Transcripts For CNBC Squawk Box 20150522 : vimarsana.com

After mettling around through most of this week barely going anywhere. They get a third of a point increase. You can take that to the bank slightly but the volatility over the last five trading sessions has been next to nothing. Were looking at that with the futures again. That feels like summer. The weather yesterday does not feel like summer at all. 57 degrees yesterday. But you know what the ocean temperature is here. 50s. Yeah. So enjoy that weekend. Buying is going to be lou i can today. Probably not super strong. Lets talk about the big stories were watching this morning. The bank of japan keeping its monetary stimulus unchanged as expected. Also slightly revising up its assessment of the economy. Lets tell you whats going on in europe. German business moral weakening in may. Thats the first decline since october but the closely watched survey remained at a high level overall and then mario draghi was beginning a speech in portugal reiterating his call for euro zone countries to reform their economies arguing easy financing should not stop reform. Future growth will remain modest. On todays squawk planner, fed chair janet yellen will give a speech on her u. S. Economic outlook this afternoon. Its a lot of speeches. Also aprils Consumer Price index is at 8 30 eastern. Also worth watching t Baker Hughes Rig count is going to be released at 1 00 eastern. This is a weekly census of the number of drilling riggs actively exploring for or developing oil or natural gas in the United States as well as our northern neighbor canada. In Corporate News Charter Communications is in talks with Time Warner Cable about a bid likely to be well above 170 a share. The wall street journal says that the 170 number is the number expected by some analysts. Charter bid about 132. 50 a share for Time Warner Cable last year before being topped by a comcast offer. Reports say the European Telecom approached them about a deal. Get this fcc chairman tom wheeler reached out to the chief executives at Time Warner Cable saying that the agency is not against cable deals. The wall street journal reports that wheeler told the companies any deal would be assessed on its own merits following the agencys stance on the deal many industry executives expressed uncertainty about the regulatory climate for the tie ups. Is that bizarre. But whatever time wheeler thinks today is irrelevant to what time wheeler thinks tomorrow. I like that andrew. When that happens he might change his view. I just want to say. Because he waved him on originally to another deal we heard about for awhile. Come on come on. Okay. Then somebody whispered. The only thing id say in addition to that and take it a step further is they looked and thought wow that comcast deal with time warner might have been good overall for the quality of delivery in both new york and l. A. And i dont know whether that was the right thing that we did. So dont think you cant do it. Remember the at t deal . That probably should have gone through too. That probably would have been for the common good. It probably would have been better they probably have blockers remorse. But the idea of calling out these ceos and saying its okay. Its weird. Totally weird. But is anything raise your eyebrows at this point. Its a high bar now. Do you really believe he called for that purpose . Thats what i thought. I always thought like the grandest plant youve ever seen. Lets put out the price we want for the deal. Lets tell everybody that the regulators were okay with it. This cant be the way it actually went down. Unless. Unless it did. But, you know lets tell you about other Corporate News this morning. This was a head scratcher for me. Uber seeking a 1 billion credit line for banks in talks with the number of financial institutions. The journal saying the socalled revolver is not needed to fund the daytoday business. The paper noting the negotiating of a credit line often a move that signals the early stages of preparation for an ipo. Well see about that. Also a number of stocks to watch this morning, a mixed quarter for hewitt packard. Separation related costs are below expectations of several analysts. Well talk to one of those in a couple of minutes and gap earnings in line with estimates. Although shy of consensus. Well discuss that a bit later this hour and then shares of otonomy down this morning. Its ear drug failed to meet a goal in a trial and blackberry do you still have your blackberry over there. Still do. One of the last. I have an iphone too. Planning to buy back 12 million shares. The company has not repurchased any outstanding securities in the last year. It will present a new Employee Share program and does that mean they believe their shares are cheap . I dont know. But i have a hard time thinking theres shareholders that wouldnt be willing to sell it back. Go for it. They can sell whenever they want. If theyre still in, theyre still in. Stock was up like 10 . Yeah. Lets check on the markets this morning, and we do that by looking at the futures. Obviously well check out the three, well look at the s p as indicated down the dow now up. It is down less than a point. So not a whole lot happening. It is the beginning of the summer and right before a threeday weekend nasdaq indicated up too. Lets check out whats happening in europe where basically the whole summer is like a vacation. So i dont know whether they actually have they kind of have a 90 day weekend instead of a 3day weekend in a lot of places. I think theyre gearing up for it. Theyre gearing up for july and june and july is a big year for doing nothing in august. Does our productivity go down every summer. Yeah. In volume and Everything Else. No. Do you mean in this particular set, no. No not at this particular im saying in the country when they look at product activity index numbers. Well have to ask but i would be shocked if it didnt drop. And he would have to ask, you know, both the fed and the Obama Administration what the answer he should give is. No he is actually the one that took everybody to task that the numbers were wrong. Hes much more independent than tom wheeler. Where are we . What are we doing . Hang seng is up almost shanghai. Almost 3 . Well settle to that year to date. Oil is back over 60 troubling. Seems high. Seems like a lot to pay for barrel of oil. 6034. Ten year now is 2. 16. The new range seems to be 210 to 235 and then the dollar has been stronger but it got remember the euro was 114 and now were back down to about 112 or so. Hopefully the sell off in the euro will begin again in earnest. But hopefully by next week at the latest and then gold 1213 back above 1200 but that has been two years of dead money with gold. 14 out of 15 quarters of declining revenue. Yeah. Sales fell 7 this quarter. 2 in currencies and like you said 14 out of 15. The big difference is they havent been aggressively domestic businesses. They have actually been acquiring businesses. Theres been no growth for five years at this company. Should we call it a Technology Company . They have technology. This i. T. World is shifting rapidly. Everyone is complaining. Sis coe cisco, ibm, oracle. The difference is theyre going in with a water pistol. 9 operating margins. Their peers have up to 47 . They just dont have the technology to address the big data in the cloud trends. Thats the big problem. And theyre moaning, wining what else about china too. We have this argument about this. I say its not snowden. They have been doing much worse with devious intentions all along but now they can point to us and say youre doing the same thing so were going to do a a quid pro quo with you. Were doing it for a reason. We had a couple of twin towers that came to earth. Theyre doing it to steal property. Its almost protectionism. I have gone to china a lot and the trend that i have seen it first started with them getting blocked from the u. S. Market. Right. Gives them cover. In april i went to china. They put the foot on the accelerator. 70 of your i. T. Must be from china based vendors within five years and if its government or defense its 5 . This deal that hp announced yesterday is brilliant. Its the right idea. It may not work but that business is going to zero if they dont do it. For private companies too . They have to have 70 or this is just the government purchases. Its important industry. So railroad. Private or public. It doesnt matter. Originally people said the companies that are complicit and signed on with the nsa. Were going to struggle. Because other companies would say if i buy their stuff there may be hidden stuff in there. The internet. But i dont think thats really not it. Thats really not a genuine rational now, is it . Its more of just a retricontribution. They think cisco has stuff in there thats going to allow us to listen to what theyre doing. If youre making a decision and youre the guy whose job it is to make a decision, i could see it swaying, just for cya if youre the chief technology guy buying some of this stuff. I guess i think the whole world knows that basically were were tapping into. That were honest and trying to do things in a way that doesnt have devious intentions. Angela merkel we have been listening on their cell phones. But they knew and they were listening on ours. Remember when he said when we go and we have a confrontation, were not there to try to seize property. Were there for a different reason. You read these stories that cisco reuters are being sent and intercepted by the government and theyre putting something into the actual router and then sending it on. Is this a New York Times story. Oh boy. And then sending it on to the customer that would make you a little anxious. Chinas trying to build out their industries. My contacts would say were not involved in servers. Now we are. We were not involved in storage, now were going to be. This is a continuation of their domination. They want to be able to take and dominate these industries. Yes. And once you get the scale, right . Once you get the scale of the domestic market and youre global you can beat everyone. Right. Nice looking young men out there. Its flea week. Oh. Ive already seen several sailors. Id wave to them. Good morning. So all right anything that they can do to be a growth stock in the future . Well theyre doing all the right things. Split up deal meg has theyre lucky to have her but i think that down the road i dont think theyre everywhere. So they ruined the dow but i dont know. Its still a dow component. How much longer . Five years from now will it be a dow component . The i. T. World will look completely different. Will you replace with google at this point . What happens after the split . Its always a curse. Yes. Worlds changing. We dont like that but we acknowledge it. I see the future. Look over here. All right. Thank you. Do you enjoy getting make up . You looked uncomfortable. Your classes were off. I got my apple watch. Were talking about china. Were talking about hp. I told your make up artists that come guests only come on here to get make up and then they get it first thing in the market and theyre set for the rest of the day. At first i used to do that. Now i just enjoy the conversation. Are you going to take it off or wear it all day . Im going to take it off. Especially now. Coming up when we return why today could be a huge turning point in u. S. Cuba relations. Michelle is going to join us to explain whats going on at the state Department Next but first a look back at this date in hisself history. Were back in a moment. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. Which airports have the worst track record for on time arrivals in the summertime . Newark liberty with 65 of flights arriving on time followed by new Yorks Laguardia and kennedy airports. A triple dose of head winds hurting the gap in the First Quarter. Old navy and Banana Republic taking a hit from the stronger dollar and lower demand from the gap brand. Joining us to talk about it is dorothy. She covers gap for topeka capital markets. She just met the new ceo of gap in march. Thank you for being here today. Thank you for having me. Gap has had struggles over the years and gone up and down with things. Where would you rate it right now . Right now is not a pretty place for the gap but the good news is that art peck that became ceo at the beginning of the year was the last person to head gap north america when it was working well. So i think that give mess confidence that he can do it again again. Everything is working. The fashion sworkis already in old navy, how do you recreate a slightly higher premium at gap. Maybe this is the point why old navy cannibalized a lot of gaps business. I dont think thats it. Old navy has been performing well for three years. In 2012 gap also was performing well. Its having the right fashion. Why are they so not on top of trends it feels like . Banana republic feels completely and utterly lost. Banana republic is not entirely lost but lets put that aside for a moment. Gap i think however has been and there was a rebecca bay was brought in. Having a wellknown name person come in and do something is not what gap needs. Gap is casual american style. I have been in old navy in the last three weeks. I havent been in a gap for years. Nothing has lured me into that place. No gap kids . Youre not a gap kid fan . We are a gap kid fan. Gap kids is working well. Gap bay bay is working well. Gap mens is working well. Gap fit is working. Gap body is working. Its really the womens business at gap thats not working well and obviously that has a halo effect over the rest of the business because its so big. I like banana too but even if you have banana and old navy firing on all cylinders. Right. The big guns are gap. Youre talking a 6 billion business. Old navy is a 7 billion business banana is a 3 billion business. Its never been as big an issue for the company as gap has been but if you go back to 2012 that was colored jeans, they hit it and that was art peck. One he knows how to get on the right fashion trends. At old navy the reason things are work and worked consistently for over three years is theres more process in it. Theres a certain amount of touchy feelyness about fashion but still there can be a process where youre doing more testing and testing silhouettes. Youre not going into a season hoping things work. It takes time to turn a fashion cycle. Would you buy a stock now. For one thing, there was a very good reception of art peck and the change in management and the urgency with which he came to the business. Theyre doing an analyst day in june. I think well get more detail on what theyre doing and how its working. So yeah i think at this point you can because obviously wall street will anticipate. It will be spring before we get the new assortment but we should see art peck has told us some tweaks, a little more color, a little more print and pattern as we move through the year and when we get to holiday that will also be a season they have been able to do more with than what theyre stuck with essentially. How much has j. Crew taken from gap. I dont think so. From banana or any of those . Not now. If we go back a number of years yes. On the womens side they have struggled the past year and a half. Its been tougher for them. Nothing really interesting going on there. Who is knocking it out of the park . Well i mean clearly old navy is knocking it out of the park. Outside of the names we talked about. If you look at nordstrom. They brought in made well. Thats a brand doing well. Nordstroms is now selling made well. Yes. I didnt know that. So it seems as if you hit a track tif price track attractive price points customers are responding to it. Thank you for joining us. When we come back this morning, the bird flu squeeze. Companies spending big to save flocks and now the impact is starting to hit consumers at the grocery store. First take a look at yesterdays s p 500 winners and losers. The Technology Changes the design evolves the engineering advances. But the passion to drive a mercedesbenz is something that is common. To every generation of enthusiast. The 2015 dream machines, from mercedesbenz. Todays icons. Tomorrows legends. Visit the dream machine event today for up to 3,500 towards purchase. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. What if there were only one kind of dog . Then it would be easy to know everything about that one breed. But in fact, there are over three hundred breeds of dogs. Because no one can be an expert in every one. An app powered by ibm watson will help vets tap Specialized Knowledge in the cloud for every breed. And whatever else walks, flies or slithers through the door. Ibm watson is working to make medicine smarter every day. U. S. And cuba extend talks on reestablishing diplomatic ties. Michelle joins us now with more on the story. The final round of talks began yesterday. There was optimism that we might hear something by the end of the day yesterday. That did not happen. Theres another meeting that begins this morning. Were told there will be a News Conference at 11 00 a. M. From the state department. First were going to hear from the cuban government and then from u. S. Officials. But it says proximately so were not sure if thats going to happen on time and exactly what the hold up is. We know one of the major hurdles was overcome in the last several days that was preventing an agreement which was that the cuban government was finally able to get a bank account here in the United States. Its been difficult for them because they were on the terrorism list list of state spontaneous source of terrorism. We believe theyll come off that list the end of next week after some bureaucratic hurdles are overcome. A Company Called Stone Gate Bank have finally agreed to give them a bank account. Why this was so crucial is because a lot of the people that work for what would even actual bli the embassy in washington there was no place to get money out. You have to bring cash. They were carrying a lot of cash. It was difficult to get Business Done without a bank account. So Stone Gate Bank help clear that hurdle. The next question is whether or not the cubans were going to concede. The u. S. Wants them to be able to travel freely around the island. Right now theres currently the intersection and what would be the full scale embassy and the cubans have not been budging on that. They would be quite difficult about that. The u. S. Wants to be able to do that. To meet with them throughout the island. If there is an agreement today we should expect that that means that they finally conceded on that but we have to really wait and see if this event occurs later on today. Okay. Well have a gentleman from travel and leisure on in 15 minutes talking about tourism. Everyone should be going to cuba . Huge opportunity. I think that companies are going to rush in there and build big beautiful multihundred Million Dollars hotels and they have promised they wont just take your property this time. That will never happen. Would you build something down there that you owned 100 of . Ive seen god father. Im going to talk about seinfeld. It was a show about nothing. But a show about everything. Everything thats ever been done has been done on seinfeld. Cramer is importing some cubans supposedly and you think theres cigars. He had four cuban guys that had to live with him. I think about the double dip. Thats been done. You think about the rental car scandal where you go in and reserved a rental car and they dont have one for you and its not making the reservation. They dont hold the reservation. Go ahead. David letterman, threw the set into a dumpster. Threw the letterman set into a dumpster. Do you remember what cramer did . Cramer got the set and found it in a dumpster and cramer brought it to his apartment and then he would have a talk show and theyd take commercial breaks where he would drink some coke and then hed say okay were back now and then he wasnt getting high enough ratings so he turned it to scandals and animals and he would out jerry that he was dating someone else and bring the girlfriend out and then he brought in jim fowler the animal guy and was showing animals and finally got rid of the set because he said just doing it for ten hours a day got too difficult to have that much material. Is there anything that has not. I cant believe they threw it in the dumpster. But its already been done. We know that. So what do you think . Should we go get the its a pretty nice bridge. It was. We can have a Real Talk Show in your apartment. Me and you. What do you think . Periscope it. I dont know what that is but i like the idea of it. I read the whole synopsis of that. Thats why its still worth whatever its worth. Why theyre rescindicating it. I bet its gone at this point. Rob on the show mentioned how quickly he is quoted here showbiz, they dont waste much time and he via instarting rotation fwram took a photo and put it out on his. Let me tell you the latest with the bird flu. They have been killing millions animals of hens that lay egs and prices havent gone up. That has changed course very very quickly. In fact if you look back to late april, eggs that you buy a dozen in the store, late april they were selling, the wholesale price was 1. 19. All of a sudden 203. It jumped rapidly. Consumers will pay 8 billion because of the squeeze. Prices are going up and creating a problem for companies that rely on egs for the things that they bake. They have been reaching out trying to talk about plant based egg substitutes that it makes. Its starting to create a concern. Theres 39 million birds effected already. A kwartdquarter of the hens have been euthanized or are scheduled to be. Its not going away quickly. You cant substitute it. This morning i didnt have any. Not because im cheap but because i substituted something for the hard boilded egg today. It was a banana yogurt shake with 12 grams of protein in it. You had it. I had it myself. It was a little thick. Its okay. Were just going to try to get our kids to do it. Do you like yogurt . I do. But i drank it. You can buy them already made. Even better. You should check it out. Who. Dannon or something. Did you see this . Henrik has got to get back on track tonight. Yes and you guys see this obamacare piece on the journal . I was hoping we can talk about that. 51 increases in premiums because people insured are going in and getting everything fixed so the amounts theyre paying out are higher than anticipated. The government cant say no. They can look into it but the price increase will stand. If you increase prices more than 10 you can justify it and explain why but the insurers are releasing numbers that show theres justification for looking for massive rate hikes. I want to talk later about the warren buffet op ed. I have the full screen built for that. Did you build a full screen . Did you organize it with the producers . I did. The patron santdint to the liberal doesnt like the wage increase. The reader can follow along and when we come back. Its interesting. Theres anything he says theyll love o. This they wont love. They pick and choose what they like. We will see. Im talking to you. I know who youre looking at. Coming up michelle told us about u. S. Cuba relations. Coming up next, travel and leisure magazine here. Are there other stories youre talking about today . Tweet us and use the keep squawking. Well post it on our Facebook Page and read them all and share the best of the bunch. Well do that at 8 50 eastern time this morning. Were back in just a moment. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. The u. S. And cuba inching closer to renewed diplomatic relations opening the chances for americans to travel more freely to cuba. Nathan is editor of travel and leisure which has potential for the tourism industry. Well talk about that but obviously europe people think its on sale. At least where they use the euro is on sale. So well talk about that in a second. But you still need one of those reasons to go to cuba. 12 reasons. Do they enforce those or can you fudge it . We have heard plenty of stories of people going. It used to be quite complicated. There were 12 different licenses. You had to get certified that you were going under one of those. Now theres one license and you can do something called a selfqualifying general license which is an affidavit that you signed. You check off a box saying what youre doing and you sign it and present it. We hear that people are doing that and not having to show any particular documentation. Technically speaking the one of those 12 most people are going to use is whats called a people to people. People to people and when you look at the fine print it says if youre going to do a people to People Program you have to do it with an operator. You have to be on an itinerary. It has to be approved. Straight up tourism is still not allowed. So for most people although the process has been simplified theyre still going to want to go with an operator. Is it worth it . Are there descent hotels . Id only want to do airbnb around here. You can do that in cuba . You can have. Theyve had an exiting program down there. Airbnb their service is new in cuba but the system has been going on in cuba since the 1990. They dont have hotels. And some of the European Hotel companies have gone into cuba and been there for years. How are they protected . Theyre not particularly. Theyre operating in cuba. They just wonder they seized everyones property once. Thats not going to happen again if they need it . Who knows . Thats why we dont see matszivessive hotel development. Are they nice . Youve been to cuba. Theyre really nice. Whats so bizarre is you go into the hotel as an american and they have Internet Access and you can watch cnbc and cnn and whatever you want and you go outside the hotel and they have none of it. Its a weird world. Right because cuba is it does have the time warp quality to it. It sounds like atlanta city. You go into the casino and its nice and you leave. But your phone well i wonder if your cell phone when i was there my cell phone could work but people had secret cell phones. A doctor could have a cell phone. The dentist would sell it to the other people. Did they have to be Satellite Cell phones. No, there were cell towers but you had to be a Government Official or doctor to have one. People used to have direct tpsv and put them in the chimneys and hide them. Youd go to restaurants in peoples homes, in their living room. All right. Lets get to europe. So you go to places where they do have the euro because the pound and some of the others are not as cheap. Exactly. But in paris its still expensive, right . Sure. Within the euro zone theres variations from country to country and city to city. Portugal is much less expensive than france is but when you think about the typically more prosperous or more expensive European Companies theres differences there as well. Germany. Paris versus berlin. Paris has one of the highest average hotel rates in the world. 300 dollars for a five star hotel. Easy. You can get it under 250. Headed through there. Making the right choices. Vienna. Fantastic. That will be good. Yeah. All right so do i hear 110 on the euro . What do you think . Potentially were really close to that. 20 down. You want 95. I do. I want 95. I dont know if that can happen by june 19th. Its possible. It has been close to that. See what you can do. Anyway, thank you. Appreciate it. And good time to travel and air fare is still as cheap as it was in the 70s andrew. Its a monopoly. When we come back this morning from uber to airbnb the number of start ups valued at more than a billion dollars is soaring. Well have the debate next. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. 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 xc60 crossover. From volvo. Lease the well equiped volvo xc60 today. Visit your local volvo showroom for details. Right now i think the private market is more expensive than the Public Market. I think theres got to be some revaluing. I think the private latestage market is overvalued. But overvalued not the way that it was overvalued during the real bubble and the real bust. Is it a tech bubble of private Company Valuations . Absolutely absolutely. Big two firms are riding the unicorn waves making huge bets on start ups valued at over 1 billion. But are they jumping in just to collect their logos . Our next guest believes we are on a tech bubble on the verge of popping. Its titled tech boom 2015. Whats driving investor insanity. Check it out. Kevin is here and the founder of Avalon Ventures and we welcome you. Morning. Youre in league with most of the, well at least with mark cuban, but maybe not some of the others we just featured. Yeah. Thats true. With my venture fund. And, you know if these crazy unicorn valuations can get realizations im all for it. Thats the problem. Whether or not theyre really how badly does this end . It ends pretty badly. How does it end . Oh, several ways. I guess the stock market takes a tank. Enormous tension between private evaluation of companies and the stock market that will lead to a tear in the fabric if you will of valuations. And then once you start to get a pickup in Interest Rates, i think youll start to see a lot of money start moving toward fix under come away from equities. And then youre going to start to see some pressure or a lot of pressure on the private valuations because sooner or later if youre a Venture Capital capitalist, you have to get your money back. They love realized. The common refrain, however oftentimes this is not 1999 and these are Real Companies that make real money. True, untrue . To a certain extent, but Certain Companies are subsidizing their markets by millions of dollars and they keep raising and sooner or later the chickens will come home to roost. It seems to me this is a bigger problem. Because there has been zero Interest Rates and zero yield, they have moved to alternative investments as a way to seek yield. Putting more money into Venture Capital. That money, you cant sit and hold it if youre a Venture Capital company. You have to find a place to put it. Is that kind of what it seems it could be inflating bubbles all over the place. Pumping up the later valuations. And, in fact they may be setting themselves up for the early stage Venture Investors to sell to them in private round of financing. Thats what happened with zinga. We were early round investors and we end up selling into the market in private transactions where we sold at a 14 billion Market Private market cap and the company went public at 10 and now trading at 3. You look at the highflying firms out in the valley and you think you look at this vintage. Right. How will they turn out . Those funds . It depends. I hope they do great. I hope all these unrealized end up becoming realized. I dont think this is a repeat of 2001. In 2001 all the Public Companies that crashed. Privately Held Companies that crashed. Who does that hurt . Im trying to figure out how the pain spreads . Thats a good question. You have to look at the big Bucket Brigade of money where it ultimately traces back to. It wont be the small investor typically. Which is good i suppose. But, you know you have to the money has to come back some way and its not going to come back by a couple people sitting around. You said not the small investor. One of the things that is unique about this time is were now seeing a number of mutual funds whether they be t. Rowe price or wellington now get into this space. While its a small portion of their funds, theyre big numbers. Again, to the point, they have to put the money somewhere. And, so if theyre getting unrealized, you know gains or it appears to be that way, thats sort of fun. But at the end of the day, either a company has to be acquired for cash or it has to go public. And you have to obviously, have a ready market for that. So, if you have a Company Already more valuable than any acquirer or take uber but uber would go public. I dont know. Nobody would go public. I dont think so. I always worry, even with Public Companies. If you ever had, if every share ever had to be paid for instead of trades on any given day, is that money really there . With private companies, i think its even scarier. So, they get, you know 200 million but the valuation puts the company at 50 billion. Getting 200 million is a lot different than cashing out at 50 billion. You need the public for that. You need the bag holders for that. Kevin, thank you. Appreciate it. Thank you. Fun to be here. Coming up former secretary commerce secretary Carlos Gutierrez on talks between the u. S. And cuba to officially reopen relations. Stay tuned squawk box will be right back. 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Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Sell in may and go away. Summer stocks that could bring sunshine into your life. World famous architect designed facebooks new headquarters. Cnbc got the first look inside the palo alto palace. Get ready for a traffic nightmare. Oh, wow. I just had the weirdest dream. You know youre driving, right . But there is a silver lining. Ibm new smart traffic system in new jersey. The second hour of squawk box begins right now. Announcer live from the beating heart of business, new york city. 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. Something developing to tell you about. The fbi has arrested two men in Southern California suspected of attempting to travel abroad to join isis. The fbi has confirmed that two people were arrested and wont provide any details until charges are filed. This is really the first ive heard of it. First were hearing of this. Okay. Well keep on that story and bring it to you when we get more. In the meantime, a couple items on our watch list this morning. Economic data ahead. The Consumer Price index coming up at 8 30 a. M. Eastern time. Expected to show an increase of 0. 1 . But if that number comes in weaker than expected it would lend more support to dubbish fed members. Speaking of the fed, janet yellin could bring a little excitement. The fed chair will speak at 1 00 p. M. Eastern time. Listing for changes in the way she might characterize the economy, the labor market or inflation and that could providary little more clarity, maybe, on the timing of the feds first rate hike or cause more confusion. Also worth watching. That gets released at 1 00 eastern time as well. The weekly consensus of the number of drilling rigs actively exploring for oil or developing oil or natural gas in the u. S. Or canada. Lets get a check on the markets this morning. Watching the u. S. Equity futures and hasnt been much movement. Not very different through what we are seeing through most of the trading week. Looks like the dow futures are up by 14 points and the nasdaq up by about five points. Memorial day is of course the unofficial start to summer bringing to mind that old adage, sell in may and go away. Is it time to send your stocks on a summer retreat or will it be different this time around . Don chula is here on set with us. Great to see you. Its good to be here. Doesnt always happen that often. I always relish the times i get to be with you guys. Lets talk about the stock market. If we talk about the sell in may and go away concept, its fair to carve up any statistic you want that can tell you one thing or another. Over the last ten years, we limited it to just that. Gives us a more indicative view of the view that were seeing. You can see here according to our market data over the last ten years the s p 500 on average is up a whopping 1 between memorial day and labor day. Its up about 60 of the time. So slightly better than a coin taus, but toss but still, again, not exactly the gang buster type move youll see up or down. If you look at another part of the market. If you look at the dow and the nasdaq. Here is where the numbers get more interesting in terms of the overall story. That what youre seeing right there is the nasdaq. Its up 70 of the time. If youre looking for one part of the market that does better statistically over the last ten years, it is the nasdaq. You can see the average gain there up nearly 4 . The dow, very much a coin toss here. Its up about 50 of the time. You can see there the average gain is a little north of 2. 5 . Thats what the bottom line is for the numbers over the last ten years. But, of course guys the discussion broadens out a little bit more because we dont exactly know if this time around is different than all those times, especially in the last five or six years during fed easing and Everything Else or whether it was like that before we got to that kind of policy. Whats interesting about this time around is that the set up going into the summer is somewhat bullish. And i say that not because i have a view on the buller bear case, ill leave that for the experts here. The three best performing sectors in the s p 500 just this month today are health care financials and technology. Up anywhere from 2. 5 to 5 . Just month to date. The reason why that is important, guys. Is because health care financials and technology are the three biggest weighted sectors in the s p 500. So, its interesting. Lets talk more about this. Lets bring in some experts from the market, as well. Were joined on set by mike ryan. Chief investment strategist at ubs. Chief economist at chase and, mike lets start with you in terms of what you think. Sell in may and go away. Is this a normal year . Weve been looking at the averages. Kind of treading water for most of this year to this point. Always a saying about seasons matter, but fundamentals matter. When i look at the fundamental backdrop i see a relatively constructive outlook and well probably see reacceleration of growth and from the policy perspective i dont see anything that the fed is likely to do and signal from yellin that will undermine the notion that it is a delivered approach from the fed. From the fundamental side i think the environment is okay. I still think the gain is going to be pretty measured. A pretty bigger measure and earning momentum has slowed a bit, although the First Quarter exaggerated it. I think well get mid singledigit gains. But i think it will be an environment where well see more choppy markets and more limited gains probably through at least the summer. Although the one thing that has led to volatility has been not knowing what the fed is doing. They came out and basically said june is off the table. Most people are thinking now september would be the very earliest that they could raise rates. If thats the case thats kind of an argument for less volatility, at least through the umisser months. Its true. Other things will add to market volatility e. We have this date coming up in june with greece. We have other events that are likely to happen. Joe just talked a little bit about the geo political issues that are happening. Theres lots of other issues beyond the fed that could add to market volatility. In an environment when you typically ehave less liquid conditions. Those type of factors can get exaggerated a bit. Im not saying were having this incredibly choppy market, a less directional, you know move where were likely to see equity markets move a uniform higher. Anthony, lets talk about what you expect to hear from the fed. At this point, im not expecting anything this summer. How about you . Im not expecting anything this summer. I do expect the Federal Reserve will move some time between december and september. The probability is much higher than december. Youre absolutely right, becky, you tend to get more volatility when the Federal Reserve is thinking of raising rates or actually moving in that direction. But a funny thing happened on the way of looking to volatility. When you look at volatility over long periods of time, it spooks investors and the stock market goes down. I actually looked at that 30day expected volatility and the other one that looks at the next three months of volatility. If you look at it over oneyear periods its going from negative to positive. Which means that today because the central bank is i think, caught in the financial markets, you not only get more mini corrections which i define as more than 3 and less than 10 , but you also see that investors are less fearful of volatility. So historically volatility is bad for the equity market in the last couple of years and volatility has not been as few. I mean the point that i would bring up here is the last time we saw any significant pull back in the market was april to october of 2011. We saw the s p drop by almost 20 at that point from peak to trough. Whats interesting about this time around like you said, to anthony anthonys point here the average pull back weve seen since then has been around 5 . We dont go very far before people step in and buy this overall market. The question then becomes, is the volatility a good thing . If we see a 5 to 7 pull back in the market if we do hypothetically. Investors over the past five years have just stepped in to buy it. Is it still a trend, i guess, the question is. That you say any time the market pulls back you just go and buy it because its going to keep on going higher and it has been for the past four or five years. Over the last four or five years the market sharply drops, you get some Central Bank Official say the Federal Reserve will not raise rates that much. Mini corrections. Normally in the bull market. If you look at the bull market since the 1940s. 19 of the mini corrections. You have gotten 50 in this bull market that began in march of 2009. That speaks to the fact that the central bank is caught in these markets and stepping in on these dips. If you assume no recession is coming is a good investment strategy. Id agree with what anthony said. You talk about the volatility and the pull back. Each of these pull backs which has led to investors recommitting have been at lower valuation levels. Lets go back you cited 2011 some pretty chunky tail risk issues then. If you have a repeat of some of the concerns about whether the euro zone holds together or probably more Political Drama coming up nin u. S. Because we have election season coming up and we have some big issues to settle. So, if those things kind of resurface, again then i think what you could see is corrections more than these modest pull backs with immediate recommitment in the markets. Mike, anthony thank you both for coming in today. Don, always great to see you. Always a pleasure. Restoring relations with cuba, washington havana well talk to former commerce secretary Carlos Gutierrez. Then reaction to our interview with new jersey governor Chris Christie. Well break down the potential gop president ial field. Plus memorial day traffic is going to be bad. Not like really really really bad. But ibm has a new smart traffic system in new jersey that may help ease congestion. Well tell you all about it, when we return. [male announcer] if youve served in the military, certain habits may be hard to shake. For reintegration and adjustment issues big, small and everything in between, visit easter seals dixon center. Org. Jo nes. Zero, three, two, six. Here to make a deposit. [bell chime] ting welcome back to squawk box, everybody. We have some earnings news this morning. Deere out with its quarterly numbers. Earning 2. 03 for the latest quarter. That was well above what the street was expecting. They were looking for 1. 55. Revenue was slightly short of expectations with deere noting an agriculture sector. The quarterly profit of 1. 29 a share. Samestore sales were up and analysts had been predicting a 5. 1 increase. Okay lets talk about cuba because representatives from the u. S. And cuba are meeting in washington to hammer out the terms of reestablished diplomatic ties between the two countries, possibly leading to the first embassies between the u. S. And cuba since the eisenhower administration. Carlos gutierrez is here. He is the chairman of the Albright Stonebridge group. Thank you for coming in. Pleasure. Thank you. What do you make of whats happening here and the tension points around what we will be allowed to do in cuba, which might be not so much and how we will work with them here. Yeah. First of all, i should say we talked, joe, when this was first announced december 17th, i think we spoke on the 18th i never expected it to get this far. So, you know whats happening this week and whats being discussed this week will lay the groundwork for potentially opening up an embassy. And then on the 29th the 45 days expire to take cuba off the state sponsor list. The statesponsor of terror list. Those are two big steps. Two big moves. Weve never gotten this far. So theres a press conference today. I dont expect anything big to be announced. Simply that you know we still have some issues. How, what is the radius where diplomats can travel both in havana and d. C. We want to be able to travel freely. Anywhere. Anywhere. And have people to be able to come to the embassy. And they dont come in. How are they trying to restrict exactly . A security around our embassy and we want that to be totally private. You can send whatever you want to send as we do with most countries. There are some countries with which we have an exception. So we have different restrictions. So, well see. What is a country where we have a different restriction . Iran for example. You know iran is a country we may have some restriction ss. And in russia from time to time we had restrictions. Not every single Diplomatic Mission is the same. Right. And then theres a banking issue in all of this. A banking issue on both sides. The cubans now have a bank in the u. S. Stonegate in florida. So, they for the last year and a half, they are been doing business in cash. We still cant use credit cards in havana. So, you know our advice to Business People is take a look at this but dont think that youre going to make a killing in 2016. Right. The cuban system is being overwhelmed with businesses who want to go in. With businesses who want to try it out. So one of the points joe made this morning a couple times is the idea that an investor or a Hotel Company or a restaurant that their business could effectively just one day get taken away like that. Well its what happened, you know, it happened throughout early 60s and 70s and 61. July of 61 was finally when everything was nationalized. Actually, july of 1960. The whole, the whole American Investment was nationized. People say if it can happen once, it can happen again. Then there were those two first years. In 1968 they nationalized small cuban businesses. And i think they realized this was a massive mistake. So you runp a barbershop. You run a shoe repair shop and all of a sudden youre an employee of the state, you get a check. What happens when you need new scissors . You have to go through the Procurement Department somewhere in havana. Its unpractable ableical and i think they have understandood this. Is this a fundamental shift that will take years and years and years. How do they back off without admitting defeat . They worry about things like that. They have two different currencies. One for the locals and one for everybody else if i remember. The Exchange Rates and then how do you combine them without hurting one or not getting enough from tourists. They have monumental issues that have to be rewound. Right. Its going to take time. And what they would like to do is have a mixed economy where the government is in. They want to continue to be socialists. They have been very frank about this. But to introduce Small Business. Thats easy. But what do they do with big business . The big business watching this program and the entrepreneurs watching thinking this is a land grab going on here and i want to get in on it. Is that a good idea or a horrible idea . You have to be real isoic and you have to look at it as a very slow cumbersome process. Its not going to be quick. Again, their system is being overwhelmed. They dont have the regulations. They dont have the logistics and they dont have the infrastructure in place. So youve got to be patient. If you were 10 or 20year player, would you say this is one of the great opportunities of this generation . Well look ill tell you something. Cuba has a country with its location and its resources could be the singapore of the hemisphere hemisphere. If that was the vision. If that is what people wanted to do. I cant think of another country in the world with the potential of cuba. Its a matter of what policy you have inside that allows the economy to prosper. Would you bet on that though . 20 years from now, cuba will be a very different place. The next two years, i think there will be lots of ups and downs and times when you go back up and go back in. Companies need to be patient and they need to be able to track it. They need to understand how business is done on the ground. You havent been back since 1961 . I go back every day in my mind and in my soul but i havent been physically, no i have not. Do you want to go back . My gosh i was born there. Any golf courses. Yes, there are. Yes there are some golf courses. Are they in horrible shape at this point . Some European Hotels and some of the European Investments have invested with cubans. I didnt play on one. They probably need i guess, some updating. Well there are not too many. But there are golf courses and they are for tourists. Im sure they are kept up. But they theyve got these investments that the cuban Tourism Company is a massive organization. Its all controlled by the cuban government and very much by the minister, ministry of defense. So youre talking now a tight government controls right now. There could be some some great ones. But the potential of the place, but the potential of the place. Its a matter of how, have people realized the reason marxism doesnt work is you dont generate money with money. You cant keep putting in money and getting nothing out. It looks like there is recognition that the profit motive is not always a bad thing. You know. We revisit whether marxism is good or bad. In 2015 almost every day. Read the New York Times read paul krugman. Were not really sure. Its not settled. Its not really settled. Its not really settled. Thats a zombie idea. Neo markism. Social i know i know. Social democracy. Thats great. But you go look what we have with capital and income inequality. Dont look around the rest of the world. Just look here. Just a certain truth. Its all about allocation of capital. And if you allocate capital where you put in 100 and you dont get 110 or Something Back then youre in trouble. Thats what the whole economy is. We have to go to the advertising economy right now. Good for us. Asissant secretary, thank you for being here. In our own selfinterest. A vote in ireland today could make it the first country to approve gay marriage. Details next. A website hacked that put user information at risk. That is coming up. Time now for todays aflac trivia question. What sports menuvenue to sell its naming rights . The answer when cnbc squawk box continues. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. Now the answer to todays aflac trivia question. Now the answer to todays aflac trivia question. What sports venue was the first to sell its naming rights . The answer. Sportsmans park which later became busch stadium. Ireland voting today on whether to allow gay marriage. The first country in the world to adopt that policy by popular vote. The measure has strong support in all Major Political parties and has vocal supporters in irelands business community. Polls indicate that the measure could pass by a margin by as much as two to one. Interesting to note that ireland only legalized divorce by a razor, a thin margin back in 1995. And dating website adultfriendfinder has been hacked. This according to reports by the uk channel 4 news. Personal details of 3. 9 million users were linked including sexual preferences, street addresses and whether users were seeking extra marital affairs. Good. Yeah. The company says its working with Law Enforcement to prevent the leak and protect customers that were affected. Karma, baby. The customers may find out either way. The husband and wives may find out first. Transparency. Transparency. Just like the fed. Just like the fed. When we come back this morning. Narrowing the gop field. Well look at the six declared contenders and the dozen more potential candidates. Right now, were going to head to a break. By the way, heres what Chris Christie told us yesterday. If i decide to run, then you can conclude that i think im the best person to do it. Financial noise financial noise financial noise ideas come into this world ugly and messy. They are the natural born enemy of the way things are. Yes, ideas are scary and messy and fragile. But under the proper care, they become something beautiful. Welcome back to squawk box, everybody. Among the stocks front and center this morning. Intuit posting better than expected revenue. Pointing to a strong tax season. Fresh market topping expectations, but it is lowering its fullyear sales view. That stock is down by less than 1 . A mixed quarter for brocade. Revenue fell a little short and the Current Quarter is down by 3 . New jersey governor and potential president ial candidate Chris Christie joined us on the squawk set yesterday morning and heres what he said about the wealth gap here in the u. S. The middle class is still running on a treadmill. And getting no where. Wages are stagnant really for the next 15 years for the middle class. And the wealthy have gotten significantly wealthier during this president s time. I think in large part because of a lot of his policies. You know easing money at the fed, very low Interest Rates sxits its inducing a stock market rise that weve all seen and that helps folks in the investor class. I dont have any problem with the investor class doing well but i dont think that is who needs to be protected that moment. Joining us now to talk about this and more. Joe watkins a former george h. W. Bush official and hes on set with us. And Jimmy Williams is the executive editor of bluenationreview. Com and msnbc contributor and a man who thinks very highly of his arguing skills because jimmy always agrees to come on and, like ive got things prepared for you, jimmy. Like full screen. I never do anything to joe. Always like me and joe against you. This is why they asked us for talking point. So you can ambush. But i am prepared for you by brother from another mother. Those two guys cant touch me. Well see whether we can or not. But, first, youre still, you know youre still talking about the minimum wage like you dont know that number one, if it helps at all, it doesnt help that much compared to growth. Compared to something we really need. Right. Thats even assuming that it doesnt hurt because even the cbo and you know this the cbo said you raise, you get a 2 bump for 900,000 people and 500,000 jobs are lost and those people go to the true minimum wage zero which is the true minimum wage in this country. Let me show you before. I might not even let you talk. Look at Warren Buffett. Look at what Warren Buffett said today in wall street journal. Your hero your redistribution and limousine liberal. You guys quote him all the time with the buffett rule. Look at what he said. Ill read it. First, we should wish in our rich society for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system. The key element, which is required for growth and prosperity. Raising the minimum wage crumble. The second crumbles in the, i may wish to have all jobs pay 15 an hour but that means that the minimum would almost certainly reduce employment in a major way. Crushing. Crushing. Many workers possessing only basic skills. Youre not going to argue with the patron saint of democratic capitalism. Are you . Im pretty sure he doesnt make minimum wage. Oh, come on. Thats not, actually and, joe, by the way, not to state the obvious, but im pretty sure no one on this panel right now makes minimum wage. Lets do something big. Do what warren wants to do or do some growth stuff. Listen i love the costco orxo motto. The Los Angeles City council model. Pay people beginning at 15 an hour. You just saw what is going to happen. Youll put people out of work. I dont buy it. I dont buy it. I dont see people not buying, i see businesses hiring. If you have a Small Business and you yes, i love this Small Business argument. Im listening, go ahead. Ive been a Small Business owner. You only have so much capital. I mean if you have to hire ten workers at 15 an hour when you could hire 15 workers at 10 an hour. Tell me you do the math. I mean you only have but so much money. I mean if you are forced to pay your folks 15 bucks an hour youve got to make youve got to get rid of folks. No you dont. You dont. Someone show me the data that you have to get rid of folks for paying them the minimum wage. Its the minimum wage. By the way, every single state that has a is not losing unemployment. I have to maintain my margin of profit right . Oh, its about profit. Okay. Thats what makes the world go round. Yes, it is. Profit does make the world go round off the backs of actual workers. Its simple. You cannot have a Small Business a profit you cant have a business. And without workers you cant have, without workers you cant have a profit. Gentlemen and ladies we are going to go around in a circular argument all day long. Lets talk about Chris Christies middle wage you know middle income middle class proposals. Thats what were here to talk about. He vetoed the minimum wage. We know where he stands and where is he on the middle class . Well we just showed you that his proposal yesterday has to do with growth and with trying to actually generate highpaying jobs. I cant believe your candidate, hillary, at this point. I figure are you, ive seen some, i dont know, some people are chafing in your party that this is what youre going to have. With everything thats happened the past three months, you have any buyers remorse at all about this . Im doubling down on Hillary Clinton. I think shes fantastic and well qualified. So, she is the person that that is her one solution is i think toppling the 1 . And raising the minimum wage as a champion as she and bill are of the middle class, right . I dont know that Hillary Clinton has never not been for raising the minimum wage. Used to be the republicans were for raising the minimum wage. When did that shift . Im just trying to remember when that happened. When did republicans begin to hate that. Full screen with Warren Buffett buffett. You mick and choose when you listen to the oracle. I do i do indeed. I pick and choose when i listen to billionaires. Having worked for one, i certainly do. They dont know all. Okay. So if you can be selective about, so theres no chance that okay. Then well just say that it would help a little. But it doesnt help that many people. But does it hurt them is my question . Does raising the minimum wage on workers hurt them . As we said the real minimum wage is zero for people who dont have jobs that they want that are high power. Corporate profits have never been higher. The stock markets have never been higher in the entire history of the United States. And youre asking me someone, joe mentioned profit. So if thats the case, where is all that trickle down money going . I dont understand where it is going. We did 0. 2 gdp growth in the First Quarter and wages have been flat because companies, you know, with the fed as easy as it is companies are doing other things. Theyre borrowing money for free from the fed. But the demand the demand isnt there to hire. Im shopping. Youre shopping. I was, i was in target two days ago to buy pillow covers. Because i bought down pillows and the needles are hitting my head. The target was absolutely packed at lunchtime in alexandria virginia. Someone explain to me why people arent the demand is there. Someone should explain to me why it is that target is not raising the minimum wage for its workers. You look at a lot of the different numbers involved with unemployment. A lot of people that would like to work more. A lot of people that arent even looking for jobs and participation. Jimmy, to your point, there are a lot of companies that have been raising what they will pay for minimum wage. That will happen with growth. Weve seen it with etna and a number of companies that have come out and actually stepped up to that. Ive seen it with cities. Weve also seen it with cities where cities themselves are raising the minimum wage. I think it is something that is kind of taking care of itself and i think it is something that if you look at the numbers and the jobs number you see an increase in wages. Finally, finally starting to happen. Thats exactly right. Once again the voice of reason is becky quick at squawk box. There you go e. Becky said that where youre seeing some good Economic Activity and some growth that theyll take care of themselves as workers become more scarce and the Market Forces raise the wage. Growth takes care of entitlements. I love. That trickle down economic stuff, again. If we can do 3 or 4 like this country is capable of and used to do all these things and the divisiveness and hating the, youre hating the have and pitting the haves going through this in 2016 and you have some influence. You could stop this. I think we should talk about Chris Christies ideas on whos going to be vice . Im not running for vice. Ill be your vice president. Im not running for vice president. I will be your vice president. But guys what about you were a republican at one time . What happened to you. Where did you go wrong . Did you hit your head or something . No, i had to abandon the party because of social issues. You know the Democrats Use im with you on that. I got you on that. But thats not what were talking about. You should still remember how an economy works and the private sector. I remember the bush and reagan, i do. The 80s and 09s. Wed love the 4 and 5 growth again. I think bill clinton is fabulous. The growth pattern he gave was off the charts gentlemen and ladies. Look at the fantastic, theres a neat work called surplus. Remember that . No you dont. All right, jimmy. All right. Happy memorial day, everybody. Thank you. Any time, guys. Thank you, guys. When we come back this morning, according to aaa, the traffic this muemorial day traffic is going to be the worse in 33 years. More than 33 Million People are expected to travel by car. 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So you can make your move wherever you are. And start working on your next big idea. Welcome back everybody. If traffic is on new jerseys highway system seems a little lighter this memorial day weekend than previous years you might have ibm to thank. The company has been working with the new jersey Turnpike Authority to develop a smart Traffic Management system. Joe getting ready for the weekend. That system became fully operational last month. Joining us right now to explain how it works is bob, Senior Vice President of analytics at ibm. Bob, thanks for being here today. Becky, thanks for having me. How does this work . Hightech system turnpike and garden state parkway. We should mention the numbers on this. 33 Million People are expected to travel the garden state freeway which is 172 miles and Something Like 3. 3 Million People expected to go up and down the turnpike which is only 122 miles. One of the most dangerous weekends in all of the travel days, right . The only more dangerous weekend is fourth of july. So theres an increase 5 increase of risk on traveling of memorial day weekend. It was thoughtful of new jersey to open Services Just before the memorial day weekend to be able to monitor traffic. Monitoring traffic, how can that prevent some of these traffic tie ups . Its getting the realtime feedback of data. This is an issuative around the internet of things. Be able to collect all the realtime information of things that is happening on the roadways and giving the traffic professionals at the Turnpike Authority the ability to then react immediately and then interact with signs and systems that actually span four decades. Like what, though . Give us an example of how it will work. Where there is a primary incident, a traffic slow down and then immediately be able to predictively go and drive the signage up the road to lower the traffic speeds and then give drivers warnings through primary systems and secondary systems. It sounds great, but my problem is i know there is going to be traffic if i try to head down to the jersey shore and try to go down to philadelphia. I know im going to hit traffic. I dont know a better way to get there. You might not know a better way to get there. One of the big primary concerns here is safety. One of the, you know tragic things that happen really secondary incidents. You know someone coming onto a Traffic Congestion very rapidly and a disabled motorist that is pulled to the side or somebody rubber necking and the incidents on the secondary can be very very critical and fatal. So by alerting drivers upstream in terms of whats happening, theyre able to avoid the secondary incidents and their primary concern, really citizen ask commuter safety. Its not just warning people congestion ahead. We have those signs. This is taking the speed limits and changing the speed limits. It was very difficult for the professionals in the command center to actually work with four decades worth of technology to go and change those signs. Weve also integrated an operational system where they can do that in a much more automated way and really immediately, which is part of the challenge. Its connecting the dots and also making the operational systems more efebtive. Does this any of this information get transmitted back to peoples incar gps systems or apps because so many people now sit there looking at google or new jersey has the ability to transmit that data back to secondary Navigation Systems and in many of the systems thats where the data comes from. Comes from the primary sensors. Adding 3,000 sensors into the roadways that will look at not just the rate of travel of vehicles but also the occupants in the vehicles. Whether or not theyre in the right travel lanes. And boogeing able to feed that information. How do they know that . Variety of different sensor mechanisms. Cameras, weights video analytics. Cool. Yeah. Weve all been on roads where the lights arent timed and then sometimes they do get them timed right, but it only at night when youre there, nobody else on the road why is it i can imagine the city of the future would be with feedback that it would be unbelievable. Very much so. Be unbelievable and be so much better than sitting at a light when theres no one out there. How many times have you run a red light because there is nobody around. You have . I never have. We started theres cameras. We started really helping cities and Government Officials in a variety of different scenarios about six years ago. Think about it the gas savings and time savings and Everything Else. Safety. The whole place wired and then it needs to be sending us what to do. Thats what we need. New jersey. This is one of the sophisticated systems in the United States being installed on two of the busiest roadways. That is where this is all going. Youre going to have the infrastructure play. A car that someone else owns that youre using because theyre not using it at the time. Car to infrastructure and a long way from seeing the massive volume of selfdriving automobiles. Always speculation that apple wants to get into the selfdriving automobile. Would ibm want to get into the selfdriving automobile . Helping Automotive Companies helping and we partner with continental and with people like diamler and using realtime analytics. Were the leader in Big Data Analytics and grew 7 faster than the market. One of our core strategic analysis in the First Quarter. We grew over 20 in a business of that scale. We are helping people evaluate information of all realtime nature and differentiate service and products. Have you met watson . Have you interacted with him . I do. Do you have little chip in him . Is he yelling at you right now . Is he evil. Does he like you . I mean does he care about you . Once he doesnt need you, arent you toast . No. Watsons goal what do we do for him once he doesnt need us . Our goal was to help him learn and his goal was to help us interact with the massive amounts. Some day youre going to be in there and hes going to be singing and one of your friends is going to be outside, you know, tumbling in space for the rest of time. Watson advises humans to open im sorry, dave im afraid i cant do that. Its the letter after or before h the letter before he works there. Just trying to see. It sounds really cool. We will test this out this weekend. Your pr people do get mad that we kid around about watson. Were just kidding. Our focus on watson is to help those professionals. Its a 2001 thing. Dont worry about it. Tell ginny to chill. Coming up facebook commissioned a new building from renowned architect and cnbc got a first look and well take you inside when we come back. [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage or major disaster, when you need us most, were there. State farm. Were a force of nature, too. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. Facebook opening the doors to its new building for the first time. Our own Julia Boorstin got a look. With facebook just passing the 10,000 employee mark growing nearly 50 in the past year Mark Zuckerberg needed a new building. He partnered with frank gehrig to develop pilding number 20. The goal to be ecofriendly and facebooks mission to connect people. Created the largest open floor plan in the world. The 430,000 square foot space fits 2,800 employees and zuckerberg usually works right in the middle. On top is a nineacre green roof with a half mile walking loop 400 fullgrown trees plus whiteboards and wifi. Insulate the building to minimize heating and cooling costs. Facebook investment in its campus is a draw in a competitive hiring market. It really creates an environment where people can collaborate and they can kind of innovate together. A lot of spontaneity in the way people bump into each other. Just a really great, fun, creative space. Now, facebook wont say how much the building costs, just that it came in under budget and faster than expected. Built in 18 months. Becky, back over to you. Julia, thank you very much. Coming up the Company Behind the smartphone is that supposed to say breathalyzer . Yep. Making a new device that can check for bad breath. Its one of the biggest investments on shark tank. Kevin oleary joins us with the companys ceo. A top internet analyst telling investors he is bullish on shopping. Rbc mark mu hany gives us his list of summer sizzlers and the names he says you should stay away from too. Super bowl champ and president phil joins us to talk markets and the Important Role that veterans play on wall street. In the Fourth Quarter he caught a touchdown pass of his own. He spent six seasons in the nfl. His Winning Strategy for your investments just ahead. And the buzz overhead. The startp that is cashing in on the drone craze matching farmers and builders with pilots. 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, everybody. This is cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. More of what we have been seeing for most of this week. The dow futures are indicated higher, not by a lot. Up by 17 points. And s p futures are up by 1 point and the nasdaq is epiabyeup by about six. You can see the dax is the biggest loser. And the ftse is up close to 0. 6. Lets look at what is happening with the tenyear. The yield is looking at 2. 271 and finally oil prices as we get into the memorial day weekend. Energy prices had been higher and oil back above 60 a barrel. Right now down by 64 cents. Here are some of the stories that investors will be talking about today. Fed chair janet yellen set to give a speech on the economy at 1 00 eastern this afternoon. Her comments come after minutes earlier this week suggested that the first rate hike has been pushed out to later this year at the earliest. Mario droggy speakingaghi arguing that easy financing should not stop reform. Draghi cautioning that future growth will remain modest. Bank of japan keeping stimulus unchanged as expected. The bank of japan also slightly revising its assessment of the economy to slightly higher. Lets talk about some stocks on the move this morning. Deere earnings beating the street. Revenue slightly short of expectations with the company noting anning a ing aagricultural sector. The most profitable quarter in its history. And sports goods retailer hibbett missing the mark. Poor weather and poor delays and a mixed quarter for brocade earnings and revenues falling short and the current guideanceguidance. Charter communications is reportedly in talks with time warner. Time warner cable about a news flash. What did you think was going to happen . Likely to be 170 a share. Charter 172 per share for twc last year because being topped by, it was topped by comcast. European telecom is also approached Time Warner Cable about a deal and funny how tom wheeler is getting a bankers fee for this right . Something is going on. I dont understand. In other Corporate News uber is said to be seeking a 1 billion credit line. The socalled revolver is not needed to fund the companys daytoday business. The paper notes negotiate alting a credit line that the company is in the early stages of preparing for an ipo. It is we are going to honor our nations heroes on monday. As we get set to do that on memorial day, one Securities Company is a successful game plan for hiring vets on wall street and phil is president of Academy Securities and a retired nfl player. Joins us now. Good to see you, again, phil. Thank you, andrew. A lot of reasons other than just sort of cooperating and what is a good thing to do but theres other reasons to hire vets, probably be good for your company. We like to say, its not only the right thing to do to engage the military veterans that are engaging. It is a smart thing to do for your company for our country. The great skills and experiences that these returning veterans have. They can add a tremendous amount to the organization and to our this is the next greatest generation. We heard about the greatest generation. This is the next greatest generation because if you look at the character and quality of these people. I joined the military after war ended. They all joined after 9 11. They joined after the war started in afghanistan and after the war joined. They joined. Werent drafted. They volunteered. Thats the character youre talking about. If you want to know the hands of our future who theyre in its these incredible people. The other thing i have to say is being in the Financial Services sector sometimes not the greatest reputation. However, in this instance on this memorial day weekend as we honor those who paid the ultimate sacrifice and the best way to honor them i believe, is to engage the military veteran community that is transitioning. Wall street and Financial Services has done the most incredible job engaging welcoming and finding gainful careers for so many. Hundreds of thousands of veterans. Helps offset the latest what was it currency. Helps offset your latest column which, once again. Theth the ethics almost. Throws the entire industry under the bus. Jpmorgan has a 200 million job mission. The leadership of jamie diamon. And cities involved in that bank of america, Credit Suisse you go to wall street war fighters. Right . Started by general peter pace. American Corporate Partners started by a former merrill banker a good friend that has thousands of veterans that they give Networking Opportunities to and career counseling and mentor. Its just unbelievable what wall street is doing on this issue. And yet, if you look at some of the statistics. Veterans have much higher unemployment numbers than the general population does. Great point, becky. To take that a little bit further. The post 9 11 veteran community, in particular has a difficult time. Now, when you look at some of the issues we have with the wages going up. Especially in the tech sector. Okay. Company has to pay more money. Were not training in this country enough people with those skills. However, this military its different than the military i was in a generation ago because everything you do involves technology in the military. So youve got this demand over here. The supply thats returning in droves that will continue to return. Match them up. You solved two problems at the same time. And give great careers to these heroes. Mostly institutions. I, while i have you here something that i thought about recently. So, you know a lot of these guys. Ramadi. I mean have you heard any of them just shake their head and say, this has been a depressing week, i think. Regardless of how you feel about the original act of going into iraq. All those hardfought gains seem to be evacuating. Its very discouraging. Im sure so many of these incredible heroes that sacrifice so much to see their hard work go down the drain. But it doesnt diminish the effort and the sacrifice and the fact that thats why jeb bush had such a hard time with the question, right . Its difficult. I mean vietnam. This is not unique to our history. The sacrifices of 50, over 50,000 soldiers thats died for what . When it toppled a few years later. But their sacrifices are not in vain because when you look at the number of lives that our Vietnam Veterans saved. The same thing here. You could say that this is an abomination, its a loss. But really its not. These heroes that are coming back right now, they saved a heck of a lot more lives. Ewe remember the green thumbs. For a while, iraq was much freer and a much better place for the people that live there. Its not going to be any more. Its a difficult situation. The whole middle east. But there are other issues and then there are some things that are going on as far as coalitions between countries that never got along and even with israel. Im an optimist. The glass is always half full. I see some of the positive effects of whats going on in the middle east. Were going to go all over the place here. Now were going to go from something so serious to something that is serious to some people. Deflate gate. You played. You know. Who was it that used to use stickum on their hands. Jerry rice came out. Not like what the raiders used to do. They would cake themselves and then they outlawed it. If it hit them anywhere it would be like velcro. You had a catch. People had been doing tough is to stuff to get a an edge. All three of you sitting at this desk looks for an edge to get better. But the difference is that rule didnt exist back then. The rules that are here now, youre looking for an edge but you dont want to break the rules. You dont want to break the rules. Even psychological. I like my socks a little higher. You think for brady its more psychological. Tom brady, probably this is my guess. Hey, guys i like my ball a little softer. I dont think tom brady said give me 10. 75. Do you think he knew . Im just curious. You know what i dont know if he knew specifically. Maybe he knew that they were at the lower end. I cant believe that tom brady is sitting there in 12. 5 or if its 12. I dont believe any of that. The other interesting thing that you pointed out. Im tired of the whole, im ready for next year already. I wish he was playing that first thursday night game that nbc is broadcasting against, i think its against the steelers. I think about myself all the time and dont know about the integrity of the game. The idea that uyou go back and look when patriots fumbled. You say belichick. Heres the great one. Let me preface everything by saying the rules are tluls and a 12 billion industry and i understand the integrity and you must uphold that and it has to be true. Like baseball. The great thing about profootball. Its so compelling and its true. So the fumbling issue. So people are going to point, the conspiracy theirrists will say, they hate the patriots. If this was buffalo bills, it would have been a blip. Taken a couple more pounds out. The nfl can start punching in artificial noise when the other team has the ball. Its bury a blip. The balls were softer and easier to hold on to. If you fumble youre on the bench and probably cut. My whole career i thought if i fumble the ball i lose my job. That is the it graest motivater in the world. Thats better than 2 or 3 or 4 psi of pressure in a football. Excellent point. We have tabloids in this town and the whole play on the words, but in your view if theyre that serious, the nfl. Why not have a professional ball handler . Now, someone says that it me im thinking that would be if you have thats an occupation where you can make a lot of money. Thats the great point, too. Where if it was can we call it Something Else . Professional ball. Physical advantage. Those balls would be guarded, you know with incredible security. Security firms. Get them to go down there and guard the footballs before you play a game. Why dont they let each team play with their own set of balls. If your quarterback, tom brady likes it a little less. You cant help it. You cant help it. Sound diplomatic here. But if tom brady wants it less let him play with it less. If Aaron Rodgers likes it more overinflated, let him play. Or let the nfl hold the footballs beforehand. Hire some military veterans for each team have the league hire military veterans to guard these balls and i dare anybody to mess with it with military veterans with the ballsen their care care. Football is so successful. Continue to be. And its almost funny. Give us something to talk about. I dont know whether it will go down in history as a major event. Can the nfl, they cant win. They dont need to win. They are winning. They are winning. Were talking about it on national tv. When i say winning, whatever punishment they put out. No one ever they give ray rice two games and when they give brady four. They will criticize and goodell gets crushed. For 40 million a year, you can yell at me all you want. Rogers fine. Bradys fine. Look bradys fine. More than fine. What more as a man or human being can you want . The great thing about him and even belichick, i spent some time with him in san diego during the season. As successful as these people are, maybe the greatest coach of all time. The guy is hungry for knowledge. He thinks he doesnt know enough. Doesnt think. When you have that mentality. Tom brady has a game where he has a perfect quarterback rating and they win by 40 points and he goes and watches film and he comes out thinking they lost the game because they focus so much on what didnt go right. Its not perfect. Nobody is perfect. This world is not perfect and you strive for perfection and thats what they do. When you have that pressure on you from a coach like bellichickbelichick, you perform. Hire more vets. Give them careers. Give them a chance. Theyll transform your company and our country, again. I love that. What kind of ring is that . Dont get that dont show it to andrew. Coming up, mark on internet stocks. Should you boo bee a buyer . Tweet us and use a keepsquawking or post it on our Facebook Page. Well read them all and share the best of the bunch at 8 50 eastern. Well be right back. E financial noise financial noise financial noise financial noise in the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. There is an ancient rhythm. [ ] that flows through all things. Through rocky spires. [ ] and oceans swell. [ ] the endless. Stillness of green. [ ] and in the restless depths of human hearts. [ ] the voice of the wild within. Our next guest is rolling out his new quarterly review of the internet sector and reshuffling some of his top picks. Lead internet analyst at rvc capital markets. Great it see you this morning, mark. Good morning, andrew. Lets talk about this. Before we get into the names that i want to talk about. Broadly speaking we had so many people talk about unicorns and the private market and an overheating of the space on a larger basis. You agree with that these days . Lets see. That the talk of the bubble has come back to the valley in the Public Markets, we dont see it so much and i look at these, the leading names and Online Advertising retail in travel and theyre still trading at 19 20 times earnings. That doesnt sound bubbleesque to me. Twitter is one that we do not like. In the private markets, probably a different take but that is yet to bleed over into the Public Markets and in the private markets, hard to tell. Two new factors here. Strategic bidders in here like the ollie bobbas and the Public Market funds that are going down stream into Public Markets. If there is a bubble in the private market, that is probably it. Lets talk about some of the public names you probably like. Large caps first. You like amazon, you like facebook and linkedin. In the broad context here, look we had a material rerating in the beginning of the year and began with many of these stocks at trough levels. Net netflix, amazon, google. Some were close to market multiples and created interesting buying opportunities. We had a reerating and overall were less aggressive than we were at the beginning of the year. We still think there is upside to those three names. How much upside . Case by case here. Amazon, we think a 500 pitch from where the stock is today. Call it 15 , 20 upplay from here. What still needs to be proven and what the market is still skeptical on is margin in the score retail business. Positively surprised by aws and we think that skepticism can be overcome. You also lost some small caps. Rubicon project and shutterfly. Among those, which is your top pick . Well, shutterstock is small cap internet land has been very, very challenging. Unless you have a company that got acquired. Very few companies outperformed. Our picks, our top pick earlier in the year was yelp which hasnt worked at all. Those are the topics right now. Shutterstock is our top pick. Among all the companies we just talked about and you also like priceline. Com and expedia. One that you think 12 months from now will pea at the highbe at the highest point . Two points. First is amazon. The one we have the most conviction on. Number one pick since the beginning of the year and throw out one more name. Netflix. Near term maybe only 10 , 15 upside. Long term substantial earnings power that is underappreciated. Mark thank you for joining us this morning. Thanks andrew. Coming up drones for hire. Well introduce you to one of the many startps who are matching builders and farmers with drone pilots and cashing in. That sounds like a jane wells piece. Shell join us next as we head to break. Check out some of these numbers. Drone sales will top 90 billion within a decade. And the association for unmanned Vehicle Systems says sales will generate about 100,000 jobs over that same period. And 2014, small drone saled topped 720 million. Squawk box will be flying back right after a break. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Theres some facts about seaworld wed like you to know. We dont collect killer whales from the wild. And havent for 35 years. With the hightest standard of animal care in the world, our whales are healthy. Theyre thriving. I wouldnt work here if they werent. And Government Research shows they live just as long as whales in the wild. Caring for these whales, we have a great responsibility to get that right. And we take it very seriously. Because we love them. And we know you love them too. Welcome back everybody. There is no business like drone business. And one start up is looking to cash in on the unmanned vehicle craze. Our jane wells joins us right now with more. Jane, good morning. Hey becky. Nothing says the new start up economy and 2015 more than drones and uber. Someone had to be the uber for drones and nearly 25 million and we are in San Francisco at sky catch. So im going to arm the machine. Arming. While the faa figures out what to do about drones the number of businesses wanting to use them is exploding. Matched by the number of pilots able to fly them. Im probably 50 feet above the roof. Now, a Company Called sky catch matches the two with work mode, an uber for drones. Need a drone for a job, a pilot will respond. This is the opportunity for pilots to get in. And start creating their own business. Sky catch trains pilots and has already certified nearly 1,000 of them including tom. Its still very new industry. Theres not that many people who realize what the capabilities are. Its been great to have them help me find work. Regular monitoring of construction sites lets them compare progress against plans. Each flight costs from 400 to 1,000. If we didnt have work mode we would have had to buy our own drones and our own pilot and carry more liability insurance. These heat maps show where there was activity on this site yesterday. Where sky catch hopes to make money is processing and analyzing data. It can even measure things like how much dirt has been removed to let you know exactly how fast crews are working. With backing from investors like Google Ventures sky catch is growing in other industries. For drones the sky is the limit. A year from now, well probably do things that we dont even know today. Just this month, sky catch got two exemptions from the faa to use drones commercially for construction and agriculture. Guys, who knows what is next. Back to you. Hey, jane is this like uber where you also get to rate them. Can you figure out this is someone who has a lot of experience doing it . Yeah. It really is a Matchmaking Service for work mode. The Drone Operators are certified. They put you in touch together. But then they also sell you their software, their analytics. Jane thank you. Looks like cool stuff. Have a great weekend. Okay. When we come back the Consumer Price index for april and later a shark a circling with a breathometer. Kevin oleary joined by the ceo of breathometer to talk about business expansion. Well jump thun tank in just a bit. Take a look at u. S. Equity futures at this hour. We have some green arrows. Were back in a moment. 40 of the streetlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. Welcome back to squawk box. Rick santelli here. Live looking for breaking news and there it is. Cpi read up 0. 1. Take out the all important food and energy and if we look at yearoveryear. Year over year on core is up 1. 8. 1. 8 is the same we had before. We havent been at 2 since may of last year. So, we want to continue to focus on these numbers and be cognizant of the idea that energy, of course, is playing a big role in this. And there is some movement there. Gasoline futures hit highs of the year. We still have to try to factor in exactly whats going on with the state of the economy in general. What i can tell you, though a little bit hotter has had a response in the marketplace. Its been a long time since the treasury market paid attention, especially to the pricing fundamentals. Weve seen yields pop up. Were back close to 220 and keep in mind that last friday is kind of the low yield close weve been copying. The low that we in other words, we closed at 2. 15 last week. Yesterdays close around 2. 18 2. 19 the lowest close since then. We continue to monitor these levels closely. 2. 17 is where we settled the tenyear last year. There has been a lot of curve movement. Were still flirting with 3 in 30s. They closed at 2. 75 last year. Becky, back to you. Rick how does it feel there today . Is it quiet already from people ready to go or lastminute jockying trying to get in before the long weekend . You know really most of the week has had a feel of the holidays comeing at the back end of it. There is good action on this number. We have early closes on some of the markets outside of equities. You are going to see this market be the callmanation, at least in my opinion, of a lot of the fixed income trade in particular. Since its a localized holiday, you want to pay particularly close attention to how the markets outside of the u. S. Look sunday night of course because we will get a sense of catch up when we come back on tuesday. Rick thank you. Have a great, long weekend. You, too, becky, thong. For more reaction to the numbers lets bring in joe, the president and chief economist at economic advisors and our senior economics reporter steve liesman. Steve, what jumps out at you in these numbers . Can i mention something and andrew and joe not fight. Can you make that pledge . I will. Youll pledge. I will pledge. And, joe, ill explain in a second. We have an argument at the table here as to whether or not the Airline Market is a free and open market. I will tell you that airline fares down 1. 3 after having been down 1. 7 the prior month. They are down year over year down 7. 5 . Dont fight. Dont fight. Just want to get the facts out. Gasoline down 1. 7. Apparel off the boil. Its been pretty hot and now down 0. 3 . Its owners equivalent rent driving it up. Only one question out there. You read this number and you say, am i as a policymaker more confident were heading back to 2 inflation rate . Weve been pretty stable nudging up. Ill throw that. Joe, what are the policymakers going to make of this number . I think if you look at some of the details. One of the advantage of taking out the food and energy is we are really do see the volatility thats in them. You know gasoline prices are likely to be up when we get the may numbers. We have the bird flu problem that makes it start driving up some of the food prices. But if you look at the fundamentals on the services side, 60 of the index. I dont see the numbers, but you seem to be telling me steve, is thats where the heed is. I think were moving back to 2 . Services are thats it. And thats really the key. You know commodities have been under control. The second we see any rise in commodities, then were back above 2 . And i think theres a good chance by the summer were at 2 . End of the year we start pushing 2. 25 to 2. 5 . Just to be clear, the fed uses a different index. The Price Inflation index and it runs about 0. 4 below the cpi number. It will be 1. 3, 1. 4 right now. Yellen has said shes ready to go if youre not falling. That has really been her mantra here and other members of the fed. I think this is your i will take this number joel as establishing the base for the fed. It doesnt seem to have falling prices. But relatively stable in the core here. Absolutely. Its not just stable in the core. If you take a look at the core in the year over year basis, theres been a slow but steady acceleration in it. I think that that is what shes looking at. If she can get this number in the pce close to 2 . Somewhere between 1. 75 and 2 then the inflation issue really goes away in her mind. So, i think inflation is obviously, not a major problem. But its settled in on the commodities side and to whatever extent thats volatile shes going to look past it. So, i think inflation, i agree ewith you, steve. Im on your side here. Inflation has got enough in it. I want to flag i want to flag yeah. I want to flag one thing, joe. We watch it, its important. Political component to it and its been an important component to inflation, medical care. It did pop here joel. 0. 07 . And one of the stories of inflation over the past year or so is that it is relatively muted. Still up 2. 9 year over year. This is a number that run 4 and 5 . Run very hot. Right now one month and you dont want to make too much of it. If medical care returns to its old surge and its old high levels of inflation, its something to watch and have an important impact on the cpi. Absolutely. The two components that i look at steve, are the shelter components, especially owners equivalent and we know that home prices are going up. Thats only going to be hot, you know, for the next couple of years. And medical care. And if were looking at 0. 3 for those two and you got 40 in the index and thats wonky. But, you know youve really established a base there for inflation being at 2 . At least, you know excluding food and energy. All right, joel thank you. Steve, thank you. Big speech today, everybody. Tune in 1 00. Janet yellen. The prompter said shes scheduled to speak and like the chief. Shes actually shes just been sitting there all along and actually going to speak. Shes going to speak, actually. They know when its going to be. 1lic. 00. Why rhode island . Who knows. But she hasnt given a lot of Economic Outlook speeches. Friday going into memorial weekend. With potentially low volume, could make for some fortrusting. The only company on shark tank to receive funding from all five sharks. The founder and ceo of breathometer will join us with a product update and a preview of a couple new products coming soon. 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 xc60 crossover. From volvo. Lease the well equiped volvo xc60 today. Visit your local volvo showroom for details. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Welcome back to squawk box, everyone. Blackberry shares are trading higher this morning. The company is buying back 3 of its shares to negate negative eeffects of a stock purchase plan. Stock up by 3 . Lionsgate entertainment is trading lower. The quarterly revenue falling considerably below analyst forecast and that stock is off by 1. 5 . We are jumping back into the tank now with an update on one of the biggest investments in shark tank history. Breathometer. Going back and forth. I was going to say it right. The only Small Business featured on the show to get, to get a 1 million total investment from all five sharks. Company developing two new products. Breeze and mint. Here now to tell us more is charles yim who breathomoter and kevin oleary, cohost of shark tank. Show us what you got. Sure. So, last time i was on here i was showcasing what is called breeze and breeze focuses on alcohol. Now im back and what we have what is called mint. This actually a monitor for Oral Health Care. What it can specifically detect is not just only breath quality, but hydration levels. So how does it work . I can demo one for you. I thought about it. Usually people just use their nose. You dont know that you have bad breath. You cant. Thats why people go you would think it is that simple, but its not. Basically from a high level there is bacteria in your mouth and essentially a byproduct of that is Hydrogen Sulfite or compounds. What that ultimately comes to is bad breath. But you can measure that into hydro Hydrogen Sulfite. The worse that is bad breath can be omitted but measure that and tell you how much bacteria. Does that tell you youre not flossing enough. Should you brush your teeth, scrape your teeth, scrub your tongue. How many times a day am i supposed to do it . You can do it a couple times a day. It takes a few seconds. Literally instead of breeze you blow in to for alcohol, this sucks air out of your mouth specifically from oral cavities. I can go ahead and do a quick demo. Just press start and it is preparing the sensor. You can hear a fan. Its sucking air. I will do this right now. This company has been a phenomenal success for the sharks. Hes sucking in to this or blowing into this . Its sucking air from my mouth and its done. Now its analyzing basically. It shows im a nine out of ten in terms of freshness of breath. Did you just brush . I did. Have you had any food or coffee . I had water only. To be specifically 54 parts per billion. If i was maybe in the 300, 400s thats pretty bad. I should brush my teeth and floss. If youre a 7, look out. Three or four or five. Hydration is interesting. Most people dont drink enough water during the day and this also tracks that. Many people during the day are very dehydrated and its very unhealthy. If you dont eat, sometimes feel what was that an alcohol compound. Its actually acetone. You sort of digesting your own so how much does this cost . This is 99. It will retail in the next i would say two quarters. And how much does breeze cost . 99s, s 99, as well. This may be a bigger market. Lets take this thing for a spin. Wheres liesman. Take this and compare to a 5,000 machine, it tracks the same metrics. A 99 device that you can own. Play devils advocate. I can see how 99 of the breeze version for alcohol would save me a lot of money and time from basically going in a car and creating a problem for myself. This is sort of a different type of thing. I dont think youre looking at this opportunity the way we are as investors. Think of the multibillion dollar Oral Health Industry and the components involved in that. This becomes an element of it. Our investment purchase by individuals or dentists or everybody . Wait a few weeks and hear what is going to happen at this company and where it fits into that metric of oral health. We just partnered with one of the leading, i would say Oral Health Care companies in the world. Well make an announcement in the next few months and we also are about to close a significant round of series a funding. But, again, to be will that put it in the drugstore when i walk in . All the major retail stores. Youll see it independently and also copackaged eventually. What if i put it between my toe sxwlz toes . Not the appropriate use case. Can you get it down . Yeah. Of course. Well see this can you get it down to 19 bucks . It will get down to 79. But the investment thesis from all the Sensor Technology is price goes down down down and then the new iteration. I can see this growing into areas, you know of all kind of health. I know people who are fanatical about their breath. More internet. We see breath is synonymous with health. A couple other products were working on like i promised you last time. Well come back with a fat burning application and also an asthmatic application. If you can actually change your diet so that youre eating a little bit more protein, the new device will show you the sweet spots. Start way down in your stomach. Roughly 90 plus is actually coming from your mouth. The real chronic heart cases that you really cant help thats down here. Thats down there. I know people. Different treatments. We can still actually detect that and monitor that. Thats bad breath. One last thing that is interesting. We can take images of your tongue cavity and correlate that to the compounds. Hydrogen sulfite levels from your breath. No one has been able to connect those two data points. Your tongue the problem is is coming from. Exactly. What about a smoker. It would be even worse, rights . I dont know. It would be worse. There would be build up and be a lot more potent. Regardless, this is really informative to your dentist. If you can save a dentist visit. Very valuable. All five of the sharks. All five. This was one of the largest, it was the largest that everybody got involved in. We just thought the theory is Sensor Technology is exploding to the upside. And hes adding the application to it making it a Consumer Product and its proving itself out. We keep coming to you every six months with a new app. Thats whats happening. Come on back. You sold me. You sold me. Its tough to do. It is. When we come back this morning, the stories that have you buzzing. Jim cramer will be here for your memorial day weekend sendoff. When youre not confident your companys data is secure the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. We monitor Network Traffic worldwide, so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. High five. I got a ten, i swear to god. Im so happy. I drank coffee at home. Before or after you brush your teeth . S. After. That was three, four hours ago. They did say you were a little dehydrated. Earlier we asked you to send us stories that have you buzzing. Now its time to share some of your responses. Jeff mason suggesting we should check out an article in boston globe. Tom bradys consumer appeal nose daved because of deflategate. After he fell to an imagechallenged group that included Billy Bob Thornton Martha Stewart dane cook. The fan website they were seeing higher sales. They say its going to last longer because even kobe bryant who had major problems but he performed on the court. Supposedly he goes back up. If it happens during competition it happens longer. I like billy bob more than leo flying around that pretentious hypocrite it. Like martha just as much as meryl streep. How do we know meryl streep isnt acting like she is nice . Shes awesome. But she is acting that way. She could be the worst person in the world. She seems like a nice person. Dont you understand she could win an academy award. Are you acting right now . Yes. We told you before about californians shaming each other for excessive time use. There is a New York Times piece, every american consumes more than 300 gallons of californian water because they eat. If you havent stopped eating because of global warming, stop now because of the drought. Among the biggest water guzzlers, one slice of avocado takes 4. 1 gallons of water. 1. 75 ounces of beef takes 86 gallons of water to produce. The idea if you love this planet, stop eating according to your paper. Im not sure what it really says. What does yoko ono have to do with this . Whats the name of this song . Were all water. Ive seen it already on my twitter stuff. It said New York Times says people need to do their patriotic duty and stop eating so its according to the New York Times. I was already prepared for that. Its good for certain things. Lets get down to the new york stock exchange. Jimbo cramer joins us. Will you be at your restaurant this weekend . I bet you are with 160 kinds of tequila. Monday, probably. Whenever the weather is nice the patio does well. People are drinking mescal union, thats the hot drink. Is that tequila . No. Its a mescal union. You cant keep it in stock. Its incredible. Certain drinks take over the mind share. Casa micas, george clooney, his tequila. Quiet today . Bigger movements because some of the players are gone . I think we could. I dont like the set up. Interest rates in wrong direction, futures, wrong direction. Hewlettpackard fine. Lets see hour deere does. There are not a lot of players may lead to selling. A lot of profit taking. There are Companies Like shake shack defying any gravity. Thats true. Weve been talking a lot about, i dont know what unicorns private sector bubbles . Not private sectors. Next week weve got four days i guess. That could be slow next week probably too. Yeah. We are getting into the summer. Maybe we have more ipos that will be hot. We had shopify yesterday. Things are slowing. David fabers got some stuff because hes got hewlettpackard. There still will be mergers in health care. Will hewlettpackard be a dow component in five years . Hewlettpackard will be out. I dont think its a factor. Davids got it. Its still the two companies when they split will be fortune 500 companies. Whether we want them or not is a different story. Jim. Thank you guys. Have a great weekend. Coming up the stories likely to drive the preholiday trading season. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Tdd 18003452550 [ male announcer ] your love for trading never stops tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account and you could earn tdd 18003452550 300 commissionfree online trades. 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Dont head out for the Holiday Weekend without first listening to janet yellen delivering a speech on the economy at 1 00 eastern time this afternoon. Her comments come after the fomc minutes earlier this week suggesting the first rate hike has been pushed out to late this year at the earliest. Well find out if we are getting more clarity on all this. Japans volcano erupted yesterday. Shooting a plume of ash two miles high in the sky covered nearby cities in a film of ash. Experts say they observed a swelling of the mountain. That indicates increase of the magma, which makes sense, inside the volcano. So you can tell maybe it was going to happen. That would be weird to see a mountain start expanding. Strange. Run. Have a great long weekend. Take time to thank our troops memorial day. Well see you tuesday. Right now its time for squawk on the street. Its a Beautiful Day good morning and welcome to squawk on the street, im david faber along with jim cramer live from the new york stock exchange. Carl getting an early start on the long weekend. Take a look at the futures this morning. We are headed for a lower open. Crude oil, the ten year like to look at those, as well. They are still in many ways keys to the market overall. You see wti below 60. Ten year right around that 2. 2