Transcripts For CNBC Squawk Box 20140430

To cnbc first around 9 30 eastern time this morning. Well also be talking to an analyst in just a few moments about ges offer, what he thinks ultimately will happen with this deal. First, more headlines from andrew. Andrew, good morning. You made it. Good morning. We can tell that story in just a little bit. Lets get you through some of the other headlines first. Two big names reporting after the bell. Twitter reported lackluster user and usage growth for the second consecutive quarter. That raised concerns about the company maintaining the mass following weve been talking about. The news on the growth overshadowing the betterthanexpected results. Twitter stock falling below postipo twice of 38. 80, that was the ipo low of 38. 80 on november 25th. You can see right now were at 37. 58. Also, lets talk about ebay a little bit. The company earning 70 cents a share versus on estimate of 67 cents. Revenue topping estimations as well. Coming in at 4. 26 billion. But guidance for its Second Quarter came in light. The company also says it absorbed a tax charge of 3 billion. We have to bring that all together. After bringing home 9 billion of foreign earnings that werent previously subject to u. S. Tax. We always have tax discussions and the move expected to increase the companys available u. S. Cash by some 6 billion. You should take a look at those shares as well. We talked a lot about ebay, given all thats going on with carl icahn. A quick programming note, john donahoe will be on squawk box later, twitters ceo, dick costolo will also be making an appearance. Thats all on squawk on the street. This is squawk box. Thats squawk on the street. Were all one big happy family. Ill call it the joey, its as joey is to friends. Its the spinoff. It is . Apple, tapping the bond market as the Company Takes on 12 billion in debt to fund its shareholder return program. The maker of the iphone and ipad if you didnt know. Thats like a throwaway line, isnt it . Finding it, a cheaper way to reward its shareholders rather than repatriating overseas cash. Every story that weve reported on in the last week has been about avoiding the high taxes relative taxes in the United States for corporations. Apple has reported 151 billion in cash with a majority of it held offshore. You know what obama will do, hes not going to address the inequity to the rest of the world, hell make sure you need 50 instead of 20 so you can leave. Theyll force you. But youll pay taxes here. These arent golden handcuffs, these are no were theyre not. These are some other kind of handcuffs. Its 6 03. Yes, sir. Youre baiting me with the handcuffs. I know. Its not me half the time. I get charred and tarred. I was thinking of golden handcuffs. Now youre saying golden handcuffs. Golden parachutes. Yes, yes. Sandfi is looking to sell a portfolio. Becky is worse than all two of us. Look at her innocent face. She wiped it right off. That was fast. Drugs that could bring in more than 7 billion. The French Pharmaceutical Company said to be working with ever corps partners and has contacted potential buyers in the past few months. The drugs for sale include treatments for high Blood Pressure and cardiometobolic diseases. The job survey coming up at 8 15 eastern time. Economist ares looking for 210,000 jobs. Well talk more about this with Steve Liesman later. There have been questions about adp, whether or not its tracking properly. There have been questions raised about that. Also, well good getting the First Reading on gdp for the First Quarter. Weak growth expected, obviously from all the weather weve seen. Just an annual rate of 1. 1 . As we mentioned, weather will be a big factor in all of that. That will be the lowest level weve seen in sometime if that is the case. Take a look at the futures right now, at least at this hour, things are moderately lower but not by much. Dow futures down by just over 8 points. Nasdaq down by 12. The s p would open at 3 points lower if it were to open right here. The tenyear note, its yielding 2. 7 . As we mentioned alstom accepting General Electrics bid for its Power Company but german rival siemens isnt backing down just yet. Joining us now on the squawk news line is more is nick heyman nsh heymann. Start from scratch. By the board accepting this, does that mean theyve got clearance from whatever politicians are involved with this . I figure theyre all probably involved at this point from holland a hollande all the way down. There are four gate keepers involved in this process. One is the french government, where this has recently been focused. The second would be the eu regulators for antitrust concerns. The third would be any banks or credit agencies. And then the fourth would be all shareholders. At this juncture, the board has recommended to the shareholders that the ge transaction is fine. With an enterprise value of 11. 4 billion euro or, you know, an equity value for alstom, excluding any debt of 12. 4 billion. So theyve got the green light currently but it is not exclusive with regards to alstom being able to listen to other bids that are unsolicited. Siemens, they werent ready. They invited them in, right . Because they could have accepted siemens bid if there was one on the table. Is there not one ready yet . Siemens is proposing Cash Payments of approximately 11 billion. 11 billion euros, excuse me. And swapping or throwing in all now, not just their high speed but all of their mobility business. Okay. I dont know what the combined entity value of that transaction might be. But you know, my guess is that at this juncture, siemens is conditional because they have to do due diligence. Theyll have until june 2nd to do that. And then in turn, put in their final bid. And meanwhile, siemens has been working with rollsroyce to acquire their oil and gas compression turbine business. That is supposed to be announced, i believe, next week on their earnings on may 7th. Theres a lot of moving parts here. To the extent that ge can come back, politically, what would they have to do to make this more attractive or attractive at all to get it across the goal line and now beat this situation . Well, i would say right now when you go through these gate keepers and the french government, i think ge will likely end up being okay. They are a larger employer at 10,000 versus 7,000 siemens employees. They help run the most successful and profitable joint venture in the world. Siemens has been indicated to be quite solid. With the eu antitrust commission, its likely to be very different. Ge has proven to be okay. In siemens case its uncertain, given the 70 combined gas and fossil base load Power Generation installed base they have in europe. In the banks and credit agencies, siemens was recently indicated by one of the rating agencies, if they spend a billion dollars, they may have their debt rating of aplus reduced. As we go through the numbers and what we are looking at with rollsroyce and potentially here, they could look at much more than one reduction. The eu wouldnt necessarily go against the u. S. Because its losing one of its industrial gems. They would actually think about the antitrust that siemens is more of a threat, combined with alstom than ge . Let me propose something to you that may be a different type of solution. Ge ultimately is allowed to buy the energy assets. That provides them cash at alstom. Which they in turn can buy out their largest shareholder, who owns 29. 3 . And in turn it provides alstom with funds to then buy Siemens Mobility business which then gives cash to siemens to buy rollsroyce oil and gas. Thats nice. Thats nice. Thats really nice. Everybody results from this, you have alstom evolving as the Worlds Largest transit rail producer. You have ge securing additional without excess concentration. Okay . In the oil and gas business. I mean, of the Energy Business. And then you have siemens able to beef up their oil and gas you should be a banker and get a commission for this deal. Theres other parts moving, too. Okay . We also follow abb, this clearly has ramifications as it relates to its utility grid business, Power Products and power systems. Ge is looking to sell some assets, right . Yes. Okay. About 4 billion. And they may in fact find some assets that could be of interest, not in the generating side, that are surplus in ges noncore status for abb. The germans, the french, the americans, the eu, we can all live together but we cant do anything in congress. They could put this thing together but we cant move one step. Well see how this all works. You have a lot of different components here. I think ges commitment about jobs, they can go back and look at what theyve done with the health care business. Theyre bigger employer in france than alstom already. Thats correct. Ge immediately pushed back and said we have an unbelievably positive relationship with French Companies and the french government. As nick pointed out, you still have to good through the eu. The eu is a bigger hurdle for siemens by far. Than for ge. Immelt kind of looks like remember that handsome guy with the gray hair that came in a couple of years ago. He looks french, european. Immelt has the gray and hes tall and im not sure kerry, they always said he was john kerry . He looks french. He certainly talks certainly his yes. Jeff is cosmo. This is all interesting. We wonder. We immediately thought the ugly americans are coming here to steal our yogurt. Maybe this will work out. Thanks, nick. Thank you. Lets talk about another big deal, Just Announced in the utility sector, exelon is buying pepco. The combined companys business will serve approximately 10 million customers. The deal has been approved by boards of both companies. The deal is expected to close in the second or Third Quarter of 2015. A long time period because of the multiple approvals required by various states and agencies. Pepco valleyed 5. 7 yesterday ahead of this deals announcement. Exelon has said it wanted to make acquisitions of companies with steadier cash flow business. This is an electric utility in washington. That is a steady state business. You can understand whats going on there. Lets talk about the latest nbc wall street journal poll. Its been released and has an uptick for president obama when it comes to overall job approval ratings. Lets get to Cnbcs John Harwood who is here with the details. It shows an uptick in overall job performance. The lowest ratings for Foreign Policy handlings of his presidency. What does this tell us . This is a bad time for anybody in politics, for president obama included. We saw a slight tick up to 44 job approval from 41 from what we measured in march when the rollout problems were still not resolved with the Health Care Law. But what you see as you look across the institutions in our society, we polled on Financial Institutions, large corporations, more than 31 negative for those organizations. The same almost as bad for the federal government, for the National News media. We dont rate very well either. And what you also see is that people are not feeling comfortable about the political and economic systems in the country. A large majority, 55 , said they think the political and economic systems are stacked against people like me. When you ask people, is this a country still where people can get ahead by working hard, 51 say no. Its not an equal opportunity society. They dont like globalization. Within we asked people, it has globalization been good and free trade been good for the United States, 48 plurality say it has not been good, 43 say yes. The same is true when you ask people, do you want us to be more active or less active in Global Affairs . People want us to pull back from other countries. This is an American Public which is hunkered down, looking at events in the world, thinking theyre not going well, not feeling very prosperous financially and wanting american leaders to do something about it. On the narrow sense of political competition. Theyre tied to 4545. When you ask people if you want republicans or democrats to control the congress. So the divide in the country is fairly even, though its going to be a good Election Year for republicans because of who will vote and where the elections take place. But this is in the a happy time for anybody in public life. And president obama can be thankful for a small favor by the upturn. Its not going to do a whole lot. I thought i just read yesterday it was a new low. What was that, the Washington Post. Foreign policy. No, no, no the that. The Washington Post had them overall at 41 yesterday. Thats where we were in march. I trust our number a little bit more because i think we were were in line with news events and other polls have shown the president and the support for the Health Care Law going up a little bit. We saw that, too, by the way. The Health Care Law still unpopular. Its less unpopular than it was. I just read it yesterday. Now i hear that its up today, down to a new low yesterday. One other time i brought up some other poll and, man, i think i almost got fired. That guy is gone, i believe at this point. Why do you think americans feel this way . Obviously after the financial crisis that tells you a little bit about why theyre headed this direction. Is there Something Else piling on and is there a time you can go back in the history of this poll and look at similar feelings to why americans were thinking that things were so stacked against them . I think its because ordinary people dont feel like theyre moving ahead economically. You look at, you though, weve clearly had a divergence at the top and bottom of the income system. But in the middle, people are just kind of muddling along, median Family Income is just not increasing at a robust pace. We had a period after world war ii when you had for a long period of time tremendous growth of the middle class, rise in living standards. Were not seeing that right now. I think until we figure out some way to get broadly distributed growth in this country, its going to be difficult and people are not going to feel as if governments are working for them. Weve been talking about this all week long. You know how many tax inversions weve reported on in the last two weeks of Major Companies trying to leave the United States and take jobs with them . And you have keystone and yet, let me ask you, do you think if we go to 10. 10 on the minimum wage that thats going to solve our problems with people being able to get ahead . Of course not. Is that the priority . Of course not. Is that the priority youd be pushing right now or would you be trying to reform Corporate Taxes to keep these companies here at this point . Tax reform is a great idea. Its difficult to publish politically. Why not lead on that. Who, me or somebody else. No, no, president obama. Instead of going from place to place talking about minimum wage, what does that represent, 2. 9 and half the people its their second job. Pfizer wants to leave. All these other companies are trying to get around paying taxes here and take jobs elsewhere. If you wanted to help the people youre worried about, wouldnt you do that, john . I think the focus on minimum wage represents a little bit of economic policy, a little bit of politics. Yes, a little bit. Theres no question that tax reform would be a value step for the american government, the american economy. But theres a reason why republicans in congress, like the president , watch dave camp come out with his plan and everyone forgot about it in five minutes. Whys that . People know it cant be done in this political environment. You cant politically get the two sides together. You know who has to lead. Congress cant lead on this. You know who has to lead. People like you have said that. Isnt the answer, john, really in truth, at some level the democrats cant do this tax reform bill . Why couldnt they, if obama got behind it . What do you mean, andrew . In this political environment, i think its harder for the democrats than it is for the republicans to proceed with a tax reform bill. You have two branches of government. You have the executive branch and youve got the i dont think its right. He shouldnt even try . Im saying he absolutely should. Hes having trouble doing the minimum wage. Hes having trouble doing immigration. Thats not stopping him from its hard are for him in this environment to do it. If you were going to try and get something done, maybe this would be more important than the other stuff. Im not disagreeing with you. Im suggesting he absolutely needs to get something done. He cant get anything done because of the nasty republicans. Tax reform is about the hardest thing you can do. Youre not really agreeing with me. Youre saying why should he try. Im saying he needs to try. There is a political reason why republicans are stopping it. Because of the far left. This is a far left conversation. Now youre talking about trade. This is a far left conversation. Hey, guys uhoh, john youre right, im sorry. Now hes going to do it. You cant isolate one particular group and say thats why were not having tax reform. The whole system is gummed up between democrats and republicans and all of the business groups by the way who also say they want tax reform. If its their sector. If it doesnt if theyre net losers, theyre not for it. You can guarantee that. Nader thinks the far left and the libertarians need to get together. Its this corporate culture. They should start their own party . We have to break the deadlock of this corporate cronyism. Good luck with that, ralph nader. Whats that . Good luck with that. I was making a far left conversation. I apologize. I think you meant the democrats cant do it because the republicans will not let them. The far left will not allow Corporate Tax reform. If youre a democrat, if you were president obama, you cant do it. I think you might be right about the republicans not allowing it either. Im not sure that the will is there, either. I play both. Just depends on the time, not even the day. Coming up this morning, this mornings executive edge goes to court. Wow. Did you see that guy yesterday . Yes. Tough. You know what, zero tolerance. You talk about it, then lets do it. The nba bans Los Angeles Clippers owner Donald Sterling for life. Will he be forced to sell and does this really hurt a billionaire . 2. 5 million doesnt. If he liked basketball, it does. He cant even go watch a game. Cnbc first member sandy weill will be our guest host. More squawk in just a moment. You saw is yesterday, the consequences for clippers owner Donald Sterling. Adam silver taking action after a recording of sterling that contained racist comments was made public and then confirmed. Effective immediately, i am banning mr. Sterling for life from any association with the Clippers Organization or the nba. Mr. Sterling may not attend any nba games or practices. He may not be present at any clippers facility and he may not participate in any business or player personnel decisions involving the team. Here to talk about it is dave briggs, host of sports dash on nbc sports network. I think people sort of thought this was going to happen, it was still hearing it verbalized. I dont think anyone thought that adam silver himself, who works for the nba owners, he works for them, and in this case would turn the tables and say owners, youre working for me on this one. Im going to lead and tell you what were going to do. Banning him for life, not what anyone i talked to expected initially. Okay. What is the players have pointed out, theres a lot of africanamericans, obviously. 76 . Okay. 76 . How do you have someone that makes comments like that have anything to do with the sport after that . I dont see any especially i completely agree with you. This was leadership, a brilliant way to handle the situation. Anything else would have been a half measure. How did he hang on for decades as a racist slum lord. Adam silver came out and was very strong on this. You saw cuban. He said great. Theyre going to force a vote. Theyre going to force a vote. He wouldnt have done that unless he knew that the other owners are going to vote in favor of this. If the initial discussion with owner was a pushback, no way, you cant do that, he wouldnt have done it. He still needs 22 of 29 voters to go along with him. Weve got comment publicly from 20 owners who already say they support the decision, including the clippers. Sterling so far seems to be saying nothing. And so my not a word. My question is does he let the season play out and try to defend himself . Does he just let this happen . Or does he sell the team and let it go . Hes a lawyer. I cant imagine hes not at some point going to raise his hand and say i was suckered into this or whatever. Hes arguably the most litigious man in all of sports. Hes going to fight it. Hes going to fight the vote, the ban, hes going to fight this all the way home. How does that happen and how will it play out. He has Nothing Better to do, because hes 80. He has no friends. He has a billion dollars to pay legal fees. He still sells this team for what im told to be a billion dollars. He purchased it for 12 million. The Milwaukee Bucks went for 550. El escalate from there. This wont be a fire sale, people will be running to buy this club. David geffen has 6 billion. Steve bomber will be the buyer. You have david geffen. There was a weird tweet yesterday by Magic Johnson. He has an owner, im not buying it but hes already involved with guggenheim. They own the dodgers, theyre right there in l. A. , it macs sense. The nba wants magic. How perfect would it be that an instagram picture with Magic Johnson and Donald Sterlings girlfriend started this whole thing. He gets the team. Floyd mayweather wants the team. Would the team move . No chance. I cant imagine anyone would do this to the city of los angeles. I think the board of governors will require the team stays there. Mark lazry just bought milwaukee. He could have had l. A. For the same type of money. This team is probably going around a billion dollars. He has twice as many chances to win a title. By two. I dont know if anyone has that kind of cash. He would like to own more than one team . Not in different markets. You have to earn your sports franchises in one market. Really . You know a lot. You should do this for a living. Thats a good idea, joe. I see you five minutes every once a while. This should be your fulltime job. Is that an offer . Or are you telling me i should do sports for a living . Oh, i do by the way. Yes, you do. Wow. Well watch what happens in terms of whether the team gets sold. I dont expect i saw this guy went out to a restaurant and they had a picture of him with his wife whos back supporting him. But you wonder whether hes actually punished his life is really not great right now. No, its not. I dont think it will ever be good again. To your point, even if he sells it, he makes a billion dollars. Right. He probably withins hear. He gets the billion dollars. For him thats not a win. Hesat home in a cage. The other owners will support this. Imagine going out and trying to get free agency, if youre that team. The sponsors havent come back to the table yet. Ultimately this isnt a business story. State farm says were still pausing our relationship with the clippers. Because he still owns them. None of the sponsors will come back to the table until hes out. This is a guy that doesnt care if they lose. They lost for decades. Dont you think they become sort of Americas Team next year . Provided he doesnt own them, right. Probably becomes the most popular team, doc rivers one of the most likable coaches in the nba. Right now theyre divided, are mem rooting for them or against them . It seems split. Dont jump the gun. Im watching brooklyn. They have a shot at this thing. They do. This is still about the miami heat. Someone has to take it away. We should go to a game. Thats a good idea. I love the knicks, though. No, no, no. Steve kerr is coming to town. You know anything about sports. A little. When we turn, the adp employment report and gdp, well have both of those, how the numbers will be impacting the markets. That discussion within we return. And the spiderman sequel, my kids want toot see this but they dont know what theyre talking about. Theyre too little. About to get the official Summer Box Office season under way. The Movie Theater operator amc entertainment, cant wait. That ceo will join us as we head to a break. Take a look at yesterdays winners and losers. Good day sunshine good day sunshine rain rain go away come again another day true businessgrade internet comes with secure wifi for your business. It also comes with public wifi for your customers. Not so with internet from the phone company. I would email the phone company to inquire as to why they have shortchanged these customers. But that would require wifi. Switch to comcast Business Internet and get two Wifi Networks included. Comcast business built for business. [ female announcer ] theres a gap out there. Thats keeping you apart from the healthcare you deserve. But if healthcare changes. If it becomes simpler. The gap begins to close. When frustration and paperwork decrease. When doctors are better connected. When grandparents get to live at home instead of in a home. The gap closes even more. And you begin to live a healthier, happier life. So lets simplify things. Lets close the gap between people and care. Mattel started in a garage. Disney started in a garage. Amazon started in a garage. The ramones started in a garage. My point . Some of the most innovative things in the world come out of american garages. Introducing the lighter, faster cadillac cts. 2014 motor trend car of the year. Aint garages great . Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. In the headlines this morning, exelon is buying Pepco Holdings for 7. 25 a share in cash. Its a 25 premium over the companys Closing Price on tuesday. The combined companies will serve 10 million customers in the midatlantic region. Among earnings reports coming out this morning or that have come out, wellpoint reported a quarterly profit of 2. 30 a share. The estimate was for 2. 12. So it was above. The Health Insurer raised its guidance after paying out less in claims. And two economic reports will come out before the open today, adps april report on private Sector Employment is expected to show 210,000 new private sector jobs for the month. And you know that if were getting that today, somehow another friday employment report has snuck up on us. Friday is jobs report, big day. The governments first look at First Quarter gdp and that is the weather, wed call this the weather report, showing growth of 1. 1 because of all the weather. We knew that. In the First Quarter. We knew that about the First Quarter. To average 3 we have to get cranking. Later today, Federal Reserve policymakers will be out with their latest policy statement. Following the conclusion of their twoday meeting. I was going to Say Something about the economy. Is china going to be bigger . Yes, supposedly. Did you read the detail . The detail is what you can buy in different countries. Is the economy really bigger . I dont think it is. They expected it to be 2019. Its buying power. Did you read the details . I dont know if im buying it. Within we come back, well focus on the markets ahead of two key economic reports. Also fotodays fed decision. Stick around. Squawk will be right back. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Today is the last day of april, should investors be gearing up to sell in may and go way . Joining us now is Joe Montgomery from wells fargo advisers. Barrons named him one of the top Financial Advisers for 2013. Youre a retail broker. I am. Also with us is mike vogelsang, his firm has about 2. 5 billion in assets under management. Are you in a position to speak for wells fargo on anything . I can relay the information that theyve put out. Normally wed book a strategist. Right, right. What are you doing with your clients then right now . The clients that youre trying to close on deals right now must think youre a big muckety muck at wells fargo. I dont know about that. From our standpoint, were looking at asset allocation. You all talk about it a lot on the show. Were concerned about what i would call a generational change in fixed income where youre not going to be able to get what you were able to get in the past. Were looking at alternatives there, not necessarily alternatives in the traditional sense but other things, be it reits, et cetera. How many guys are in your group, retail brokers in your group . Im really the only how much do you manage . 15. 8 billion alone. Just you . Me, our group. Which is all one thing under my group, under my number. Were all one part. We do a lot of institutional business, insurance companies. We consult for them. As a retail broker youre handling alone 15. 8 billion . Yep. Wow. You would be number one on that list, wouldnt you . If you look at what a lot of people handle whether it be options, how they rank that, i cant answer what barons does. It adds up pretty quickly. Where are you . Were only 2. 5 billion. Youre not a retail broker. We run a Money Management firm. Were 2. 5 billion. Were more worried about the rest of the year. We think this summer would be selling may go away, it may be a perfect outcome for this year, perfectly natural, sort of expected. Youve got monetary conditions working in the wrong direction, even though theyre accommodative, theyre still working in the wrong direction and you have corporate profits that are decelerating clearly. Theyre doing okay. The economy is fine. Were not expecting a bear market. But were not expecting 12 , 15 , 18 next year. Your insurance clients are the ones concerned about being in bonds, theyre the ones looking around . Everything we do is based off of risk. As you can imagine with insurance companies. Its been 35 years since the bond market youre absolutely right. The tenyear, most people managing money, i think you mentioned it on your show yesterday, its been a bull market in bonds since september of 1981. Most of the people that manage money have all come into it after that. Not many people that perspective before. If you go back and look at the charts say to 1954, you have it up there. On the blue side, you have an after inflation, 6 on your money versus if you go back on the green side over there, 1954 to august of 1981. A lot of 1 . Youre seeing a minus 1. The change is, this generation is going to have to find a better way of doing business. Or theyre not going to get the yield. The interesting part about that is, it used to not be terribly unusual for stocks, actually, to have a higher yield than bonds. People considered stocks morriskmorris more risky. My cap and gown came off, i walked into the market, Interest Rates have been coming down ever since. It is, it really colors and shapes all of our backgrounds and history. I dont think people understand what it could be to see Interest Rates going up. I think you have to look at different places, reits themselves cant take over the entire amount of money thats gone into the bond market. Absolutely right. It does force us to brooen the mix. I dont know if you have the other chart, what we call the evolution of the investment process. If you get a frame of reference and go back to where we were, lets say, in 1975 when i got in the business, it was pretty much stocks, corporate bonds, maybe treasuries, maybe munis and cash. Those were your tools. Look at the tools you have today, they creep in, suddenly youre talking about international. When irisa came into play, you had large cap, mid cap, small cap. John templeton, it was into the 80s before anybody was talking about international. You hear the music. All right. Thank you. Appreciate it. Coming up, gearing up for the Summer Box Office. A many. C entertainment ceo will give us his reviews when we come back. No matter what kind of business you own, at t Business Experts can help keep it running. Seamlessly. So you can get back to what you love. When everyone and everything works together, business just sings. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Make a my financial priorities appointment today. And it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. Would you have put yourself on the list yet . Of course, i would. I think it has a lot of energy to keep tackling the tough challenge. Money is a scorecard. I dont need money anymore. I am obsessed with getting it right. I am that poor kid afraid of failure. I think that drove me all those years. That was 25 years ago, it will be 25 years from now. Welcome back to squawk box. Amc earnings after the bell, joining us to talk about that t. President and ceo of amc entertainment. Good morning to you. Jared, can you hear me . Good. Lets walk through the earnings real quick, try to set up the Summer Box Office. It looks like the numbers were better. Was it a particular movie that drove that or was it a shift in strategy . It was a couple of things. We had a great quarter in the 80s. We were lucky enough to outperform. As always in our business the movies helped. The lego movie was a fan taft irk fantastic performer. It was a combination of the movies that did well and kept the crowds coming back as well as a shift in strategy that we put in place about a yearandahalf or two ago where we began to remodel a lot of the theaters. In proving improving the experience has paid off. It came through in this quarter for us. Getting it retrofitted theaters that you have, i have been, i go to one regularly, by the way, one with these big lazy boy chairs. At broadway, its a remarkable thing. You can lie down, some people wanted to see the wolf of wall street. Some said it was too long. I had no problem with it. The question i had for you is what is the additional margin relative to the capital cost of rebuilding and retrofitting those theaters . The mar jen we see on those receipts on average are about double. The margin we get in our traditional core business. Its really driven by a couple of things. Number one, the capital contribution we put into the building, itself, originates not only with us also with a landlord. A lot of the landlords are continuing to be remodelled. They want to see their property enhanced to that degree t. One the overall experience for all of their arent the maintenance on those particular seats, which seems to be xhorngs theyre almost like airplane seats, they go up, down, theyre electronic. My worry is you are putting a lot of money in, in five years, you have to do it all over again. That hasnt been our experience. We are a couple years into this journey. So we havent had the fiveyear experience yet. Even when you factor in the cost of maintenance, you factor in the composite of cleaning, there is more involved cleaning involved. What we are seeing is that the attendance driving benefits of the remodel far outweighing anything we have in terms of increased costs. The capacity in the theater is better utilized, frankly, it gives us more on priceing, it all works out. That theater that you go to is running about twoandahalf times revenue what it used to run prior to the remodel. Jerry, what is going on with this sort of imax versus this premium large for debate thats going on or not even a debate. Its a battle. You have a number of imax theaters, obviously. Long term, are you going to be an imax partner forever or are you going to find this alternative modems others are doing with you to compete against that and take them out and keep the margin for yourself . Well, forever is a long time. We have been imaxers aparters i. Today we are the largest imax contributors. We have 106 up and running. They set the sound experience. What you see happening with this other private label formats, large format, we calm them pls, is we have a lot more flexibility. For a imax the decision to render it in imax, that is made by the studio, be i the director on the producing side of the movie. With the private label ones, frankly, we dont have that reerm. So there environment. So there is a lot of flex iblth at the theater level. We like the flexibility of both. Jerry, we have to run, hottest movie of the summer, which will be the biggest blockbuster . Well, it will be a battle between two, one opens friday, spiderman. The other is transformers before the 4th of july weekend. My personal favorite is a movie about you and joe, its called jersey boys. Check that out. Thats a big insult for andrew. I am i admitted. I have a daughter thats a jersey girl. You chafed at that completely, didnt you . Dont lie. If its a blockbuster. Is there a back end percentage of the take. Jerry, thank you for joining us. Congrats on the earnings. We will see what movie wins this summer. Thank you, guys. When we return, a conversation with a banking legend, sandy weil is our guest host and a cnbc finance and changing the world all coming up in the next hour right here on squawk box. Squawk box. Sfx bing. Whos got two hooves and just got a claim status update from geico . This guy, thats who. Sfx bing. And i just got a. Oh no, thats mom. Sorry. Claim status updates. Just a tap away on the geico app. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. What is this place . Where are we . This is where we bring together reliably fast internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system. Only from xfinity. Tv and internet together like never before. Good morning, welcome to squawk box on cnbc. The futures at this hour after, wow, another, what was that yesterday . Good earnings . Good mergers . Were getting a lot of mergers, everyone is moving their company out of the occupation, hey, good, good for the market. An offer from General Electric for the power unit. The bid is worth about 16. 9 billion, but its leaving the door opened for a rival bid from see mens, the biggest competitor of ge. Its interesting. Everybody is interested in the same assets, apparently. These must be pretty nice even though its in france. Exelon is buying Pepco Holdings. The combined company will have a midatlantic Customer Base of about 10 million. The deal represents a 20 premium for pepco shareholders. You love paris. You love france. Its my favorite city. There you go. By far. And i love the french when im there, too. I dont have any problem with, you know, they may have a problem with me. They may recognize you. I got a daughter pretty good at french and also speaks a little. So we do just fine over there, thank you. You should go strike a deal. He may offer. He may need your help. We mentioned a backing offer from ge for power asset itself. Germa germany seem siemens isnt accepting that bid. Reporter they can solicit unsolicited bids. To that end, siemens is ready to sweeten an earlier bid, offering to swap some not all of the power assets along with cash. They called ges offer compelling, alstom has untildown kd 2nd to make a decision. It would then seek approval of the Company Shareholders as well as the labor board. Alstoms largest expects if offer. If approved it will immediately add to the companyings earnings eight to ten cents a share. It will mean that 75 of ges operating mar jens will come from its industrial operations by 2016. Thats important because its targeted 70 of margins from industrial operations. So that allows it to exceed that goal. It sees 1. 2 billion in cost savings. The therm am renewables and businesses would be the biggest acquisition of the ceos 13. 5 year tenure. In a statement. They say it furthers ges strategy of expanding into industrial businesses leak power and water. Now, when news of the ge bid first leaked, alstom is considered an industrial treasure. Politicians were also concerned about losing jobs. Ge in a statement said france will be the center of its european power businesses and expects net job growth in the acquired businesses once the deal is completed. Ge has scheduled an hourlong Conference Call with an a lists. That starts at 8 30 eastern. Then, following that call, the ceo joins us first on cnbc to talk about the deal. You want to tune in then. Back to you. Exlen. Thank you, mary. We will see where all that goes. We will be hearing from them in just about twoandahalf hours. We are continuing our Coverage Today of cnbcs list of the 25 most influential people over the last quarter of a century. Joining me now is a very special guest. He is one of the icons, rebels and leaders from that list. Sandy weill the former chairman and ceo. It is great to have you here. It is great to be back. Thank you. So we looked out. We got to talk the other day about all the people that could have and should have been on this list him uma id the list because of your influence financial sector. Over 25 years, there is not another person who had nearly the influence that youve had. You joined us two years ago here on the set. You talk about how at this point it could be some of the Financial Institutions into ed to get smaller, the banks need to break up. Do you still think thats the case . I think what i said exactly is the regulators will come after them all the time and not allow them to make mistakes and not allow them to really run their business. Then i think that we should consider breaking up the part that the regulators really dont like and i think whats happened since then is that there is a constant criticism of the banks, you know, so much so that when i was the ceo of citi, we looked as the regulators helping us become stronger, helping us do a better job. We respected the regulators. But when you have a regulator come out on the stress test and embarrass the ceo like they did with citi, where the person is in korea, has no idea that they didnt pass this test, then this is a company with 250,000 employees in 125 different countries, how are these people supposed to feel . Thats an interesting issue, though. From a Public Policy perspective, is the regulator supposed to help american businesses, thats one position and i want to make it black and white. On the other side, are they supposed to, is it supposed to be an ad ver sarl relationship . Because thats whats turned, right . Absolutely. The question is, take yourself out of being a ceo, a former ceo of the bank. Im out. You are out. What is the right way to think about that role and i dont think the regulator should be an ad ver sari. A regulator should be trying to make an industry stronger, help to make sure that the Companies Follow all the rules. Regulation is important and theyre doing some very important things on it. But it shouldnt be to, gotcha, gotcha, youre a crook. You know, you dont do anything right. Its an bell e embarrassment. What your compensation is questioned. Everything is questioned. When you see a young man like mi cavanaugh leave j. P. Morgan. He had a great chance to run that company. Thats a great thing to aspire to. He left. Its becoming very hard to attract good people to this business because the business is migrating to the nonregulated part of it. But people would argue that we have the financial crisis, in part, because the regulators werent adversarial enough. Is that not a Fair Assessment . I think we had the financial crisis because a lot of people did a lot of things wrong. We allowed banks to get to leverage. We allowed them to do up Balance Sheet things. We are rating agency, ratings that but a lot of that happened, in part, because the regulators took the position they were trying to help, this is a Public Policy issue again, right, in terms of how they approached the job . It was a perfect storm, in if you were im not you wrote the book about too big to fail you know heads you win, whatever that saying is, few know the taxpayer, i dont think they really thought that, but that is, by definition, what was written. They could take risks . Lets think about the future. I mean, that happen. It was a terrible mistake. A lot of people were responsible. Fannie mae and freddie mac were responsible for a lot of those things. Thats the past. How is the United States going to stay a leader in the world . How are we going to help the development of the emerging mark companies . Look at lehman and aig paying these guys, unwind these positions. It left a bad taste in everyones mouth. The high compensations everyone was getting paid. They knew what they were doing. They made a profit. What is the route, a Million Dollars maximum for a banker . In there Something Like that. Maximum. In the New York Times and a lot of times where youre headed. I understand. If its a part government entity, maybe a Million Dollars is right. Thats why we dont want it. The challenge is trying to figure out how you reestablish the banking the banksers are making their own way, if you are in the industry, are you thinking this is not helping our credibility at all. At the same time from a policy perspective from the u. S. , how do you grow the business in the context of regulators constantly on top of you trying to in their way reach out to credibility. The idea that the citi ceo would find out in his hotel room in south korea. If you have someone trying to follow the rules. If you dont know the rules, where they stand, if thats okay, thats disribution, too. The only way the stress test would be valid is to embarrass a Different Company every year is not a good thing. The regulators should be telling these companies what to do, help them become stronger. You think what they did to citi helped citi become stronger . I saw wit bank of american. They will not be extending or raising their dividend or buying macas many shares as possible. We spoke with jack welch about this yesterday. He talked about how business is not fun at this point. That people have a heavy burden that theyre trying to lift with that. There is a long way to come back from the banking sector, in particular, after what happened in 2008. Who. To go in, where your decisionmaking is questioned. You cannot make a mistake. Where in the world can you have a 6 billion trading loss that hurts your shareholders an then be fined for doing that . Although, some people would say, why do you need bankers . Make the case. Ill give you a good reason why you feed bankers because over the 15 years before this crisis, the United States, the american banks went around the world created Capital Markets and helped create Capital Markets in all these emerging market companies, over a billion people came from abject poverty. Who makes that case . You might. No. You are laughing. You soon say that. You dont want your young effort and brightest. A lot of people will say you dont want your youngest and brightest people going out, leaving college and going straight into wall street and then into the banking fimpls. Why do you want that . I will talk about the engine of finance, itself. We want to be, we want it to remain in new york. The, what the Financial System allows and capital raidsing allows for us the economy can naat break without it a vibrant strong, to get the best people. You got to pay them. To me, thomas, were, all these things we thought we knew we are reevaluating. We think community ichsm is theo go. Somebody will not get paid x, they will take less. Sandy. Immediate is police it. It is in terms of the way the media portrays it. The Banking Industry, these people right now here. I want to talk to sandy. Have you seen this one before . That the one he used to work for . This is a front page story after the break about whether they will make a criminal case and criminal charges against banks for the first time. What happens to their business when they are charged criminally . There is a whole bunch of issues that relate to Asset Management and other things, you cant be in those businesses. One of the banks has already capped compensation at a Million Dollars and theyre still if trouble. So it didnt work there. Theyre still in trouble. Even though they, you fixed out what assaulted compensation. Those guys were transferring money through not for. Right. Not for their own enrichment. Somehow it still happened. Well talk about that in a little bit. When we come back, we will continue this. We will also talk about the debate over High Frequency trading. Michael lewis says the markets are rigged. Sandy weill will give us his reactions to those comments after this. Shares of twitter trading lower t. Breakdown report at 7 30 even time. Squawk box will be right back. Aflac. Aflac, aflac, aflac . Check the futures right now, the s p is 1878, 28 divided by 1850, right, so were still not up much for the year. Flat today, adp, the employment report is coming out. Then friday, we get another report. We get gdp to see what that is. The first look at First Quarter gdp. What if its under 1 . 1. 1 is what were expecting. Lets see. A lot of more coincident or leading ones have been pretty good. Lets get back to our guest host this morning. He is one of cnbcs banking legend sandy weill. Lets go back if we could to the story about too big to jail. This is this issue, an article that suggests that people or the other prosecutors plan to bring criminal charges for the first time against major banks. One of them Credit Suisse is the other. These prosecutors seem to talk about how they could bring the charge without putting the bank out of business. Again, in bnps case, it seals like an open and shut case in that they were transfering money to companies for sudan and maybe even iran. Its more than a crime. We have sanctions. Its an illegal thing. They did it anyway. Therefore, the question becomes, if are you the regulator, what do you do . How do you approach it . What should be the answer to all of this . Oh, i would say maybe the u. S. Attorneys office is saying these things to get a good resolution of the problem without it going to court and without it having to do that. Or doing the criminal part in a way that it doesnt really affect broad based the business. Theyre also talking about a Foreign Institution that doesnt do all the businesses in the United States. Is this the same as you were talking about in our last secment, which is this idea, i dont know if you put prosecutors in the regulatory. You are too overzealous maybe, im trying to. I wouldnt put a prosecutor in the same position as a regulator. You know, i think you get to meet a prosecutor when people think you did something wrong. The regulators should be working with a company in that position. But do you think the structure, structurally the banks are too big either to big to fail or to jail in this case . You know i dont think that. I think that the model of having a broad based institution is still a good one and and your argument for splitting the banks up, people always ask us, is more a businessbased argument. Correct. Than it is a policy argument . Well, if you cant do your functions because you cant be in those businesses anymore, you cant make the markets, then whats the purpose . I remember the whole sequence of how we got to that. There it was first time sandy was on. He made those earth shatters comments. I wasnt in that day t. Next time you were on, he explains that, thats entirely different in the way a lot of people took it. Exactly. A lot of people take things wrong and still do. Anybody knows glass steegele had nothing to do. That was gone 15 years before that. All it had to do was insurance underwriting, period. What do you think we look like in 25 years . What does the finance industry . Oh, the industry. Not us. I think you got to be an incredible optimist about whats happening in the United States. When you look at how our government just is not able to work oeth, that everything is political from both sides, yet, we are coming up with more new ideas, more new ent entrepreneurs in spite of this stuff. We are acting like a young country. If we were to change our immigration policy and keep these people we educate here. Because we built the highest Education System in the world, there would be much more competition. New ideas at the top, compensation would come down. You know what happened after him . The next 20 years after carter. It gets really bad. Remember that helicopter that dug up the scuttle to go and stop the propellers from going around . I do remember. I remember those guys got out the day the next guy came in. I remember. I want you to address Michael Lewis new book. He claims and suggests the next financial crisis may be the result of what he thinks, High Frequency trading and dark pools have created this huge new risk to the system. Have you read the book . I have not. Do you buy into that argument . No. Because . I think our markets are very, very sufficient. What was it warren buffet was on tv talking about how the cost of doing business has gone down a lot. When i was a broker originally, i mean, stocks traded at an eighth of a point or a quarter of a point differential. Now they traded onethenth of one cent differential. Specialists knew everybodys orders on the way up and down through open orders. Now you have seven or eight different competeing exchanges. The stocks trade in these very tiny minute difference. Im an investor. I dont feel im being taken advantage of. I think this thing helps me and really to pay a half a cent more, if thats what you are paying. That is meaningless compared to what you should be investing. You should be investing really for the long term and investing in things that you have some understanding of and believe that its going to help make america grow. Do High Frequency traders help the market or liquidity. It seems the other guys are trying to get in. Theyre the first ones to run for exits when things are bad. It doesnt seem to me like theyre necessarily helping things. I really dont know, but what i do know is that the marks are very, very tight markets. Would you agree i thought that, too. I think im with kramer now, sandy, in that just add up the bulk sum that the dark pools are able make. The amount of money they make. Add up the exchanges for charging for the faster delivery. That money doesnt need to be. Its like a middle man. It doesnt need to be there. Its like a tax. Even though its not hurting, it would be cheaper an better without it probably wouldnt it . Unless they provide liquidity. If you didnt have the money to create distributions because you didnt have the min for technology. But they solely for the reason of getting in front of the next person, it seems like it, anyway. Sandy will be here for a little bit longer. So we have a lot more to talk about. Coming up, sandy weill changing the would philanthropy. Philanthropy philanthropy and youre like. If youre getting. A good deal or not. Led up. Truecar. Com. All the information. You should be paying. You know, and with truecar. Com, my feeling is that. We got a fair price. Theres no buyers remorse, you know. Im happy with my purchase. Its the truth. When youre ready to buy a car, save time, save money, and never overpay. Visit truecar. Com in a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. 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More with our guest host sandy weill. We will dig into a report with an analyst right after this. More squawk box just after this. This. What is this place . Where are we . This is where we bring together reliably fast internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system. Only from xfinity. Tv and internet together like never before. Wellcom back to squawk box, everybody. In our headlines this morning, time warner among the companies out without earnings reporting a profit of 91 cents a share, revenue came in above consensus, that stock looks like it was up just over 1 . Mortgage applications fell to the lowest level since december 2000. The Mortgage Bankers say higher Mortgage Rates and tight inventory is contributing to a slump in new mortgage applications. The refinancing coming in, just about everyone that wanted to refinance has already done that. Ebay is bringing a big chunk back to the United States. They took a 3 billion noncash charge related to that move, which will allow it to boost its available u. S. Cash by 6 billion. Ebay reporting a profit three cents better than expected. And another company we are watching, Energizer Holdings is planning to split into two public companies. One focuses on household products. The other personal care. That is helping the stock. Its up 30i7b 3r8s. For twitter, its all about user base. After hours, despite, shares of twitter tumbled over concerns all the other all the users, joining us is a senior analyst, you are, is this, would you boy this stock right now . I wouldnt boy right now really for three reasons. You know, first of all, you got very lofty valuation multiple. Secondly, have you the desell rakes in the metrics that you mentioned. And then thirdly, you got really technical thing thats happening in the marketplace, which is this aversion to new media or internet stocks that technically makes it such that investors are selling low and theyre not buying low, selling high. Theyre sort of selling low and selling lower. There is a tech physicalal thinthin technical thing. Id wait out. Is it a good company . Its a good company and a real company. In the checks with media ad buyers, theyre alocateing more and more dollars to facebook and twitter. The thing is the street cares about user growth desell rated. Is twitter a main stream product . This continues to be the question. In the answer, though, it a main stream product in terms of real revenue . Advertise torres marketers . Right now for consumers, i think its more difficult to use twitter than facebook, i think the Management Team at twitter would say the socalled scaffolding of the language, these are things that need to be visually more easy, the user interface needs to be easier for people like older people, people less tech savvy to take to the twitter experience. I think thats what investors are trying to pars out of the User Engagement numbers. An through, let me throw a little speculation here, which is there has been a number of big mergers and 66s in silicon valley. I can cant talk about deals. Can twitter become a target . You know, i dont want to kind of comment on that. I think its easy to speculate on that. I think for a buyer of twitter, i think you have to look at the price tag and, for me, its hard to valuate on earnings right now. It trades in the midteens on sales. You are bringing this on yourself. So you are not going to comment on deals in the future. What about last deals like the one for whats up . You know, joe, this is joe. You brought this on yourself. Whats up . We asked you for a deal then you say, i wont comment. You know we are going to bring up whats up. Joe, are you exactly the kind of older nontech savvy type of person that twitter needs to get on the platform. Are you so, you know, i resemble that remark, anthony, im going to sue you for definition of character. I finally learned whats app was from this trial. All those messages between the bladerunner and that was all. Let me Say Something more serious about whats app, which is, when you look at the use cases of these social media platforms the question is, do people want to have conversations publicly on 26th or is a private Group Message sort of taking share of the use case . If thats true, then whats app and globally other short messageing or over the top messaging, those platforms could be something that twitter needs to defend its user base again. Anthony, there was another anthony that thought it was progress, as you know on twitter and it wasnt quite so private, was it . I think he tried to send it out to. A direct message. You know who im talking about. See, we got another sound effect, when we say weiner, we love you come on here. If you den want to come on here because of these sound effects, you are in the ds for analysts, right, i think there is an e, an f, a g. We love you. I thought it was andrew back on set that the level of seriousness and intelligence would kind of reaccelerate or kind of return, but then, andrew, you are being usurped now by joe. Whats app . Its been nice knowing you. Get your less comments in, well remember you by those. I will ask a serious question, from an excukes risk perspective, to the extent you think twitter will have to transform itself to continue to grow, it, of course, is therefore, going to have to turn away from what was its core and how it back in a minuuilt its b it keep the core into this broad based product . Wow. I dont think if i believe the premise of that particular question. I dont know that there is anything at risk with the core use case for 26th. I think the Management Team needs to do things to make it more userfriendly. I definitely think it needs to be more visually engaging on my phone. In some cases, its hard to tweet. Its hard to talk on 26th as compared to facebook. But i dont think that the core use case is being threatened. I think its a very high bar in terms of analysts and their expectations for users and for engagement. Andrew, thank you for joining us. I will see you around the hood. You dont remember lava lamps. I thought he was your age or younger. Maybe you missed the old anthony, its great to see you, twitter Ceo Dick Costolo will be on squawk on the street street to talk about this at 9 05. This morning. Coming up, sandy weills donation to Sonoma University have people singb his praises. We will talk philanthropy next with cnbc first 25 member sandy weill. Weill. I humans. Even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, well give you the money for a new one. Call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, the repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty Mutual Insurance responsibility. Whats your policy . Until. Checking the futures right now which i think will be meandering until it can certainly affect things too. Its no longer the fed will stay in. Right. Good is good. Bad means are you on your own. Fair is foul. Gdp goes down the better it is for the market in the future. All that will be made up because of the weather. Because you think you are still at 3 for the full year . I thisty rest of the 84 well be around that. I think things look very good. Yep . Why . Companys will doing well. A lot of cash, company Balance Sheets are very strong, Interest Rates are very low. Our country is sort of leading the world. You think we are shaking off some of the blaze we seen the last several years, were improving at a faster rate we have been . I think we are. In spite of no action in washington. Our guest hosts this morning, for those of you just gining us is sandy weill. We are continuing our change the world series now with a focus on the gift of music and philanthropy, joining us is the coexecutive director at sonoma state university. Shy the former president of the new york philharmonic. Sandy weill, we mentioned he is the former chairman and ceo of citigroup. Thank you very much for joining us. Thanks for having me. Usually when people talk about gifts to universities, that i are talking about giving to the university, the basketball teach you gave money to finish the philharmonic center. Why . I think that is our football team. I think this center will make sonoma state well known around the country and the world for having maybe the best Music Complex of any university in the country. We happen to be lucky and the sound is terrific. We have very good relationships with Carnegie Hall. Zaron knows everybody in this business. People come, when they come and perform there they want to come back. I think that california, especially, but most states will not have enough money for higher education. So i think all their money is going to have to go for k through 12 and, therefore, these universities are going to have to figure out how can they become self sustaining . And i think with this music center, we can attract students from all over the world that pay a normal price for tuition and become and, you know, come and not be subject to cuts in the funding every year from the state of california. The center was unfinished when you stepped in. What attracted you . I was told there was this great music center and i went there and i saw there was a building but no seats and had no lobby, no entrance, but it looked like it could be great. Somebody played the piano, i thought it sounded good, but my background was playing a bass drum in a military band. I asked a friend, can you do me a favor, go out and tell me what you think of this because were thinking of investing. He could me back and said i can get out there between 12 15 and 12 30 in the morning. Im saying, oh my god, this is a Public University in the state of california. Theyll all be gone at 5 00. But five people or six people were there to meet him. He was there for over an hour. He told me he thought the place could be terrific. He ended up being the person that opened the hall in 2011 and he is the person that said to me, you should close down and make him your executive artistic director and here we are. Its one thing to have a building. Its quite another to build a program. How do you go about bidding a World Class Program . Well the great thing about this job for me, coming out of retirement, was that there was no program to follow up on, really. It was to start from scratch to try to build up a transformtive kind of season in an area that didnt have that much going for it except this absolutely july of a hall. And sandy. That helps. And the fact that he said the economy is good also for my business, because more people buy tickets, more people give money and i have been calling on people that i know and people in this business and in four months, we put together one heck of a season. In fact, i brought it along with me so you can all buy tickets. What kind of headliners are you talking about . Who do you bring in . My position is to expand, not just Classical Music. That may be my background, one of the hottest tickets so far is johnny mathis. Then Stewart Copeland the drummer for the police and joined up with an old friend of mine, a classical pianist. Theyre going to mash together. Robbie shankars daughter is coming with people from newfoundland to create a six people, sixtet of different kind of music from different parts of the river. I have ethiopians doing music of that area and talking about water sustainability. We hope to put into the university. Okay, we have a few people. Io yoyo man. And tony bennett. Yes. Michael feinstein is coming. And the plan, sandy, is that once the program is built and the people come, then that will be something that can give back to the university. Not only from the cultural perspective, just from building a Super Program that will attract talent. For example, if we get 25 of our students come from outside the state of catch that would pay a 20 or 25,000 surcharge above the 5,000 that and instate student would pay, you know, thats 40 or 50 or 60 million we would have. Right now, our whole budget from the state of california is 49 million and this is a beautiful place for school. The school was voted, has the best dorms of any university, Public University in the country. Its in a wonderful area. So i think this center will help the school really come on the map. Is it too early to see results of any of that yet . Yes. In terms of the student body coming in. You think that will take a few years . It will. We have to get people to know about it. I think you are doing this and you are doing this in a lot of different philanthropys. It was really trick. I mean, one of the great cultures of the United States is people do have the culture of giving back, more so than any other place in the world and for to you do this around get Corporate America more interested and investors more interested and knowing that they can make a difference. Its not, philanthropy is not just money. Its a lot of time and effort. My wife and i have spent lots of time in everything that we do. Decade long relationships. Zarin. Whats the biggest challenge you faced so far . Developing an audience. Remember, sonoma is one of the visited places in california after disneyland. How do we get those people coming to taste wine, stay sober enough to come out at night. That will be the key to build and expand the knowledge of the people in this extraordinary place. It really is extraordinary. It seems like there is good synergy for me, Classical Music and wine. Leave me my card. This you can hang out a while. The back of the hall opens up. The weather is beautiful. We have a terrace lawn. We have tables out there, can you get wine, keyes, listen to the music. It will be even more perfect for you. Man, i leak this picture. Sandy, a quick philanthropy question. You were talking in competent america wealth. There are two schools, one is sort of the war reven buffet school, make your money, you dont needily need to make it immediately, compound your money, then give it away. Others say start early, start quickly, you may not be able to give out as much money away or have as much time to do it. Whats the answer . I love your question, because when people tell me they dont have the time, the biggest merger was 1998 when the city merged with travelers. And i became the chairman of that, running a company in 100 companies with 250,000 people and i was chairman of Carnegie Hall and chairman of Rockland College and the american foundation. And i made the time. So i think people should start young. I think philanthropy is really about brains. When somebody comes out of college. They get a job at twitter or clorox, you pick the company. That person also gets involved in things in the community. I guarantee you that person will end up doing better than the company he is working for. Hell feel better about it. And hell get other people to follow him. So i think this is something that we should teach and people give graduation speeches should talk about. I heard that other, its unique for him. Because hes a capital allocator. He thinks he would be that goodnessly. But most people do it. Sandy, warren is like the only one i heard, i want to xointd and leave a big chunk. Playboy magazine in then 80s you said, look, the amount of time it takes to do philanthropy right is something i dont have time to do right now. In the 80s. I wasnt reading the playboy in the nanny 80s. You are 16yearsold. Im sorry. Looking at the pictures. But the point is, to do flaven philanthropy takes time and energy. I think steve jobs should have given away a lot more money a lot quicker when he was still alive. How do we know that . Warren buffet picked somebody he thought now how to do it. You do it for me. That will work. Anyway, xarin thank you very much for joining us. We present hearing about the program. Come and see is, its really good. Sandy weill will stay with us for more of the program. Do you remember who the centerfold was in that issue . I didnt read it contemporaneously. I was reading the article. Burt reynolds. Do you remember that, anyway, go on. Coming up in the next hour, more talk of the centerfolds. No, coming up in the next hour, private payroll, people will stay tuned for. That then banned for life the nba may force don sterling to sell the clippers after those racist comments. We will talk basketball economics in a minute. We talk to sandy as well. We come back after this short break. T break. Up next on squawk box, dont start your day without knowing the names that will plaek you money. Joe has your list of stocks to watch right after the break. Passion. Im almost done. [ male announcer ] now you can pay your bill. Manage your appointments. [ dog barks ]. And check your connection status. Anytime, anywhere. [ dog growls ] oh. So youre protesting . Okay. [ male announcer ] introducing xfinity my account. Available on any device. Thats what i was thinking. He has another daughter, norah jones. Lets take a look at stocks to watch, austin powers for andrew. We used to play him all the time and do a schwing sound. We should bring it back. Im game for. We need to be more serious according to your pal. No. You dont want to do this. Hes wrong. Get racy. Energizer holdings will split in two publicly traded companies. The household products will be led by if energizer and the ever ready battery brands and personal care brands lick schick, wilkinson, we were talking about playboy. In this case play tech. They looked up who the centerfold was sherry winter. Do you remember . I dont. You say you saw it online. A pdf. What does that stand for . Electronic file of the. The article. Dont do it. Go here. The article. An interview with steve jobs. Go back, google it. Ford backing ges bid for power and energy. We will have the details. Ge chairman jeff immelt will be on squawk on the street street. Were coming back after this. Coming up, the adp payroll report and a preliminary xhim economic growth. First quarter gdp data is out. The numbers you feed from the best morning show on cable. Squawk box on cnbc. Profit from it. Profit from it. Celebrating cnbcs first 25 list. Member and banking pioneer turned philanthropist sandy weill is here. The board of french industrial alstom backing ges bid the latest on the buyout tug of war ahead. Plus, banned for life. The fallout over Don Sterlings racist comments and economics of basketball are ahead the final hour of squawk box begins right now. Raindrops keep falling on my head and just like the guy woes feet are too big for his bed. Welcome back, everybody. It is a rainy morning in new york city. You can see times square. In our headlines, we have a busy morning for economic numbers. The adp is coming up on private sector unemployment. We follow that with the First Quarter gdp numbers. Congress is looking for 210,000 new sector jobs. A big deal in the Utility Industry this morning. Pope e pepco is being bought by exelon. 25 cents a share. That is a 20 premium for pepco shareholders over yesterdays close. They are up 17 . Frances alstom is backing a bid for ge for the Energy Business and is giving germany siemens to come up with its own bid. Mary thompson has some news to help us understand whats going on with this whole alstom bid. Mary. Reporter . The mic is not working. I dont think her microphone is not working. We can come back to her in a moment. She does that once in a while. You know, lets get back to our guest host sandy weill, former citigroup chairman and ceo is currently city chairman emeritus apong other things and you are busy. We had to hear all the time talking about weill medical center. Too. And its exciting. Just recently, we seen some, i dont know how close you must follow it fairly closely i would think, mice, they change the single base mutation. You saw probably recently in muscular dystrophy, there is a way of skipping over the mutation, which might have, so we are going, things are going to be. The next decade. It will be unbelievable. What will be very important i think is for institutions to partner with other institutions, so that everybody doesnt have to start from square one. Its just so expensive. We should share knowledge with other like institutions. Between 75 and january, 75 million. Was that 100. Its april, sandy, its a new quarter, isnt it . Did you bring a checkbook . I did bekeith it to the u. S. Government. That will be well spent. Let me, we talked immigration with you. That seals to be something you think good. Let me parra phrase what you said earlier, this country does great no matter what. We are starting to do good again because of the we built it. Not the government. We are building it again, in spite of all this stuff. What do we need to do to help things out, immigration, what would you do . More tax reform . Obviously, thats an issue when you see a company like pfizer thinking about relocateing their headquarters to a different country because the tax rate is so low. We have the highest Corporate Tax rate in the world. That should be a weekup call to our government that the problem is the tax code. Its not the problem what the company is doing. The initial talk was, maybe we should say that you have to have 50 of your employees working overseas to do that. I dont think thats the right approach at all. Doesnt the arbitrage dill goes on with the tax rate, right . You cant keep people in prison. Thats palliative. Thats addressing the symptom, not the cause, correct . I agree. Immediately, we talked about something earlier, there will be a story written later today, sandy weill says we have the tax rate thats highest in the world. Heres the actual tax rate. Theyll show you the corporations, andrew wrote an article in the New York Times. Some pay zero, some pay a lot of tax. You will lose the companies that are paying high tacks, fiezer is paying the blended, the whole idea is you look at the blended rates of these companies, they move stuff off shore, so its blended, thats why its lower. Exactly correct. Your 10 rate if your article. What do you make the rate to make it competitive . If you have a company like pfizer who is willing to take on the regulatory risks. The u. K. Changed their tax policy. Andrew, they said it was 200 net income per percentage. Its a billion dollars. I dont disagree t. Question is how do we make the policy work and repatriate the money . Also to the extent the democrats are having a hard time dealing with it. The far left say look what happened last time, the money didnt go towards creating new jobs. It will create more income equality. Thats the argument the far left would make, the democrats stuck on one side and you have the republicans stuck on the other. Correct. If we had a good palmettos, our government worked through corporation. A lot of money is spent for capital expentdtures. The factory operating rates are getting higher. Theyre not working it. Nobody knows what the rules of the road are going to be. If we could get investment. No one is investing here either. Other countries arent coming here, with our input costs with energy, with the trafficking revolution, we will have a great place. We are having Foreign Companies invest in the United States, but theyre investing in rate to work states and thats the, you know, again, you are not Holding Companies hostage. Are they paying taxes to us . Yeah, they have to. Some of those country, only, leak our tax system is messed up because we try to, you know, we try to tax it around the world, right . Thats right. We do. Then they leave it over there. Right. Individual, the american citizen pays taxes on money they earn anywhere. Very few country, have. I want to talk more about that why you are here for the cnbc first 25, why are you on that list. One of the things we talked about with jack welch yesterday was manage . I didnt realize until i sat through and looked at some of this, there are 11 ceos right now who used to work for you. Four are at dow components. We all, of course, know about jamey wright diernlgsd you have jay fishman at travelers and charlie sharp at visa. Thats pretty amazing. Its great. Im proud of all of them. Its fantastic. When you build a good company, you know, people are always looking from what they learn and go to other places and i think the best recognition ceo can ever have is that people that work for them and work with them do incredibly well. One of the things i wonder is what you learned over your time, over your years, if there was something you wish you did differently, if there was a big lesson you learned. I think a lot of times people learn more from their mistakes than anything else, what would it be . I made two mistakes, one was i wished that jamey wright and i had been able to work out our issues and that it didnt have to end up in a breakup. Because it was a very good relationship. And i made a mistake and my recommendation for successions. I knew you were going there. Im getting nervous. Dont mention any names. Okay. Was he a lawyer . Okay. Are you talking about dancing. Did he like to dance . He liked to dance. I knew. He might be a exactly. Or the executive formerly known as prince, its a symbol meaning. I knew thatsthan where we were headed. Sorry. Thats okay. Looking back, what would, do you wish you would have looked at differently in succession, thats a tough question for any ceo. I tell you what i did look at and i didnt want the same thing to happen. Jack welch was thinking about his succession at the all the that i was. He created in competition the same thing that they did a decade before and you know somebody gets the job, but everybody else feels that they were competing they had a lead and a lot of good people left and i felt, you know, maybe chuck got along with everybody and we had nine people on our Management Committee and if they all could stay and it was a team and chuck became the ceo, that bob became the chief operating officer, he was a good operator they would all stay. One by one, they were all moved aside, including the umbrella. So once somebody is in power, its not necessarily the same they were before. They wont be the same person in that. Sandy, who would you put on the list in the finance world. I was thinking of hugh, b of a what he did to create a sort of a national imprint. He dade good job. Foot prints. I would leave to who who is on the list to you all. On a personal basis, i hoff your decision. Yeah. Thats what welch says. Would you put yourself on the list . Well, number one. He didnt say that. No, he didnt. He was being modest. He said, absolutely. There was a debate. Jamey wright was in the top 100. I think the top 200. What do you manl of all the debate at j. P. Morgan over this past year . You know, i think jamey wright did a great job in managing j. P. Morgan through the crisis. He blocked two companies that helped the country get through the crisis. And i think hes being shot at by everybody you see he was too successful. Would you have. There he is. Would you have settled . He had to, didnt he . I know. Its a huge number. So hes between a rock and a hard place. You settle. People see him huffing people say by definition, hes a bad manager and a bad guy, meanwhile, you had to settle to force your shareholder to be a good manager, you had to do it. The government is coming after you. All you have to do is hire more and more lawyers and accountants to try to defend yourself. The minute you do, its like admitting guilt in the first place. Its a tough shot. Its not a great way to make banks stronger, is it . Has he had the same succession he has had frankly given the people between cavanaugh and others around him . A lot of them have gone. But, as i am bullish about the future. So and im hopeful that people come the regulators come to their sense about the Banking Industry is an important industry in the United States. Dont go anywhere, coming up, the adp payroll report. P payrol. Customizable charts, powerful screening tools,. Welcome back, everybody. Private payroll data released. Steve. Up by 220,000. We had a nice revision to the prior month. Lets take a look at the board, private payroll up two 20,000. March revised 18,000 to 209. Goods producing 24,000. Powering ahead. The estimate for friday is 15, two 15,000. What that means is we are a little light. The estimate is a little light for friday. You might have fewer revisions. Guys are a little nervous about this number. They have been for months. Joining us, mark its a better number with a 2 on it. What is your take obvious it . Well, i think we are kicking into a higher gear. I think we were south of 200k for a few years. Now i think we are north of that for three years. I think we are off and running here. I think the bls number the risk is it will be on the high side. We could get some kick from payback from the price numbers in the winners. So we may get an outsized number this month as a result of that. So when you look at the february number, which was 192. You are saying it could have and should have been higher than that because of the weather. Yeah. I think all winter long things were depressed, december, january and we should get a little bit of a pick up, a catchup. So if we get a month or two closer to 250k, that feels about right to me. I think underlying job growth, though, is now north of 1200 is k. We are probably 225k. Lets look. Construction did well. Manufacturing not so well. Trade and transport. Service sector has been a big engine behind job growth here. Lets talk about the weak one, mark, the 1,000 on manufacturing. Yeah. Well, you know, manufacturing is incredibly productive. Underlying productivity growth is in the 3, 4 that means the output has to be more than that to create jobs. So its very tough for manufacturing to create jobs, even in the best of times, its not going to create a lot of jobs. It creates income, wealth, a lot of indirect benefits to manufacturing, but i dont think we can expect a lot of jobs from manufacturers. All right. Were going to run out of time here. Let me get your sense on overall growth the estimate for the 830 number is 1. 1 . How should people digest that if it comes out as weak as that . Weather had a big impact in the rating. Go ahead. Ignore it. I do think we will get much stronger numbers q2 going forward. Less inventory accumulation. Everything is stacking up for much stronger growth the remainder of the year 3 plus. Before you go, i asked steve, did you see the Allen Reynolds piece, your stimulus, i blame you for, the demand side policy gave us the big economic fizzle from the 800 billion stimulus from a couple years ago. Ander brings up this guy. I will bring up casey mull began when you bring up pickeddy. He wrote redistribution recession and talks about the disincentives to work how that is hurting, mark, this you pick i bring up pickady all the time. This guy in no Uncertain Terms says your crummy stimulus didnt do anything and if we would have had well, i opine about lots of things. Counterfactual. This one i have a great deem of conviction. When we look back historically. Joe, that stimulus package was february of 09. I can give you the die. Jup of 09 were out of recession, one year later the economy was growing. In this country, we come out of a recession, normally we come out better than on this one. There is your counterfactual. It was the biggest turn around in postwar gdp. Unbelievable. Joe. All you did is line the union call. You didnt do a single joe, look. As your guest host what do you want the world to look like in february of 09 right, amess. You know what i hope your adp numbers are better than your stimulus numbers. I will end it with that. Oh, thats a low blow. Thats a low blow and they will be. You stick with me, joe. Stick with me. All right. My man. Things are going a little better. It only took six years. Things are going better. Sorry. Were you going to i want to know did you see that already . I didnt see it, no. Have you settled obvious the pronunciation of pickady . Is that still french . Tomas i get. Casey mull began university of chicago. You heard of university of chicago. Absolutely. Some guy freedman was there. Who was balanced in terms of marketing. He went to rutgers before that. He did. Steve, thank you. We will see you in a bit. Meantime, lets get to our guest host sandy weill. He is your honor can thely ceo or citi champl emeritus i should say. Thank you for sticking with us. You are of the opinion things are really Getting Better . I am. I think they will continue to get better. This country is absolutely, its fantastic whats happening. Is there one area of the country or is there another country that you would really put your money on for the next 25 years . It can be right here in the u. S. We have a rule of law thats get good, better then other places, look at the money coming into this country. Look at what may come in from russia over the next period of time. Thats, i mean, something people look at. They look at energy is what jack welch was talking about yesterday, you think finance is going to be an area of strong growth . I think finance is at the root of everything that happens. So i think it has top. The economy will be good. I think it has to be good. I think energy, when you see a pipeline thing that makes sense, put it off until after an election. Is this on purpose . I wasnt listening. Now you say that. Isnt that just. It doesnt make any sense. I mean, then you have to wait until the next election and the next election. Every two years, unfortunately. The stuff is going to go some place else. Its obviously a safer way to transport that kind of oil. Why not become an exporter of it . We talk about this often on camera before. Who did you support, two elections ago for president . Oh, boy. You supported barak obama. You didnt the last time around, why . Pardon me . Why . I didnt think he did a good job. The thing that bothers you the most. The divisiveness in the country. Two political. What about the country. Would you be a hillary voter, a jeb bush voter . Who would be your person . You want to open up my voting booth . Sure. Okay. Im a big fan of hillarys and i have been for a long, long time. She would be. And of bill. And of bill. Do you think. And of chelsea. Do you think the private sector is something that doesnt have a problem with, at least not overtly hostile to the private sector . You know, i think they understand the private sector. As opposed after his first two years the last six years, he was a great president in business the economy, he really got the country growing. We paid down deficit. It was fantastic. Do you think the Federal Reserve has been supporting the mark for too long by keeping what they have in place with qe . I think i do personally. I dont believe in zero Interest Rates and, you know, hopefully, well see the economy really improve to a point that they can do something. I think it hurts retired people. It hurts Pension Income of a lot of things. But i think janet yellin did unbelievably good thing in trying to get sam fisher to be vice chairman of the fed. I mean, i traveled all around the world with him. He is so respected in just about every country i have ever been to. I think he. Thats a great example of not being able to hire somebody very smart and i respect people who are not afraid to hire people smart. Sandy. I want to thank you so much for joining us today, for sticking around with us. We want ocongratulate you. We hope to see you again soon. Thank you, absolutely. It was a lot of fun. Coming up, more Economic Data that could shape the trading sessions, the First Quarter advanced gdp released in a couple minutes. Check out the futures ahead of those adp jobs numbers, squawk box returns right after this. Well, we just got the adp reports. Up next, the First Quarter gdp. We will have that in a few moments. Right now, take a look at the dow futures down 16 points, nasdaq off fiveandahalf, s p up less than one, squawk box will be right back. Ll be right. Theres a new way to buy a car. Its called truecar. And truecar users. Save time and money. So when youre. Ready to buy a car, make sure you. Never overpay. Visit truecar. Com today. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Anbe a name and not a number . Tor scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer scottrade proud to be ranked best overall client experience. Welcome back to squawk box, we are a few seconds away from First Quarter advanced gdp numbers. Steve leisman is with us in studio. Holy cow. Lets look at this twice. Up onetenth. Up onetenth of 1 on gdp him up wintenth. Which means its a tie. Its a tie the last time we had such a fawn robust level of growth was the nonrobust level of growth was 2012, fourth quarter. The same as now. Wed have to go back to march of 2011 to fine a lower football, it was minus 1. 3. Lets go through the internals. So up onetenth. If we look at conis up shum shun, it was a decent number 3 . Lower than our last look which was 3. 3. Still better tan postexpected. The price index was 1. 3 up 1. 38 as well. We also had the First Quarter employment cost index. That was up. 3. Thats light. We are looking up. 6 to summarize, weak. Back to you. Wow, we are doing a double take there. Its like mr. Sandy this, mo. Being if i. Ch. We know how that goes, wait until next year. Wait until next year. Its been like what, 1908 that the cubs won a world series, eventually, eventually, they will all be right, just like the economy is. I was kidding when you said that, under my mic wasnt on, i said, thanks, sandy. I was kidding. We were talking about that. 1, wow. Im not kidding, though. Its wonderful, guys, behind the wheel like these academicles who are brilliant. They should write textbox that our kids study from. When our kids fruit, they graduate to the real world. Right, without a job. Because of a lot of this. Anyway, for more reaction, Steve Leisman is back, chief economist j. P. Morgan chase, you were looking, you found nothing but bad things to explain this. Well, thats not true, joe. Because what i found was Consumer Spending was right in line with a decent economy about 3 . Do we need a good snapback, stretching the rubberband further to it will snap back further . Strong services 4. 34rs. Durables were weak. Business investment was where there was a lot of weakness. Equipment down 5. 5 after being up almost 11 in the Third Quarter. Housing is not doing all that great. Emgs ports are down. Let me tell you our tracking survey, cnbc wrap it up tracking survey was at onesixth. This is 130i7b 1. 1. The government is making assumptions. Almost certainly with trade and inventory and investment. You want to bring if bruce right here. Rick, this before we go, apparently apparently, the stimulus wasnt big enough is what im taking away from this. Thats, we need more demand. Cant you see, thats really what were talking it will be two second before judge has. 1 on its thing. 1. We need a bigger stimulus. A bicker one. We need to tell our kids, hey, joe, lets define the constitution, does it talk about the Fourth Branch of government . People that make rules through all these regulatory agency, ecant vote them in, add them out. Add that into the competent tax koetd every politician thinks is let me get to bruce. We dont knee to stand up for water right. What point is he makeing . Put sandy on, one of the best economists say basically ignore this number. Its a weather number that you had a huge decline in inventory. I dont understand the macropoint being made off a weak quarter. The viewers read it. They understand what you dont understand. Oh, god, oh, my. We post a 01 rick. I will let gassedden talk. Nobody will make an Investment Decision off what you are saying today. Look at the pile of cash overseas if excess reserves, all those people agree with me none of them do, rick, thats why they are all wealthier than before. Bruce, you are going, are you going to sort of paint over this number, too, bruce . Where are you on that . Look, its a disappointing number. Its a number that has a lot of things which are noisy in it. The way im kind of breaking this number out. I look at the domestic findal demand number which grew about 1. 5 . We thought it was going to grow up, too, the capex number is disappointing. I think the volatility in trade and inventory, the issues around this number, we have to wait to watch how first and play out. Its a disappointing number. We dont want to go too far because of the headline print close to zero. You think we can make up the ground to get to an average of 3 for 2014 . We dont think we will be quite there. We look for a number in the 2. 6 2. 7 range. I dont say, hey, we need to step back and reassess the views. Its a disappointing numbers. I say in under lying sense it feels a half a percent lower in things not that noisy. We will watch how much gets paid back into lift into the number on friday and beyond. Let me ask you this, today we are expecting a statement from the fed. Will a number like this put the fed on hold in terms of, in terms of another 10 million asset . Do we go up to 65 or down to 45 . We go down to 45. We are on automatic pilot on tapering. We want to do more of this, becky, because its work sock well for a half a dozen years . The fed has been pulling money out on the assumption the economy is Getting Better. You look at a number like this. They say they are data dependent. A number like this changes their mind. The qe has run its course. It doesnt past muster. So the fact theyre removing it. You see a bad number doesnt to me august tore step up a program. No, it doesnt. That has been in place before we arrived at these wonderful numbers. My point is, the fed will have a tougher time saying its all data dependent if we are ignoring numbers leak this, they wont go out and say they dont think qe is effective anymore. Look, i think we got a number on friday which i think is pretty strong in employment. We are seeing the monthly data in march lifting. I think what the fed will tells us what they told us last time is they see the First Quarter weakness as transitory. They believe we will have a decent year. There is nothing in the High Frequency data that tells them thats not happening. They will stay the course on the tapering and stay the course more importantly on the local long and Forward Guidance message they have been delivering. Yeah, by the way, just remember, one other thing here, we had a very low cost Employment Index here which i think is important to recognize, the raij wage pressure story is not in the picture. Inflation is not aen issue here. We have a fed that will be looking i think more at the underlying numbers at okay growth beneath the surface and very low expectation in the future. Bruce picks a point the more recent data has shown the snapback. We measured it in there. Everything we seen suggests a substantial weather effect. You had a massive decline in inventories, strange trade numbers arc negative. 5 when it came to government purchases, better than the shutdown influences from the fourth quarter. But still negative. The Consumer Spending is 3 t. Question is the one we debated around the table. Thats where i see rick makes good points on exam spending. What keeps that down . Why is Housing Investment so negative . What were the assumptions . I think bruces ideas is the numbers that have snapped back recently are the ones guideing the market. Thank you. He was watching me and rick argue. No. How can he . No. No. Coming up next, when we return, were going to talk about the nba commissioner. Mr. Silva banning clippers owner don sterling just an hour be every the teams first home game in the playoffs. That story and possible economic impacts. Thats coming up next. Investors on ebay, drop after the outlook came back lower than expected. We will speak with an analyst when we return about these results. Results. The conditions in new york state are great for business. Welcome back to squawk box, everybody. We have been watching the futures and after that horrific gdp market, the dow futures are a little lower. Nasdaq futures off by about 13, the s p futures down by two points. If you missed it, the gdp came in at 0. 1 . Expectation were for a weak football. It was closer to 1. 1 , economists were anticipating. A lot of people writing that off as backwards looking. A new agreement announced by fork state attorney general, eric schneiderman, they agreed to customers certify they will not engage in High Frequency trading. He struck a similar deal earlier this the year with business deal and market wired. Okay. Lets talk about the fallout over the poor choice of words, thats probably an understatement, by Donald Sterling, the owner of the clippers badge team halls come to a head. The National Basketball association has decided to ban mr. Sterling for life, fine him the maxable allowable amount. Effective immediately, i am bank mr. Sterling for life from any association with the Clippers Organization or the nba. The nba says it will urge the bird of governors to force a sale of the clippers. For more on this. We are joined by Patrick Richey from Webster University and sports Business Writer with forbes. Lets walk lou the perm mutations of what you think will happen literally over the next couple of weeks . I imagine there will be a vote. I dont know if you think that happens before the season is up or not t. Question also is does mr. Sterling try to defend himself . Andrew, those are great questions. First of all the board of governors, the other 30 owners, adam silva feeds threefourths of the vote to oust and force a sale of this franchise. I believe that will happen within weeks. Secondly, with respect to whether sterling can fight. Hes a littigious gentleman, he is a lawyer. Based on legal experts that read the constitution thoroughly, he will have very little wiggle room. This is not a court of law. A man was forced out of the l. A. Dodgers within a year when he got in trouble with major league baseball. I see this team with a few owner before the next nba season. Will he sue the nba . Sure, they are their own court. There is a also a federal court and state courts. I imagine you can go to them and say, it doesnt matter what the bylaws say, im not saying he has a good case. He could make one if he is littigious about it. Lets put it this way. He has a financial incentive to do so. If he is 1sted to sell this he is looking at a Capital Gains tax of 330 million. If he held on and bekeithed q bequeathed it to his family, it would have been much less. I imagine over the summer if you talk about it happening before the new seventeen next year. Thats right. Let talk about the bidders, gafd giveen. David johnson perhaps gugenheim to get on the list, i threw out the name steve bomber. Who is on your list . All those names are on my list. Just within the last 12 months, you had two nba franchises sold in milwaukee and sacramento. Their sales values were around 550 million. Those are the two weakest in terms of park size. So you look at l. A. , you are talking about at least fetching somewhere between 700 million and a billion darst. So i would not be surprised if Magic Johnsons group, the gugenheim paid 2. 1 billion for that franchise. I would not be surprised if they were the winning bidders. They would have the sin ev gi sinner gistic value there. This was a twist Magic Johnson trying to take his name out of the running. It was a strange tweet. He says the clippers already have an owner. Did you audience what he was trying to do will . Again, it k0u9d be an issue they dont want to be seen as tampering. One thing, you mentioned legal repercussions, someone mentioned maybe sterling can go after them in an antitrust perspective. Its not as though the owner will force him to try to relocate the franchise. Those would be grounds for antitrust claims. Thats not whats going on here. He will get fair market value for this franchise. Patrick. We have a list. Maybe we can show it on the screen of those sponsors who have suspended their relation with the clippers, those who have terminated. On the terminated list are mercedes, virgin america, car max, a suspended list, red bull, krona and others will. The ones that have terminated, do they come back now . And the ones that are suspended, do they, how does this what happens . How does this work . Well, first of all the clippers revenue based on last year was 128 million. I subject 10 million were sponsorships. I suspect what will happen, andrew, before next season, a lot of those companies will be appeased with the actions that have been taken and that will take place. So i suspect a lot of them will come back. I make the argument next year its possible the clippers become Americas Team. If they do get a new owner, that you get a whole country that gets behind that team and actually makes it oddly almost ironically more valuable to sponsors. Am i crazy . No, are you not crazy. Despite what your cohost might sometimes tell you, are you not absolutely crazy. Thank you. I appreciate that. Im talking about joe, he gives you a hard time. Hes right here. I think, look, theyll be better than they have. The clippers were kind of like a net. Brooklyn helped the nets, too. The clippers will never be Americas Team. But they can be thought of a lot more, they can get a much higher profile than they have right now. At least youd hope for them. They wont be the Dallas Cowboys on the cincinnati reds. But you have to speculate. You have to wonder as you both mention, this gentleman has had a history of discriminatory attitudes and he has been so cheap with running this franchise. Only because of the economic change and the nba modem has he chosen to spend more money in the last two seasons. We can wonder if gunenheim, takes position, they can make it blossom. You have to give credit to the players and the corporations, the players were talking about boycotting games, without that impetus or influence, who knows if the decision would have been as harsh. We expect academiaics to align with andrew, anyway. For gods sacs, are you in the midwest. You cant rise above that, you are from st. Louis you didnt grow up there . Where are you from . More than ponew york. I rest my case, snow is from cincinnati. Dont tell them cincinnati the cardinals owned us. Lets not go there, guys. Yeah. Thank you, patrick. Thank you. For real. Academia eing am dem eggsto. We talk Quarterly Results. Isnt that are where cornell is . Upstate new york. Yeah. Well be back. Tomorrow on squawk box, cnbc first 25 member and the father of india i. T. Na ryan mur this, chairman and ceo of info sis. Evercorps partner and founder chairman altman on the latest deals. The driving season with the chief oil analyst of gas buddy, squawk box on cnbc. First in Business World wide. In. What did geico say to the mariner . In. We could save you a boatload foghorn sounds loudly whats seattles favorite noise . The puget sound foghorn sounds loudly all right, never mind doesnt matter. This is a classic. What does an alien seamstress sew with . A space needle foghorn sounds loudly continuously oh come off it captain geico. Fifteen minutes could save you fifteen percent or more on car insurance. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Recapping this mornings Economic Data, this is big, adps monthly report showing 220,000 private sector jobs in april better than expected and most since november, this is a be big but in this case, First Quarter gdp come on. You guys have have your mind in the gutter. How do you come up with this stuff . This squawk awkward moment has been brought to you by do you have any idea what youre saying . Ever . How big was it . This was i mean the doorways have to be extended. This was a Kim Kardashian situation, put it in that category. Youre digging deeper. Youre digging deeper. This is a big one. Im going to get in trouble. First quarter gdp look. Want me to read this for you . First quarter gdp, heres the important part, well below expectations, showing an annual growth rate of 0. 10 . Huge debate with rick and steve. Economists had been forecasting an increase of 1. 1 . I wasnt going there at all. I want to tell you i wasnt going there. A really big but. Theres its a really big but and you went i was not going there. Well and you went there. Shes not like me. It was her. You said like it was the same kind. I cant help it. I did hear it. Im sorry. Very fast, john, come up with a song. When we come back big bottom girl. Ebay earnings after the bell came in better than expected. But, investors sold off the stocks on some of the other news. We will tell you what was bothering possible bidders right after this. She has freckles on her with fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. 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When working with an investment firm, whats really important is whether the people behind the desks actually stand behind what they say. Introducing the schwab accountability guarantee. If youre not happy with one of our participating Investment Advisory services, well refund your program fee from the previous quarter. Its no guarantee against loss and other fees and expenses may still apply. Chuck vo standing by your word, thats what matters the most. Welcome back. Ebays Quarterly Results coming in better than analysts were expecting but Second Quarter guidance light of expectations and has investors selling in afterhours trading. Joining us is chad barley at Pacific Crest securities. What would carl icahn think this morning . Hi, good morning. Well, i think overall it was a pretty solid quarter as you mentioned, the stock is selling off. I think theres some disappointment around the u. S. Marketplace business and certainly the q2 earnings outlook. And your a sense in how they turn that around or do they turn that around at this point . Well, i think management has a lot of initiatives, a lot of opportunities around the marketplace to reengage consumers and active buyers, which is still growing in the low teens. Theyre going to look to marketing and advertising, look to use data, look to personalization, so hopefully over the next several quarters we can see a reacceleration there. We think it will take some time. Tell me about the stock. Whats your target on the stock . We have a 60 price target consistent with where we were heading into the quarter. Weve been telling investors this is a good franchise a good growth story with a reasonable valuation. We continue to own ebay and we would be opportunistic buyers on pullbacks like this that were seeing this morning. Where would you put amazon by the way, given whats happened to that stock recently. Absolutely. [ inaudible ] retail. We have an outperform on amazon. We would definitely be buying that stock as well, particularly given the pullback and weakness weve seen year to date. As you mentioned a different story, different concerns among investors but as you look at valuation, its basically at the trough sales multiple. We still view this as a strong growth story, very strong opportunity to gain share, and we think theyll continue to enter new markets. Well leave it there. Thank you for joining us. Tell everybody coming up at 10 00 today, squawk on the street ebay ceo john donahoe will join the crew immelt and costo costolo. And sir mix a lot. Right now time for squawk on the street. Two Major Players at the center of things this mornings biggest stories and weve got them. Good morning and welcome to squawk on the street. Im david faber, thats jim cramer, we are live from the new york stock exchange. Carl quintanilla, wondering where he is, hes in San Francisco and hes going to be interviewing twitters Ceo Dick Costolo in a few moments. A live interview with ges chairman and ceo Jeffrey Immelt on his companys 17 billion actually 13. 5il