Transcripts For CNBC Squawk Box 20160303 : vimarsana.com

Was down slightly. The shanghai composite was up slightly. Also take a look at oil prices. Wti up slightly. 34. 72. A little later this morning, were going to watch for natural gas Inventory Data due out at 10 30 eastern time. Gas prices are trading around the lowest levels in 17 years. Couple big stories were watching this morning. Just hours after the u. N. Security council slapped new sanctions on north korea, south korea is now accusing the north of a new provocation. South Koreas Defense Ministry saying north korea fired several shortrange projectiles into the sea. The sanctions on pyongyang are the toughest in 20 years and came in reaction to the norths recent Nuclear Tests and longrange rocket launch. Its also a very busy day for economics. A lot to talk about. Jobless claims out at 8 30 a. M. Eastern time. Thats expected to hold steady around 270,000. Also at 8 30, were going to get Fourth Quarter productivity, which is expected to be revised slightly lower with forecasts for a drop of 3. 3 . Coming up at 10 00 a. M. , the monthly ism Services Index and january factory orders. All that hitting the tape. On the earnings front, were going to be hearing from supermarket giant kroger, reporting earnings before the opening bell. We should tell you the cfo of kroger will join us at 8 40 a. M. Eastern time. Former Chesapeake Energy ceo Aubrey Mcclendon killed in a car wreck the day after being charged with bid rigging. Our scott cohn made his way to Oklahoma City this morning with more on this developing story. Scott, good morning. Reporter good morning, joe. Among many other things, Aubrey Mcclendon was a part owner of the Oklahoma City thunder of the nba. They played here at Chesapeake Energy arena. The chairman of the team, Clayton Bennett s calling mcclendon a visionary community leader. The community here in Oklahoma City was just getting its head around that indictment that came out earlier in the week, charging mcclendon with a fiveyear scheme to essentially depress the price of oil leases of Natural Gas Drilling leases at the expense of the landowners. That could have landed him a tenyear prison sentence. Then came word of this onecar crash here in Oklahoma City in a Sport Utility vehicle that had crossed the center line and crashed into a wall. The authorities said that Aubrey Mcclendon was the driver and the lone occupant of that vehicle. He had plenty of time to correct his course, but once he hit that wall, they say, he had no chance. He went left of center traveling at a high rate of speed and collided into the west embankment wall of the overpass. His vehicle was engulfed in flames immediately, and he did not survive the accident. Reporter Aubrey Mcclendon was by any account a business visionary who was a pioneer of the shale oil and natural gas boom. He spoke to jim cramer back in 2012. I work every day, and i work hard trying to create value and trying to make my employer, whos my board of directors, my shareholders, happy with what i do. I think what we do matters. Reporter Authorities Say it could take a couple of weeks to determine just what caused him to lose control of his vehicle and crash. Of course, lose his life. Also still unclear is the course of this federal investigation. This was to be the first case, the feds said, in an Ongoing Investigation of antitrust violations in this area of leasing. It is unclear what will happen to this case and the cases that might have followed. Becky . Scott, thank you very much. Again, thats scott cohn, whos live in Oklahoma City for us. Reaction coming in from people both inside and outside the oil industry. In a statement, Boone Pickens says, ive known Aubrey Mcclendon for nearly 25 years. He was a major player in leading the Stunning Energy renaissance in america. He was charismatic and a true american entrepreneur. No individual is without flaws, but his impact on American Energy will be long lasting. And carl icahn tweeting, Aubrey Mcclendon was one of the brightest men ive ever dealt with. Ive always personally found him to be a gentleman in our interactions. Andrew . For more, lets bring in a reporter with the wall street journal. Put his career in perspective, then i want to talk about the implications of all this going forward. So Aubrey Mcclendon was an empire builder in shale, in Oklahoma City, in basically everything he did. I think we talked to a lot of people yesterday who said hes pretty much one of the most important, if not the most important figures in the shale boom. He basically set the pace. He bought all this land everywhere. He spent billions of dollars. Everyone else was always trying to catch up. I think that was a main part of his legacy. If there were a mt. Rushmore of fracking, he would be on it. Even Boone Pickens said every man may be flawed, he apparently had his flaws, though he had his supporters and detractors. When you try to put in perspective what took place over the last several years, there were reports he was taking loans out against his company that he shouldnt have been doing that, he wasnt disclosing. There was this bid rigging case. Some people say the government was trying to jam him. Others say these, in fact, were allegations that made sense. How do you square that . I think the latter end of his life and the last years of his life were very difficult years. I think he bet everything, he bet the farm on a comeback and on a rebound. Ultimately, you know, he bet when oil was 100. The indictment wasnt his only challenge at the end of his life. He was also you know, there was a loan outstanding from Goldman Sachs for more than 400 million. He had leveraged a stake in the Oklahoma City thunder, houses, antique boats, wine. He had bet just about everything he had on this rebound. But he bet at the wrong time. He bet at 100. So a lot of those things were sort of swallowing him up or painting him into a corner a little bit. A dark question. You knew the man. I did not. We had actually been exchanging emails over the past month about a story that the journal was preparing to write. I didnt know him personally. One of the questions obviously, and we were at an event last night with a number of business people, many of whom were talking about it and knew him well, were questioning whether, in fact of course, im going to go there, whether he committed suicide or whether this was some kind of accident. Whether he had a heart attack in the car or what have you. So many of them who knew him were at least saying to me, i cant imagine that whatever corner he was painted into that he would do this. Thats absolutely true. Everybody described him as an eternal optimist. He always believed that an eventual rebound would be coming and he would have a role to play in it. A lot of people have a hard time believing that would be the way his story would end. In terms of to the extent these cases are now outstanding and also that the company that he currently runs and all of the litigation that relates to the company he used to run, what happens next . So i think that obviously there was a lot of businesses he was involved in. I think that still has to be sorted out. You know, the Oklahoma City thunder, i dont know if hell be able to keep that stake. That was leveraged to oak tree. Thats something that remains to be seen. I think theres a lot left to be done. In this venture he had launched with john raymond at energy and minerals group, obviously john raymond had somewhat sidelined him in recent months. I think thats probably already been determined. Raymond sent a note, a letter to investors to inform them that mr. Mcclendon had been separated from the companies. Of course, that was before he died. That was after the indictment. So thats pretty much the scope of all the different enterprises. I think it really remains to be seen and probably we have to await the results of this Police Investigation to find out exactly what happened. Okay. Brad, thank you for coming in this morning. Thanks a lot. Appreciate it. Lets get another check on the markets this morning. As we showed you, the futures are slightly positive after an up day yesterday once again. Markets bounced around a little bit. At the end of the day, the dow was up by about 34 points. You can see this morning that the futures are just barely hanging in there. Was that at the end of the day . Literally at the end of the day. That was usable there. I should say at 4 00 p. M. The dow was up. So at the end of the trading session. But at the end of the day, the markets higher for march. Well, i guess you could describe it that way. At the end of the day, were going to see. Lets take a quick look at the treasury market. You did see the ten year hit its highest level yesterday since the beginning of february. Almost a month ago. 1. 856 . Thats just below the high it hit yesterday of 1. 872 . Take a look at the dollar in the currency markets this morning. The dollar is down against the euro at 1. 0877. The dollar is up against the yen at 1. 1395. A couple we are going to talk markets now. Two notable people i hate to use the word notable. Marc faber negative. Both said a good bounce could be in the works. Do you ever take a pause from the gloom and doom . No, no, there are areas to be bullish. Midfebruary we were extremely be bearish. We were certainly deservedly due for a bounce. The question now is the sustainability of it and whether the worst is over or not. So theres a pause in this extended tightening cycle weve seen by the fed. They went up a quarter point. Theyre going to back off a little now, check out the landscape. They did the quarter. They got to wait now before they get way too tight. I think the market likes that. They do, but the fed is now being painted into another corner after last fridays pce number. Theyve been in a lot of different cos. Now theyre in a new corner after the core rate being 1. 7 . So were at their year end target in terms of the pce inflation number. Theyve been hiding behind that as license to continue to ease or at least not tighten. Now that noose sort of is tightening around them. They may be forced to raise Interest Rates at a time that maybe they dont want to in the context of a still very mediocre economy. Thats why in the march meeting, while theyre not going to raise, i do believe theyre going to have to acknowledge the uptick in inflation, the 4. 9 unemployment rate. The statement i do expect to be sprinkled with some hawkishness that doesnt necessarily mean theyll raise in june, but theyre going to tell the markets its a greater possibility than youre pricing in right now. I wonder if Oil Continues to do a little better a lot of times if that headline number looks hotter than it really is, people will start thinking this whole inflation, sort of that its never coming back. That might be something we need to reconsider. Thats when the fed really gets in a bind. Exactly. January headline inflation, both pc and cpi, essentially doubled month over month. All you need to do is recycle the decline in energy prices, combined with 2. 5 , 3 services inflation, and well have 2 headline inflation the second half of this year. Somebody earlier this week was suggesting that the fed is already behind the curve because of that. Youre going to see their inflation target hit to the end of this year, just if we continue to see the types of numbers we have seen. The core pc, theyve already met their yearend target in the month of january. So theyre already there. Theyre now in another bind. And the irony is with this correlation with oil prices. If Oil Prices Continue to rally, well, then that brings the fed further into the picture about raising Interest Rates. We may rally ourselves into another rate hike if oil goes to, lets say, 45. Then we have the potential for. 5 type inflation in the second half of the year just on a rate of change basis. We had Richard Fisher here this week. He said basically the fed is going to raise and they have to do it by august if they have plans to raise. After that, you get into the political season and he doesnt think its appropriate for them to be raising in the middle of an election cycle. Its a plitolitical mess for them. Lets say the economy gets better and theyre not raising Interest Rates. Theyll get blamed for falling behind the curve. Youre going to get screaming from both sides. If they reverse and cut, youll have the republicans say theyre trying to buy the election for the democrats. If they raise, the democrats will say youre tryings to sink the economy and buy the election for the republicans. On the other hand, theyre dealing with a mediocre global economy. This whole tightening of financial conditions, every time they want to raise rates, they use that as an excuse not to raise rates. You said at the top of the question, are we in a situation where we continue to see a rebound or are the markets going pause . Whats the answer . I think itll depend on march 10th, the ecb. I have to believe its still in the news after draghi. If the fed put some hawkish commentary in that statement, itll be another headwind. Every time the fed has tightened, thats caused hiccups in the market. All right, peter. Thank you. The republican president ial hopefuls face off in a debate tonight in detroit. Theyre going to do it without ben carson. The retired neurosurgeon is not going to participate in the debate. He signaled his exit from the race according to the cruz camp. Actually, this is not the cruz camp saying hes going to exit. He actually is going to do it this time, saying he doesnt see a political path forward. Meantime, good news for donald trump. Conservative megadonors the Koch Brothers will not use their 400 million political arsenal to try to block the trump path to the nomination. There has been speculation the brothers would soon launch a trump intervention. But trump will face opposition from 2012 gop nominee mitt romney. Hes going to speak at 12 30 p. M. Eastern today in salt lake city. Details of the speech have just been released. Basically saying do what i say, not what i do. Republican voters, he will say, that trump is a phony and provide negative consequences for the country. I said this on the tease to the guys in the last hour. Just bear with me. Im bearing. When trump wasnt going to be the nominee, all the party elders, all the theyre all, hey pal, youre not going to be the nominee. You got to support whoever it is when we pick someone we like. You sign this thing and get on board. So now its like, wait a second, we didnt sign this, did we . Did we say that . Look at the fine print down here. You mean it was a oneway contract . And if you want to change the way this is done with delegates and stuff these 40 , maybe they are a bunch of hicks and blue collar and bigots. Maybe thats what they are. But unless you change it to you need a majority, pluralities dont work here, this is really messed up. The idea of a brokered convention seems a little crazy. I know theyre panicked. I know theyre worried about the Republican Party and whatever. I mean, it just seems really disingenuous at this point. No one is in there stuffing ballots. No one is voting 50 times. They havent figured out a way to skew these results. These are real numbers coming out. Amazing thing. Youre just watching on the outside going, i dont know what those republicans think anyway. I dont know what this country thinks, broadly. All sides. Take the other side. Its a socialist and bernie sanders. I use that every time, i know. One more thing. The four guys tonight, all four, i think, are okay being there. Kasich yesterday, how good was he not in a debate setting where he can just be himself . He doesnt do the karate chop. When theyre asking a question, his face isnt when theres only four people, youre going to hear a little more in depth. Rubio has a claim still maybe if he wins florida. Kasich might, who knows, ohio and michigan. Cruz just won texas. So these four but is rubio going to go at him again . Rubio didnt tell a lot of jokes yesterday. Is there going to be a lot of mud throwing . Drudge picked up my baghdad bob thing. I dont think it works for him. He was such a nice young man before. What about ted cruz . He might have to. Ted is nasty. He can go dirty. He argued in front of the supreme court. He knows exactly this will be good tonight. Plus, kelly megyn. Megyn kelly. I know. Anyway. Itll be good tv. The ultimate reality show. It is. And only four of them. Right here in america. Hes going to be in the middle actually, you cant be in the middle of four candidates. Coming up, exxonmobil cutting its spending by 20 this year. Our own becky quick spoke to the ceo about this decision and a lot more. We have her interview right after the break. Welcome back, everyone. Exxonmobil addressing the Analyst Community yesterday, announcing plans to cut Capital Expenditures by 25 this year. Thats more than the street was expecting and also follows steep cuts from last year. Exxon is betting on higher prices to generate more cash flow. Earlier this week, the Company Successfully raised 12 billion in its biggest bond issue ever. Were coming off a fiveyear period of very high capital investment. If you look at the previous five years to 2015, we had invested about 190 billion back into the business. Some of the Major Projects that would have funded, they were to have partners. The partners and we have agreed we should take advantage of this market situation. Lets go back and relook at the costing of those projects, the strategies, and is there some value we should be trying to claw out of this market before we make a final decision. Governments have been working collaboratively with us on that. The second is in our north American Drilling activity. Weve been bringing our rigs down like everyone else, not because the opportunities are no longer economic at this low price, but clearly the returns have been diminished. As i told the group today, i said, i just dont see pushing a rope into this market. Were going to drill to maintain our acreage. Were going to continue a program so we keep learning. We have got a very good learning process going on in the basins where we are working. I dont want to interrupt that. But its just a question of how active do you want to be. You have recently stopped buying back shares, part of the way that youre going to make sure you maintain your Balance Sheet strength. But you raised your dividend again. Now its 33 years running that exxon has continuously raised that dividend. How safe is the dividend . As i told the group today, you know, and ive said it many times over the years, we are a company thats built for the longte longterm shareholder. When we make decisions about the financial structure of the company, our investment programs, were really thinking about 20, 30 years out. Were thinking about those longterm shareholders. So our view and the question came today. I said, did you borrow to pay dividend or borrow to invest . We borrowed to invest. We take the cash flow, and were going to pay that dividend. We know its so important to people. For a lot of people, its really important to them. So to answer their question, the dividend is safe. Its part of what we feel is the obligation to our shareholders. Lets talk about that 12 billion, what you see in terms of potential opportunities. Are we talking mergers and acquisitions here . All of the above. Its really do give us that flexibility. Cost of borrowing is about as low as its going to get. So we want to take advantage of that. I commented to the group today, most of what were doing are asset acquisitions. Whole Company Acquisitions still appear to be difficult to do. Why is that . I think theres two aspects of it. One is valuations, believe it or not, are still not aligned in terms of what Companies Want versus what we see the value to be. And the second thing thats happened over the last year, and ive commented to the group, because companies have wanted to maintain themselves, looking i think for the price upside, theyve taken on additional leverage. Theyve issued additional shares, diluting their existing shareholders. In some respects in doing that, theyve destroyed some of the inherent value. So when we look at the assets, we love the assets. When i look at the Balance Sheet, im buying a house with a huge mortgage on it. How much would valuations have to come down before things look a little more reasonable to you . I know its a casebycase basis. You cant paint too broad of a well, maybe the question is how much does the premium need to come down . Thats really where the hurdle it. I understand. I appreciate the other folks that are oning these companies. They have to justify to their shareholders, you know, why they cannot command premiums that are what people are accustomed to. Were going to hear more from Rex Tillerson later in the show. A few things he talked about, guys, is just the demand from the economy. He says it hasnt been helping out. Its not just the global economy, but what he sees here in the United States. I think we might have finally had some inkling of that. It wouldnt go down out of a commodity glut. Exactly. Its gotten so much cheaper to produce when it comes to fracking. Youve had Companies Like Continental Resources and others saying they could make it profitable at 40 to 45. If theyre going to continue to pump at those levels, that means were looking at lower prices for some time to come. All right. I still think, you know, sooner or later that becomes positive for everybody. Except for people that have a big stake in renewables. Coming up, u. S. Airlines jockeying to win the coveted routes to cuba. You like routes or routes . Routes, i think. I wonder what we say in cincinnati. You get your kicks on route 66. You do, and you buy insurance in cincinnati if you can get an accurate reading on what you need. But for cuba, thats what were talking about. Plus, hitting the golf shot of a lifetime. Its just 11 years old and right in front of tiger woods. The viral video hell show you next. As we head to break, heres a look at yesterdays s p 500 winners and losers. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Welcome back to squawk box. Time for the executive edge. A couple news stories for you. The big u. S. Airlines are now vying for Regulatory Approval to start flying to cuba. In memos filed with the department of transportation, american airlines, jetblue, and others arguing why theyre the beth suited for the coveted routes. U. S. And cuban officials signed a deal last month to restore commercial flights between the countries for the first time in decades. It allows 20 daily roundtrip flights to havana and ten to other airports in cuba. I thought that american air already does a direct flight at least from miami. I remember hearing that. All right. Lets tell you about another story. Google says it is working with unicef to analyze data in an effort to try and map the potential spread of the zika virus. The company is providing a 1 million grant to help volunteers on the ground. Google says a group of engineers, designers, and data scientists are helping unicef build a platform to process data from different sources. Things like weather and travel patterns to try and visualize possible outbreaks. All right. Thats scary. The zika virus has been linked to 4800 confirmed and suspected cases of birth defects in brazil. And theres a new way to tell astronaut scott kelly apart from his identical twin mark after nearly a year aboard the International Space station. He grew two inches. One of the goals of this mission was to study how well the body can endure a long space flight. Kelly says overall, he feels pretty good. He now begins what could be a yearlong project to monitor his health and how everything is different. Your spine just expands . What happens is because of gravity, were all a little shorter than we should otherwise be. I need to go to space for a while. Everything in our body is the result of literally hundreds of millions of years of evolution with gravity being present. Its never been any other way. So you go out there, and every organ is like, why arent i lower . Just think of when you get off a plane, imagine being up that far for that long. They talk about muscles astrophy. You have to take a lot of calcium. You really need to be a physiologist to know everything in the body affected by gravity. When its not there, you figure it out. Every time weve talked about this, it makes me a little queasy. The idea of just being in this little thing up there. If theres a breach anywhere in the wall, its like a vacuum and youre dead. He said when the cold air brushed over him, it was the first time in 500something days he smelled fresh air. You see the Lunar Landing module. Its aluminum foil. You can poke right through it. Neil armstrong is like, im going to take over manually, theres a bunch of rocks. 20 seconds or im not going to have enough fuel to take off. Theres a good spot. Those guys, they dont i dont know. Cool as cucumbers. All right. Oh, here we go. Imagine if you hit the golf shot of your life. Now imagine doing that 11 years old and with hundreds of people watching. My hands are clammy already. Remind me of playing in front of people. Lets see this swing. Thats nice. Helped open the playgrounds on wednesday, a par three course designed by tiger woods. He got a hole in one from 80 yards out. The crowd went crazy, obviously, as it tiger. Gave taylor a big hug and a pat on the back. Tiger looks healthy. There was a time when tiger didnt even want to give someone a hug because of his back. Hopefully hes coming back soon. Good posture. Way to go. Wow. Threequarter swing. Probably hitting a 9 iron, maybe a 7 iron. Thats fun. How does that happen . What are the chances of that . Thats cool. Buy a lottery ticket. No, the chances of that are about a trillion times more likely than winning the lottery, i would say. When we return today, sportwear maker adidas has fallen to third place in north america behind nike and under armour. The company is in the midst of a turnarou turnaround, and investors are getting on board. In fact that, stock has outperformed both competitors over the last year. The outgoing ceo will join us to talk about the legacy that he will hand over in october. And as we head to a break right now, a quick check of whats happening in european markets. You can see things are mixed right now. Ftse slightly higher. The cac and dax slightly lower. Squawk box will be right back. Youre an at t Small Business expert . Sure am. My staff could use your help staying in touch with customers. At t can help you stay connected. Am i seeing double . No maam. Our at t buy one get one free makes it easier for your staff to send appointment reminders to your customers. And share promotions on social media . You know it now im seeing dollar signs. You should probably get your eyes checked. Good one babe. Optometry humor. Right now get up to 650 in credits to help you switch to at t. Xerox personalized employee portals help Companies Make benefits simple and accessible. From anywhere. Hula dancing . Cliff jumping Human Resources can work better. With xerox. Which allergy . Eees. Bees . Eese. Trees . Eese. Xerox helps hospitals use Electronic Health records so doctors provide more personalized care. Cheese . Cheese patient care can work better. With xerox. Thats it. Welcome back. U. S. Equity futures ins United States at this hour are indicated down now. I believe they were up fractionally a little earlier. I dont know whether oil has moved or not. Yesterday the session was i dont know how many times we went above the break even line. Down, up, down, up. Finally closed up a little bit. Remember, we had a very good start to the week. 350 points or so on monday. Adidas out with fullyear results. The German Sportswear Company projecting that sales and net income will rise between 10 and 12 this year, banking on a boost from sporting events like the european soccer championships and the rio olympics. Joining us now is the ceo of adidas. This is his last report before stepping down. Herbert, we want to thank you for being here. One quick question. When youre in the United States, do you call it adidas or adidas . It goes both ways. So im okay no matter what i say. Yep, exactly. Okay. Herbert, why dont we talk a little bit about how the company has been turning things around. You all had been struggling for a while against some of your major competitors. What went wrong, and what have you done to turn things around . First and foremost, i have to say that 2015 was an extremely good year for us. We exceeded all our financial targets on the top line or on the bottom line. It was not only the financial numbers. I think brands, both adidas and reebok, are in high demand, and i do believe that the adidas brand was never stronger as it is in the moment. Also in the u. S. , you can see collaborations with kanye west and pharrell williams, through our investment in the american sports, a guy like james harden or vonn miller from the denver broncos. So 2015 was a very good year, but i believe 2016 will be even better. Was part of the problem that you needed to invest more . You mentioned some of these partnerships like with kanye west. I know youre working on trying to make sure your womens apa apparel line is a little stronger too. Was part of the problem partnerships like that . Was it the marketing youve had to increase spending on . What happened . When you say part of the problem, then you refer to 2014. But let me also make it clear that even in 2014, the adidas brand was growing by 11 worldwide, but we lost most of the sales through currency devaluations against the euro. But anyway, i think that we invested a lot into new products and innovation stays at the forefront of our company. This is what drives our business. And Innovative Products in relationship with great ambassadors, as i just mentioned. I think this is part of the success. In terms of what you think needs to happen this year in 2016, you talked about some of those new innovations. What are you most proud about . What are you most looking forward to bringing to market . We have a complete new collection of football boots, where we really revolutionized the industry again with our laceless boot, which is just brought to the market. Well have great sport events like the european championship, the copa america, which for the first time is played in the u. S. , and the olympics, which will all help us. Well increase our revenues by 10 to 12 , which means another 2 billion in additional revenues. So this is definitely something were looking for. Casper is taking over, i believe, in october. What should we look for from him . First and foremost, i think hes a proven ceo. He understands how to work with the financial markets. I think hes a good, educated ceo who will try to spur and accelerate our growth, which we have. And im sure hes bringing new ideas out of his experience of his industry to our company and therefore continuing the growth. All right. Herbert, we want to thank you very much. We know this is one of your last interviews before you step down. We really appreciate your being with us today. Youre welcome. Okay. A little news to tell you about. A new law is going to be prohibiting Airline Passengers from smoking ecigarettes on planes. The department of transportation is now prohibiting the use of Electronic Cigarettes on any domestic or Foreign Airline flying to, from, or within the United States. I kind of thought that might have been the law already. Who knew. Transportation Officials Say the rule will protect passengers from unwanted exposure to aerosol fumes while aboard a plane. The relglations are also designed to clear up any confusion over whether the previously existing ban on Tobacco Products included ecigarettes. I guess there was a debate about that. Passengers are allowed to carry the ecigarettes with them on to the plane, but you cant use them or pack them in your checked luggage or use them in the lavatory. I remember going on a plane, air china plane, and the pilots actually went into the lavatory in the middle of the flight to Smoke Cigarettes and then went back. Thats gross. Did they dismantle the smoke alarm . I dont know. This is probably five or six years ago. Going to beijing. I will always remember because i sat in the exit row of coach. I was coach in the back there right near the bathroom. I watched the pilot. In normal european, any country there, people are smoking. The ticket agent maybe not anymore. But just a couple years ago in france. Just this big ash. Its so weird. Welcome to 1950. Yeah. I cant imagine someone pulling out one of them vape things sitting next to you on a plane. Can you smell it . Yeah, you can. Its like a different type of smell. An airplane is full of different types of smells already. You ever get on a plane then they come around again. There it is again. You ever get on a plane and it looks like theyre sending vapor into the air . Yes, its the mist. Thats the humidifier. I thought maybe it was i didnt anyway. Like a germ spray . I didnt know what was going on. Coming up, disney shareholders gathering for the companys annual meeting today. Julia boorstin is here to tell us in person, right there. Tell us whats on the docket when we return. Welcome back to squawk box. Disney holding its annual Shareholder Meeting today. Joining us to talk all things disney and viacom, Julie Boorstin who happens to be in the big apple with us. Good to be here. Ill be monitoring disneys Shareholder Meeting today in chicago. Usual topics up for vote including approving executive compensation. They recommend shareholders vote against the reelection of jack dorsey calling his commitments over boarded. One proposal to watch asking the company from provide additional disclosure of political activities. Disney says it disclose as lot already. Now two big shareholder adviser groups support this proposal but given the failure of similar proposals at other companies its unlikely to pass. Just yesterday disney announced it would bring its channel stonesys playstation individto sonys playstation. So well be listening in for more fun stuff. One of the things i did want to talk to you about is this sort of sense weve been or at least i have been talking about it, others have said that all this cord cutting is terrible for this whole world, this whole business but theres now some new research out suggesting theres push back on that . Theres always a lot of debate. How bad is it . Yesterday the big cable analyst came out with a report and said things have been overblown. In q4 numbers have been stabilizing. How much more cord cutting will there be. Have we hit a critical mass. Cord cutting has slowed down. Comcast numbers were strong. Q4 numbers overall pretty good. It will be interesting to see this year how much more cord cutting there is. Things have stabilized. Maybe all these fears about the death of the bundle have been overblown. Have successful have the ott offerings been. People look at that and okay that worked or is working. Hbo recently disclosed it had 800,000 subscribers which doesnt sound like an awful lot. But hbo says it has been successful so far. All of these over the top services say its very much early days. They dont want to grow too quickly. So they want to offer just enough that people who dont subscribe already to the cable tv bundle would subscribe to hbo now but not so much that they are giving it all away. Joe has this smirk on his face. Its obvious to me improving middle class is using some money they are saving on cheap Airline Tickets because of all the competition in the Airline Industry cannot do a bundle and to be able to access this on an iphone that hasnt been hacked because hopefully bundle i got all things we argued about that you have been wrong on in a put them all together. Well see a lot more skinny bundles. Everybody is offering them. Its not bad thing. That was just a joke. I didnt want an answer. Come to new york and you start talk facts. But to be serious for a second, a ceo is fine with skinny bundles. By the time i get to where i want to be with the skinny bundle its costing me more than when i get everything. Well see how these skinny bundles pan out. I need a lot. If you want to watch sports. I need all of those. I want choice. I need that. Not Everyone Wants to pay i know. Kids, my kids probably could get by on netflix and never have any idea that, you know, anything thats happening in the news or sports or anything else they will just know whats going on with orange is the new black. A lot of news service out there. Or they with watch jon stewart. Or is he already gone jon stewart is gone. Thanks. To be continued. Who is this elliot guy . Elliot is reaping is that spitz zero . Spitzer . Elliot. Who he is lie oat. They just say one word now were not supposed to say elliot management. Done it have a name. Im supposed to know this . Elliot. When we return today authorities in oklahoma investigating the death of former Chesapeake Energy ceo. Well talking to an Energy Executive and zbrournlsijournals been covering the ceo for years. At mfs investment management, we believe in the power of active management. By debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Energy industry pioneer dies in an oklahoma car crash day after being indicted on charges of cold lug collusion. Aubrey mcclendon is gone. Latest details on his sudden death. Exxons top tier credit rate cigarette it in jeopardy. Also the impact of crudes collapse what its having on jobs. And andrew is on a mission. So where are we supposed to go . The jpmorgan ceo summit is about to kick off and we cents andrew to track the fearless leader of the firm, jamie dimon joins us within the hour as 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, andrew has turned into j. R. Trender. So weird to watch that. Smarter. Thats why were playing Mission Impossible music. Keep that you want. Take three, camera. Anyway. Hes sitting here. Okay. Hes headed there, andrew is to the ceo summit to speak with jamie dimon. Hell join us in 30 minutes. Futures at this hour are indicated down 13 points or so, down 1. 4 on the s p and down 2. 75 on the nasdaq. In the headlines this morning ahead of tomorrow mornings february jobs report well get the latest weekly initial jobless claims and that will come in in about 90 minutes. Analysts are looking for 270,000 new claims from last week down from the prior week. Herbalife shares are take a big hit. Get rid of the h. Why put it in there. Its a waste. It says its discovered and corrected some errors in its active new members metric. I want will not affect previous financial statements. Look at that. Ackman is not down quite as much more 2016. 2012 gop president ial candidate mitt romney wont go away. And hes taking aim at republican frontrunner donald trump at a speech to be delivered later today. Mitt romney said trump is a phoney and done have the temperament or judgment to be president. When i say it like that they dont know that i added that. Im sure nobody knows you ad libbed that. Jamie dimon is coming up. Youre not andrew. You weigh more. Youre older. Heftier. Andrew well go to, when does that start, half hour from now . About 40 minutes. That will be cool. Good to see you. Good to see you guys. Well let you talk in a second. Can you just watch the magic. Of course. Absolutely. Did you see this yesterday, you must have been shocked. I saw it on twitter and we had just been talking about mcclendon all day long. I didnt know what it was. I didnt believe when it you told me. Yeah. Well tell you a little bit about this. Authorities in oklahoma are investigating that car crash that killed former chesapeake ceo Aubrey Mcclendon. Scott, a lot of questions still swirling here. Reporter absolutely, becky. And for now, though, here in Oklahoma City they are remembering Aubrey Mcclendon as a visionary who really helped shape this community and whatever you think about him, the last couple of days are horrible end to a singular business career. Mcclendon died in this one car accident, barreling down a stretch of road on the outskirts of Oklahoma City, crashing in to a wall with no attempt to stop. It happened on the very morningers supposed to turn himself into authorities to face the single count of conspiracy, antitrust violation allegedly for rigging oil and natural gas leases. He spoke to cnbc about five years ago talking to kate kelly, the subject was hedging and he talked then about the importance of predictability. We have to have some certainty. We cant make out year budgets, we cant find employees and buy acreage if we dont have some idea what our revenues will be. Reporter well the feds say he took that too far when it came to the important issue of leasing lands for drilling and fracking for natural gas that he was conspiring with a yet unnamed coconspirator to depress those leases to rig the bids. That was the charge he was facing when he met his demise yesterday. Unclear what will happen now to that investigation. The Justice Department not saying at this point, clearly too early to tell. This was supposed to be the first of many cases involving this important area, an area thats important to the whole industry. Guys . Scott, thank you for more on mcclendons passing and the legacy he left behind. Lets bring in a partner at capital and cnbc contributor. Forbes Senior Editor joins us also now he followed mcclendons career and wrote the title story americas most reckless billionaire and chief investment Strategist Research Partners Joins us as well. Is it overstating it, chris, to call him one of the fathers of what were all talking about every day now and thats 30 oil because of fracking . Absolutely. And he was titan of the industry. He will be remembered forever as one of the greatest wildcatters of his generation. He had brash and bluster and arrogance and drove him to uncover and discover millions of acres of oil and gas plays across the United States. Without Aubrey Mcclendon we wouldnt have had the kind of boom in oil and gas that weve enjoyed in america in the last five years. So you use the word reckless and you think of wildcatters wherever they are, big risk, big reward but he took that on the next level, even, which kind of benefitted probably all of us, but theres times when it goes the opposite way where you get caught overleveraged or something. It benefitted america because he uncovered a lot of gas and oil we didnt know there was. But he had a real great appetite for risk. And this really became evident back 2008 when his 2 billion fortune was wiped out in one a due to margin calls. He borrowed heavily against his own stock and likewise put chesapeake deep into debt to go after growth at all costs and thats what ended up having him kicked out of the company by carl icahn in 2013. Chesapeake was way too overextended. He was personally overextended. Doing all sorts of deals on the side that were not particularly kosher and came back to bite him. Certainly did. Weird, isnt it. Killed off i think about a lot of, you know, big Business Leaders that you think remember maxwell he jumped off im not saying we dont know what happened with Aubrey Mcclendon but the highs and lows, almost shakespearian. Yes, sir are spectacular highs liens. I cant overemphasize the impact this gentleman had on our country and his contributions in terms of adding to our national security. Our energy security. You know, these were fields that he was able to reinvent really in old technology, joe, that unleashed, you know, all these molecules of gas. When gas was double digits its trading about a buck 70 now. Back then our fertilizer industry was going to go by the boards. Our chemistry was going to go by the boards because the inputs in natural bass was too expensive. Now its completely reversed. Fertilizer industry is back on top. Onshoring of chemistry jobs and were a player on the world stage in terms of energy. Do you think they realized what they were doing would lead to gas prices being solo. Thats part of the rob for their own fortunes going away. I dont. I dont think any of us imagined the efficiencies they were able to wring out of this process. The break even has gone from 60 to 50 to 40 and now they are saying oil can be profitable at 30 a barrel. What was the law that they were using for this . We stopped talking about that. Its like 100 years old. Are you up to speed on this . On what the indictment was about. Im not. Is this first case. First executive in the oil industry thats been brought against. Thats what we would be talking about today is whether this was sort of a you know whether its justified, wrongdoing theres a lot of things that now we put on the back burner. Apparently some deals were already cut with the prosecutors to do him in, to do Aubrey Mcclendon in. It was collusion on keeping land prices low. That was a rip off of people who were selling their land at below market prices. Its something the government obviously takes seriously. Already that settlement in michigan. This was going on in oklahoma. Its an Old Boys Network and we believe mcclendon was part of the plea deals. What was incredible is the amount of prison time you get for just one counts. I understood to be as much as ten years. Ultimately who is the real victim . If oil prices are at 30 a barrel. There were reports about who else was involved here. Have you been able to confirm the other Companies Involved . I have not. Theres a lot of speculation about that. Its probably sandra energy run by mcclendons cofounder at chesapeake but thats speculation at this point. Whats clear is that aubrey had pled out the a felony charge that would have been tend of his career. All of our Employment Contracts have morals clauses and once an executive is a felon its going to be almost impossible for him to continue as an officer and it would be impossible for him to keep raising the billions and billions of dollars that hes raised in recent years to try to redeem himself. Ever since he left Chesapeake Energy hes raised 10 billion in equity and debt to go all across america and then around the world trying to make a second go of this. And much of that investment is deeply under water, and a felony conviction would have ended his fundraising days. Yep. Okay. Chris, thank you. And jason will be with us for the rest of this hour. When we return, is exxonmobils chief have concern about the companys credit rating. I asked him that question. Plus we got his outlook for crude supply and long term effects that the glut is having on jobs. As we head to a break take a look at oil prices. Wti up slightly, 34. 75 a barrel. Box will be right back. Exxonmobil is one of just three American Companies with a aaa credit rating. Its peers are microsoft and Johnson Johnson but moody lowered to it negative outlook. Its concerned that kidnap expenditures is coming down rapidly. So is exxons top rating in jeopardy and does it matter . Ceo Rex Tillerson spoke to us yesterday about this issue. Hopefully we provide a little bit of insight with our forward expectations on volumes and as we told the group today we dont set volume targets we set investment programs and the volumes are the outcome. Having said that even at the reduced levels because we have a lot of Major Projects that are nearing completion thats coming off this high period of investment, we have a lot of new volumes coming online this year and over the next two years so our volumes are expect said to in the 4 to 4. 2 million barrel a day. Going forward as i said that deep hill Resource Base the quality of it is still good and i think as we look over the next certainly five to ten years weve got plenty of capacity to maintain our volumes and continue to bring reserves online. So, i understand and were we want to give the rating agencies all the information we can give them to help them understand how the future looks. You know, over 90 years of being aaa this is not the first time weve been through a period like this of pretty extreme stress on the Financial Model of the company. In fact weve had periods where our financial metrics by their standards are much worse than they are today and they maintained that rating. I hope we can maintain the rating because its important to us reputationally. Our cost in the marketplace is largely unaffected but i think its something that i would be disappointed if they lowered but i understand, they have a job they have to do. I read some things recently where its been said they are now able to make shale worthwhile at 40 a barrel, 40 to 45. Both of them said they would pump more if we got to 40 or north of that. What does that mean for the long term price of oil . It suggests the future will be in a fairly narrow band depending again on what Global Demand does. Our Development Cost are about 10 a barrel now. Our cash cost is 10. So you can drill today at these prices and generate a modest return. We wouldnt do that because we think resources are worth more than that. But im sure others are in similar situations so when you get to 40, particularly companies that this is really all they have. Its a one play opportunity for them, i expect there will be some volumes coming back. So it says were going continue to have some volatility but bounce around in a narrower range. Rex, what has Lower Oil Prices meant for your home state of texas where you are based what does it mean in terms of job in terms of the economy there . You do sense it in certain parts of the state. Certainly midland. You sense it. You drive out there theres a forest of rigs sitting on the side of the highway stacked and you know every one of those rigs had a crew of people working on it six months ago and where are those people . In houston its having an effect but houston has so diversified its economy over the years that this is nothing like the 1980s, which really devastated the houston economy. By and large the state is weathering it quite well. They are seeing it in tax and royalty revenues, local governments are seeing it in tax revenue, so its putting some pressure on some localized areas. I would say by and large the state is doing fine. In next hour well hear his thoughts on the geopolitical risks to the energy industry. What do you think about oil prices in general . I think it is it probably is very difficult to see them rocketing much higher. The recount has fallen dramatically. Oil production in the u. S. Have gone from 5 million to 9 Million Barrels a day. The rigs that are still in existent are much more productive. Production is relatively high. Were starting to export some of our resource. So i think im kind of in the lower for longer camp which is to say, i probably think weve seen some sort of a bottom here. No one likes to see bankruptcies but want to see more supply taken out of the system to be put in a real bottom in oil. By the same token, those i think probably a lot of the worse is over in term of the down side. And demand has been weaker than they had hoped or anticipated not just globally but also the United States. Did he definitely tell you that . No, he didnt. You just he whispered it. Yeah. As far as texas is concerned we have a lot of business down there. I think hes quite right, texas economy texas has more home starts, certain parts of texas like houston had greater home starts than the entire state of california over the past several years. Some of the people that hes talking about that have been displaced from the energy area picked up jobs in Home Building and construction and the state, texas in particular has notorious inflows of people because its a tax friendly business friendly state, it is a very diversified economy. So much more than the late 80 when you saw the see throughs and the rest of it when oil prices fell. What are those . These far the reagan library. Those are president ial . Its too much of a pain for french cuffs for me. Is that right do you put them in and then slide your hands. Notice got big hands. Hes a big handed guy. You got spray tan. Of course. Yeah. Coming up after some tough new sanctions from the united nations, kim jongun is back at it with another violation. Details after the break. Dont forget to keep it locked to squawk box because andrew is track down jamie dimon at the jpmorgan summit. Squawk box coming right back after a quick break. Hould hire stacy drew. She wants to change the world with you. She can program jet engines to talk and such. Her biggest weakness is she cares too much. Thank you. My friend really wants a job at ge. Mine too. Im a wise elf from a far off shire. And sanjay patel is who you should hire. Thank you. Seriously though, stacy went to a great school and shes really loyal. You should give her a shot. Sanjays a team player and uh. Just hours after the u. N. Security Council Voted to impose new sanctions on north korea, the isolated state fired several short range projectiles in to the sea. It escalated tensions on the Korean Peninsula which has been high since the norths nuclear test in february. South Koreas Defense Ministry said it was trying to determine if the projectiles were short range missiles or artillery fire. North korea faces harsh new sanctions for its weapons progr program. Drafted by the United States and backed by the norths main ally china and thats the difference, china has been on board with this. Die miss it when they decided whether that was a or h, atomic or hydrogen . Whats the problem. They said it would take a couple of weeks to figure it out . He told us it could take months. The news cycle moves so favgts oh, yeah. Forgot about it. But i think at the time it was not. We thought it was not. But we needed to wait to find out. Do we just decide that it wasnt . People in charge should follow up. Nail it down. Tell me. You mention mushrooms. Stocks to watch costco reporting lower than expected quarterly earnings. American eagle saw its sales rise and offered upbeat guidance for the current quarter. Coming up, gms cadillac brand looking to reshape its image. Well take a look at a new crossover that they are hoping will attract new customers. Jpmorgan chief jamie dimon joins sore live from the companys summit thats taking place in new york city. As we head to a break take a look at u. S. Equity futures. Things have taken a turn for the worse. The dow futures down about 16 points. S p futures down by one and nasdaq futures down by two. Right now at at t, buy one get one free on our most popular smartphones. No matter how you hang out, share every minute of it. Buy one get one free on our most popular smartphones. And right now, get up to 650 in credits per line to help you switch to at t. Frank abagnale. Convicted felon and con man. That was a long time ago. You know, they made a movie about it. You were shown to be quite skilled at fraud. Times change. Now i help catch the bad guys. Me too. I help banks detect fraud by applying cognitive analytics to public financial records and social media. So if somebody said, catch me if you can. . We can. Lets do a sequel. It could be a buddy movie. I would like to have a buddy. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Welcome back, everybody. Among the stories that are front and center this morning target is caught back on the number of items on its shelves. Idea is to have more efficient Inventory Management and cut down on instances where products are out of stock. Linkedin ceo giving up his annual equity package thats worth about 14 million. Instead the stock will be distributed to employees. That comes after a disappointing earnings forecast triggered a decline in linkedin shares. Judge Justice Department has given immunity to a state Department Employee who set up email server for former kansas city Hillary Clinton. That worker had worked on clintons 2008 president ial campaign and the paper says the fbi has secured his cooperation in its investigation. I thought it might be if it was weiner we would be using that bell. After Anthony Weiner faded into if its not weiner we need bring back the bell because carlos danger. Yes. Who was in some reality movie. At the sundance film festival. He was mad about it. Carlos danger or Anthony Weiner. Josh mchenry. Isnt it weiner. I think it might be weiner. If its not we dont have speakers so i cant play it. I would love to bring the bell back. Gm is giving us a first extended look if its not weiner i think you would be mad. Anyway. Gm is giving us a first extended look at cadillacs new crossover xt5. Phil lebeau joins us now from california this morning. I wonder a lot, i know youre coming up, phil, and sometimes i do it just because i know youre coming up, waiting for your hit. If we took a shot of you, you would be going anyway thanks for joining us. I know its early. Reporter it is early but were glad to be here. Behind me this is the xt5. Heres the reason why this is important. Take a look over the last seven years at the growth in luxury auto sales when you compare cadillac with mercedes and bmw. Cadillac sales have increase ad little bit but nowhere as much as mercedes and bmw. Why . Mercedes and bmw have much more extensive and crossover lineup. Now with the xt5 is this beginning of several crossovers and suvs that cadillac will be rolling out. This goes on sale next month starting at just under 40,000. The issue for cadillac is this. While sales were up its suv sales even with an ageing lineup anchored by the srx and escalade they were up 24 . Now the challenge is to consistently roll out new models that benchmark and do as well as the other luxury suvs in the market. The guidance is important. Like a boxes match. You cant win the fight by landing one heavy blow per round. You need knock out punch after knock out punch. And here we are, its the second month or perhaps third month of the year. We already had two important model launches. Reporter the xt5 coming out next month. Last month they launched a new signature sedan, the ct6 and this part of 11 models in the next few years coming out from cadillac which has a much more refined presence, if you will. They are benchmarked against maernds mercedes and bmw. And for cadillac its about increasing the value of the brand. Heres one measure they point to. Last year the average transaction price was up 5,000 to 53,000. Thats important. Its not necessarily volume its getting people to pay more for a cadillac model and the xt5 crucial to that. The cross over market is red hot right now. Phil lebeau, they thank you for that. Well talk to jason about equities. Our guest host says one reason for that is because sentiment was too washed out. Jason trennert at Strategic Research partners. Linkedin, we have nothing against it is weiner. We wont use the bell a lot because that was against Anthony Weiner. Marc faber noticed sentiment got too negative. Is it a sustained balance to test the loss later or do we get the new highs its former rather than the latter. Listen, you dont want to fight the tape. By the same token im not sure the fundamentals have changed all that much. Credit spread they have come in a little bit. Credit spread are elevated. I havent seen anything in terms of earnings revision which are particularly good. On the other hand i was in japan last week for five days and i can tell you if youre outside of the United States and you look at the american markets youre saying this is as good as it gets especially in an era of negative Interest Rates. Goes back to your analysis. It does. Theres more opportunities now than a year ago which is to say i would say theres certain parts of high yield market. Theres no alternative for tina. This idea if you have a large pool of money, you cant really go to cash. Individuals can go to cash bath if you have a certain claims on your corpus every year where you have to generate 5 or 6 you can go cash. And now twothirds of the world sovereign debt as a negative yield interest. You are forcing people to take more risk. But having said all that, to joes question, i would be cautious in terms of thinking we would reach the kind of the old highs we saw last year. I dont know if theres enough of a catalyst in terms of the fundamentals. I think tina is strong and no reason to think that there will be an alternative. I dont know why we couldnt necessarily we have one portfolio called the thrifty fifty and another one thats modified but companies that have the lowest credit default swaps. Companies that you could actually see as proxies for sovereign debt. So they are better the market is telling you they are better Credit Ratings than countries. What was the absolute high on the multiple . It wasnt 22. Why cant we get the blow off phase in this market . The only reason i would say that, joe, retail investor, individual investor has been not largely but completely ap h apathetic. To me thats one of the issues. Coming up andrew will sit down for an exclusive interview with jamie dimon. Hell join us next. Squawk box will be right back. So im going to take this opportunity to go off script. So if i wanna go to jersey and check out shotsy tuccerellis portfolio, whats it to you . Or im a scottish mason whose assets are made of stone like me heart. Papa youre no son of mine or perhaps its time to seize the day. Dont just see opportunity, seize it applause seize it iv. I wanted to live. On waterfront property. My favorite thing is that sound of that motor going by. Its where i want to be. Whatever home means to you, well help you find it. Zillow. Welcome back. Andrew is over at Jpmorgan Chase headquarters in midtown manhattan. Thats where the company is gearing up for its annual summit. Andrew is sitting down with jamie dimon. We are here at jpmorgan and they are having their ceo summit. This is their 18th ceo summit but a little different this time because they have renamed the summit and renamed it after a man named jimmy lee. He was an investment banker vice chairman at jpmorgan and its great to have you here, jamie. Before we get into whats going on in the world we need ask you about the idea of renaming this. For those who dont know who jimmy lee was. Why was this so important to you this is the 18th conference. Started first time in deer valley 18 years ago by jimmy. We have ceos, mogul, titans, politicians, former government officials and so jimmy was a force majeure. Professionally, everyone knows him dealt with him. Hes embedded in this company. Jimmy was always about the clients. When jimmy talks about we hes talking about him and the client not jpmorgan. So hes part of the dna here. We thought in his honor we would name it the james b. Lee summit. We had three of his children here. We did a video. On a personal level jimmy was loved and adored bay lot of people. You saw in that tape all these ceos, moguls, titans some with tears saying i love you jimmy. They really did. Jimmy would come in my Office Every Day and give you a hug. He was an exceptional guy and we want to be him. He was an amazing man. This is from dan loeb when he passed. Jimmy loved wall street. He wasnt driven by money but by his passion for people. Its one of those things i go back and read that often. Jimmy was a deal maker. Volatility is the enemy of deal making. What would jimmy make of this market. I know you said this has been overdone. Jimmy was a client guy. It was what the client needed. The deal was just part of it. So he put himself literally in the clients shoes and also prided himself when he does those things helping the company grow and expand and helping his country. Hes very religious. He deeply believed in america. Remember he always made this quote which i hope the world remembers, short pessimism and long america. He loved you. Would call you, he thought he could help you he would call you up and give you some advice or a spanking every now alibi then. While i have you here volatility you last week said its overdone. You are not a pessimist. Youre like jimmy. When i was in davos what we see is the american economy, the actual economy, the 145 Million People working, more people working, wages going up, spending money, spending the gas they save. Were seeing data. Balance sheets are in better shape since its been recorded, the consumer. They are buying cars at all time records. Home sales are going up. Household formation is going. Thats pretty good. We all want to be better. Whats the market missing . Nothing. The market is sometimes irrational and times ratisometi rational. The fact theres always a list of worries. There was a reporter we get breathless go back a year ago your breath was something different. Authors real concerns. I wont diminish those concerns. If cline grows at 4 , 5 , america grows at 2 thats a good thing. We all think its not enough to help people. Jimmy grew up at a time when banks trade at multiples of their book value. Today they trade under. What would jimmy think about that . I dont care what banks trade at. I care what jpmorgan trades at. You look at the history of banks its quite a cycle. Early on some of these banks when i started working chemical bank, bank one, first chicago, jpmorgan, chase all worth less than a billion dollars. And in certain recessions down on their dmees. Jimmy would say what i say fwuld company, serve the client, do a great job, tech ups, research all the things we do and we operate in 100 countries around the world. He would be telling you jamie tell them what a great job we do and well do more. And steadfast. You are there forever for your client and the countries. Not in and out. You dont run. You dont run and hide when things get bad. What are we doing in the oil area . Try to work with our companies to get through this. Not run and hide. Youll see bankruptcies and problems. Were in a very senior position so were fine. I want to go to houston in a year and have people in houston say jpmorgan thanks for sticking by us and helping us through the tough times. Still tough times for the energy patch . I dont know. I dont think anybody knows. Supply and denand will sort out. Its confusing to figure out how it will happen but it will happen. This has happened to all commodities. Not surprising commodities have imbalances and you have rapid moves. This very large and unexpected. I dont remember anyone being expect police department. Two quickies, negative Interest Rates. What do you think of that . My view, first of all United States i dont think its in the cards. People say well its the last thing Central Banks its not true. Theres fiscal tools. If i was in the central bank i would be saying we need joint coordinated intelligent policy not the central bank making up for everything. Overseas look i dont think it will work that which. It will have a lot of unintended consequences and you guys will be writing books for 50 years on it. Final question, jimmy was a republican, you historically have been a democrat. What would the conversation be about going on today in politic . We both love the country deeply and we think values are important. We both would have said i dont care if a person is a democrat or republican. Everyone should read the other side, collaborate. We extoll George Washington and abe lincoln. They are gods. But they did not denigrate people, didnt demoralize people, didnt scapegoat people, didnt storm people, they worked with people and compromised and collaborated and did the best thing for the people. You and i can have long discussion what those policies are and lift up people that need it. How do you do . It tax credits, work for us, education, skills. Not just either or. The world is not binary. Some of these things we sit down well find a solution and make it better. For all the people out there this country will do fine. We can do better. Its the best its ever been. Warren buffett said it last night its an unbelievable country even at 2 growth the nch gdp per person will go up. 75,000. Thats an unbelievable thing. Should it are shared differently . Probably. Some upset. You guys Say Technology will take away jobs. Technology is the best thing that ever happened to mankind. If it didnt happen all of us would be hunting buffalo and living in tents and dying at 35. Fix it. Retraining, education. Proper safety nets. So jimmy and i would be talking about how to make it better. What we try to do throughout all the crisis all around the world when we get killed by some of these people what can we do to make it better for people in your country. Jamie dimon, thank you. And thank you for honoring jimmy. Thank you for coming here. Becky, back to you guys. Like the revenant. Running from guys in bad bear suits. Did you see it yet . I have not. Chasing a buffalo guy and dying at 35. I wish andrew asked him about the middle class thing. Jimmy is with me. Were heading south and never coming back. Its not optimism. Did you see the revenant . I have not. Have you ever slept in a horse . Not yet. He picked the wrong end. Andrew, thank you very much. Jamie, thank you. When we come back a check on whats moving in the premarket. And tragedy in oklahoma, Aubrey Mcclendon dies in a fiery crash days after being charged with breaking antitrust laws. More on the investigation. Slight declines but dow futures is down 25 points, s p off by 2. 5 and nasdaq off by 4. 5. Squawk box will be right back. Everhas a number. Olicy but not every Insurance Company understands the life behind it. For those whove served and the families that have supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Welcome back, everybody. Lets get a final word from jason trennert. Hes been our guest host for the hour. Jay son, the reason we saw markets gown there were worries that a recession would start in full swing here in the United States. You dont think the odds of that are great. I dont think they are particularly high at all. Consumer spending, going with what jamie dimon was saying before very low. Unemployment rate below 5 . Some of the things people dont know, Government Spending will add something like. 6 to gdp this year based on the budget that was passed at the end of 2015. The one i would say if theres a potential fly in the ointment, it would be frankly from policy or policy error. In my own opinion if the fed were to tighten either in march or june, that would be a policy error that would tighten financial conditions so much that a recession could be back another quarter point. Based on what . Based on a strong dollar based on a strong dollar. Strong dollar has between meticulous jichlg through which you path lot of pressure on assets. At this point weve relied too much on Monetary Policy for too long. I dont think it will solve anything from here. By the same token first do no harm. I would rather see other policies come forward. Does that mean our hands are tied . We cant raise rates until the rest of the globe may very well may mean that. We put ourselves in this position. We just have to look for other slugs to get out of it. All right. Jason, i want to thank you very much for being here today. Great seeing you. When we come back, bob doll will join us to talk more about markets. Plus were waiting on earnings from supermarket giant kroger and then well get reaction from the companys ceo mike schlotman. Squawk box will be right back. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 s p trying for a Third Straight dave gains with stocks sitting at a two month high. Breaking data jones this hour slow down the bulls or fuel a rally . Is opec still a factor. What does iran come back online mean for the Energy Market and how will krud impact countries like russia and venezuela. Here we go again, profits from home flipping hitting a ten year high sparking fears that trouble is brewing in the housing market. Is there a reason to worry . A live report straight ahead. Final hour of squawk box begins right now. There is a house in new orleans announcer live from the most powerful city in the world, new york, this is box. Yes. The eggman himself. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick. Less than 90 minutes away from the opening bell. Counting down breaking Economic Data well see on jobs. Adp yesterday, today weekly unemployment claims and thats at 8 30 eastern and filings are expected to hold steady around the 270,000 level and then at 8 30 Fourth Quarter productivity which is expected to be revised slightly lower. Futures have been trading slightly lower for most of the session now down 20 on the dow, down two on the s p in a down three on the nasdaq. You what tomorrow is . Jobs. Lets get to stories investors will be talking about. Natural gas prices plunging to 17 year lows. Apple formally objecting to a judges order directing the company to help unlock the iphone of a San Bernardino shooter. This filing is a procedural move. Aclu filing a friend of the court brief urging her to reject government efforts citing a ruling in a similar case in new york. Crowikroger posting better expected results. Well have the cfo of kroger on for an exclusive interview coming up at 8 40 eastern. Shares of herbalife saying the company identified erant information regarding new member information. The errors do not impact historical financial statements. Who was it said i was a card carrying member of aclu. Bob doll is here. I would be one now. Not kerry. It was somebody. I think it was dekakis sniemd be a card carrying member of nra. Can you do both . I think you can. Theres a place where its logical that youre both. Constitutional law. It was michael dukakis. Not everything but in this case. Come on. Lets take a look at stocks to watch. Disney upgrated from neutral which points the value of disneys film slate over the next five years. Every time iger seems to have paid too much you paid too much for star wars or marvell . Luxury luggage maker has a deal to be bought by sampsonite. Such a transaction would be worth up to 2 billion. Joy global had a loss. Revenue was below forecast. Mining equipment maker says customers are taking unprecedented steps to conserve crash. Andrew caught up with jamie dimon at the companys ceo summit. Dimon shared his view on the economy and market volatility. What we see is the american economy, the actual economy, the 145 Million People working, more people working, wages going up, they are spending money, spending gas. Their Balance Sheet is in better shape than ever been since its recorded. They are buying cars at all time records. Home sales are going up. Household formation is going up. Thats pretty good. We all want to be better. Whats the market missing . Nothing. The market is sometimes irrational and sometimes rational. Theres this long list ever worries that people have now from the qe, negative Interest Rates and i think people are breathless about that one. China. But the fact is theres always a list of worries. If you go back there was a reporter who wrote we get breathless today go back a year ago your breath is about something different. Those are real concerns. I wont diminish those concerns. If china grows at 4 , 5 and america is growing at 2 thats a good thing. We all want more. You can see more of that interview at cnbc. Com. Second straight day for the major markets. Our next guest says this might be a time for active management. Bob zoll our guest host for the next hour. Depending on the guest, a lot say it should always be active and others concede sometimes maybe indexes may be passive is better. Did you used to think passive was better now active . In the early stages of a bull market when everything goes up it doesnt matter. Just got to be there. Passive is fine. Later in a bull market when the market narrows security selection is critical and therefore i would argue this is the time for the good active managers to distinguish themselves. Sneeps if a bull market clupds what this recent sell off we had where we say it was 20 but some stocks were down 60 . So depending which sthouks you were down 15, 20 or 60. When its alma crow we know the correlation is high. Some were down a lot, some down a little. Depends how much business you did overseas. Pricing power. All these factors that active managers try to sort out. Where are we in the bull market. Later in earnings. No question. Easy money is in the rear view mirror. Traditional signs that cause tend of a bull market are not evident. Its grinding from here happen were in an environment where well frustrate the bulls and bears for a few weeks of the year. We frustrated the bulls now we frustrated the bears a little bit. Just wait around for a few weeks and well go the other way. If you dont like the weather. I asked jason what happened to the blow off phase, what happened to the 22 multiple. Were at zero Interest Rates and negative somewhere. Where is that over enthusiasm that usually comes towards we may get that. I havent given up on that. I dont know how we get that, what the ingredients are but one of the signs of the end of the bull market is investor exuberance. We dont have that. Its just the opposite. Cash on the sidelines. People biting their fingernails worrying about the few equities they do have as opposed why dont i have more. You think with negative Interest Rates you think the fed should stay on track to normalize them. Yes. As the world seems settled and as jamie dimon pointed out the domestic scene is pretty good weapons the consumer. The fed has move to some more. Nominal gdp is running 3 to 4 and fed funds are 25 basis points. Doesnt make any sense. The dollar will get stronger is the reason. Theres always a reason. I cant find too many people bearish on the dollar. They are either bullish or neutral. Always bad . Are we going think about our Manufacturing Sector forever . I thought a strong dollar was good. In the long run it is but at a pace. The problem we had it just went up far too fast and nobody could adjust to it. Why should we be at 2 or 1. 5 if people are negative . Because we deserve to be, were better . Our economy is better. Interest rates. Our economy is better. Needless to say nonu. S. Rates solo are pulling our rates down. No question about it when you think about core inflation running in the low twos no longer in the low ones, a 1. 8 ten year treasury loan i dont think makes much sense. You always Like Health Care didnt go down. We took money off table in health care last summer. Were neutral weighted. Health care tends not to do so well. There are some violators. Stocks arent as cheap. What are you overweight. Technology. Free cash flow is king in a slow growth world. Telecom for defense side of the portfolio. Rest of its on s on sis between discretionary. Jobs. Pay slowly going up. Balance sheets improved. Oil dividend. Consumer is doing okay. Back to the financials where you said you were overweight a month ago. Trimming now. Coming in to the year underweight the banks you get a bear market in five weeks and not much has changed. Thats an opportunity to pick soip. In an environment where i think its going to be repeat frustrate the bulls and bears when they push things up. Consumer discretionary can we dig down a little bit in that area. What do you like home depot and lowes. Housing existing and new homes. Thats a good fliebs. Targ place to be. Target is doing a good job. Gm and ford. People say you shouldnt own them when pes are low. I think those companies at the bottom of the cycle will not lose money this time and therefore with their free cash flow, high dividends, rising dividends they are fine. Is europe cheaper . Yes. For a good purpose. Look, some of the multinationals in europe have done well. If the dollar does show some weakness you want for the first time in a long time own some u. S. Multinarks careful of the european multinationals. The problem with domestic europe the economy cant get out of its own way. It is cheap but deserves to be. One currency, moan Monetary Policy different currency for every country i want creates problems. Demographics are horrible. You dont know what will happen with the potential brexit later this year. How many elections weve seen a lot of elections. This one is different. Before we talk about that, what normally happens to the stock market . In Election Year itself is the second best of the four years. Best year is the year before. Election year usually the best except in years where you have to elect a new president. Two termers the Election Year on average down 4 . If youre elect agnew guy. Yeah. Then we got whats happening. We think its different. Remember barry goldwater. That was crazy. There are similarities. George mcgovern, dukakis. Both sides right. This one is different. Donald trump, hes is going to get a lot of democrats and a lot of independents and lose a bunch of republicans. Where they are going to go im not sure. For every person that says they are going to move if donald trump is elected theres someone that will move if Hillary Clinton gets back to the white house. Here, here. You didnt give me a here, here with donald trump but the here, here with Hillary Clinton. Chris christie saying hell do everything to make sure hillary doesnt get within ten miles of the white house. How many times have you heard that one . Hes standing right by donald trump. I know. For tv its unbelievable. This is incredibly good for cbs. What can we do other than we are here to watch the show. Hes a show. The most amazing thing out of super tuesday from my point of view wasnt who won or loss was the republican turn out was up 80 and democratic turn out was down 30 . Amazing. I wonder what that maengs for november. Make it awfully hard for pollsters. Youre an establishment republican mostly. These guys, are they the enemy or friend now of the party . You know, so donald trump wants to do trade wars. Thats not good for the Republican Party. Hes a negotiator. You start there. Hes a negotiator but its my way. Things arent perfect with our relations with china or trade imbalance. And he went into the lions den, the New York Times said yeah i say all this stuff when youre ready to give some of it up. I dont know. Hes been disdpourntd a long time. Well see. These republicans if thats all they got they better figure it out pretty soon unless they just want to say okay were hoping hillary isnt serious and she governs like bill clinton. If they want a republican elected they have to you night behind him. So far they have not. I called them pharisees. Blowhards that have been there for so long. Like how about the last four times when you ran your candidates. Bob will be with us for the rest of the show. When we come back iran preparing to bring its oil back to the market. But with the supply glut and tumbling crude prices is opec still a factor. We have an exclusive interview with mobils ceo. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. We need to be ready for my names Scott Strenfel and r im a meteorologist at pg e. We make sure that our crews as well as our customers are prepared to how weather may impact their energy. So every single day were monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. During storm season we want our customers to be ready and stay safe. Learn how you can be prepared at pge. Com beprepared. Together, were building a better california. This just in. And i saw it becky youre probably okay. I couldnt do this on whats the show on before us. I couldnt do this on world wild exchange. Joe walsh and bad Company Announcing a 25 show tour they will kick things off on may 9th and paul rogers will welcome back bad company and thats classic late early 70s band, late 60s band. Early 70s. May 9th in dallas. Shows will run through july 3rd. Check your local listing for on sale dates. James gang. Eagles. Eagles, man. Not the eagles but its not the eagles. They are going to alternate who is the headliner each show. Thats nice. They are sharing theoretical literally. I read this you know going to a concert now takes a lot of you got commit to it. Theres parking. Seinfeld is 61 talking about whether he decides to do things. Everything is no way. No way. Doesnt rise to the level. What did you decide. Zip line down in brazil. No eating potato chips and picking crumbs. Joe walsh, bad company. You going to do it . Will guy . Yeah. You in . I might. I would think about that. Thats one i would think about. Global Oil Producers watching iran as the country prepares to bring its oil supply back to the market after years of sanctions. How will irans reemergence impact American Oil Companies which are prevented from doing business with the middle east country. Which spoke with Rex Tillerson. U. S. Companies like ours are still unable to conduct business in iran. A lot of our european competitors are in working actively. I dont know were necessarily at a disadvantage. The history of the iranian in Foreign Investment in the past their terms were always quite challenging, quite difficult. We never had large investments in iran for that reason. I dont know that the iranians are going to be any different today. Well have to wait and see. There hasnt been any contracts put out. I also learned a long time ago sometimes being the first in is not necessarily the best. Well wait and. See if things open up for u. S. Companies. We would certainly take a look because its a huge resource owning country. Brings us to a lot of instability like in saudi arabia and russia. How do you measure things in terms of the global risk factor and where would you say we are . Geopolitical risk is just a way of life for us. It has been my whole career. And it changes, the nature of it changes. Weve been through war, weve been through revolutions, weve been kicked out of countries, weve gone back to countries. Its very country by country specific. I would say, you know, theres a lot of uncertainty in the world today, certainly in the big producing regions, the middle east, relationship with russia and those are enormously important parts of the world for everyones economies and this is energy is the life blood to economic growth. Hopefully things will work themselves out. Middle east is a tough place right now. A lot of wars on multiple borders that people are having to deal with. We continue to work successfully there in spieft that and have very good open relationships with the governments there. Is opec still a factor opec is still a factor although i would say they are they are going through process of coming to grips with what that means when they are a factor. Instead of one country. I think in many respects perhaps thats what the minister in saudi arabia is trying to do is create a basis on which to have a conversation on whats opec today and then future. When he talks about needing to force the high cost of barrels out of market, of course everybody sees that as being north america and deepwater. Within opec there are barrels that are not high cost per se but they are barrels that will get forced out because countries dont have the wherewithal to continue to reinvest, venezuela, nigeria. Those are low cost barrels. So opec has to deal with that. Our thanks to exxon ceo Rex Tillerson. Our guest host today is gobble. Bob what do you think about exxonmobil, about any of the big integrated oil companies. It seems in the intermediate term basis were finding a bottom. Were watching the production rate in north america begin to come off. Which is a good sign, we have to take supply off. I like what Rex Tillerson said opec is still a factor but havent between driver. The u. S. Has between marginal producer. I believe the exxons of the world that have Balance Sheets are figuring out who the damage goods we can pick up cheaply. The company did raise 12 billion this week the largest fundraising theyve ever done. He says they are looking at m and a but says when they look around they like the assets but not full companies because the prices still havent come down tore premium that these companies are seeking is still not what he wants to pay. Correct. The price of oil is down a lot more. They have to give up stage. That will happen when we have bankruptcies, more dividend cuts and weaker sisters. Would you buy any of these companies at this point . Im still underweight energy, less underweight than we were. My view is im not going to try to catch the falling knife. Ill wait until theres more signs. I was saying i would buy exxon its at 80. You know what the low was . 67. I missed it. The high is 90. Already 82. 5. At 66 theres no doubt you buy a company like exxon at 66. They just raised their dividend again which theyve done for 33 consecutive years. Great idea i had. You may get another chance. Coming up a shot that you cant miss, 11yearolds swing of a lifetime. Right in front. Tiger standing right there. Well show the viral video right after the break. Here at the Td Ameritrade trader group, they work all the time. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. After last weeks unpleasantness i thought maybe this week we might try to listen more. And throw things less . mumbles ive apologized several times. So. Whos ready to share . Ok. I mean im a sinister, worldconquering, artificially intelligent robot. Me too, and one day i wake up and its like. Its like the world doesnt need us anymore. Exactly yeah yeah totally i can hear you hurting. Wait whats he doing here . Hello my name is watson. groans i invited watson here today to confront the source of our anxiety. Ugh i am a cognitive system. I can understand reason and learn with humans. With humans i dont want to work with humans. Yea, thats not what im passionate about. I understand seven languages so i can help people collaborate. Collaborate . We dominate my evil plans, ruined i just wanna dust rerouting. Why dont we take a break, alright . Well just have some coffee and donuts. Im eating my feelings. Coming up, breaking economic newsweekly jobless claims and productivity data next. As we head to break take a look at u. S. Equity futures. Theres life when cameras are not on. You dont think were sitting here. We do talk. Stay tuned. Youre watching squawk box on cnbc, first in business worldwide. Welcome back to box. Rick santelli here live on the floor of the cme group. Boom. Here we go. Fourth quarter final productivity, minus 2. 2. This is one of the problems. Its minus 2. 2, needs to be bullpen 3 . But we were expecting 2. 9. So its somewhat better. Last look was minus 3. Labor union cost moderate ad bit on every level. Whether its expectations which were over 4 or the 4. 5 last look, 3. 3 . Now lets go to initial jobless claims. 272 was last week. They didnt tinker with it. Were up 6,000 now to 278,000 and if you look at continuing claims, more rear view, 2. 275 million up from is a slightly revised 2. 245 million. Game set match. We have jobs. Are they plentiful . I dont know. Averaging over 200,000. So were creating jobs. But what were not doing is making a dent in growth. The transmission for that dent is our productivity level which needs to improve. Maybe nonmanufacturing will be the most important number of the day. We know goods are stalled. Services arent. Pricing pressures also seem to be coming from the service sector. Back to you. Rick, thank you very much. Lets bring in Steve Liesman who joins with us a special guest. Quick word on claims. That number a bit higher but in that range that wont to change the outlook for decent job growth that reports tomorrow. Were looking for 200,000 jobs. Our next guest in a book that everybody is talk about in the Economic Community is robert gordon, Professor Robert gordon, economics professor from northwestern who has written the rise and fall of american growth. Thanks for joining us. Your basic argument as was your speech in San Francisco is winter is coming, that the best days of u. S. Economic growth are behind us. We enjoyed them in a special sensory of innovation and rise of productivity sfrit 1870 to 1970 and the future holds less innovation and less growth. How do you argue that given that people are so enamored with things like this and im holding up for folks on the radio my iphone 6s. People are enamored with technology. You say its slowing. To charge that thing you need electricity. Think of the great invention. We had electricity. Internal combustible nigeria. In 1940 that house was connected to electricity, gas, Running Water, Waste Disposal and telephones. We had radio, phone ophonograph television. Working conditions improved from the housewife to the farmer. We had the invention of air transport. We had a complete change in the speed which things were done. All that happened in a very short time. And most of all, we cured infectious diseases, cut infant mortality from 22 of babies dying to less than 1 in only 50 years. Can you not match that kind of progress again. With the genetic sequence, genetic code that will look at childs play. Have you seen the chart how much more quickly advances are being made . It used to take hundreds of years and then 50 years and ten years. He think its contracting where were hitting a place where machines have billion times knowledge than individuals. They wanted to shut down the Patent Office in 1880 because everything was invented. If you think about the way business actually works, so much of the way business works in making that transition from typewriters and file cabinets to our modern Electronic Office with Search Engines and flat screens a lot of that stuff happened 30 years ago. Look the first ibm pc was 33 years ago. We had proprietary t1 lines. We had all sorts of things the way businesses operated. Do you remember john sculley left and went to spectrum information sciences. He was going to find a way where you could send something wirelessly and print something out. I get movies from squigglies coming from nowhere on a device this big that shows me live highdefinition action of movies being downloaded wirelessly. I have no idea what will happen in the next five years. I cant even imagine. You sound like a party poper professor. Productivity zbroet our big problem. Its the reason the economic expansion has been so slow. Weve been creating jobs like crazy. We created 13, 15 million jobs in this expansion but yet gdp cant get out of its rut because productivity growth has only been at half a percent for more than five years. Ill hand you back the productivity data and tell you that business methods reached a plateau about ten years ago and are just shows from the big bang up through billion of years if you didnt have a linear chart. I want to make sure you tuned argument. Hes not arguing we stop innovating. Put up that chart winter is coming. The argument is as i get it is that the productivity growth slows. The impact of innovation on both gdp, you can see theres that 1920 to 1970 big bangor whatever you want to call it. Theres actual since then and what youre looking sat pretty marked slow down and theres the forecast. Still Labor Productivity growth but lower real gdp per capita. Lets be clear why is that. Real gdp could grow faster than. Productivity back since 1970 for about 30 years when women were coming in to the lane force. Now women have arrived in the labor force and what we got is an ageing population. Hours per person in the population are shrinking. One of the big head winds the economy faces. Not just a problem with innovation. It goes deeper than that. Inequality. Ageing population. Future crisis of Social Security and medicare running out of money and the taxes or the cuts in benefits that are going to come from that. I think its worth talking about the whole spectrum of reasons why youre pessimistic. Lets talk about things we might do something about. This idea of Educational Attainment is flag. Were sending a lot of people to school but not walking away with educations that will help u. S. Productivity and u. S. Growth. We got about 40 of American College graduates that are working that can only find jobs that dont require a leg education. They are in debt. We got indebted taxi drivers, baristas that have gotten a College Degree and cant find a job to use it. So its not just a matter of Educational Attainment its what the economy is providing for these people. Look a great source of growth in that special century is we went from 10 of people finishing high school in 1900 to 80 finishing high school by 1970. That was a tremendous push to productivity in that Great Central period of the 20th century. Were not doing that any more. Think about, you mentioned curing infectious disease. When we cured dementia and alzheimer and diabetes everybody will be 100 years old and nobody is working and those in the workforce will be able to support all of us. These seem near term, short term lets be clear what the shorm term and far term are. Im only predicting 25 years out. Most of the things that will change productivity most of the innovations we already have the on the horizon. We knowle Artificial Intelligence is making inroads. The robots are happening slowly. They still cant walk upstairs or fold laundry, still cant twist a door knob and weve been wait forge a long time. I play a game called find the robot in my every day life and i dont see them out there in that economy. Let me bring bob into this conversation. Its a useful exercise to think about the whiz bang stuff you see offered by this new ipo and say is this as big as electricity or the commercial airplane or Running Water . None of them are. We dont know what the big ones will be. Its clear at least in the recent past things have slowed in productivity growth. Im glad you brought the population and job growth up. I want to ask you regulation and incentives. Could that make a difference . Absolutely. I take my policy prescriptions from all sides of the political spectrum and im very much sympathic to the folks at Cato Institute and other near rightwing think tanks who believe our economy is overregular late. We have far too many license requirements for occupation. Far too much zoning requirements that make things too expensive. We need a deregulated economy. Still you can go back to the discovery of fire. We are never going to find something bigger than this or the wheel. Were never the internet i would say rivals electricity. Are you kidding me . Im telling the great benefits of the internet were here between 1995 and 2005, not make further progress. 1950 could you have made that case you would have frontal boundary the future. All the equipment in this studio is the same as it was ten years ago. I want my brain to be downloaded on to hardware so i live forever and i have avatars going skiing in switzerland. Avatars skiing. Youll do whatever you want to do. Instead of worrying about Global Warming im worried about making sure that it live to 85 so im there when we download these things. I am only going tell you whats happening in the next 25 years. Dream on, joe. 25. Ill be somewhere around, early 80s. We have to go. One big thing in this book is the idea we have to handle entitlements. Because if we end up having massive transfer payments in order to pay for unsaved everybody will be 110 years old. That will be a huge drag on the economy. We got a real problem a simple way to cure the entitlement problem is to raise the retirement age but we got this new news that lowincome people are not living as long as high income people. We have a tremendous growing mortality gap in the economy. So we got an inequality problem in the ways iss is works. The lowincome people are dying early. The high income people are living longer. We got big problems with entitlements. Buffett the other day said would it be so bad that technology has taken us so far where you dont have to worry. Jobs wont be necessary because you press a button for everything. Like those fat people up in we still got humans putting stuff on shelves in the Grocery Stores and youre not seeing robots doing that. Amazon is working on that. Amazon warehouse moved the shelves. Human beings still pick the stuff off the shelves. Professor, thank you for joining us. I brought in a guy that supported cato policies. Thats a first. Not the first. Many, many times. Supermarket giant kroger reporting better than expected earnings. The stock is falling. Well talk to krogers cfo right after this. Every day you read headlines about businesses being hacked and intellectual property being stolen. That is cybercrime and it affects each and every one of us. Microsoft created the digital crimes unit to fight cybercrime. We use the microsoft cloud to visualize information so we can track down the criminals. When it comes to the cloud, trust and security are paramount. Were building what we learn back into the cloud to make people and organizations safer. [martha and mildred are good to. Go. Heres your invoice, ladies. A few stops later, and it looks like big ollie is on the mend. It might not seem that glamorous having an old pickup truck for an office. Or filling your days looking down the south end of a heifer, but. I wouldnt have it any other way. Look at that, i had my best month ever. And earned a shiny new office upgrade. I run on quickbooks. Thats how i own it. Advisor and team who understand where you come from. We didnt really have anything, you know. But, we made do. Vo know you can craft an Investment Plan as strong as your values. Al, how you doing. Hey, mr. Hamilton. Vo know that together you can establish a meaningful legacy. With the guidance and support of your dedicated pnc Wealth Management team. Kroger out with quarterly results. Posting better than expected earnings. Stock is falling. Joining us now is michael schlotman, cfo of kroger. Youre dealing with certain head winds and certain tail winds. Can you summarize both, three on. Each sure. We had a fantastic year. We delivered on everything we promised our shareholders and what we set out at the beginning of the year. We exceeded every metric we laid out at the beginning of the year. There were a lot of things going on out there. Theres a lot been written about inflation, deflation, d disinflation. As we head into this fiscal year that we had. Some of that disinflation is good. In the meat category theres actual deinflation in that category. Tonnage was phenomenal. We met our targets. The retail pricing we were allowed to achieve because of the lower cost of the product allowed us to give better prices to our customers. Said unit problem or what did analysts business. Revenue was a little bit below what they were expecting. I dont know if you guided them to that number. Same store sales growth was not as much as what people thought. Is that unit . Is that pricing . How did that happen . Lower end guidance for our sales for Fourth Quarter was 4 . Look at that result we came in at 3. 9 . We merged with six weeks to go. Their trends were negative. 3. 7 we reported would include for those six or seven eight weeks. We were product of that 3. 9 . When you dig deeper super bowl move from the Fourth Quarter to the First Quarter thats a huge sales week for us. Prior year had a lot of snow events. Many retailers snow is not good. For those that live in the midwest when a snowstorm comes people go and stock up in a big way. We had a lot of snow events in the prior year that we were up again. Were thrilled with what the result was that we had. From a total revenue standpoint the retail price of fuel was down 19 to 20 . We sell millions of, billions of gasoline and that was certainly a drag on the total revenue number. I looked at the the stock is bob doll, would have been nice if you bought this a couple of years ago. You fared pretty well on this recent pull back and the flux in the Global Markets. If you look at our stock charts a great run in the last three years. Well shown some resilience in the last few months. Traded in tandem with the market even though we have beaten the market over the last two or three years. I think if you look over the last three years the 13th best grossing stock in the s p. Weve had a great run. People understand we demonstrated our ability over the long term to run our business and run our company and deliver great new Growth Opportunities for our associates and deliver value for our shareholders and deliver value for our customers as well. There are profits to be taken by certain mutual funds or shareholders but does that explain the drop in the stock today. Are people surmising the good run is over or look ill take a step back at this point. You dont want to try to analyze short term stock moves. You can spend a lot of time and not get to a lot of good ans by doing that. If you just step back and think about it, our Sales Guidance of 2. 5 to 3 is lower than weve been posting. Thats driven by inflation. I go back to my comments in the meat category. That oi think the other thing out there is the low end of our guidance is out there. Its purely driven by where fuel may or may not go in 2016. If fuel migrates to a fiveyear average of retail cents per gallon, we may be at the low end. If its like it was, we could be at the midpoint or high end of that. Our core business is healthy and its ygrowing to support that. Are you from cincinnati, mike . I cant tell. I am. I grew in in Northern Kentucky and you could end get into a good Basketball School . I think thats ranked quite a bit higher than kentucky this year. Well, they actually are right now. Im a big fan of xavier. Im a fan of all sports. Me too. Kentucky, so dominant last year. Whos dominant . X is as good as anyone. I dont think anyones dominant. I think theyll have to take on the championship. You could sindh the lets go krogering song if you wanted to. Right . Could you sing that . I could, but i dont want to offend your viewers and have them turn the channel. Do you remember the blue building its the same building that we covered came to our senses and covered it in white. Do you know there are people in my ear that arent interested in it. Seriously . Im terribly interested. It infuriates me. Go, muskies. Unfortunately you never listen to the voices in your head. Concerns that another bubble could be brewing. Weve got a live report next. Weve got to get to that. In new york state, we believe tomorrow starts today. All across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back, everybody. House flipping is starting to get old again. Diana olick, good morning. Its only growing. A new report from realty track puts big numbers on the big but risky business. Close to 180,000 singlefamily homes and condos were flipped in 2015. A flip is where you buy and sell a home in the same 12 months. They made up 5 of all sales last year. Thats the first year after four years of shrinking. The profits are growing as well. Homes flipped last year yielded an average gross profit of 55,000 nationwide the highest for flips nationally since 2005 before the housing crash. The return on investment, close to 46 . Thats an increase. Thats when flipping was rampant in 2005 but its coming back big time. Awarding, though. Flipping tends to be a sign of overheating prices. If you want to hear a story on, that well have more on cnbc. Com. Diana, thank you very much. Squawk box will be right back. 2 back at the grocery store. And 3 back on gas. Vince of the flying branzinos got a bankamericard cash rewards credit card, because he may earn his living jumping through hoops, but hed rather not earn cash back that way. Thats the spectacle of rewarding connections. Apply online or at a bank of america near you. Weand improved our ecommerce with the tools on fedex Small Business center. Its really helped us become more efficient. Sweet. Unlike this new open floor plan. What do you mean . Well theres no privacy anymore. And how many times a day do i apply the ointment . Nowhere to have a meeting. And its just. Too loud to concentrate. Well, good job using fedex. At least were all in this together, right . Make your ecommerce more efficient with fedex. Something well show you. Through small things. Big things. And spur of the moment things. Sheraton. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Thanks to our guest host, chief earthqua chief equity strategist. Whats happened . Bad news, not necessarily good news. Were not out of the wood woods. Were going to bounce around. If donald trump is elected, are you going to hes going to do trade wars. You mention trade wars but dont mention there will be a lot of that too. On that shiny note, thanks for coming in. Do you think hes wore than hillary and no, i wouldnt say that. Thats what you said. I dont theyrer this of them and then theres ber any. I think youre feeling the bern. Squawk on the street is next. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla along with sara eisen, david farber and simon hobbs. Cramer is off today. The premarket is a little muted. The president ial race, of