Ftse 100, italy, spain, all up. Looking at crude. Wti sitting at 50. 91. Lets get to that microsoft story. It is the top corporate story. Shares of the tech giant popping on better than expected quarterly results. The big driver, the cloud. The shares of the microsoft product doubling in the most recent quarter. The stock hitting an alltime high in afterhours trading breaking through a level hit at the peak of the tech bubble back in 1999. Its going to close in on a half trillion dollars again. Its great day to have ballmer on. He took a lot of flack for not turning it into something it wasnt. In hindsight, now that we have the benefit of hindsight, he kept that thing moving along. Increasing revenue. Maybe the share price didnt go all the way back. Got pretty rich himself. How much does he have left . I expect him well have him for an hour. I expect him to be in a really good mood today. Because of the stock price. Very few of us get like 4 billion richer on wake up in the morning. I dont know how much it is. Hes worth about 27 or something. I dont know how much of that is still in microsoft stock. Youll do that for me. Well find out how many shares times like 4 today. If hes got i expect him to be at i hope hes in a giving mood. I would be just showering anyone in my i would be throwing microsoft stork or money at Anyone Around me. Maybe hell lay some on the set. Some type of goodies what do you think, sorkin . Looks like he owned 333 million shares. Times 4. Theyre not worth a dollar either. That was back in 2014. Doesnt look like he sold much stock. Well talk more about this with him. With him. Yeah. He may not want to talk he has a team, doesnt he . It may take a while for the clippers to win a championship. Why not buy the nba . Just buy the whole league. Just buy it. Call it a day. Win every year. Yeah because if you own every team yeah. All those rings. If you buy the nba, do you actually own all the teams . Buy all the treatmenteams. That that you couldnt do. You couldnt do that. The doj . No, each team is worth each team is a couple billion dollars. Really . Given the multiple he had on the clippers. If he paid what he paid for the clippers that he had for every nba team they werent a winning team. No. British American Tobacco is offering so buy the remaining stake in reynolds for 56 a 20 premium over the close of reynolds yesterday. The British Group already owns a 42 stake in reynolds. This would value the company at 83 billion. Brexit must have played into this to some degree, b. A. T. Stock is up sharply since the brexit vote, Reynolds American is down on the brexit vote. This has been in the work force quite some time. We call it an unsolicited bid, some call it a hostile bid. Not really the case because the laws in the uk, the second you decide you want to have any type of negotiation, you have to file. This is pretty much from a logistical component the only way to do this. People will look and say this is an opening bid, sure. Will they go higher . I imagine they will. Theyre kind of in a box. Reynolds is kind of in a box, if you think about its not that theres some other player that can come in these guys own 42 of your company. It was going to happen at some point, it was a question of price, how, when. We learned a lot about the uk merger laws as a result of inversions, especially within the pharmaceutical companies. What happens, all the rules that goes into place. You cant even smoke outside here in the city. You cant. I dont think you can. When you go over to davos, walking down the street its weird. Every Single Person smokes. Its weird. When i go over there, im back to a pack a day. Just from walking around. I was in vegas for the debate. Those people are all drinking, losing money. But there you can still smoke in public. You walk through the casino, you walk through restaurants, people are smoking. Its weird. Down 8,000, youre smoking, you need another. I got to make it back. Go to the cash machine, ill make it back. You can guys explain ecigarettes to me . Vaping . Why could we explain this . I saw a car i thought was on fire. I swear, there was smoke wafting from it everywhere. We pull up to the side of it, a guy, i thought he had a bomb with him. It was a big machine i dont get the vaps. Its a nicotine delivery system. I know. But there was smoke i didnt think the guy could see through the windshield. Nicotine doesnt do anything for you. You have no need for it normally. So you start doing it, then you start you indouse youce your habit that does nothing for you. It must do something to help with stress, right . Members of the military f youre in combacombat, youre far more likely to smoke. Theres got to be a calming effect. Better to do it the vaping way than the traditional i assume its better for your lungs. People people are fixed in the oral stage, psychosocial development. They are its freudian. Its early to take us there. Freud is not ds this squawkward moment was brought to you by i didnt say the this squawkward moment was brought to you by joe kernen. You can regress to those early stages i took psychology 101 at cornell. Do you still dream about trains and stuff this squawkward moment has been brought to you by joe kernen. Having not gone to the math class, going to the finals tomorrow. I have nightmares that i dont get to squak on time. I arrive too late. That doesnt sound like a freudian. You loved your mother, right . Of course. I love my mother. How about you, andrew. A lot. I do. A lot. A lot. Mom, if youre watching. By the way, since i mentioned my mother, happy birthday to my dad yesterday. I wasnt on the air yesterday. Awesome. In media and tech news we are watching shares in at t and time warner, this after bloomberg said that Senior Executives of the two Companies Discussed various Business Strategies including what they said was a possible merger in recent weeks. Neither side was said to have hired financial advisers. Peter chernen addressed the speculation on fast money last night. I dont know anything about the deal. I do have a partnership with at t. I would say two things. They are great partners. They are visionary, terrific to work with. As much as any distribution, they understand the content business because they have had directv for the year and our venture is 2 1 2 years old. Again, i cant speak to the specifics. Theres a lot thats attractive about time warner. Its the biggest content company on earth. Produces more hours does more box office, theres a larger library. It is, if you assume the world is going direct to consumer, it probably has the largest because of hbo. Everybody else is going through cable packages. They do have hbo. Great sports rights, cnn, competitor, but still valuable assets. After this bloomberg report came out, an analyst at jeffries said his firm didnt think the deal was likely. His argument is that at t is not likely to do another big deal after directv and that it wouldnt likely make it through fcc approval. I dont think well see this particular transaction soon. The idea that jeff bukus is willing to sell is news to people. You also have separately, maybe we have tape of it. I interviewed les moonves from cbs, the natural deal that should happen, not cbs viacom but cbs time warner. They overlap with cnn, the things you can do with entertainment so content and distribution married. If all of a sudden you tell us that jeff bukus is actually willing to sell, that could change the dynamics. Both sides are look at that. The bad news is the Redstone Family would like to control the ultimate asset. Unclear if cbs and time warner tieup, if they would have enough of a role to do that. Thats the one little wrinkle in this. Im still bitter the doj did not allow comcast to buy time warner. That was the deal that comcast didnt really want to do. Time warner cable. Oh, there we go. Im bitter about that, too. Im a time warner shareholder. Not a Time Warner Cable shareholder, im a user. Comcast shareholder me. But your bill would have went down. Oh. Right. Thats what im talking about that. What cable bill . Exactly. And you get every channel. 10 bucks. Right. I want to have the comcast box. Did you ask les moonves about survivor and he said that funny thing . He said they came in with that idea and said that was the stupidest thing i ever heard i think we should survivor . Thats a huge hit. He has a lot of stuff the dumbest idea, still the dumbest idea. Talked about letterman, how letterman hated him. Didnt talk to him for years. Letterman doesnt talk to anybody. It was fascinating. Maybe well roll some tape. Letterman hates himself. A lot of those comedians are unlike us. Selfloathing. None of us are. As is very clear, are comedians at all. Investors are watching key earnings reports today. A dow component, mcdonalds, and General Electric a day after verizon results dragged the Telecom Sector down 2 . Joining us is jim paulson and rich stein buburg. One thing that starting with you, rich, one thing that occurred to me this morning was that, you know, i was reading something i think from mark grant about how its probably when its all said and done, we may have another quarter where we have year over year earnings comparisons down or flat. This would be the sixth. We wonder why were having trouble making headway. Maybe we should be wondering why in a period like that how do we even how do we tread water for that period . I think were back to the fed. There is this underlying, you know, pool of money that keeps us above where we should be based on the actual fundamental. Or no. Is it discounting that sooner or later we will have an up quarter. Certainly we will have an up quarter. Dont forget, if financials start to get better with better Interest Rates, higher Interest Rates, energy holds up, joe, those are two head winds that were hurting both earnings and revenue growth. The big problem is in the short run theres a lot of fatigue by the public, by the investment public both for the market and for the political environment that is keeping us probably in shortterm treading water or purgatory in the short run. The dollar headwinds have no longer abated. Theyre back to headwinds again. I dont know why we should be optimistic there. No. The big problem, joe, right now earnings is 130 for next year. 13 eps growth. Revenue growth of 6 . If we stay in a low growth environment it will be hard to really move the ball forward in the market next year. Maybe single digit returns because of that. Probably keeps us range bound. With the strong dollar, which i dont know what happens if the fed gets off the snide f they do find a range, maybe were strong now because were anticipating that eventual increase. I looked at the euro, its below 110. It could keep the fed from raising too quickly. That could be the next thing thats the excuse for the fed. Okay, paulson. I guess its your turn here. Waiting for these inflation and commodities forever. You will be right one day, like the clock. Are we 2 or above right now . I would take it if we were. Is that where we are in this country . I think so, joe. Core inflation at 2. 3 on the cpi. 2. 2, i think. Wages are 2. 6. I think were above there. One thing i think that been interesting is the wage expectation in the tenyear t. I. P. Treasury bond has risen by a half percent since february lows from 1. 2 to 1. 7 . Tenyear treasury over that sameyear period of time has been flat. Hasnt changed. Theres upward pressure here to the fed and to Interest Rates with inflationary expectations climbing in the bond market. If you look at fiveyear swaps around the globe, you see Inflation Expectations also going up most places, not just in the united states. Im a little more optimistic on whats going down with earnings. It looks so far the earnings reports weve had will suggested well probably get a positive year on year growth rate, the first in a while here on this earnings quarter. I think its the quarter that will label the upward turn or the return of positive earnings momentum again, looking forward into next year now. If you put that together with sort of Economic Growth doing better both here and abroad, i think it paints a better picture looking into next year. Were down to below 2 again for this quarter. Why should we think next year gdpwise will be when you say better, you mean 2 . Not awful. Thats what i was talking about yesterday. Not awful. Better than everybody else. Right. Yeah. Doing 1. 3 , well get back up into the 2. 5 or better. Weve been waiting for that for a while. Yeah, for the last couple years. But i do think that i think theres elements, we have a healthy consumer yet. A healthy job market. Getting capital goods reports doing better. Manufacturing sector has been stabilizing. I kind of think you might see better housing activity. Im sorry to interrupt you. You were right about the stock market having a lot of trouble. When did you get bearish with us . About a year and a half ago . At least neutral a your andear half ago . In the summer of 2014 when the market went through 2000, i thought we would tread water. So next year . What . Are you bullish again now . I am. We go 2400, 2500 on the s p . I havent got an official target for next year, i think right now we could make a move northward 10 higher sometime next year. Rich, just real quick, you agree with that or will we tread water . I think in the next year we have a target of 2300. One thing that might be right on jims part is firms like ours have raised some cash into this uncertainty. Were around 15 cash. In one portfolio we have a hedge in the portfolio, so there is that spring that could spring that cash to work if the markets look better. Okay, guys. Thanks. Take care. You didnt have any did you ever have Clinical Psychology . I mean, i probably need some. I dont know any of that stuff that freud talked about. Is any of it found to be relevant . He was a coke fiend. Really . Yeah. He might have also been a nicotine fiend. A lot of the stuff he says, youre kidding, right . All of that stuff. Dont know if any of it has real still ahead, life after microsoft. Former ceo Steve Ballmer weighs in on the economy, politics and his role as owner of the clipper clippers. Whoa whoa whoa he joins us on set for an hour starting at 7 00 a. M. Eastern. Microsoft shares hitting an all time high after reporting First Quarter earnings after the bell on thursday. Joining us is the managing director of Software Research at griffin securities. Big day for microsoft. Finally at a new all time high after all these years. What drove the quarter besides the obvious cloud statement, azur selling so well. Thats the main thing investors are looking at. We knew going into the quarter that the growth and profitability of that business are the two things the invest er ers would focus on, and other traditional businesses, but the 116 growth in that business was nearly double what we thought the growth would be. The profitability was 400 basis points better than we thought. Those two things will take the stock higher. As a percentage of its overall revenue, where does it sit and where do you expect it to go . The rate is about 13 billion a year annualized. That puts it at 13 billion out of roughly 90 billion or so. Its not a tremendous percentage of the business. But when you have a low Growth Company on the whole, you have this tremendous growth in this new business, thats going to add value to the company. Chuckling. 13 billion. When you talk about microsoft, thats a small number relatively speaking. Right. What do you do with the stock from here . Weve been recommending it since july of 2012. A year ago andrew asked mre if i had a dollar i would put it in the name. I said yes. The answer remains yes. Weve been fortunate to have a double in the name at time. But they continue to outperform. Ultimately the big story here for us has always been generating cash flow. You look at the cash flow in q1 the annualized rate was much more than we thought. Biggest competitor is amazon. Is that pie growing so much it doesnt matter . Will they try to overtake them . How do you look at the competition. The pie is there for what will be a small number of ecosystems. Microsoft is and will be one of those ecosystems. The differentiator is not just the capacity, as i mentioned on previous pieces like this before, they have the applications or the functionality with office and azure. Its not just about capacity to do computing, its to extend dominant brands that theyve had into new forms of delivers to customers. The nucleus of what ballmer built is growing. Were going to have ballmer on for an hour, what would you ask him . Nothing about basketball. Who gets the credit . Both of them. Satya improved on what he given. Five years ago steve talked about what we are now seeing. What they would do with windows, speech recognition, all of those things were glimpsed at that time. We think microsoft has tremendous technologies that will concert into revenues more and more over time, including again speech recognition. And combining their technologies across the portfolio is a differentiated story. Thank you for coming in. Thank you. Coming up, General Electric is set to report. Well bring you the numbers and reaction after the break. At the top of the hour, former microsoft ceo Steve Ballmer will join us to talk tech, the economy, politics and the nba, hes the owner of the clippers. As we head to break, heres yesterdays s p 500 winners and losers. That was wonderful. Bravo. That was great. Pretty good. It wasnt that bad. Could have been a lot better. I didnt like it. It was terrible. Was awful. Boo. Sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. Sprint . Im hearing good things about the network. All the networks are great now. W