want to have 8 upgrade in profit. We want to have the most satisfied customers and employees. Those are four targets we have. And one is the volume. I dont know whether well surpass toyota this year. But we try to also achieve our other targets. And those other targets are part of the focus of this meeting, guys. They are talked repeatedly today about the need to improve Profit Margins which were squeezed last year. But make no mistake. Everybody in the Auto Industry expects volkswagen to become number one in the world this year. Back to you. Okay. Phil, when are you coming home . Thats your primary question . Im coming home tomorrow. Ill spend an evening in berlin then ill be on a flight home to you tomorrow. He misses you. No my primary question was when is the porsche report you promised me . I guess youre just doing all volkswagen. Its right there. Its right there. We looked just for you. The photographer is going to show you this love 918 spyder. One person said does joe have one of those. I said hes got five. Haha. Wow. Is that the whats the horsepower on that thing, phil . I knew you would do this. Guy guys guys, whats the horsepower on this one . They dont even have the information at their fingertips. But well find it for you. What about the cost . A half a Million Dollars or something . I dont think it is a half Million Dollars. But it is its up there. Now youve got them this is like the price is right. Theyre going up there and reading what the exact figures are on this. Oh. Hes bringing it. Play music if youre going to do that. Thank you. Horsepower 887. There you go. Over 887 horsepower. Hows that . You like that joe . Yours for a cool 824,000 euro. Its yours. Yeah. Ill send you dollars. This is the time to do it with the euro. It is the time to do it. And by the way, we should say that porsche thats one of the growth engines they had. A great year last year and theyre planning to parlay that success this year. See, those are important questions. What am i going to ask you about volkswagen . Is the beetle coming back . Come on. See you later. Hey, guys. Later on we have thoughts on the apple car. Interesting. Oh, joe loves that. Thank you, phil. Well see you in a bit. When we come back on squawk box, if you dont know why 3d printing could change the world, stick around. Well talk to a man whose job it is to stay on top of tech trend and help translate them. Well look into the future of 3d printing after this. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Boy once upon a time, there was a nice house that lived with a family. One day, it started to rain and rain. Water got inside and ruined everybodys everythings. The house thought she let the family down. But the family just didnt think a flood could ever happen. The reality is floods do happen. Protect what matters. Get flood insurance. Visit floodsmart. Gov flood to learn more. In our house, we do just about everything online. And our old internet just wasnt cutting it. So i switched us from uverse to xfinity. They have the fastest, most reliable internet. Which is perfect for me, because i think everything should just work. Works . Works. Works works . Works. Works. Welcome back bb everybody. One of the big topics of the agenda at the forbes reinventing america conference is the future of making things. In the spotlight, 3d printing. Jordan brandt is the tech futurist and hes joining us to explain how this technology is changing manufacturing. Its great to see you this morning. Good morning. How are you doing . Great. Thank you for asking. When it comes to 3d printing ive seen some of the consumer aspects where you can print kind of an ugly bracelet or something that looks cheap. That doesnt make sense to me. But i understand there are much more viable products. Tell us about the cool stuff youve seen. Yeah. You know we often think about the consumer box in our home thats printing anything we want. And eventually thats going to happen. But what we fail to realize is its already transforming the way we manufacture products. That may not be in obvious circumstances where its printing the final thing. But on timeoftentimes were printing tools. To be able to print organs that a doctor could open someone up figure out the heart valve thats needed and print it up there. How does that work . Well obviously now the ability to customize and be able to print organs that are specific to the dna of the recipient of the organ is a huge thing. Already were actually printing liver tissues to use in drug trials. As you may know one of the number one reasons that drugs may fail the fda trial is liver toxicity. Its a draconian system we use today using pig livers. Now we can sample real human dna and grow liver tissue to speed up the trial process for drug approvals. How frequently is that being used . How widespread is it . Well its in testing phases now. So this isnt being used you know, global yet as the method. But you can imagine now that if we could print 10,000 samples of liver tissues and test the drug simultaneously the speed of the feedback is much greater. We could expect this to come online soon. What about other areas . Like in car manufacturing, maybe even in the production of cement homes ive heard in china. Yeah. I mean already were using this to increase the productivity of our plants. Were printing components of homes. Youve seen this happening across the world. Europe, china, even in the u. S. And also in automotive manufacturing, its really changed the way we approach the production of several parts in that supply chain. You think one of the traditional ways of Manufacturing Products is Injection Molding where we squirt hot plastic into a mold. We cool that plastic down and squirt in new hot plastic to make a new part. One a the primary limitations of the production rate is how quickly to cool that plastic. Were now 3d printing the molds, the tools we make to get those parts. And we can increase by multiple factors. How does autodesk play into all this . Well for everything thats 3d printed you need to have a design in order to 3d print that object. Everything around us starts somewhere in 3d software. And so weve been a provider of 3d software for now over 35 years. And were also getting into the 3d printing hardware and Materials Market as well. Because weve launched our own 3d printer earlier this year. Okay. Well jordan thank you for joining us with that preview this morning. Hopefully youll come into town some time so we can see some of the stuff in the flesh. You should come out and check it out. Theres a 3d printer down the hall here. Okay. Thank you very much. Great talking to you. Thank you. Okay. Coming up big banks scaling back plans for buybacks and dividend hikes to pass the feds stress test. Mike mayo will be with us to talk about the winners and losers. Were back in a moment. Hello. I am here to offer sophisticated investing strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Todays theme, shake it off. Shake it off from stress tests to the dollar dilemma, evercores partner and taylor swift fan roger altman reveals market bright spots and tells us where investors should be putting money to work. Alibaba is betting big money on the future of snapchat. Will it help revive the struggling stock . And cocktails with Constellation Brands. Whats behind the off the chart Stock Performance of the last two years. Were going to belly up to the bar with the ceo to talk beer wine and the dollar. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. Were 90 minutes from the opening bell on wall street. The futures right now are indicated up about 65. Market unable to hold onto its gains. I think its been down both days apple, since introducing the watch. We havent talked about that. We talked a lot when you were out about a 770 billion Market Cap Company. As of yesterday i think its 712. Still above 700. Thats the question we keep posing. You know its up 8,000 or whatever in the last i dont know how many years. Does it double again from 750 . I still think its an underpriced company. On every valuation . Every valuation metric. Having said that the whole watch thing, i have to say disappointed me. Thats significant for you to say that. Only because the battery. Threehour battery. Its like only if you use it as a watch and look at it never. That to me is complicated. Well see. But excited about that laptop. Did you see it . Its thin. Im going to get one immediately. Thats on my list. Must be nice to be so flush that hundreddollar product. What is that 800 . You just go out and get that immediately. Little bit more than that. I understand you have an elevator in your building as well. Hows the porsche . We just talked about that. Lets tell you whats making headlines at this hour. We are waiting for three Major Economic reports. Heres whats happening. Weekly jobless claims retail sales. Were going to get that at 8 30 eastern time. And bum ler liquidators is doing a business call ahead. The company says it stands behind its products offering free air quality testing for customers that call. Happening about 10 00 a. M. And the fed approved capital plans for all but a couple of global banks. The u. S. Units of Deutsche Bank and san tander were among the losers. Were going to have to watch that. And talk about a lot of financials in just a couple of minutes with mike mayo whos going to join us. Lets talk about a few stocks on the move this morning. Shares of shake shack posting a larger than expected loss and warning that Comp Store Sales stock is to slow. Also box shares dropping in early trading today. The Cloud Storage provider posting a bigger than expected loss. And that stock looks like it is off by 13 . Plus dow component United Technologies getting a boost today after the company says it will explore spinning off its sikorsky helicopter unit. Greg hayes stopping by our set ahead of United Technologies investor day. We asked him if he is looking to do deals. As much as id like to go do a bigger deal its valuations. Valuations are sky high today. So were going to wait. You think about the euro coming down. I was telling folks yesterday, europes on sale today. Maybe theres an opportunity over there for properties that may have seemed out of reach six months ago. So is europe full of opportunities for businesses and investors right now . Roger altman has an opinion or two. He is founder and chairman of evercore partners. Id like to talk to you about ten Different Things probably roger. First of all, before we get to europe and well get right to it, but you saw the stress tests. Are we asking are they holding too much capital at this point . Have we overshot . Is that whats causing the velocity of money to be so slow and credit so tight . Thats not what the regulators think. Theyve been relentlessly tightening the Capital Requirements and most recent big one is supplemental leverage ratios. So i dont think thats what as an evercore guy, what do you think . Is it making it harder to do what you want to do . No i wouldnt say so. Of course were not a bank and so forth. Were not a lender. We dont position securities. Do you think its making it harder for the ones were talking about to do business . Well i think its harder in some areas. And i do think theyll be there is a review by some of the largest institutions as to which institutions continue to make sense in this high capital ratio environment. And probably some of the institutions will shrink their Balance Sheets because its too expensive to hold certain types of assets. Ironically including things like treasuries in this environment. So i think youll see some shrinking of Balance Sheets as companies focus on higher only assets. And one of the things the regulators have in mind probably, is seeing some of the Balance Sheets shrink. So theres a method to this. They must know cher overshooting. I think this mornings news is good news. That these institutions by and large all pass. You have to take your hat off to citigroup because they came back a long way from the problems they had a year ago. These institutions are focused now on returning capital and getting on with large return of capital programs. And so were now seeing probably the beginning of that with this round of passage through the process. So is the speed of the decline in the euro surprised you versus the dollar . Not particularly because, of course you look at the level of Interest Rates in europe. You look at the arooufl of qe. Some of these Interest Rates look like misprints. I saw yesterday spain 10year is trading at 50 basis points. And you say to yourself how does that square. And those are almost incomprehensibly low rates. For the euro to be weak especially with the u. S. On the verge of tightening no it doesnt surprise me. I think theres lots of kbli kags of it including that europe will now begin however slowly and however to recover. I think its a long slow process. But i think its off the bottom. Theyll resolve greece in one form or another. And so the comments that greg hayes made to you earlier, i think a lot of people are thinking now is this the time to come into europe from an investing point of view . I mean, a deal investing point of view . They might come to you for that. Theres a lot of discussions going on about that question. There are a lot of different views on it. Most people would like to see structural reform. Meaning labor market reform pension reform. Very little of that has happened. So i personally think its going to be a long slow road for europe recovery. But of course in a zone the eurozone where the export share of their gdp is high unlike for example, ours. This fall on the euro is going to have a strong effect. One of the reasons that he mentioned looking towards europe as a place to invest is because he has capital thats stuck over there. Money that he cant bring back here. Hit does not look to me like we are likely to get anything done this year. Maybe a few months ago i would have said something different. Repatriation . I agree. And the reason is and i can remember tim cook referring to this with you guys. When strong corporations can borrow, say, 3 most of them say im not going to pay a 14 repatriation tax. I can get all the cash i need at a low cost why would i pay 14 to bring it back . Thats one of the factors thats a big one in this environment. So i dont think the proposal 14 repatriation tax is going to actually pass. So whats a number that works . It would have to be a lot lower. I think it has to be and im not really close to the congressional debate but probably has to be below 10 . Even then whether you could actually get the votes in an environment where nothing is going to happen this year if you just look at whats going on in congress. The iran letter for example. It may or may not be significant. When the president made his proposal or put out his plan was that just theater and he knew that . Are people like you calling saying this is not going to fly . No i think that you know the state of the Union Address and so forth, they wanted to lay out what their vision was. I dont think theyre under and im not certain of this but i dont think theyre under illusions of how much is likely to pass in this lame duck environment and contentious environment. By the way with lots of problems between the house and senate. So the idea that this when we have jack lew saying were closer than ever on tax reform. Every time we see him he says were closer than ever. You think were not . Well that might be true in a narrow sense because theyve never been very close. But relatively speaking. But i think the chance of legislation on Business Tax Reform as they call it including a repatriation deal are very cloe low. And i think the chances of passing anything in the category of reform of any kind is very low. Would you raise in june . Sorry, raise . Would you raise in june . Im one who thinks they should take their time because i see labor markets still being very slack. Even 5. 5 . I dont think 5. 5 is the best measure of labor market conditions. I think the measure which includes people who are working parttime, people who want to work fulltime, people who have given up looking were thats still in the vicinity of 11 . And at 5. 5 were capturing the condition. You wouldnt see it take off. Its weird being at 0 . If we were at 4 then saying we should stay at 4 . But when youre saying 0 and saying were considering going up to a quarter point, i would do it because it historically seems so out of kilter. And i dont even believe in the inb flags thing. That can sneak up quickly lyly cant it . But the futures market isnt suggesting that. They were saying gold was worth 1900. Well i dont think there are any signs whatsoever of increasing pressure. Right. But some companies are starting to think the wage picture looks a little better. As much as we talk about it now, you would think eventually wages are its time. Because weve talked about it so much. Yes it should. We should see some improvement. But so far its been really small. I dont think if we were all sitting in this five years from now wed look back and say its between june and september. And i still want to get some dry powder in case we ever do go into a time when we have something other than qe to fall back on. We could actually lower rates because we cant lower rates if theres a problem. Thats a fair point. Really . In other words, that no i just was glad that i like it that one of the downsides of qe and where we stand now is we dont have anything left in the tool box. Often crises come out of the blue and the next one never comes from where the last one came from. And the message of the last 20 years is the financial crises are occurring more and more often. And thats rather natural around the world. But its just a matter of time until we have the next one. You dont want to be in a position where youve used all of your weaponry. Right. Thats a downside of qe. Right now i would say, you know i would give the fed high marks, myself. Do you know who taylor is bringing as her opening act this time around . Its coming this summer. I did read that but i cant recall it. But youll let us know. Ill email you within five minutes. Its outside again, isnt it . Well a lot of them are. Giants stadium and foxboro stadium and all that. Im going to some of them. I know you are. Im going to glom onto you, maybe. Well see. I got a feeling there are going to be a lot of people. Sean menendez and vince joy. Last year ed sheeran was amazing. He is amazing. What a talent. Inkr ebl. Id like to see rihanna and kanye and Paul Mccartney open. You are so hip, arent you . Thank you. Coming up when hes not crunching musical notes at capital theater with happy sunshine burger joint, Steve Leisman is crunching shadow banking. The latest report card for banks is out. Will you break it all down with mike mayo after the break . And if i get to talk im going to say san tander. Financial noise financial noise financial noise in our house, we do just about everything online. And our old internet just wasnt cutting it. So i switched us from uverse to xfinity. They have the fastest, most reliable internet. Which is perfect for me, because i think everything should just work. Works . Works. Works works . Works. Works. Its back. Shadow banking has returned in a big way to the mortgage market. But is this really is bad thing . Steve leisman is here and he joins us with exclusive new data. Becky, good morning. New data from fannie mae. She gave us the report exclusively this morning that shows that shadow banking has returned in a big way to the mortgage market. Mortgage banks which are not regulated by the fed, theyre socalled nonbanks, now account for 40 . Double what it was in 2009. The share of regulated banks in the mortgages falling. This could be an unintended consequence of doddfrank regulation. And for the moment its probably a good thing. If banks have diminished appetite for anything but refinancings and jumbo mortgages, its got the nonbanks step up. And so far nearly all the papers being sold to fannie and freddie freddie. Its not the loans that got us into trouble in 07 and 08. But it does cast a spotlight on whether ultimately it pushes capital outside of the regulated Banking Industry where its tougher to oversee and control. And yesterday, andrew when you see that the fed needs to approve dividends and share buybacks for banks its embarrassing for a major capitalist country. And you want to know is there a way to get back to a place where the market can correctly assess what is the right level of capital . Because whos to say the fed is right here . Whos to say the fed is wrong. You really want to get to a place. Its one thing for the fed to step forward in my opinion. Its just my opinion. Say, you know what . We need to stress you guys for a certain situation. You would think that the basic corporate function the function of a board to decide the right level of dividends and the right level of buybacks is something that should be did you fall down and hit your head yesterday . What happened to you . Ive always been this way. I felt that there was a series of measures that the regulators should have taken in an emergency. But as soon as possible, get back to a place where youre zone defense not mantoman which is essentially the way theyre running it. How do they defend themselves . Well what they would say is once you get into the position of stress testing for capital, then you have to then approve dividends and buybacks. Because dividends and buybacks can bring you to the right level of capital in a stress test in a stress situation. Steve, stay where you are. The banks and the results of the feds stress test were going to continue the conversation. Mike mayo is joining us. Of course hes a banking analyst for csla. Before we get into e the banks themselves, just policy issue. Do you agree with steve . Do you think were making it too hard for the banks . Are we setting ourselves up for another catastrophe . Setting ourselves up for a horrible economy because were putting constraints on them . Steve, its not changing any time soon. Right. The theme song here taylor swift shake it off. Youre going have to shake it off. Its not changing. But i will say the banks are a lot more resilient. The banks that failed look good by the regulators before the crisis even partly during the crisis. Something had to change. But ooerndn the other hand, the equity ratio is at an 80year high. Though extent you force the industry to derisk and delever to have unintended consequences. Loan growth for the past 12 economic expansions was six times faster than it is today. Youre right. I just want to be clear. I dont come at this from a philosophical standpoint. I come from an economic standpoint of everybody puzzles about the standpoint and one culprit is definitely slow lending. The capital goes in and like a roach motel, it doesnt come out in the form of loans. And theres certainly issues with the stress test. Its unpredictable. Theres got ya moments and theres so much emphasis on this single outcome. We had a countdown, the time to the stress test occurring yesterday. It was the super bowl of banking and it shouldnt be that big of event. If there was a problem, the regulator should let them know on a daytoday basis. You said something to me in the back. But the fed is stressing for two financial crises . Not one. Explain that. Well, the fed is stressing for a ninequarter severely adverse scenario where unemployment goes to 10 , theres a shock to gdp. This year they made it tougher in terms of the stocks going down further, volatility getting worse. But using the feds own data from last week you could say in aggregate, the industry could withstand not just one financial crisis, but two. So you do raise a fair point. At what point is it too much . You always want more capital. It was more capital, more capital in the 80s. But the point was where should we stop . Seven years after the financial crisis, lets get the finer rules in place and eliminate all that uncertainty. The greatest source of uncertainty right now is what the regulators will do. Who gets to come back and say well congress would like to. But on the stress test thing, is that Something Congress should do and say you need to set levels that are different . Look, the fed oversees Bank Regulation with oversight from congress. So theres certainly questions from congress about the feds role. Before, during and after the crisis. So the fed, keep them at the fed please. I want to talk to you about bank of america. You have concerns. This is bad for bank of america. Weve had concerns. For qualitative issues. We dont feel as though they have a complete grasp of the numbers. You saw this is the second year in a row that bank of america has had had an issue with the stress test. Last year they had a 4 billion capital regulatory capital restatement. Theyve had four chief risk officers in the last several years. By the way, did bank of america make its financial targets last year . I dont know. You know why . Im not sure what their financial targets are before Interest Rates go up. You need to hold them accountable. If the industry doesnt hold banks accountable youre krading a void a vacuum. Who is going to fill that vacuum . Washington, d. C. By the way, i mean, the second year in a row bank of america has issues what happens to the ceo . He becomes the chairman. He gets promoted to chairman also. Again, this is not the way our system is supposed to work. You think thats a mistake . First of all, bank of america did not show the transparency of who they looked at for that role. At least delay put someone else in that position. Dont you think bank of america has done a remarkable you dont think its remarkable . The world is relative. Think about where they were and where they are now. Im not going to be their biggest defender. Im just suggesting you look at where they were five years ago and where they are today youd say give somebody some credit. Absolutely. Bank of america had a tough hand when Brian Moynihan took over. It was a very difficult situation. They resolved a lot of the lawsuits. But the question was the strategy for the last five years the appropriate strategy for the next four years. You see them having an issue with the stress test. Thats not the timing. Thats not the right time to promote a guy to chairman. You hated citigroup. Thats what i was going to ask you. Whats that . Citigroup. That was your poster child. You hated them forever. Now theyre your favorite. Nobody says corbett did a great job. Is he doing a great job . People didnt say mike corbett ceo of citigroup is gone if they fail. He said that. Thats called taking responsibility being accountable. Last year a year ago he said if we dont pass the feds stress test, im out of a job. Thats what we want to see. Thats the right tone at the top. That is a change from the citigroup weve seen for the last 15 years. We see a path the next five years buying back stock. If we dont hit this government number at 8 30 Steve Leisman is going to resign. Then you dont want us to hit it. I was going to say i would, but im not going to say that. When we come back this morning, a viral photo that has golfers wondering if they should risk hitting the course in florida. Photo after this. Plus breaking economic news. Jobless claims and retail sales data ready to hit the wires. Weve got numbers just ahead. All right. Welcome back, everybody. We are just a few seconds away from jobless claims. Retail sales and import prices. In the meantime look at whats been happening with the stock market futures today. They are indicated higher. Dow futures up by about 75 points. S p futures up by about 7 points. Nasdaq up by 14. We saw numbers like this yesterday morning at this time. And those gains evaporated as we got into the trading day. You did see trading under pressure yesterday. You could see the 10year this morning is at 2. 091 . Obviously the euro is something were going to be watching closely too. Euro has dropped significantly versus the dollar. And in fact, this morning well look at that in a second. Looks like 1. 0617. Rick santelli is standing by at cme. The numbers, please. Oh, boy. Here we go again. We expect up. 3 because we had headline sales. This is soft. Down. 6 . A big reversal versus expectations. And last months down. 8 remains unrevised. Lets go through the internals. Autos, does it go up or down . It gets stronger but it doesnt get breakthrough velocity. Still down. 1 . You take out auto and gas its down. 2 . 9 originally released last time up. 2 . Now down 1. . On the claims front, 289,000 is the new. A drop of 36,000. Put yous back in that zone. Theres been a lot of movement. But it should start to zero in on a more accurate level. And if we look at the price index, also february month over month. Again we get a multiple. But this time to the plus side. Price index up. 4 . Now, last month, though we did move from minus 2. 8 to minus 3. 1 . If you look at the data in entirety, you can say initial claims being lower is a good thing with respect to retail sales. I dont think i can spin this one in any sort of good way. That control number that people like to look at because its easy, mash everything together were looking for that to be up. 5 . Its a goose egg, unchanged. Now, before looking at the markets, ill tell you what i would think yields are going to be lower. I think the bulk of this data retail sales is one of those top tier numbers. Indeed weve shed a couple of basis points. The treasury market was doing at lo of work very close to where it had settled last year especially on some of their selloffs. Were backing away from that a bit, but were still around 2. 05. No market moves in one direction forever. So were seeing the dollar index actually down over a penny. I cant remember the last day it was down over a penny. So were seeing some mean reversion. Were continuing to handicap the qe thats going on in europe. We also have more data thats going to be actually pretty important over the next several days like inflation data. Back to you. Rick, stick around for a minute. Steve leisman is here and he has more on the numbers too. Steve, what does this mean . We keep waiting for consumers to spend the money that theyre saving at the pump. Doesnt seem to be happening. I think thats right. There is a lot of talk in the prerelease analysis that i read about the weather having a big effect. You see that i think, in autos. Also since prices are falling, the zero number that we get on the core is probably going to be ultimately as a real number incorporated in gdp as a positive. Okay . So that would be its not flat on a real inflation adjusted basis. One thing is you did get a help from gas lienoline which reversed. Thats all a price effect in there. But you do see things like autos. Things Like Department stores. We know that consumers have more money in their pockets. We know that from more jobs wages are not entirely flat. Ian shepardson in his analysis this morning says all things equal, Consumer Spending should be rising by about a half a point each month here. Thats what you would expect. But he thought weather potentially had a big effect here. Plus you have the impact of gasoline prices. I wonder if people are feeling comfortable to spend that. E the number that jumps out at me the most when it comes to fed policy is the expetroleum decline of 0. 4 . That means the stuff that were importing not counting whats happening with oil prices are falling. So again this issue of importing disinflation. Which creates less inflation in this country and lower oil prices. You think this number makes them less likely next week to take the word patience out meaning they could raise as early as june. I think look. Everybody in the market have been waiting for the fed survey to come in. Most people think the word patient comes out. I think theres a good argument for them to keep it in this time. Theyre going to be moving further away from that 2 goal. The report i gave yesterday morning, jpmorgan thinks all things being incorporated into their analysis theyre going to shave half a point off the core inflation rate. Everyone if they take the word patient out, doesnt mean they have to raise. But the trouble is the market will begin to incorporate that. If they do hike they get further away from whats happening in e the rest of the world. We saw the bank of korea cut this morning at a quarter point. And other Central Banks around the world are going to be cutting there. So its all going to be the fed going even further away on whats happening around the world. I know, joe. Im sorry. I wish they could hike. We should be if we have to go against them we should do it to be the reasonable just because theyre all crazy doesnt mean we need to no. The collective. Joe, we all have a march together come on get with the program they all came scurrying back. Okay. They all went could we just go up a quarter then you can stay there for awhile . That would make you happy . Just do it once. Get off of zero. Do it into the camera. And beg janet. No it wont help. I want you to beg her. I listen to her. But i dont know where she stands. Look, i talked to stan fisher. I was right across from him. He said this is the year we need to do it. Its hard to lean against that. Wow. Crazy. 5. 5 unemployment. They might go up to a quarter point this year. Some time. Wow. But down to the low ones joe. Okay. Thank you. Coming up were going to talk about a cloudy number for the box. And alibaba making an investment in snapchat. Tech story buzz when we return. As we head to a break, look at equity futures. Dow looking up 61 points. Nasdaq up by 11 points. And the s p 500 up 5 points. Sal khan khan academy is a notforprofit, with a mission of providing a free worldclass education for anyone anywhere. If you look at a khan academy video, they can cover everything from basic arithmetic to calculus, trigonometry, finance. You can really just get what you need at your own pace. And so, bank of america came and reached out to us and said we are really interested in making sure that everyone really understands personal finance. and were like well, were already doing that. and so it was kind of a perfect match. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Welcome back to squawk box. Shares of box plunging after reporting its First Quarter as a Public Company. Josh lipton has more on that story. Josh . Andrew this wasnt the public debut that ceo aaron leavy hoped to make. I had a chance to speak to him last night. He said there was confusion. Box posted a q4 loss of 1. 65. That looked back compared to what appeared to be the consensus view. But levie says that 1. 17 number was wrong because unnamed analysts he says set expectations based on the e wrong share count tweeting as much after the call last night, the actual consensus estimate was a loss of 1. 99. In that case boxs results were much better than expected. But even if levie is right, box might have bigger concerns. The company is forecasting Revenue Growth of about 30 for fiscal year 2016 nap is a fastgrowing company, no doubt. But its a big slowdown from the 74 growth rate that the company enjoyed in 2015. Levie tells me the slowdown is natural given that box is now a bigger, more mature company. He encolonelurages to focus on the number of box clients signing 100,000 contracts. Switching gears, in other tech news there are reports that alibaba plans to invest 200 million in snapchat. Not surprising that jack ma would be excited about snapchat. Its growing fast. Users 18 and over jumped. That would be a 40 jump year over year. And for snapchat what a better way than to explode your user base by going with the ecommerce giant in china. Can i ask a question . How does he say they got the wrong number of shares . How does that get confused . Well he listen. Were dealing with unnamed analysts. He says they were based they had set expectations on the wrong share count. He did say he reached out to those analysts before the earnings call. But it was multiple analyst who is got the wrong number of shares outstanding . Dauz that happen because of Stock Options . Im kwusconfused how that happens. Its a bis confuse ingt confusing. They fixed the number. The figure was fixed but not in reuters. So we had do competing numbers coming at us. That caused confusion. I think you really dont want to in talking to analysts last night who cover the company and financial analysts say even if thats true its not why the stock nose dived. Josh, the snapchat with the email disappears. How quickly does it disappear . Seconds, right . Well, you know joe, im actually 40 years old so ive never used snapchat. Im not a target demographic. My thought is it disappears quickly. Did the clintons have it do you know . I think even spiegel might have it checked. Did they not think of this . Maybe because theyre out of it too, like we are. Just a thought. Might work for the future maybe as president. For that personal stuff. All right, thank you, josh. Up next Disneys Bob Iger talking china with jim cramer last night. Well get his reaction next. Its 5 00 somewhere. Thats good for those in booze. Whats the Company Brewing up to keep the good times rolling . Stick around to find out. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The s60 sedan. From volvo. This month, get these exceptional offers on a new volvo. Visit your volvo showroom for details. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Disneyland is extremely unique although there are theme parks in china. We believe the combination of our expertise, our technology our creativity with our ip and the Guest Experience we create makes us extremely unique. And therefore the demand on it is going to be great. Which is one of the reasons why concerns about the chinese market, the ups and downs, and even if there was some uncertainty is not something were particularly focused on. Thats Disneys Bob Iger making comments last night on mad money. Jim cramer is standing by. Jim, whatd you think of everything that bob had to say on your show . Look he is the most bullish ive seen him. I think thats because theyve got star wars. Theyve got cinderella this weekend. A sevenminute frozen, a tease basically. But thats going to go well. But then youve got china. Youve got another avengers. They have so many brands they remind me of Procter Gamble 20 years ago. Literally. Theyre just developing a number of brands just right now that bob iger really has a path to really 2020 for earnings. Wow. Jim, earlier today we had the ceo of United Technologies on. Hes going to be talking to investors later today about his potential plan to maybe spin off sikorsky what do you think about what hes saying . He thinks gdp right now and what were feeling is better than 3 gdp as far as hes concerned which is pretty bullish too. First, i loved that interview. It was really important. I wish that everybody could see it. I think it kind of defines what were really thinking. Joe, you brought a lot of good stuff out. He can be a little old cfo. But the orders thats amazing. You get nonresidential construction going in this country, you could see gains. I thought his european comment was constructive. Saying you talk about a strong dollar. If the economy comes back in europe, we have 30 europe. Its going to be great. Thats my takeaway. That guys good. Hes really good. Always wonderful to see you. We will see you in a few minutes. Im meditating. Coming up abuse news with the ceo of Constellation Brands. Were back in a moment. In our house, we do just about everything online. And our old internet just wasnt cutting it. So i switched us from uverse to xfinity. They have the fastest, most reliable internet. Which is perfect for me, because i think everything should just work. Works . Works. Works works . Works. Works. Lumber liquidators launching its counterattack following the withering 60 minutes report about the safety of hardwood floridaing. A Conference Call over an hour from now. Scott cohn live with advance word on what to expect. Scott . The company has already set up a special section of its website, responding to allegations of formaldehyde in its flooring complete with a pair of slick videos. We didnt grow from starting a company in a pickup truck to being a New York Stock Exchange company by selling anything other than good quality product at a good price. That is founder and ceo tom sullivan. The companys already put out the agenda our products are safe. Thats the first item according to the company. Well learn why they insist that is the case. Next, whats causing the confusion . Likely hear why the companys questioning the test method used by 60 minutes and the state of california. Weve confirmed that Test Procedure is not the same one thats required by the california regulations. You can expect the company to make a lot out of that. Also hear how the Company Plans to take care of its customers in light of all of this. Then, the call turns to business with an update on Quarterly Outlook and what Lumber Liquidators plans to do next. Also the companys put out the slides it plans to use to accompany the call those slides give us another glimpse into what we might hear. One of the things that the company says it will do is offer free air quality testing. And it compares formaldehyde emission from Lumber Liquidatorss flooring to other house old sources. Does not appear the company will take questions but that does not mean there will not be plenty of them. Even if the test method is the wrong one, how does that explain the fact that Lumber Liquidators flooring tested higher than the competitions . And how does the company repair the damage to its reputation warranted or not . The Public Relations offensive then continues when tom sullivan appears first on cnbc tomorrow at noon eastern, on the halftime report, with scott wapner. Well be monitoring the Conference Call coming up this morning and details coming up on squawk on the street. Thank you for that. We appreciate it very much. Well keep watching. Are the stars aligns for Constellation Brands . The beer business has been a big, bright spot. The ceo joins us in a moment. Eous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. 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Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Constellation brands up over 166 over last two years outperforming almost all of its peers. Joining us to talk about how business is faring ceo of Constellation Brands. I understand somewhat, i know the other day jim cramer talked about boston beer maybe getting hurt by kraft brands. Youve got great brands like corona, et cetera. But what is the difference . You have been outperforming almost all the other spirits companies, why . Well, you know were in fantastic categories imported beer is very strong especially our mexican portfolio. You mentioned corona. Medello the second largest he import brand in the United States and growing high double digits. A fastgrowing wine business with brands like Robert Mondavi and black box and dreaming tree. Great growth and margins in our business. Business is always if theres an interelastic business, its booze. People will drink corona i know i am no matter what happens. Rob, i will tell you, i get filled up now. Im drinking white wine with my finger up in the air. Should i be okay with that . Hey, look i think that white wine is great. Beers great. You know weve got a great spirits business. Yeah you should be good with it. If you look into this powdered alcohol . You would have to as a company, just to consider that i mean its weird, number one, when we heard about it. But i guess youd be remiss if you didnt see what its all about. Yeah, you know we are, of course, have looked into it but we seriously doubt that its going to become a mainstream or material part of the business. So i would say were not very interested in it at the moment. The competition in the highend spirits market how do you approach that, because its crowded. Is it all about marketing . Is the product really different between a i hear people order a kettle one versus some other expensive vodka. I didnt think vodka tasted like anything anyway what difference does it make . Well you, know i think theres a lot of truth in that. Our bran happens to be a premium product, but we call it a mid premium product. It now the Third Largest vodka brand overall in the United States and the second largest import. Largely because its a great value, swedish vodka, for the money. And i think consumers are realizing just what you said and, therefore, theyre buying brands like svedka instead of more expensive. Its all the same in some respects. You probably talked me into thinking tequila could be different. Theres different kinds. Hows yours . How expensive is it . Well tequila is different. Theres a wide range of quality. Ours is cassanoble, it is one of the highest best premium tequilas in the industry. It has won a lot of awards and taste tests. And mixologists absolutely love it. All right. Great product. Rob sands appreciate. Want to try all of those after the show. Thanks for joining us, everybody. See you again tomorrow. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with Jim Cramer David Faber at New York Stock Exchange. After two days down for stocks premarks looking for some relief. Dow futures up triple digit but was retail sales are not going help down for the Third Straight month. Oil reeling from yesterdays selloff, below 50 at the moment. And the tenyear yield has come in now below 2. 06. Road map begins with a pause in