Tell us volatility is back, but were not seeing it. This morning the vix is trading at 10. It marked the second time this year that the vix traded below 10. Overnight in asia, take a look and youll see the nikkei was up by 0. 7 . Hang seng was up by a third of a percent. The shanghai was down by a third of a percentage point. In europe, some of the early trading, things are relatively calm. Ftse up by a half percentage point. Modest gains for the cac and dax. Among the top stories, big news out of hollywood. The Writers Guild of america reaching a tentative agreement with the alliance of Motion Picture and Television Producers avoiding a Writers Strike. They reached an agreement just after midnight. The Writers Guild had threatened to strike today if an agreement was not in place. Infosys making a big bet on america. The Company Announcing it will create 10,000 jobs here in the United States of the next two years. Those jobs will focus on the cloud, Artificial Intelligence and big data. They plan on opening four new facilities in the u. S. With the next one by summer, august of 2017. Higher oil prices helped boost bps earnings. They reported earnings of 7 cents a share on revenues of 55 billion. Lets tell you whats on the agenda. Another beg round of names reporting resultses before the bell. Conoco phillips, mastercard, merck and pfizer. After the bell closes today, we have apple. Well talk to an analyst about what to expect from apple. The fed kicking off a twoday policy meeting. The central bank expected to hold rates steady, but investors looking to find out when and if they will hike next. The fed statement will be out at about 2 00 p. M. Tomorrow. In washington, house panel will be holding a hearing today to examine Consumer Airline issues. In co this comes in the wake of a viral video showing a United Airline passenger being dragged off the flight. Oscar munoz from united will be in the hot seat along with others. United settled that case, but it took quite awhile in doing that. As a result it stirred things up. Well see how this plays out. See if congress does anything. On monday, Warren Buffett will be joining us for three hours, live from the annual Berkshire Hathaway meeting in omaha. Berkshire is the largest owner in many of these airlines. Also also be joined by Charlie Munger and bill gates for the 8 00 hour. That is monday at 00 a. M. Eastern. In other washington news, President Trump says he is considering breaking up the nations biggest banks. Its a promise he made on the campaign trail but put it on the back burner. Major averages slipped and rebounded on the news, while government bonds hit the highs of the day. Bank stocks dipped and then rallied with investors taking a winwin view that breaking open the banks would offer smaller firms opportunities. When that headline crossed, you saw the Immediate Reaction t lost a half percent on the s p financials. But time stopped within the corner offices of wall street at the same time. The algos did this, but within big wall street, there was a freak out moment. Until they went back and looked at it and realized this is not something he was intending to roll out or talk about. We heard some of these issues already from steve mnuchin. I dont think he does it. If you really think about it, if youre trying to goose the economy f thats the prism with which you look at the world, by default you would slow down the economy in the shortterm during whatever transition if you didnt think banks were lending when doddfrank was getting announced, the same thing will happen on the flip side. President trump went on to say after that that we are looking at making sure the banks lend again in that same interview, within moments he said were looking at some of these issues but also want to make sure the banks lend. Its important to understand other people, democrats most notably, put this forth as well, it didnt get support. So how is it going to poass at all . You need congressional action to do this. Im not sure the administration is 100 behind this. Only brought up when asked. No other time. About 100 Community Bankers were at the white house yesterday. This was on the brain, if you will. They were also talking befo abi two tiered system regulating banks, but in his head that may be his version of glag seeingssl 2. 0. We will talk with more about this with barney frank at 7 30 a. M. Eastern. The white house touting the bill as a win for the government. Eamon javers joins us now. He was hanging out on the lawn there yesterday. Eamon . Thats right. In fact at that briefing you mentioned with sean spicer i asked sean spicer directly does the president favor breaking up the big banks . Spicer gave me a longwinded answer that did not say yes or no. It said the president talked about this glasssteagall 2. 0 on the campaign trail. He said hes been in consultation with steve enough be and others and that the white house doesnt have anything to roll out at this time. My sense is this is not on the front burner, this is not imminent or a plan they have to roll out, but its dramatic when you have the president of the United States talking about the idea of breaking up the big banks at all. Especially a president who comes from the political right and thats something that is an idea thats more societies yassociat Elizabeth Warren and political left. But theres a weird populism thing that dovetails, where you could see a political deal around that idea but nothing like the ground work you would have to lay has been laid for that. Mick mulvaney laying out the administrations case for why the spending deal is a good deal for the Trump Administration. Here are his bullet points that he made yesterday with reporters. He said the budget deal gives 1 21 billion for defense including 9 billion for ready chb readyness. He said theres no money for a new border wall, but got money for maintenance on the existing wall. They expect the president will sign this later this week on thursday or friday. And then there was this moment yesterday at the Milkin Institute conference in beverly hills, california. Wilbur ross speaking before a crowd of financiers talking about the strike on syria that donald trump took. The moment at maralago when donald trump informed the chinese president , xi jinping saying this happened, it was in lieu of afterdinner entertainment. The thing was it didnt cost the president to have that entertainment. That being widely seen as a gaffe by wilbur ross to refer to a military strike as afterdinner entertain the. That will get some attention today as will the president s call later today with vladimir putin. A lot going on in washington. Foot in mouth. We know wilbur. Im going to im going to generously say foot in mouth. He has a sense of humor. I will leave it there. But on just to put a fine point on this issue of glasssteagall 2. 0, that weve been tossing around here, you talked to spicer yesterday. You hear gary cohn talking about things, and when you talked about the idea of Elizabeth Warren on one end, the administration on the other, how do you see his view about it . What do you think that he that is inspiring him to do it . Garr cohy cohn specifically . The great irony here is if you had a former president of Goldman Sachs being viewed skeptically by the left as a bankster, but heres a guy arguing for breaking up the big banks. Ultimately i dont know what gary cohn is pushing behind the scenes. I cant put him on either side. But there is a push pull inside the Trump Administration between the Establishment Republicans who would not be inclined to take on that idea. And some of the populists who would say, look, ultimately if we have to bail out the big banks when they get in trouble, they do not believe doddfrank solves the problem of too big to fail, and if we have to bail out these banks, lets make the cost smaller. Also you could see it as a pro jobs argument, if you break up the banks, all the efficiencies and economies in scale they have by being so big, they will have to lay off people, there will be a jobs implication if you have ten citi banks instead of one. Eamon, yesterday wenanke ot. , he said there is a specific area in doddfrank, section 2 or title 2 title 2, the living will issue that explains how to break up a bank. If doddfrank is repealed, and that is taken away, his point was there would be nothing taking care of that. Its odd to talk about repealing doddfrank and breaking up big banks at the same time. Maybe theres parts of each that you wanted to take and consider. This is a question thats never been fully resolved bisince 200. Under doddfrank you would have the living will provision, the banks with have to spell out what to do. Ultimately the criticism from the Trump Administration of doddfrank is that it didnt solve too big to fail. In fact the banks got bigger rather than smaller after doddfrank. The argument being ultimately its a safety net and lets make the banks smaller so when they go under they dont bring down the rest of the system. I asked tim geithner about that in 2011. There was talk about breaking up the big banks that year. His point was you shouldnt lock at the size of the banks, you should look at the interconnectedness of them in the Financial System and thats the problem. Well see if the Trump Administration lands there. Eamon javers, thank you, sir. You bet. The markets have a lot to digest this week between earnings, the fomc meeting, april jobs report and all these headlines out of washington. Is it time to buy in may and stay and play . Joining us is eric knudson, and bruce kasman, chief economist from jpmorgan. Welcome to both of you. Eric, lets talk first about these headlines out of washington from the president yesterday. Lets talk about the big banks, potentially breaking it up, not just that headline but the idea that on any given day you could have Something Like this royaling the markets. What does that mean in terms of investing . Should mean volatility will go up, but we have not seen that. The key for us is looking longer term. We tend to invest with a 12month horizon, that allows us to look past the shrtd chop. Weve been saying volatility will rise that has not been the case. We saw a little bout in late march, now its being priced out as the major geopolitical risks recede. The French Election that gone pro europe last week. We think that will be finalized sunday. Even with the Trump Administration uncertainty, things are not plague out to the fears of major antitrade, major if youre looking at this longer term, is all this just noise . Theres a lot of noise. You have to distinguish the signals, and twl ahere are only few, but the signals from the noise. The signals are that the Global Economy is in a cyclical upswing. You see it less so in the u. S. Theres enough data to tell us things are moving forward, but in europe strong evidence of growth. Pmis, business confidence, still a strong monetary stimulus environment in our Global Allocation Fund we have been taking gains from s p 500 large cap stocks, moving into european equities, emerging markets, japanese equities. Bruce, lets talk about the u. S. Economy. We got that weaker than anticipated gdp number. First quarter stunk for many years going back. What do you think is happening in the economy . First of all, it is a bit of a puzzle the First Quarter gdp number. Its ban per seen a persistent thats been followed through stronger news and in the First Quarter, labor markets were solid, manufacturing picked up. Our core view is that the u. S. Economy is a 2 animal right now, in a world that the global story is really what matters. How much improvement were seeing prodab ablybroadly there. We think well rebound in the second quarter. We got a disappointing consumption number yesterday. We think the auto sales number will show pick up into april and payrolls on friday will show solid news. I think the economy is on sound footing. The u. S. Is the center of attention on politics and policy but not whats happening in the Global Economy. We heard this idea that other areas may be seeing more growth, other markets may be a better place to play. Youre basically saying your growth protections are telling you the same thing . No doubt. Were seeing a broad fading of disinflationary drags that head meernlg mark held emerging markets down and thats a fullfledged support for global growth. I think we accelerated sharply into the start of the year. We think well consolidate here in the next few months. So you wont be seeing consistent upside surprises. But well see solid growth. If the u. S. Does what we expect, rebounding off of that puzzling First Quarter, theres a reason to think theres e. This is a solid economy. Just a lot of noise around what i think will be relatively Little Signal on u. S. Policy or european politics. Eric, is the set up of the markets, are they concerning in that when the vix is so low it draws ctas into being long equities . It almost feels like thats whats happening now. When you have a vix below 10, you have the markets at record highs or within a percent or two of record highs, with valuations where they are, the leadership is very narrow in terms of the largest stocks and the stock market leading the way, how you are feel being this market overall . It feels like its set up for a spike in volatility. The nature of shocks are that you cant see them in advance and people are pricing out the known concerns that everybody has been worried about. We think the next surprise could be the fed raising in june. We think one thing not priced in the markets are only pricing in two hikes this year and fewer two hikes in the next 12 months which is out of line with the fed dots, despite all the evidence that chair yellen is determined to normalize rates. We talked about the concerns around the Financial System. What is more important that when there is a shock that the fed has dry powder to act. We think that the rising rates will help certain sectors. Where you are more finely priced, you could get some hit there. We could take our marginal exposure and Smaller Company stocks where we think theyll benefit from whatever tax reform comes through, which really is not priced in the markets yet. Thanks for being here. Coming up, apple set to post results after the bell today. Well tell you what apple could do with its 2 250 billion cash. Squawk box will be right back. welcome back to squawk box. Apple releasing results after the bell today. Analysts will be watching for iphones sales growth, comments from co tim cook about the tech giants 2 250 billion cash pile which was the story of the morning yesterday. We will make it the story of the morning today as well. Dan arnst will help us break down what could be on that buying list along with what you are expecting this afternoon. Right. So when you take a step back, what is fascinating is apple is up 26 year to date, 60 in the last year, but still trades at a discount to the market. Under 16 time s earnings, the market is still at 1 time8 time. I never like on apple getting to a market multiple let alone a premium. But 18 times earnings around 130, 30 a share in net cash. So theres room for upside but they need to have growth. So the bar is reasonably well. Analysts are looking for 5 Revenue Growth this quarter. Only about 2 iphone growth. So, they need to hit those numbers. The stock is not trading on what will happen this afternoon. The stock is trading on what will happen next fall. Precisely. It wont even be this fiscal year. The phone comes out the last week of september. Most of that is hit into the december and march quarter of next year. Its really fiscal 18 that were talking about. Even then, all the excitement about the iphone 8, their tenth anniversary phone, the expectations are not that big. Im looking at numbers from all the different banks, 5 , 7 growth for the ix phone. Its not that demanding. So im on every gossip and tech gadget site, you can go to those sites, too. Boy genius and the like. You have seen anything that exciting about this next phone . Heres the beauty as a product guy. The two things that really matter for apple, the two things that apple and the iphone need for growth are installed base and replacement rate it doesnt matter if its an old l. E. D. Screen or an lcd screen that is better. The camera doesnt matter. A better battery everyone always asks for. They have between 650 million and 700 Million People around the world with an active iphone connecting to apple every day. If that replacement rate was just 3 years, 215, 245 million phones. You dont think if you want to goose growth the only time weve seen the growth sort of outside growth is when they changed the size of the screen. Most of that well, we had much higher growth rate before that. But most of that growth came from china where there was an appetite for larger green e. Scre screens, and that is just when you were getting 3g and 4g in china. You dont think it matters whats in the phone. I dont think it matters. Thats kind of sad. People will replace their phones no matter what. It doesnt matter if its a camera or an old screen . The people in china, that bought the 6, theyre sitting on a 3yearold phone. Sorkin is sitting on a 3yearold phone, too. I am, too. Im waiting for this. I waiting for something magical to happen. I want the better camera. I was in a meeting with a big bank, they had come back from china. One thing that is interesting is that theres new stickers you ca