Transcripts For CNBC Squawk Box 20130724

Do bells. I got wiener fatigue. It is too easy. Lets talk wall street. It has been we had earnings and the market softballs. I cant do it. Softballs, great. It is another busy day in earnings central today. Among the names that are set to post Quarterly Results before the bell, we have boeing, caterpillar, eli lilly, ford, glaxosmithkline and pepsi. And tonight hearing from facebook. If thats not enough for you, among our squawk newsmakers, well be joined by the cfo of pepsi, Hugh Johnston. And eli lillys chairman and ceo Doug Oberhelman and wick mooreman. We have a big morning ahead. And we have Hugh Johnston on today. And a big lineup. Yes, we do. And and after a nearly decade long Insider Trading, federal authorities are close to leveling a criminal indictment against sac capital. Prosecutors and the fbi in manhattan are expected to announce the charges as early as this week. No word on whether the hedge fund might try to settle at the last moment. But reports say that is unlikely. Founder steven cohen is not expected to be charged criminally, but authorities are reportedly still contemplating bringing charges against other employees at the firm. Well talk more about the story in a few minutes with former s. E. C. Attorney Jacob Frankel. Sandro . Sandro. In corporate news, apples Third Quarter earnings per share beat the street by 15 cents. Not bad. Revenue was in line and iphone shipments jumped 51 , topping analyst forecasts. But apples Current Quarter revenue outlook does fall on the low side of the current consensus. Still the shares are moving higher in extended trade. Well talk about this all morning, get more details. Give you an idea, though, the journals take on this, and the journals been a little bit negative and kind of pessimistic in general on the front page the last couple of days. Apple, the profit slides hit by a demand slowdown was the headline that i saw. Stock was up after hours. It was. I saw on the chart, it was and also if you listened to jim the last couple of days, hes just flying right in the face of some of the conventional thinking about the results were seeing, the revenues are still light, and it is tepid out there, and corporations are running he says a lot of the Big Companies had great results. Not hiring a lot of people, learned how to do it without hiring, which i dont know what kind of world we end up living in. If we end up selling and exporting to the rest of the world as the middle class rises and all these developing countries and if a lot of the stuff we do is built over there, it is a real issue. A real issue how we do the middle class thing that president obama will talk about today. We need to do, you know, i dont know what the new Business Model is for in a technological age where so much is automated at this point. I dont know how you where the middle class jobs come from. Scary job. What are you, jose . Jose. Jose jeopardy. Thats a little weird. Like a trebek sound to it, doesnt it . It does. Makes you erudite. Makes you smart. Last week dell had to push the meeting on the topic back today in hopes of convincing them to take the deal. You need the whip and the whip to whip up the support. The loudest shareholder opposing the deal is carl icahn who put forward his own offer. Here is icahn at our delivering alpha conference, cnbcs delivering alpha conference last week. Things can be done. It is this is worse than, you know, where you had these dictatorships, i mean, you look at dell, it reminds you of a dictatorship. They absolutely go scare you. They say things wrong about the company. They got all the lawyers protecting them. And nobody would have got away with it risk of being modest, would have got away with this if i didnt have a spare 3. 5 billion around. Icahn is just a spare 3. 5 billion. Shares of dell just under 13. Washington news, president obama will travel to illinois today for a speech on the economy. Hell be speaking at knox college, where he gave his first major speech as a freshman senator in 2005. The white house is billing todays address as a major one on the economy, ahead of key budget deadlines this fall. Well get a preview from obama adviser Valerie Jarrett at 8 30 eastern time. Ahead of the president s speech today, there is a new nbc news wall street journal poll out this morning and john has the highlights for us. It is an ugly poll. It is an ugly poll for washington. We talked to peter hart, the democrat who does our polling with the republican, said the entire country outside of the beltway is looking at washington and saying you dont get it. You look at the numbers across the board, this is after months of not much getting done in washington, fighting over irs scandal, the turmoil recently over the zimmerman trial and people were pretty dispirited. You see when you ask people as a country headed in the right direction or off on the wrong track, 29 , only 29 say were going in the right direction. 61 say how does that compare to what they said recently . It has been underer with the f water for a while. President obama takes a step backward. After the election, he was up in the low 50s, now down to 45. You ask the approval of congress, worst in the 25year history of our poll. Approval of congress, 12 . It was already so low. But it keeps going down. It keeps digging. It is journalist level, really. 83 disapprove and then ask even somebody like Speaker John Boehner who is not terribly well known, relatively speaking, compared to, say, the president , hes 2 to 1 under water, 18 favorable, 36 unfavorable. And the rest of the people dont know who he is . Thats so sad. So it it is wrbracing news for washington that is stuck on immigration, stuck on the budget, stuck on debt limit and what to do about economic strategy. They havent even gotten the deal yet on student loan rates. So it is not good news for d. C. The president has this speech today and i did see earlier this morning that ben white from politico laid out the argument that said when the president speaks like this, it doesnt help negotiations behind the scenes, makes it that much more difficult. I wonder if thats what he wants to do. In the past, i thought he was trying to get him to and make sure they pressured other congressman to go along with the plans. Hasnt worked to this point. Right. But when you think about what the president s actual objective is in this speech, it is more longterm than that. It is not just about the debt limit, spending. It is about the debt limit. It is partly about him trying to say here is the longterm strategy that i see, that revolves around education, skill building, ways to add value within the United States, so that infrastructure. Infrastructure spending is part of it as well. You dont think it is about 2014 and congress . Thats when they really think they can get things done. Everything is a little bit about, you know, the immediate fight and how is it looking . The 2014 elections. How is it looking . But this is bigger from obamas perspective. Hes trying to in the long run argument, talking to austin ghouls bee the other day, he said there is a religious conflict between the two parties on Economic Policy. There is one approach that says leave the job creators alone and thats the way we get growth, and there is another that says we need to try to put money and skills in the pocket of middle class people, and they will generate through the added value that they can offer, they will generate rising Living Standards and the president is trying to shape that argument going forward. It is interesting. It goes back to what we were talking about with the jobs that are now being created overseas, when things are being manufactured overseas. There is a deficit, where there is not Skilled Workforce to meet some of the jobs that we do need. Exactly. And part of that is dealt with Immigration Reform through what they do with the visas. Part of it is education. If it wasnt adventurous from a tax point, to offshore stuff, that your halfway there without all the other stuff were talking about, building up the plants here. It is a big problem. There doesnt seem to be any impetus or any interest in trying to figure out what to do to make the territorial tax system favor us a little bit more. Have you seen Larry Summers proposa proposal . Larry is someone were high on around here. You know why . Suddenly the left hates him so much. You know who else is high on Larry Summers . A leading contender now. I know. President obama is high on Larry Summers. Larry is smart. In the reporting i was doing yesterday, which matches what many of my colleagues have done, larry seems to be the frontrunner at this point, nobody knows except the president and a couple of people, but he seems to be doing well. Larrys pre posal is not to have a holiday or not to not to force this money back, but to establish a permanent lower rate that all of this income gets to create certainty in the market, because his argument is he said if you have the expectation of a holiday and holiday never comes, youre in the worst position because all that money is stuck. Larry, deep down, as a private sector guy, he knows where the jobs thats the quandary im in. I want to be the middle out thing too. But i know that private sector jobs are the only thing that generates tax revenue to do all the things we want to do that youre talking about. If youre setting up larry as opposed to obama not being a private sector guy, youre not thinking about it john, we know now, it is not thats never going to be ive given up hoping for that, hoping for a speech, hoping for something that i think this is the knox college speech, what we hear today, thats what were 7 million private sector jobs. Im glad that, you know, the u. S. Economy creates jobs. We are the best the most vibrant economy. But we could be doing so much better. So much better. Few stocks to watch today, based on after the bell movers from late yesterday, at ts Quarterly Earnings fell a penny short of expect takings. The company is hit by rising costs. Revenues did beat the street. Well talk to an analyst at 6 40 eastern. And then at ts cfo at 7 50, when i heard him speak, he knows if youre the cfo of at t, hopefully youre pretty good. Panera breads earnings and revenue fell short. Theyre lowering their full year Profit Guidance. I have no time for bread. Bread is something i just thats the worst. Bagels, oh, bread, bread is just whats wrong with bread . Bread goes right youre doing all right. Bread goes right there, my friend. Nothing good about it. You should just avoid it entirely. Eat the bread and go running. Yeah. Why not run without eating the bread . Eat an egg . A hard boiled egg. Computer softwaremaker vm ware reporting better than expected earnings and revenue and quarter Profit Guidance pleased analysts yesterday. A different story, you can see, nice move, 8. 10 . Broadcom beat the street, but Current Quarter revenue guidance was disappointing. And hertz reported a smaller than expected loss, full year guidance met the current consensus. Juniper, topped wall street forecasts. Full year guidance upbeat and the Company Announced a billion share buyback. They say their ceo will retire and wants to find a successor. As we talked about, federal prosecutors are reportedly preparing to announce criminal charges against sac capital as early as this week. Joining us right now is Jacob Frankel, former s. E. C. Enforcement attorney and partner at shulman rogers. Jacob, theyre not talking necessarily about criminal charges against steven cohen, but this is pretty much the full court press short of that. Without any question. Good morning, becky. Somewhat reminiscent, 24 years ago. Drexel bern laimbeer was staring down the barrel of similar charges to six felonies and that was the end of drexel. Arthur anderson in 2002, indicted for obstruction of justice, wiped out, Supreme Court overturned that conviction. This is, you know this is the ultimate battle. Im really surprised that we are at this point, but these were discussions, back in may, between the company trying to persuade the Justice Department not to bring criminal charges, but almost appearing to be a game of one upsmanship between the Southern District of new york and the s. E. C. , you know, who can bring the next charge and be almost more macho or show more testosterone. Steve cohen and sac were cooperating with the government up until a few months ago. At that point, they said, forget it, were no longer cooperating. Was that throwing down the gauntlet, this is what happens . It is throwing down the gauntlet. The real question here, to your point, a good one, is there still value in cooperating with the government . You have a company that cooperated, in connection with all of the criminal investigations of the internal staff who were accused and indicted for Insider Trading and at the end say thank you for your cooperation. Now not only are we going to turn on you and your principle, were going to indict you to get you off of wall street altogether. There is going to be a serious revisiting of the concept of cooperation with the United States government or at least there is going to need to be a better more concrete expectation of the ultimate outcome. Not to mention they paid a fine. Sac capital paid a fine, well north of half a billion dollars. Was that what happened . Was this something where they really found things out of whack and didnt think the company was really cooperating or how do you read the tea leaves here . It is difficult to read the tea leaves without being inside the room. You look at how everything is postured right now. And steve cohen, you know, for the company, has hired one of wall streets premiere trial lawyers. Theyre going to fight this criminal case. When i was a federal prosecute, i tried a case against ted wells in the mid1990s. This is going to be a fight to the finish, but almost beyond that point of what were those expectations and where did this go wrong. It is almost as if the government, whether the s. E. C. Or the department of justice, were sending ambiguous messages with the hope of keep cooperating, keep cooperating, and this is going to, you know, come out, not necessarily okay, but there is an expectation among the lawyers that you usually know where this case is going to go. And to your point, this fell apart, it is not clear why and probably was because the department of justice said, okay, we expect the guilty plea and the answer was, number one, to what . Why should there really be corporate criminal liability when you have charged the individuals and we have Compliance Systems in place, and, yes, you do get corporations indicted, but that really is the rarity and the place i would look. Were trying to stay focused on s. E. Sac capital and steve cohen, you look at the practices act area, where there is always the effort to find that one Company Subsidiary that has limited business with the u. S. Government, so it doesnt disrupt the ability. No charge actually against bae or against semens, it cant continue to do business with the United States government. Here you have a company that is going to become statutorily disqualified from being a participant in the u. S. Capital markets. This is a big deal. Thats why theyre in this for the full fight. Jacob, thank you for joining us this morning. Youre welcome. All right. We got to go. We have all right. To break. We got our own steve cohen who had problems in washington, you know that, right . No. A different one, you mean. Congressman from memphis. Yeah, yeah. Pretty common name. Coming up, were you confused . There is only one carlos danger. Yeah. I put beckys name in the generator. Benito covert. Thats good music for carlos. A year after he resigned, this man has trouble not sending pictures of his pecker to people, a year after. Maybe we have to acknowledge, if he becomes mayor, hes going to do this stuff. That was the stunning thing, this was a year after. Can we accept that . He can be a great mayor. Once in a while he sends a picture of his pecker to people. I dont think that means you cant be a great may, does it . We have to accept he has a problem and that problem is not going anywhere. Shares of apple getting a boost. Well get an analysts take when we return. And maybe talk more about carlos. Welcome back, everybody. We have been watching the u. S. Equity futures. And at this hour, before we get a slew of earnings that are expected today, you can see now the dow futures are up by 27 points. The s p futures are up by just over 4. You did have the dow closing at yet another new high yesterday. The s p was down, but down by just about 3 points and only the third time this month that it has actually dropped. Well continue to see what happens, but we have a lot of earnings that are hitting today, including well point, which was out with the quarterly profits just moments ago. The Health Insurance provider provided reported quarterly profit of 2. 60 a share. When you strip out certain items that was well above the estimates of 2. 11. Well point also raising its full year earnings forecast. Also, a fire has broken out on a blownout gulf gas well that was evacuated yesterday. That blowout happened after about it happened on a hercules platform off the coast of louisiana. The shares of the owner hercules traded lower yesterday. You can see right now, it is down by about 2. 4 in the premarket at 7. 69 a share. And Just Announced takeover deal, maiden form being bought by haines brands. A premium over yesterdays closing price. The total value of the deal is 575 million. Right now, to the National Weather forecast, for that we go to the Weather Channels alex wallace. Alex, good morning. Good morning to you. Unfortunately a bit of a wet one for us in the southern plains. And secs of the midsouth. A lot of rain were seeing from little rock, just around oklahoma city, moving through the city right now. Very heavy rain, a lot of lightning associated with that. Already seen some flash Flooding Issues and even some damaging wind reports from some of the storms here this early part of the morning. Were going to keep it unsettled for parts of the south for the midpart of the week. Stretching from the carolinas, all the way back into eastern oklahoma, right along this boundary. That will be the focus for some of the showers and storms for wednesday. But finally, finally as we get to the late week, thursday, friday, well see some clearing out there. Memphis, down towards jackson, mississippi, birmingham and atlantis, a wet july. I think late week going to be dryer, but along the gulf coast well see the best chance for some of the storms. But eventually the rain will return. Well be tracking next storm system and cold front. This will be moving from the midwest, moving its way south with an upper level low. This weekend, the storms unfortunately they return. Back to you. That looks like there further south. Will it go up all the way up the east coast too. A better weekend saturday for most of the i95 corridor. Well pin our hopes on that. Alex, thank you very much. You bet. Apple shares getting the best following Quarterly Results. Joining us now, Senior Research analyst at Advisory Group in new york, this reminds me of the flip side, tom, of where we were maybe a year or year and a half ago where price for perfection and no matter how good everything was, it wasnt good. Maybe some would say there is value in these shares and even though it wasnt perfect, the stock is sharply higher because it sort of sold out, isnt it, when it got down to 400. It seemed ipads dropped 4 from a year ago. Seeing mac sales down 7 from a year ago. Cheaper iphones, none of this is that great, but the stock is sharply higher. I think youre right on in pointing out expectations are low for the stock. At 700, if they came out with the television or iwatch, it may not have moved the stock higher. Todays levels there is upside. Basically i think the quarter would strengthen the iphone, in particular in emerging markets with the iphone 4 and then somewhat disappointing reports in the ipad side. I guess maybe down below 400. We were the whole world was looking for a bottom, trying to find one. Do you think that bottom is in place now . The way i think about it is the 60 billion repurchase Program Gives the stock a ton of support. 400, pick your number, low 400s, there is kind of a bottom in the stock. And then ultimately over the next 12 months, as they launch the next generation iphone an ipad, that innovation will drive the stock higher over the next 12 months. Thats what were looking at then, the innovation is going to come along existing product lines. It is going to be a next generation pad, next generation phone. Thats it. I think thats the minimum. I think there is potential for them to move further along in televisions, and along with the iwatch and then while yesterdays results suggest maybe last generation devices are selling well in emerging markets, i think they have an opportunity to come up with basically the ipad mini to penetrate emerging markets. Will the next generation iphone be best in class or are there android products that will, you know, put that into question . I would say it is best in class to the extent that it will have one operating system for the most part, that it is running on. Android frequently updates its operating system and you have multiple Android Devices running on different oss, different versions of android basically. So, yeah, i think the next upgrade were looking for potentially a bigger screen, i think there is a lot of low hanging fruit on the payment side, but it will be fun to watch when they announce it later this fall. I wonder if i wonder if they could make the actual letters when you text a little bit bigger. I dont think i spelled a single word like it spelled yet because my fat fingers, the things are too small. If it gets the right word, eventually, but i dont think ive been able to hit the maybe i got the shakes. Theyre so small. Anyway, but why cant they make them bigger . Make them they can. Buy an ipad. Tom, thank you. Thank you. Appreciate it. All right. Everything else is amazing. They could make them bigger, it would have to be a bigger screen. Everything you do on there thats the only thing. Im okay with that. When we come back, the fight over the detroit bankruptcy begins in federal court today. We have a preview from the motor city right after this ive been doing a few things for a while that i really love tdd 18003452550 playing this and trading. Tdd 18003452550 and the better i am at them, the more i enjoy them. Tdd 18003452550 so im always looking to take them up a notch or two. Tdd 18003452550 and schwab really helps me step up my trading. Tdd 18003452550 theyve now put their most powerful platform, tdd 18003452550 streetsmart edge, in the cloud. Tdd 18003452550 so i can use it on the web, where i trade from tdd 18003452550 most of the time. Tdd 18003452550 which means i get schwabs most advanced tools tdd 18003452550 on whatever computer im on. Tdd 18003452550 its really taken my trading to the next level. 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Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Its been a hard days night and ive been working like a dog good morning, everybody. Welcome back to squawk box here on cnbc. In our headlines this morning, chinas Manufacturing Activity slowed to an 11month low in july. New orders actually declined, and the job market weakened. Also, former goldman trader Fabrice Tourre is expected to take the stand today, on trial in new york, accused of misleading investors in the 2007 bond deal. John lickliter is coming on from eli lilly, the ceo. If a ceo agrees to come on, is he coming on to crow about results or coming on to explain results . Could be either. Both reasons. Come on for both. You dont really know. I think crow. In this case it is crow. The company not only did it Beat Estimates by a wide margin, 16 cents ahead of estimates, 1. 16, estimate was a dollar, and then it raised its guidance for the year. But it should. If youre up 16 cents in the what quarter is this . Second quarter. They should probably bump up full year because they beat by a wide margin. 4. 05 to 4. 15 and currently at 3. 92. And revenue is now seen at 22. 6 to 23. 4 billion for the year after reporting 5. 82 billion in the Current Quarter. Im sorry, that was the estimate. They reported 5. 93. That was above also. Pretty good report from eli lilly and well get details f m from off 6 . Second quarter Revenue Growth was actually below the year ago, but above expectations and they see that resuming after 2014, dealing with the patent exploration for years. And in detroit you had suspected that 100 Million People would watch the show and it turned out that 116 Million People watched the show, you would go on somebody elses tv show about that. I would also go on, if i needed to, explain things too, explain what happened. You can do you can come on and sort of sell your results, you can come on and explain the interception and the fumble . Exactly. Rg will be back. Hes going to make it. Hes going to start opening day. Good. You said something about football and i look at you and i think, rg, rg3. Better than ever. Going to be awesome. I love watching them now. Thats good. It is good to have a lot of different teams that you like that youre interested in. Otherwise on sunday, you end up with two teams and it is like id rather go out and watch the grass just slowly, right . Bengals. Bengals, hope. Hope. Never know. Dont count on any Cincinnati Team for long. In detroit, the fight over bankruptcy begins in federal court today. Senior correspondent scott cohen joins us from the motor he does it all. The best places to do business and absolute worst places to do business. He doesnt really have a preference. Hey, scott. We play it down the middle, joe. The first hearing in a bankruptcy case is always crucial in terms of sort of setting the tone. But just getting today to today in federal court in detroit was a huge battle. The way for this hearing cleared yesterday after state court of appeals decided to put on hold at least for now the many challenges to this bankruptcy, the city emergency manager, to see detroit through the bankruptcy process, says today is an important moment. The trip of a thousand miles starts with first step. Were making our first step. But were moving forward. There is progress. Not only on the legal side. Were going to be moving side on the operational side. There are a lot of fights to come. The first of them today as the city and union square off in federal court. Only two items on the docket, but this for today, anyway, but this hearing is likely to take all morning. The motion for bankruptcy protection, thats relatively routine. The city is also filing a motion to do away with these challenges by the unions once and for all. Thats going to be a huge bone of contention in this hearing and beyond. The city workers say that the emergency manager did not deal with them in good faith throughout this, before filing the bankruptcy, thats a prerequisite under federal law. They also say that they and their pensions are being unfairly singled out. We are being scapegoated and i think that people need to look at in totality what it going on in the city of detroit, to get a full understanding of what is happening. What the unions say is that there are sweetheart deals being cut by the emergency manager, with consultants, the city is not as broke as they say. Hearing it all will be judge steven rhodes, a reagan appointee, an expert on ponzi scheme law and also reported to be a very down the middle fair and tough judge. And certainly appears guys a tough judge is exactly what this case needs. Back to you. All right, scott, thank you. We were talking all morning long about what an interesting case this is and how closely well be watching because we know other municipal areas are watching as well, as well as the companies that would be ensuring any of these bonds. It is certainly something that will have ripple effects far beyond detroit. Scott, thank you. Well check in with you later today. When we come back, president obama is set to give a speech on the economy today. The white house is hailing it as a major address. We have a preview from both sides of the aisle right after this. When we made our commitment to the gulf, bp had two big goals help the gulf recover and learn from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. President obama will embark on his focus on the economy tour today, delivering a speech in illinois. Joining us now, jared bernstein, at center for budget and policy priorities, and tony fratto of Hamilton Place strategies, former official in the george w. Bush administration. Jared, let me start with you and ask you what you think this president , as we head toward the fight over the budget bills that are coming in the congress, the debt limit, what can he accomplish with a speech like that, because when you talk to people at the white house, they say it is only partly to set the table for those things, but also to shape the argument longterm. Well, you said focus on the economy, there are a lot of people out there who wonder why washington isnt more focused. Since the second half of 2009, the economy has been expanding. Were adding a couple hundred thousand jobs per month. The Unemployment Rate has been coming down. But middle class incomes are stagnant and have been that way for a long time. That predates president obama. He needs to get out there and explain once again his vision for how you reconnect middle class prosperity to a growing economy. It doesnt mean that congress is going to then say, okay, welcome back, mr. President , were ready to legislate all your ideas. But i still think just because there is gridlock here, he cant just give up the focus on the economy. How do you, jared, rebuild middle class incomes and create conditions for much better longterm growth . Well, i think one of the most important things is job growth and moving closer to full employment and the president will talk about that today, i suspect in the context of clean energy investments, manufacturing, implementing the Affordable Care act, infrastructure investment, college affordability. I think those are the kinds of issues that hes consistently hit on and he is a big believer that it is a private sector story, as you have been talking about all morning, but sometimes the private sector underinvests in some critical pieces like clean energy, like manufacturing policy, and those kind of public investments can actually interact with the private sector to generate more growth. Let me ask you, a, do you think strategically in terms of approaches for raising middle class incomes, the president is correct, and, b, do you think he can move the needle with speeches like the ones that hes going to begin today . Well, i dont know were going to see a whole lot out there that really addresses that question. I dont know if youve seen any or caught anything in terms of previews on it is hard to see how he can accomplish that, talking about the same things hes talked about the last couple of years. I was more optimistic about where the economy was going to be. I think most americans wanted to be more optimistic about where the economy was going to be as we get into the fifth year now of a recovery. But, you know, jared is right. Employment has gotten a little bit better. But it is still at 7. 5 Unemployment Rate, which we most usually associate with recessionary conditions. Growth has been really tepid. And americans really arent buying. I think what makes the white house really nervous, we look at the nbc, you know, wall street journal poll, and they see their numbers correlating with congress. I think that makes them nervous. Thats the reason for them to come out here and try to get on the us side of this debate on how we think about the economy and put congress on the them side of it. It is really what theyre going to try to do at the end of the fall. What makes markets nervous is the idea we may be headed for another debt limit, stalemate and crisis that fall. What do you see happening on that . Look, i think the president is going to try as much as possible to put this squarely in Congress Court and not be the negotiator on the debt ceiling. I do think we are running into a heading for another cliff on this, really is going to be a dragout fight we now unfortunately have become very used to. Ive always i hate to use the debt ceiling this way, but thats clearly where were heading, i think what the president is going to try to do is say, congress you have to deliver me the solution on this. Im not going to solve your problems for you. Thats the right strategic place for him to be, but it doesnt take us away from brinksmanship, just puts that in Congress Court. John, can i let me just pick up on ill speak to that, one thing tony said, i think it is important, the president does need to distinguish himself and his economic agenda from congress, which i would argue their economic agenda has been negative. Thats always done for five always done as argued with congress for well, you know, it is interesting. I mean, thats what we know where he stands on this. Lets negotiate. Unless hes planning on changing congress. Thats the only thing i can figure, hes going to change congress until it does what he wants. Hes not going to work with what he can get accomplished here. Congress isnt going to do what he wants. Fine. What we hear in the beltway is different from what people hear outside. You can see this in the polling. I think tony mentioned it as well. Hasnt gotten enough calls from people out in the country to change congressional minds. It is not going to work. I dont see why you set these longterm aspirations when you got nearterm problems. Because the near because gridlock is completely blocking any nearterm path, so you but unless youre one of the major things theyre blocking is the question. We any weknow were going to h brinksmanship, but there arent major things through the that the president was really pushing strongly in the campaign, and since that people fell Congress Really needs to move. Guys, were flat out of time. Were going to have Valerie Jarrett on later in the show to preview the president s speech. Yep. And still to come, we have top executives from pepsi, eli lilly, at t, caterpillar and Norfolk Southern on the companys earnings and outlook. Thats coming up. [ male announcer ] ive seen incredible things. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. So you can capture sudyour receipts, ink for donall business purchases. And manage them online with jot, the latest app from ink. So you can spend less time doing paperwork. And more time doing paperwork. Ink from chase. So you can. Welcome back. At t earning 67 cents a share in the Second Quarter. That missed estimates by a penny, but revenue did top consensus and subscriber numbers were impressive, too. Senior telecom analyst, kevin, what did you make of the quarter . I thought it was pretty much in line with the preannounced Strong Subscriber metrics they had talked about. A couple of nuances that you need to focus on as an investor. One is the higher capex. In comes in at 5. 4 billion. Thats correct. And what youre seeing is that at t is arming for battle. And we think that the wireless market will be much more competitive in the second half of this year and into 2014 as sprints and tmo upgrade their networks and launch new plans. And from at t with the acquisition of leap and higher capex and stronger upgrade this is quarter which pressured margins is their response to these emerging challenges. I would guess as a long Term Investor thats a good thing, you want to see them putting back in to their network . Thats right. We think this is a strategic positive that theyre investing in business locking down customers into long Term Contracts ahead of this more competitive environment. And actually i think thats a good thing. Did pressure margins in the short term, also freed cash flow which some will take as a negative today, but i think it was a long term right strategic move. And you do have an underperform on this stock, though. Why is that . I think were pretty negative on the entire sector right now with the exception of tmobile. We do think that basically youve had a duopoly in u. S. Wireless and data, sprint and tmo get their act together, roll out their networks. And launch the new marketing plans. Tmo has had quite a lot of success with new marketing promotion this is quarter at the expense of sprint and to a letters extent at t and verizon and i think sprint will respond in q3 with soft Bank Management team taking over, that company i think will be a much stronger player as we head into 2014. So for at t, limited Revenue Growth, the buy back is slowing which has been a huge underpinning of the stock. And i think that will create pressure for at t shares as the buy back slows. Also huge m a risk. Leap was the first deal. There are other deals that creates uncertainty. So we want to wait and see what they do in europe and how this telecom battleground shapes up over the next two years. Youre paying out the short term versus the long term. If you were looking at the long term, do you like some of the strategic moves. What is the long term . Glink t i think the long term is that the market i mean how long is the long term if youre looking at like short term you have concerns. Longer term, you like strategic. I like what theyre trying to do. I think the environment will deteriorate. Im not sure that they will be able to protect their Subscriber Base and their margins from these emerging competitors. Sprint has already cut pricing. Sprint has the best spectrum position in terms of quantity of spectrum with this clearwire purchase. And i think that hes shown in japan that hell come in and really cut pricing for sprint and drive down pricing for the entire industry. That wont be good for verizon or at t and ultimately the question is can tmo and sprint take enough subscribers in that environment to offset the lower margins. Kevin, thank you very much for coming in today. Didnt he say in the long term were all dead . This is true. That is true. All right. Im still you know, tweeting is dangerous. I mean im do you have to watch yourself . Worst thing ive ever done, ive had the and you dnd youdac question whether every adverse weather event is due to 0. 01 additional co2. And i cant bleeelieve have you ever tweeted a selfie . I thought it was something else. But this guy if he cant be weiner, he cant be 500 feet within an Elementary School, should he be mayor . But here is the mayor of new york weve increased funding for that Elementary School . Here is the mayor actually this, picture doesnt do it justice. Because if you see bloombergs feet and cuomos and well splay Something Like hobbit music or something. But those are the two top guys. Ill just show that without comment. Im okay with that. Cfo of at t is coming up next. I turn ed 65 last week. I turn the math of retirement is different today. Money has to last longer. I dont want to pour over pie charts all day. I want to travel, and i want the income to do it. Ishares incomes etfs. Low cost and diversified. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus, which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. Earnings central once again and parade of top executives visit squawk box. Boeing, caterpillar and eli lilly and ford. Nelson peltz wants pepsico to make a move. Its a wonderful business. But its not growing. What does the company want to do . We have pepsi cfo, hell talk to us about the latest Quarterly Results first on cnbc as the second hour of squawk box begins right now. Good morning. Welcome back to squawk box. We do have numbers out. Ford is just crossing the wires. Lets get to phil lebeau. He joins us with more. This is a beat by a wide margin. In fact when youre looking at these earnings, it will be hard for wall street to find much to complain about here. Ford earning 2. 6 billion in the Second Quarter. Thats 45 cents a share. The street was expecting 37 cents a share. Automotive revenue coming in stronger than expected at 36 billion. Nearly a billion better than the street was expecting. Turning a profit in south america, reducing losses in europe. Operating margins nearly a percentage and a half, 1. 5 i should say better than they were a year ago in the Second Quarter. And here is the part that wall street will be keying on, guys. They are raising their Guidance Full Year earning guidance equal or better, thats an improvement p operating margin about equal. Thats an improvement. Cash flow already greater, thats what they were saying. Now they were saying it will be significantly greater. They already have 4 billion in cash flow versus 3. 4 last year. And europe, theyre cutting the estimate in terms of the amount of money they will be losing from 2 billion down to 1. 8 billion. Guys, across the board extremely strong numbers. North america think about this, operating margins of 10. 4 . Thats really high in the automotive industry. 2. 329 billion. Thats how much ford made. So very strong numbers with ford beating the street by a wide margin, 45 cents versus 37 cents. Back to you. Its not trucks, right . Even lincoln, i see a up canal of those go by, mq something or other, sedans with the full sun roof. Yeah, lincoln is not part of this. This is trucks in north america. It is trucks in north america. Theyre strong in cars, but you cannot deny the fact that what weve seen with demand for pickup trucks is a big part of this. The f series dominates that market. The reason im saying that is what we seem to lose and a lot of others have said that the impulse buy for like a camaro or something, and even the theres another model of a ford. Pretty cool looking. You need to get that so that people say i like the looks of that car and it looks like its a good car. They clearly have the portfolio where you want it to be right now. Its not just utilitarian. There is definitely a wow factor and thats showing through both in terms of sales, picking up more market share than their competitors. And also now in terms of profitability. How long can mulally i dont know why he cant stay until hes 80. 70 is the new 50. Youre absolutely right. What is mulally, 66 or something . Hes 66. But he has no plans to leave. He enjoys his job. He loves his job. But i can also tell you this. Alan mulally wants to make sure that he has a successful transition. At the end of the day, people can look back and say, well, he just didnt run up great numbers and say see ya. But hes 66. She take his shirt off and take one of those shots in the mirror and show that im 66, but 66 is the new 36. We all know hes in great shape. And he has that glint in his eyes. He looks like hes 50. He does. Ky tell you pepsi numbers . All right. Were done, phil. Anyway. Lets talk about pepsi numbers which are also out. Pepsi is coming in with core earnings per share of 1. 31. That is up 17 . First call consensus was for 1. 19, but i believe the analyst didnt know about 7 cents. So its a beat by about a nickel. Also revenue came in just about in line. 16. 807 billion. Consensus was 16. 798 billion. Organic rev new was up 4. 2 and if you look at some of the numbers on this, this is not a situation where youre hearing necessarily about the weakness that we heard from cocacola when they were talking about how the weather actually impacted some of their sales. Its a different model than cocacola. They also have Pepsico America foods and frito lay north america. They got mid single digit organic growth at frito lay and double digit in latin american foods. But i dont see anything about the weather this this anywhere at all. Core Constant Currency operating profit grew 4 reflecting 3 Percentage Points of effective net pricing and productivity gains. Well be taking a closer look at these numbers, well see how the street actually reacts. Revenue came in just about in line and we do have the cfo, Hugh Johnston, will be joining us later this morning. Our other top story today, development in the s. A. C. Capital, that saga. And the government investigations in to Insider Trading at the firm. Kayla tausche joins us now. Quite a bombshell when it hit that federal authorities didnt want to be left out of the recent action. Those reports that federal regulators are readying criminal charges. This will be the most high profile charge yet that would result from a multiyear investigation into the firm led by steve cohen. 73 convictions. Among the charges, two Portfolio Managers that reported directly to cohen. Cohen himself was the target of an administrative action by the sec last week for failing to prevent Insider Trading. But the wall street journal said federal criminal charges will focus on the firm and not cohen. The u. S. Attorney for the Southern District of morning was asked but wouldnt talk about the firm directly but he did talk about the nature of what his unit is trying to do. Take a listen. Its not a joking matter. And people who run whether a hedge fund or bank or some other kind of Financial Institution or company that makes any product needs to take it very seriously. The most important thing you can think about doing at that moment is to think about how fort coming you should be and to cooperate because the history is if those who come forward andh coming you should be and to cooperate because the history is if those who come forward andfoo cooperate because the history is if those who come forward and volunteer information do better than those who dont. S. A. C. Capital stopped cooperating with the feds on this investigation in late may and two weeks later saw outside investors ask for a large chunk of redemptions. By next year the firm will have returned up to 5 billion of the previous 6 billion. The known outside investors blackstone, morgan, chat wood. Up clear the naft tture of the federal charges. But the Justice Department could get fodder for its trial on august 26. Cohen is expected to testify. Anything he says could be used against him there. Would the prospect of a criminal charge like this being brought, would that prevent would that maybe keep cohen from testifying in the other one if that can be used against him in the sec trial . Its unclear. We saw the date for the administrative trial elised yesterday after s. A. C. Had already put out the lengthy 46 page white paper defending its claim. We havent seen a statement since then from the company from its lawyers about whether he will testify, how they will approach that trial and how they feel about the judge thats been appointed to that trial. So unclear what really will happen. But if you dont have the man that is the target of the charges or that administrative action coming and testifying, what does that look like. Especially when theyre trying to defend defense what the sec is alleging here. Just makes you wonder what happened, why they stopped cooperating in may. We talked with Jacob Frankel and he said the company was cooperate to go a certain point and it makes him wonder if other companies will rethink cooperation. Optics are confusing especially considering cohen and s. A. C. Settled with the sec in march 6 616 million. They had to have believed they would clear them of any potential forthcoming action. And to see that come two months later, they must have been extremely confused. So i think that when they probably stopped cooperating, i dont know this for sure, but they had to have been under the impression that whatever they were doing to cooperate wasnt working. And that they would be better off not cooperating. But certainly an interesting turn of events and wield very to s well have to see what the charges look like. Thank you very much. Joining us is Hugh Johnston. We appreciate your time to talk about some of these numbers. Core earnings was 1. 31. The street estimate was 1. 19. How do those match up . Yeah, we feel terrific about the quarter. The 1. 31 does include a 7 cent gain, but even backing that out, it was a strong beat versus where the could not census had us. The reality of it is we feel great about the top line growth in particular. Thats the sixth straight quarter of mid single digit top line growth. If you look at latin america with 12 growth, led by china in the 20s, india in the mid teens, pakistan in the 20s. All of the countries are really performing well for us. Both in the snacks business and in the beverage business. Bottom line on it is the portfolio is working really well. Combine that with the strong productivity that we got, 110 basis points, portfolio is work and frankly management is relentlilerelent lessly focused on driving value. Cocacolas numbers were a little disappointing. And they said they had issues because it was such a cold wet spring around the globe and that that i am pacted sales. You havent seen the same thing . I saw a little bit of the Weather Channel that you and you featured last week. I think the reality of it is the weather undoubtedly affects our business, but the way weve constructed the portfolio, thats what enables us to power through those types of things. So when its hot out, gatorade sells. When its cold out, quaker sells better. When theres a lot of party, frito lay tends to do well. When its cold and flu season, tropicana does well. The net of it is the portfolio is what enables you to power through and frankly the portfolio is working very well. But just beverages that you drink to cool off, to you sdo y couple of points less, hot weather beverages, did you see the same thing is this weve always said if a Company Blames weather, you needily put an eyebrow up inside its an overcoat company. So youre not throwing coke totally under the bus, but youre saying that there was something to what they were saying i guess, right . As i said, there is no doubt weather affects us, but when you look at it as a Global Company and as a company that has both a snacks business and beverage business, thats what really allows us to power through these things. Salty snacks and beverages like Peanut Butter and jelly. If you have salty snacks and beverages, duh. Makes you you thirsty. We think they fit perfectly together. You did get pressure from nelson peltz. Youre pointing out how well the portfolio is already working. What would you say back to this idea of picking mondelez and wrapping it in . As weve said before on this one, we think pepsico as a portfolio is working so well right now and the complexity of taking onnen a 80 billion acquisition and some who try doing all of that integration, frankly will, will distract the business from doing what it is that were doing right now, which is creating a lot of value for shareholders. So the bottom line is youll hear people occasionally advocate for that type of a transaction. The thing that they really need to look at is whats their Percentage Holdings of man do lea mondelez and pepsico. Hugh, talk to inga. Get by get rid of that name. Fold it in to pope city company. Hugh, talk to inga. Get by get rid of that name. Fold it in to pope city company. An interesting point, though. People who have much bigger stakes than mondelez and want that problem to get taken care of. More often than not, that seems to be the case, but ill leave others to judge that. They created that name. It wasnt like it was legacied in. Somebody said how about mondelez and they said yeah. Hugh, thank you for joining us. Congratulations on the earnings and thanks for your time. Thanks, becky. Our parade of Corporate Leaders and newsmakers continues this morning. Up next, ceo of eli lilly shows the Company Getting a nice wocet in premarket trading. Opportunit to experience the precision handling of the lexus performance vehicles, including the gs and allnew is. This is the pursuit of perfection. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. And experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. Welcome back. Defense stocks have been extremely strong lately and this mornings earnings reports arent likely to derail any of that momentum. General dynamics Beat Estimates of 1. 62. Revenue also coming in above consensus. It was a similar story for northrop grumman. 1. 97. That beat the estimate of 1. 71. Revenue also beat the forecast here, as well. Joe. And coming up, the ceo of eli lilly will join us. Well talk earnings. The outlaw, how the company has dealt with patent expirations and what the pipeline looks like. Wi drive a ford fusion. Who is healthier, you or your car . I would say my car. Probably the car. Cause as you get older you start breaking down. I love my car. I want to take care of it. I have a bad wheel i must say. My car is running quite well. Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. In a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. [ whirring ] [ dog barks ] i want to treat more dogs. Our Business Needs more cases. [ male announcer ] where do you want to take your business . I need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. So you can capture cayour receipts, ink for do. All business purchases. And manage them online with jot, the latest app from ink. So you can spend less time doing paperwork. And more time doing paperwork. Ink from chase. So you can. Share of eli lilly up nearly 4 in premarket trading following the Quarterly Results. Joining us, john, weve talked many types quarter after quarter and youve been dealing with some of the same things. All the Drug Companies have to deal with things like that trying to replace a big seller. What were the highlights of your efforts to do that in the Current Quarter . In the Current Quarter, we largely overcame the rescissors youll impact of losing that patent by growing sales of our own inline products zimbalta led despite the fact that the growth was hurt a little bit about the weak yen which depressed our results in japan which 10 volume growth in ja n japan. When you look at the top line and you add in improving gross margins, good cost control which resulted in lower spending by 2 , we produced 1. 16 at the bottom line and raised guidance for the year to 4. 05 to 4. 15 on a november began basis. Was that a depressant ssri . Cymbalta is an antidepressant. Well lose the u. S. Patent in december. So obviously we continue to have a patent challenge, but we also have a great pipeline and were in the process of filing for three regulatory applications already this year and we expect to file a fourth new drug application with the fda before the year is over. So its that pipeline that will come in and help us resume growth as we come out through 2014 and the worst of these patent expirations. Are you a Mental Health company, a diabetes, whats your focus at this point . Neuro . Or cancer or how should we view eli lilly . Its been around 137 years. I like to say about every ten years we move into a new therapeutic area. When i joined, we were a big Antibiotics Company in the 70s and 80s. With the launch of prozac, we became a neuroscience company. We expect that will continue. Keep in mind our alzheimers portfolio, we announced were starting a new phase three study competent position three. So that remains a strong focus. Diabetes is a focus. Cancer is a focus. And were moving into a new space auto immune disease by virtue of our pipeline. So to take over the baton from cymbalta, what is most promising, any of those that you just mentioned . We hope to see launches of the pipeline possibly beginning in 2014, but certainly continuing in 2015, 2016. Scymbalta is our largest produc, sole it will have a substantial impact. But starting in 2014, we expect to grow out of it. In the past youve bought some great Biotech Companies and had good partnerships. Do you see things out there that make sense for you . And with the backdrop of the ac chlt a and whats happening in health care, is about positive for drug makers . Or are the cost pressures going to hit everyone . Care, is about g makers . Or are the cost pressures going to hit everyone . Certainly health care is changing whether you hafactor i aca or not. The industry is competitive. We face generic competition, as well. And yet we believe that if we can continue to discover and develop medicines for diseases for which there is no good approach or treatment, well continue to be successful following aca implementation. Which products to you advertise . And theyre great commercials. S cialis. Cute couples can be anywhere. Like the girl is texting get me out of this conversation can and they kind of walk off. And you know where theyre headed. Bathtub. Who hold hands. Is that the only is all your advertising 1k3e7bsexpense cial . We also advertise cymbalta. Okay. Yeah. Because good anytime, right . Like 24 hours. Its not that hour thing where hwhere that just seems to put more pressure on you, right . You seem to know better than me. Hes ready. Hes quick. John, sorry we couldnt get you on camera today. Thats our loss. Thats all right. Im glad to be back with the show. Good to have you on. And our viewers loss that we werent able to see in you person. But hopefully next time. And keep up the good work. Drug companies, thats the future of humanity. So a lot on your shoulders. Were excited about the future. And we hope the next few years youll see the payoff in this r d investment. Especially alzheimers. Nobody needs that. Were very hopeful. We have a whole broad range of things that were doing there. And hopefully in the coming years well continue to make progress. All right, john, thank you. When we come back, we have two reports within the next few minutes. Well hear from boeing and caterpillar next. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Hooking up the country whelping business run if you dont have something important to say . Build were investing big to keep our country in the lead. Load we keep moving to deliver what you need. And that means growth, lots of cargo going all around the globe. Cars and parts, fuel and steel, peas and rice, hey thats nice Norfolk Southern whats your function . Helping this big country move ahead as one Norfolk Southern hows that function . Welcome back to squawk box. In our headlines this morning, a takeover deal in the apparel industry. Hain hanes brands is buying maidenform. Also ford reporting First Quarter profit of 45 cents is share. That Beat Estimates of 37 cents. Revenue also came in above consensus. Ford raising its profit and its sale forecast for the year and that stock up by better than 3 today. Federal prosecutors are reportedly preparing criminal charges against s. A. C. Capital. Those charges could come as early as this week amid an Insider Trading proefb. However the reports say s. A. C. s founder steven cohen will not be personally charged. Boeing out with quarterly reports. Phil. Better than expected numbers by a wide margin for boeing. Earning a core earnings of 1. 67. That compares with the street expecting them to earn 1. 58. Revenue also much better than expected. 21. 8 billion. Thats up 9 . Thats a billion and a half better than the street was expecting. They have raised their eps guidance for the full year. Now expecting to certain about 6. 20 and 6. 40. Thats an increase of a dime on both ends there. Theyre also raising guidance for revenue for the year by a billion dollars. And when you look at whats driving this for boeing, its clearly on the commercial side of the business. Take a look strictly at the revenue side. Because they are now delivering those 787s and they have increased delivery rate for other commercial lines, all of that is filtering into greater revenue for the company. 9 increase in revenue in the Second Quarter. And when you take a look at what their guidance is for the full year, they are expecting an increase of a billion dollars. One last thing. The split in terms of how they did bringing in money in the quarter, up a commercial airplanes. Flat on defense. But clearly the commercial side of the business driving a better than expected 2 q earnings for boeing. Back to you. Okay, phil. Yeah, all the news about boeing, it hasnt been Financial News recently. And, joe, one thing. Youre looking at that premarket at 110. 43. New alltime high. Which kind of shows us that a lot of the stuff that the media might focus on is not really that relevant to whats happening with the company itself. Right . Well, i think the one question that will come up in the Conference Call is clearly they were able to protect and keep the delivery schedule for the 787 intact as they were going through the grounding in the First Quarter and into the Second Quarter. They have gotten past that, they clearly will be increasing delivery schedules. Now the question is how do you bring down the cost. How do you really drive the profitability through. Thats the real challenge for these guys now. We should also talk about caterpillar because those numbers are also just out. The company is warning for the full year talking with 650, street at 684. Also looking at revenue coming in light. Somewhere between 56 to 58 billion. Street at 58. 6. How much did they miss this quarter . I havent looked at those numbers yet. I mean im telling you why theyre lowering guidance for the year because they earned 1. 45 versus 1. 70 which ishfr i im not a smart man, but is that 25 cents . So theyre coming down 34 crepts cents on the year and they already missed by 25 cents in the Second Quarter. So do we read into this china . Mining . Jim chanos talked about commodity super cycle slowing down because of china and that in turn cutting into Companies Like caterpillar because i think he said Something Like 40 , i cant remember if he said it was revenue or profit that came from mining. And you know the company was at 7. Street was at 6. 84. So the company came down from 7 to 6. 50. Not the end of the world, but they are dealing with macro issues. And actually we have talked to doug about the big acquisition. What was that, the big miner . Bucyrus. That was on the day that we had and it did turn south, the mining business turned south. Long term, people still think it will be one of the transformative remember paul ryan was onset with us that day. Oh, yeah, right, from wisconsin. But it doesnt mean it wont eventually work out. Revenue number was 14. 62 versus 14. 924. But that doesnt explain the bottom line being that far plea expe below expectations. But there are companies that arent quite as cyclical that are still dealing with an economy both here and globally that is not everything it should be. China is a smaller part of the business, butt inmooing itself that commining itself isr deal. And commodities, you know, you heard chanos. The big 15, 20 year super cycle bull market. Just real quickly i dont know. A year after so a year after he was gone from congress, this was happening. So she was pregnant the whole time. So it was august of last year. Who was telling him to pull out . The New York Times is recommending he pull out of the race. All right. Youre not doing the dings. But politicians, here is the politicians that i wanted to show you. These are the ones that are running new york. Thats the shot that i want to look at the knees. Look at the come on, joe. I dont want people a chasing me. Pull it back out again. This is without comment. But thats cuomo on the right. Not outcommenwithout comment. Thats bloomberg on the left and they will challenge each other on the white water. Ill take it any day. Go ahead. Youre so nice. But i saw that in the post yesterday and i go thats where you pull a sean penn. You see someone taking your picture. Or godfather. Bro where theyre at the wedding. He takes everything out of the camera, smash it is on the ground. I dont want anyone following me on vacation. If you know you look like hes always in a suit alone at a podium. Anyway, much more could have used a couple of big gulps growing up. Much more on boeing and caterpillar. Up next, our guest host for the morning. Byron wien, vice chairman of blackstone advisory partners. And he looks much better in shorts than that. If you have high cholesterol, heres some information that may be worth looking into. In a Clinical Trial versus lipitor, crestor got more highrisk patients bad cholesterol to a goal of under 100. Getting to goal is important, especially if you have high cholesterol plus any of these risk factors because you could be at increased risk for plaque buildup in your arteries over time. And thats why when diet and exercise alone arent enough to lower cholesterol i prescribe crestor. [ female announcer ] crestor is not right for everyone. Like people with Liver Disease or women who are nursing, pregnant or may become pregnant. Tell your doctor about other medicines youre taking. Call your doctor right away if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine or yellowing of skin or eyes. These could be signs of rare but serious side effects. Is your cholesterol at goal . Ask your doctor about crestor. [ female announcer ] if you cant afford your medication, astrazeneca may be able to help. [ female announcer ] if you cant afford your medication, help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. The dow closed yesterday at a record high. S p also drifted near a record finishing just shy of 1700. It looks like the bulls have been dominating the summer. Joining us now to speak more about this is Vice President of blackstone advisory partners. Also former Morgan Stanley investment strategist. Im having flashbacks. The last time you were on, i was giving you a little grief for the previous time when you had gotten more bearish. And you had been right all the way through until so were at 1700 on the s p. You got less positive. Absolutely. At what price . And i remember what it was about, too. It was about margins. Good for you. That they cant get any better. So are where he out over our skis right now, do you think, in the market . Well, the market i think ive been right another whichec. The economy has been slower than expected. Everybody was 2 or above at the beginning of the year. And ive been right about earnings because i think earnings are disappointing. Because cramer doesnt cramer loves a lot of these results. How about 20 orders in ge in Industrial Orders in the u. S. There is good news and bad news. Its always mixed. But look at the caterpillar report. So cyclical and so tied to commodity, mining. The problem with the economy is there isnt enough demand out there. Globally. But nobody you look at ford and they blew numbers out of the water. There is good news and bad news. But i think there is more bad news on the mar begin. You know who is involved in every aspect of our life right now. Does that make up for all this . Bernanke. The liquidity, the unprecedented amount of liquidity pouring in, the whole Balance Sheet of the fed in 2008 was 1 trillion and were putting 1 trillion in this year alone. You know what, you might be we might be soul mates here. Oh, my gosh. That will be a first. No, you know thats not true. But my worry is that like you, i hear the consensus that unemployment gradually comes down, gdp gradually goes up, but what if it doesnt. What if we stay at 7. 5 unemployment, what if demand stays weak. The fed has said it will stay. So do we do 4 trillion Balance Sheet, do we do 5, 8 . What happens . Is 10 trillion a point where we need to worry . I dont know where the point is. I dont either. Is there one . Lets look at japan. They put 600 billion to 700 billion in their economy through the bank of japan this yearnd at economy is less than half of our size. So thats 1 1 2 times our stimulus. We could do more. So you you dont have a problem with what were doing . I dont have a problem because i think the economy needs it. Then were not soul mates. The economy needs it. So you didnt think they would agree with that you we why did you think how did you miss it then . You think we need it. I now think we need it. I did think that the economy with a develop enough natural momentum, but it hasnt. Does that mean were setting ourselves up for a big decline in the market when liquidity gets taken away . Any amount of reduction of y liquidi liquidity, it will have the effect of tightening. To go from 85 to 60, thats sort of like tightening. If they do it gradually, will we be able to not really notice the change . Maybe. Maybe well be like the frog. Why does it say new bull market down there. Are you forecasting a new bull market . No. Yes, you are. Okay. Well i guess im behind my press. Damn it, it why does it say that . Oh, now it doesnt anymore. All right. Never mind. Youll be here straight through until 9 00. If you can handle me. This is going to be a smackdown. Cramer thinks people are being way too negative about earnings. Will you talk to him, are you afraid of him . Im not afraid of him. Were old friends. Maybe well do that at 8 50. I want so bad i will to be right that things are getting better. I want to. I do. We all want things to be better. Right. Were down two Percentage Points from the beginning from prerecession levels in tirms of participation rates. Weve gone from 65 i think 65. 5 to 63. 5. Youre on today at least. I got you back here, right . Youre happy about that. But well talk to in you a second. Well have more from byron. In the meantime, glaxosmithkline earnings fell short of consen s consensus. It expects some impacts on china, but argues it is too early to quantity fight september. Eunice yoon joins us from beijing. There is serious damage control going on at glaxosmithkline headquarters in the uk. Ceo is speaking at the second Quarterly Results and basically disassociating the company as best he can from the scandal here. He said that the chinese allegations were deeply disappointing and that headquarters had no knowledge of the china scandal. He also went on to say that 99. 99 of the staff operate in appropriate way and as far as they are aware, he says there were no allegations that the top two uk executives in china were involved in the scandal. As of right now, the entire Health Care Industry here is very, very nervous. And on edge. There was another detention for national, an american this time who was detained as part of the ongoing investigation. So far we dont know the name of that person, but and we also dont know for certain what company that person worked for although we do know that he does not work at xwlglax owosmithklg phase pfizer, a lot trying to extricate themselves from the investigation as best they can. State agency also came on very harshly. Saying people should not be surprised if norm famore pharmal Companies Get targeted for an investigation. They also said Big International firms, this is in the state run media, which is basically almost a mouthpiece for the government saying that International Firms should shoulder their responsibilities and set good examples for domestic companies. So already were starting to hear even more and more of a harsher tone out of the Chinese State press. Guys. Eunice, thank you very much. Next we go inside the numbers. Apcoming up, doug owner held man will join us to talk about the results of caterpillar lowering guidance for the year. The world is changing faster than ever, creating new opportunities for those who stand ready to seize them. In a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. At t releasing Second Quarter profits of 67 cents a share. That missed estimates by a pen anjohn teach stevens oig is joi. The numbers came in just a penny shy of what the street was looking for. Revenue beat. Is that because youre spending more on capex . Were growing revenues over 800 million quarter over quarter. So we had a great response there. We did it by adding 2 million broadband customers. When you add those customers, you have to invest in them. So most of the challenges were related to investing in our customers and investing in our networks. And we spoke with an analyst earlier this morning who said that he thinks thats the great strategic move. He did have some concerns about what happens to the entire field down the road, though. He said there are more players who are spending more on this, primarily sprint and tmobile. What happens from your perspective . This has been a Competitive Industry for a number of years. Were more than willing and welcome competition. I think an advantage for us is we have the best networks, the world east fastest 4 gflt a and anyone to compete, they have to provide a Great Network and we can do that. You have a new plan that the public is still trying to maybe look into a little bit. This is a way of telling people that you can change your smartphone much more frequently if you want to. How does that plan work and how has the public perceived it so far . First of all, its a choice. For those customers who want to take advantage of it, they can. We want to give our customers more choice. Secondly what it really does is allows customers to take the value of their old phone and trade it in and get value for that by giving it to us and having us take care of reselling it for them. What allows them to do is to get a new phone every 12 months. In return, we waive all upgrade fees and all actity s tit tivat. And what are you seeing as the number of customers who choose that option . Were just going live with this friday. Weve run it in test markets and weve seen good results. But well go live with it on the 26th. When you look around at the big issues that are facing some of the providers at this point, just in terms of consumers demanding more and more, using more spectrum wrrks do y, where us a few years down the road in terms of how much we demand . I think the quality lt networks were putting out on the mobile side are allowing customers to greatly enhance their use of data. Our customers increase their use of data 50 year over year. So were seeing it. So when you provide a quality product, they will use it well see it in video and Industry Based health care, technology, connective cars. So we see it expanding significantly. Thats kind of mind boggling when you try to figure out how much we require. Did you say 50 year over year in data usage . Hand set usage, yes, increased 50 year over year. So when you give them the right hand sets and Great Network, people respond with a lot of usage. And with our Customer Base on tier data plans where they get to pick how much they will e, its a great relationship for our customers and for us. All right. John, we want to thank you for joining us today. Appreciate your coming on on a busy morning. Thank you and thank you for your interest at at and t. Coming up, a big hour still ahead. Caterpillar chairman will join us to talk about his companys earnings. And well talk with wick moorman. And a presue of economic address from Valerie Jarrett. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this cadillac srx for around 369 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. When you do what i do, iyou think about risk. I dont like the ups and downs of the market, but i cant just sit on my cash. I want to be prepared for the long haul. Ishares minimum volatility etfs. 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[ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. The ceo parade continues. Wick moorman breaks down his companys latest report. And president obama set to unveil his economic Recovery Plan later today. Senior white house adviser Valerie Jarrett will give us a sneak peek. The third hour of squawk box begins right now. Welcome back to squawk box. My carlos danger name is sandros self. If youre not from new york, you dont know aboutanthony weern. Andrew ross sorkin is not here. Our guest host byron wien. Well have more from byron in just a second. First, though, becky has the morning headlines. It is all about earnings. If take you a look at whats happening with futures, youll see right now at least the dow futures are up by about 43 points. That is some improvement over where we started the morning. S p 500 futures are up by 7. Dow closed yesterday at another record high. S p 500 was down by about three points yesterday, but you can see its already making that up at least if the market opens where it stands right now. Overseas, the nikkei was down by about a third of a percentage point. Do down by 47. Half a percent in shanghai. In europe, you will see at this point the dax is up by over 1 as is the cac in france. Ftse up by about 0. 8 . We do have plenty of earnings news thorn. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Thorn. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Horn. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Orn. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Rn. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. N. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Boeing, earnings 1. 67 a. Compared to street estimates of 1. 58. Boeing, earnings 1. 67 a share. Compared to street estimates of 1. 58. Also some strong numbers for ford in the Second Quarter. Company posted earnings of 45 cents a share. Revenue also above consensus. And that stock up by about 3. 25 . Pepsi came in with earnings of about 1. 31. Numbers probably about a 119 to 124, so a five cent beat. Revenue roughly in line with what the street had been expecting. And you can see that stock is up about 1 this morning by about 80 cents to 87 a share. Shares of caterpillar are trading lower in premarket. Posted 1. 45 a share. 25 cents short of estimates. Revenue also slightly below. The companys full year earnin s s guidance is below current consens consensus. Doug oberhelman, great to have you on. Good morning. Good morning. Nice to be with you. We go back with jim cramer and a lot of earnings certain e season. Its great to have you on to talk about the headwinds that a Cyclical Company is experiencing globally. Its things we need to know with all our emphasis on what the fed does and whether were really getting beyond stall speed here. Is it u. S. , is it the end of the commodities super cycle . What would cause a weakness in your report . We have several things going on. Certainly mining slowdown is one of them. Everything im going to talk about here has been happening to us for about the last 12 months. Mining has come down. All of our big mining customers certainly are spending less on capital. Were seeing new exploration cut backe and so on. I guess the interesting thing about the mining business is most of our large customers have been reporting record production. And just in the last few weeks, weve heard that. So there is still mining activity going on in existing mines. Which mean after market business for us. But certainly new exploration, the overall level of mining activity is coming down. That has hurt us in the quarter, its been a drag for almost a year as weve seen the slowdown. But the bigger news and the bigger impact on our earnings is an eventer to reduction both by us and our dealers. The vast majority of the equipment we sell, construction mining, engine and Power Systems we sell through 200 independent dealers. Theyre going through a large eventer to reduction in the Second Quarter. They reduced inventories over a billion. We reduced ours almost a billion, too. So huge inventory reduction in the quarter as the last two or three. Were actually sell to go dealers far less than theyre selling to he said users. That bodes well for the future, but certainly been a drag on earnings. Where are the dealers . International all over the world. They all look and feel pretty much the same and theyre all doing the same thing. Theyre cutting back inventory because of a couple reasons. One certainly is slowdown in mining. For those mining dealers, we see that. Our availability from our factories is a bit better. And weve been producing to Distribution Centers which they are drawing on. So all that supply of inventory and machines and engines and equipment is coming down over the last year. Were at a historic low in terms of inventory on hand. So it has nothing to do with the Construction Industry in the United States really. Thats pretty good, isnt it . Well, it is pretty good. And the thing that i also want to emphasize is our business is made up of four very large and important businesses. Power systems and engines, solid. Large part of our profitability in the quarter, in fact largest segment of profitability for us in the Second Quarter in the first half of the year. Very stable, its been stable over the years. I expect to be stable going forward. A very good business. Financial products and services up in the quarter doing very well. Construction equipment soft primarily do to the inventory reduction i talked about. And of course mining inventory reduction and demand reduction from our customers. In gidifferent parts of the world you said it was everywhere. So are there areas that are weaker . Is china something that do we throw that in to the mix and say china was part of the problem for caterpillar . China has been part of the slowdown in the last couple of years as we all know. But actually in the Second Quarter, our total sales in china were up 20 across all of our businesses. We think chinas bottomed. Its had a very low base. Its coming back slowly. Again our numbers were pretty good, but nothing to write home about. I really dont want to see a big spike in china demand as we have seen you because i think they have to do better in managing that economy. Im optimistic they will. But our business is a bit better from a low base. United states good and steady. Our machine deliveries by our dealers across the country, north america for that matter, have been pretty much the same month in and month out all year. So relatively steady. Somewhat i guess you could paint an optimistic picture as the economy continues to grow out here, housing a little better. Well see how that goes. But all in all across the word, its mixed news. Mostly arounds mining slow down and even other reduction. Ld, its mixed news. Mostly arounds mining slow down and even other reduction. We also announced that because of the tremendous cash flow we saw in the Second Quarter, another billion dollar share repurchase. And we did that because water seeing such great cash flow. Weve averaged a little over a billion dollars a month in 2013. Were giving some of that back to the shareholders in the Third Quarter. Weve bought a billion dollars back in the Second Quarter and raised dividend last month. So im quite happy with that and we still end up with a very solid Balance Sheet. Our Balance Sheet is stronger today back into position it was prior to acquisitions of bucyrus, and three big sk acquisitions. So our Balance Sheet is strong. Jim chanos said hes authority shorting the stock because of the mining. He says you have a lot coming from mining. He thinks this will be a cyclical slowdown. He thinks china was sending the entire super commodities bubble that he doesnt think is coming back. About a do you s what do you see in terms of mining activity is headed as a result . Having been in this business 38 years and lived through cycle after cycle after cycle around the world, were definitely in a si cycle in mining. But long term for me, mining is a great place to be. Ive said this before. 7 billion people on the planet. Going to 9. Rising Living Standards will require minerals and energy. Certainly its not going to be a Straight Line up and we knew that. Super cycle or not, i dont know what you call it, but definitely a cyclical business. Were used to it. But i think you have to look out, i dont know, three, five, ten years, mining will come back. As i mentioned, mining an different and existing mines today is pretty good. Off time it will come back. It is definitely cyclical. I agree with that. What do you come when you hear somebody like chanos say that, does it change how do you business . Or just focus and keep going straight ahead . Im used to monday morning quarterbacking by lots of angles. And what were trying to do here and have been is make us within our four walls operationally very solid. Our safety numbers, our quality numbers, market share numbers are all doing very well. You take away the costs absorbed in inventory which is a technical thing, our operational flow through is good and solid. Thats what were aiming for. Because we know the cycle will end in mining. When we come out, well be lean. Were doing a lot of cost reduction, tuning and tweaking. We put in a tremendous enterprise system to control our inventory in the future. And match demand to lead times. Thats a big effort in the next two years. We can take advantage of that in this soft spot and really come out when the cycle turns a lot stronger. Thats our intention. We have done that in the past. This is byron wien here. According to estimates on world growth, world growth was running around 4 in 2010. Its down to 2 now. Im concerned that there is a sort of secular change. I agree with what you said about the population of the world increasing and standards of living rising, but im concerned that were in a proceed lounged period of slow growth and that will have an impact on your business over the next several years. Do you agree with that . I would agree with that and inthe slower froet, whether secular or not, time will tell. But were in a grow out period. Europe will take a long time to recover. Basically debt driven which has caused a lot of this. But in the end, if its 2 to 3 , thats the economy we have to deal with. Well learn to live within that means. And we will. Well become very efficient, take out a lot of costs, do what we can. But within that, you will see spurts of activity in Certain Industries that ought to be good for us and well just have to take advantage of that as we go. Id love to see 3 to 4 growth and thats one of the reasons i feel a little stronger on china i think than many. 7 growth rate, 8 growth rate isnt too bad. A lot lower than what it was. John, thanks. Appreciate you coming on today. Wow, we do have breaking news. Dell now announcing that it has received a reviewed proposal from michael dell and from silver lake under which they would increase the price for acquiring the company, talking about from 13. 75 a share in cash. But this is subject to certain conditions. They say in light of the special proposal, the company itself is saying that they are evaluating this with the assistance of their legal advisers. And as a result, that special meeting of stockholders that was to convene today at 5 00 p. M. , it will be adjourned to august 2. So they are moving the meeting to august 2 at 9 00 a. M. Central time versus 5 00 p. M. Today and because of a new deal they have coming in from michael dell. They didnt have the votes. But the company or michael dell is now increasing his bid. Hes talking about 13 ppts 13. 7 cash. Old bid was 13. 65. So ten cents have a. Increase of about 150 million. They say this is our final and best proposal. We are not willing to discuss any further increase in the Merger Consideration nor are we willing to increase the Merger Consideration to 13. 75 without the change to the unaffiliated stock and they want something for that. Wow. Yeah. They get the ten cents, they want something. Oh, my gosh. Voting requirement is the approval of a majority of them. And another dime. All right. Byron, i plugged your name into if you were to do something on twitter, like carlos danger, your name would be victorino risk. If you look on slate, you put your name in, they will give you the name you can use to be cool if youre going to do a selfie, Something Like a weeiner type thing. Victorino is cool. Mine is sandro stealth. But id put you in and you got a male name. I got benito shall be. I dont think they distinguish. I dont either. Anyway, coming up, we have the squawk box ceo calls continuing. Wick moorman will be joining us next to talk transportation trends and a lot more. Also still to come, we will talk to white house Senior Adviser Valerie Jarrett ahead of president obamas economic address later today. Thats me. I made you something. I made you something, too. See you next summer. [ male announcer ] get exceptional values on the highest quality cars at the summer of audi sales event. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Dell up 33 cents after the company postponing the meeting. Its moving it to august 2 because it received another proposal, updated proposal from michael dell. Michael dell and silver lake are now offering 13. 75 a share in cash. Its subject to certain conditions. But that is about a ten cent increase over the past proposal. That stock has been all over the place. Again its up by 2. 7 on the news. They say this is the last and best offer. They will not be willing to negotiate or increase it any further. Again 13 pmt 75 is now the offer on the table. The meeting moved to august 2. Also Norfolk Southern reporting profit of 1. 46 a share. Missed the streets expectations by three cents. Profits fell 11 from a year ago on lower demand for coal shipments. Joining us is wick moorman, ceo. Thanks for being with us this morning. Thanks, becky. From we know about the issues with coal shipments. But others have been able to offset it with things like shale. Why has norfolk had a tougher time with that . Well, everyones coal franchise is slightly different. Our export coal franchise which is aimed at the metallurgical markets has probably suffered a little more than some of the other franchises. But we also had a lot of positives in the quarter in terms of growth in crude oil shipments, growth in automobile traffic. We have a great intermodal franchise. But we saw strong headwinds in the coals franchise and we had some timing issues. When you talk about the export coal, is that something thats tied back to slowdown in chinas growth, as well . We were talking about that with the caterpillar ceo. Sdl ye yeah, i think thats right. I was listening to doug. Were also seeing on the competitive market with export coal, metallurgical coal, weve seen the Australian Dollar decline by 13 . Australia has big reserves of coal and that puts them in a more competitive position. And then clearly the ongoing malaise in europe has an impact, as well, in terms of steel making in europe. So Global Conditions are really what influence the price of metallurgical coal worldwide. Its something that will take a while to work through. And its something that well work through, as well. What was the issue with the timing on the fuel surcharges . Does that mean youre collecting that in the Current Quarter . Yeah, it all has to do with there is a lag between the time we collect from what the price actually is. So if the price is higher in a quarter, we dont start to collect it until 60 days later. As i say, its a timing issue. But it just so happened quarter over quarter, we had a big positive lag effect a year ago goerks slight neck difference this year. It comes out in the wash, but it does affect Quarterly Results. So does that mean youre on track still for the full year . Yeah, we think the full year is going to come in just about where everyone expects to. We dont give guidance. But that as i say is a timing issue. In temps of the full year, we expect strength in chemicals, autos. We position ag shipments which have suffered because of the drought should improve later in the year because it does look like well have a really good crop this year. So a lot of positives out there for us. You said you dont give guidance for the full year, but the street is looking for 5. 57. You dont think theyre out of whack . If we thought they were wildly out of whack, we would probably say something. The street has some reasonable look at what we do because one of the thing thats public is every week all the railroads publish their car loadings. So it assists the modeling. One complaint ive seen from an analyst is that Norfolk Southern has had a tougher time with some of the price increasing. Can you address that . Yeah, we feel like were pricing well. We dont give specific pricing information. We let revenue per unit be the proxy for that. But were very comfortable with our pricing and there is no real reason why we wouldnt price you will the way all the other carriers price. We price to the market as does everyone else. But have you been able to have some of the price increases stick or are you getting push back there your customers . As i say, the marketplace governs what we price. The real issue is the export coal because on some september as the benchmark price is declined by more than 50 , weve clearly had to take pricing action to keep u. S. Coal in the marketplace. A quick question from byron. Housing has been a favorable part to the u. S. Economy this rear. Are you benefitting from that in any way . Yes, we have a good size Forest Products commodities sector. We are seeing growth there. I will say its off a very low base. So still not where it was five or section years aix years ago. But we think it will continue to grow. The other place were starting to see a little life thats important is in the broader construction business. Commercial construction, highway construction where we hall a lot of materials. But it will be a long climb back. Wick, we appreciate your time. News also hitting the wires about edward snowden. There literally appears to be movement in the saga of former u. S. Spy contractor edward snowden. Nbc news several Wire Services following reports from russia state owned news agency that the federal Migration Service there have provided snowden with a document that would allow him to leave the moscow airport and stay in russia while his claim for temporary asylum is being looked into. That actual process could take months. Nbc news also confirming independently that snowdens lawyer is on his way to the airport as we speak and a separate report from russias task news agency saying snowden could actually leave the moscow airport within a couple hours. Those are the latest developments on the snowden case in moscow. Back to you. Coming up, well dig through the report with an analyst of boeing. And then well tell you what to expect when president obama kicks off his latest economic tour. Valerie jarrett will join us. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. 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Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. Boeing reported 1. 67 a share. Revenue also topping expectations by low to a biclos billion dollars. Joining us is howard rubel. Howard, you look at just about every metric here. 15 jump in commercial aircraft. The company talking about raising its boosting outlook for the full year and the stock looks like it will open at another new high today. The cash was terrific. They generated much more cash than earnings which tells you operations are starting to click on a number of funds. So what are you saying when you look at the stock realizing it will open up again at like 1. 0940 today, another new high. Does it still look like this is a building story that you would buy into . Yes, we have a higher price target. Were at 115 and well reassess it when we hear the earnings call. We have been watching this story, we heard from be aerospace earlier this week, talking about how there has been a serious change when you look at the growing middle class around the world. Is that what the story is about . Hes right. There is a really neat story in point to point markets with the 787. Wherever you fly, you can get into markets that big wide bodies cant. So how do you compare boeing up against some of the competitors . I think boeing has a new set of products and as theyre introduced into the market and the customers find out how good they are in terms of fuel saving and operating efficiency, i think they will sell more of them. You say youll reasset basssd on the call. Well listen to what the order outlook is, efficiency of the Development Program on the 737 max. Those are a couple of the items. Okay. Howard, we want to thank you very much for joining us this morning. Thank you. Coming up, president obama will kick off his Economic Policy tour this afternoon in illinois. Up neblxt well talk to Valerie Jarrett about the president s plan. As we head to break, take a look at the performance of the u. S. Economy over the last ten years. Welcome back. Dell shares are higher this morning after michael dell and Silver Lake Partners raised their buyout bid. The offer goes to 13. 75 a share from 13. 65 a share. And it is subject to certain conditions. This is said to be dell and silver lakes last best offer. Meeting to vote on the buyout bid that had been set today is adjourned until august 2. Stock up about 2. 5 . Also maidenform shares jumping after theyre being bought by hanes brands for 23. 50 a share in cash. About 23 premium to yesterdays closing price. And you can see stock right there up just about 22 panera bread taking a hit after they earned 1. 74 a share for the Second Quarter. Revenue fell short, as well and the company cut its full year forecast as sales growth falls short. Stock down 6 . President obama set to kick off a Campaign Style tour today promoting his latest plan to boost the entire economy. His first stop knox college. Joining us, Valerie Jarrett. Signor adviser assistant to the president for Intergovernmental Affairs and public youre the most Senior Adviser. Sd does that work for you . You can call me whatever youd like as long as we get to talk about the president s speech. Im reading from the New York Times. It says the president Senior Administration Officials Say hes probably not going to have any sweeping new proposals and its not intended to break the stalemate with congress. And then the republicans say that they cant believe its another speech without any legislative negotiations. So what will the president be trying to do do you think, valerie . The president is looking forward to going back to our home state of illinois, back to knox college where he gave his first major speech after being elected to the u. S. Senate eight years ago. And in that speech and as he has done since that time in other major speeches, he talks about what is important to the American People. And that is building a strong middle class from the inside out, building ladders of opportunity into the middle class and not a top down strategy. And so today is an opportunity for him to launch that conversation, remind congress about why were here, what the American People are expecting of us, and hell have a series of speeches that go into much more specificity in the weeks ahead. So in what hes trying to do since theyre so entrance gent in the house and so hard to get anything through, and hes try to bully pulpit a lot. Hes great obviously. Hes a great speaking to the American People. But it doesnt seem to move a lot of these guys. And hes tried more than a few things. 447 billion proposal in 2001, and then during the campaign. It doesnt really seem to get anywhere. Is this trying to get 2014 set up for maybe taking make gains in the house and senate, is that what this is about, more campaigning . In not at all. What this is about a setting forth the Long Term Strategy for how we continue to grow our economy. We have come a long way in the last 4 1 2 years. If you think about it over the last 40 month, weve had 7. 2 million private sector jobs. Thats great progress. But we all know we have to go much further. We need to rebuild manufacturing, we need to make sure that our workforce has the skills they need to compete for those jobs of the 21st century. We need to invest in infrastructure and transportation. We want the United States to continue to be the best country on earth and because companies can now locate wherever they want to, we have to really do whatever is necessary to motivate them to invest right here. Create jobs right here in america. And thats what this is about. Its laying fort a Long Term Strategy for how we can grow our economy for the middle class out. Thats what this is about and thats what the American People want to hear about. Theyre not interested in hearing about short term fixes and the politics as usual here in washington. We need to break that logjam and thats what the president intends to do. I couldnt agree with you more. But one of the Big Questions is there going to be something that lays out an overhaul for the Corporate Tax code. Is there going to be something that addresses do you think this is a cyclical or structural problem and how do you get after some of the structural issues . We have a lot of challenges. The president has said for a long time we need to revamp our tax structure. We need on create incentives for businesses to locate here. We is one of the highest tax rates in the world but yet many businesses dont pay that rate because they take advantage of loopholes. So we need to bring down the rate particularly for manufacturing. So you will hear similar things here about what will it take to keep the United States competitive. What will it take to make sure we have the best workforce in the world. And what it will take is a variety of things. Yes, today the president is going to use the bully pulpit. But we also put forth legislation and we will continue to do that. The president has said hell do whatever he can through the executive branch to make sure that we are lean and mean and investing smartly. So were also going to call in the private sector to partner with them. There are businesses that are make sure that their employees have great benefits and making sure that theyre well fapaid. We want people to work hard, get a good he had karks geteducatio job, not worry about going broke if you get into an accident or get sick and retire with money in your pocket. Its the president s desire to make sure that he sets forth a strategy that he believes will show that northstar and how to get there. And thats what motivates him and thats what he wants to motivate congress. Is there anything that with the current makeup of congress, is there anything that the president and congress could agree on . Oh, yes. Absolutely. We just sought immigration bill pass through the senate. Economically. The president has been having conversations with members of congress. And he is encouraged that within the Senate Republicans for example that there is a will to try to tackle these issues. I know they have been hearing from the business community, small and Large Businesses who are saying we want the government to get its act together and if they do, it will unleash unlimited potential. So we know the republicans have been hearing from them. So we still believe that we can tackle big things. Thats what we have always done in this country. And the president will use today to remind congress about what they were elected to do and that is represent the American People. Byron. Valerie, this is by ran wien here. Is there anything specific that hell say about job retraining or Infrastructure Development i here. Is there anything specific that hell say about job retraining or Infrastructure Development i here. Is there anything specific that hell say about job retraining or Infrastructure Development i here. Is there anything specific that hell say about job retraining or Infrastructure Development in those are two important issues. They are absolutely critical and he will mention those today. As i said, in the weeks ahead, he will be giving speeches on the basic fundamentals of each part of his strategy to drill down a little bit further. But absolutely we hear time and time again where employers want to hire and they cant find people with the kiskills that ty need and yet people who are out of fwork a very long time. So we need to make sure that every american who wants to work hard has the skills that they need to compete for those very important jobs. Thats what will keep the United States competitive and frgrow o middle class and we know that benefits everybody. If people have more money in their pockets, they will buy goods and services and that will be the engine for the economy. These are basic fundamentals that i think everyone understands and when people are sitting around their kitchen tables, trying to figure out how to make ends meet, what their expectation is that when people come here to washington, that they are going to do so with those folks in mind. And thats to whom the president will be delivering his message today. To say, come on, stop with the political short term straenlgs and lets tackle the challenges that the American People want us to tackle. And we can do that. Valerie jarrett, thank you for your time. Thanks very much. When we come back on squawk box, well talk more about dell postponing its Shareholder Meeting that was supposed to convene today. A slightly richer offer from michael dell for the company. Well talk to an analyst right after this. Help the gulf recover and learn from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. 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What do you make of it . It looks like he has succumb to pressure and raised his offer by a dime. Clearly thats not exactly what carl icahn and southeastern were looking for. They were looking for something a little more material, probably 14. This increases the amount of money that michael dell needs to raise by about 150 million. So it is a material amount of money for him. But if youre a shareholder, not a huge difference in the long term. Will it make a difference in terms of voting . I think it will make a difference in those shareholders will see he has raised his offer, but it was a fairly nominal amount, so it wont be a push that theyre looking for him to continue to raise his offer. I think this will put a stop to that. They say this is their last and best offer. So at this point, do you think he reality last time when it looked like he wasnt going to have the proper number of shares. And it doesnt look like carl icahn would have to support either. So youre confronted with a Legal Litigation battle for the future of dell and that would most likely cause dell shares to decrease materially in value. So you think that this is it, it will push it over the top. And then what happens with dell . Well, then you go through the process of the buyout and dell will go through a painful turnaround as a private company. But michael dell has also the power to incur whatever he sees fit in terms of losses in the short term for the long run viability of his company. Hes able to bring in hopefully leader thats sees from around the industry that he believes in. Pay them and not face the scrutiny of shareholders. Thanks. Coming up, much more on the earnings reports. And dell as we just talked about postponing its Shareholder Meeting. Well ask jim cramer what he thinks about that maybe when we go to the New York Stock Exchange. So much to ask him about came. Today. Sttomorrow, quarterly repor from gm and 3 m. And plus live interviews with the ceos of duncan brands, Southwest Airlines and dow chemical. Squawk box starts tomorrow at 6 00 a. M. Eastern. Wi drive a ford fusion. Who is healthier, you or your car . I would say my car. Probably the car. Cause as you get older you start breaking down. I love my car. I want to take care of it. I have a bad wheel i must say. My car is running quite well. Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah with fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Lets get down to the New York Stock Exchange and jim cramer is joining us this morning and jim, i want to do a mini lightning round, because i have so many stocks to ask you about and this is a tease for 9 00, but what has happened at ford, because you are talking about the Companies Reporting better than expected returns and they raised the estimate for the quarter, and alan mulally says they will be adding 2400 new job s. I would love to see latin america turn around and on europe, he said that money is under control and it is more under control and china is strong. This reminds me of the ford of the late 80s and coming on and the cash is extraordinary. And boeing up is as well this morning. Well, who doubts mcnerney. We thought that there was an ethiopian thing to sink the whole thing and i thought that the dreamliner was backed up to 2019, and i think that it is 2020 before you can get a dreamliner, so it is a remarkable, and cash flow and talk about the operating cash flow doubling is amazing. Pepsi beat expectations by a long shot, and they have not talked about the weather as cocacola did. Well, if they bought mo mondelez, i like that they took shares away, and i think that cocacola is losing share in china in pepsico who is a major player there. And byron is worried. The byron wien is worried. Well, he is wor wried about what . Well, no, worried about jim, im worried about the Profit Margins peaking is my worry. There is a lot of favorable reports, but a number of disappointments, too. If you look at the customer spending space in auto, and telecom and in housing and in cloud, and gas, these are all better than expected an also, buy rorngs we didnt talk about ate, but the european pmi says they are coming out of recession which is margins of 51. 2, and so margins are coming down from everyone i have seen, but the worst ones are the commodity hedges, and they got it wrong. What about caterpillar . Caterpillar, wrong clients and i did not hear anything about it, and they come in and basically give you the number. I would not be surprised if the stock is up at the end of the day and i know it is hard how poorly they are performing, but i was expecting a lower number, and i am surprised it is not a five, because that is how poorly they are doing. The steel is coming down dramatically. Jim, the carlos danger slate name is jamie dynamite. Really . Well, the thing is that with you, you have tweeted 23,000 times and never tweeted a selfie. No, that is true. I have to get on the case there, and i did a couple of the snapshots throw, and so did steve barton, and i have to tell you that the decision to go after a criminal case against s. A. C. Is something that needed to be telegraphed when delivering alpha, because so many news stories coming from that occasion. We used a sound bite from your interview earlier this morning with four others. And the snap shat sound bite and lets talk about how the Insider Trading is going on. Come on. You laughed and said what the heck is that. Well, you know, they put spitzers name, mario smash is his. Well, he is worse than expected i will tell you, and im taking numbers down for weiner. Only a year. Only a year after he resigned. I nknow. Issues. And slashing dividends by and issues, jim. Serious ones. I mean, that is going to get to the 500 feet from an Elementary School. And coming up is byron with the last word. And plus a former golden trader is expected to take the stand today in his own trial Fabrice Tourre as we caught up with him a moment before he headed into court. Are you going the testify today . Im well, thank you. Are you concerned about thank you. Very well, thank you. Are you going the testify today . Yes, im going to testify. 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. People find out state farm does car loans as well as they do insurance, our bank is through. Good point. Grab an edge. Look theres two guys on the state farm borrow Better Banking sign. Nope for real theres two dudes on the state farm borrow Better Banking sign. [ reporter ] breaking news from the state farm borrow Better Banking sign. Were seeing two men that have climbed the borrow Better Banking sign gentlemen please get down from the state farm borrow Better Banking sign. Phil get the hose. Okay hes getting the hose. Alright, lets go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. Thats borrowing better. Stock of the day is apple. The company beating expectations better than expected. The Third Quarter revenue higher on the side of the street, and showing that it is going to do well, with shares moving higher. Back to the guest host byron weams and i looked at the huffington post, and Larry Summers is guy now. They hate it. The panties are all bunched a they hate Larry Summers and if you go far enough left, you dont like your own people. Do you like him . Well, yeah. I have Great Respect for larry. Would he be a good fit . I have no idea. Well, that is pretty noncommittal endorsement from you for someone who knows him. Well, i dont know what the fed is on a course here that provide provides enormous long term stimulus to the economy and that is an inefficient way to stimulate the economy. I thought you wanted more . No, i want them to keep up what they are doing. And you would like them to get up to 200 billion . Well, yellen will continue bernankes program and not increase it. Who would the market feel bet better with, summers who is a better known quantity through all of the offices he has held or yellen who people believe will keep bernankes policies in play . Well, i cant speak for the market, but i know that the market wants a status quo, and yellen represents the status quo. S summers is much more likely to be independent, and you dont know what he will and what will stop you from worrying about the profit margin and prevent you from being outright bull . Well, i want to see the Companies Increase revenues. The problem with the economy is not enough demand. That is what the fed is for with no action from congress and the white house. Yes. All right. Byron, a pleasure to have you with us this morning. Always good to be here. Our favorite. The alantronasaurus. That doesnt sound right. Thank you. It is time now for squawk on the street. Good wednesday morning. Welcome the squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the New York Stock Exchange and the futures are looking up with a record high, and the tidal wave of earnsings and some good like boeing and panera and qualcomm, and now some of the data is coming with fnc