Transcripts For CNBC Squawk Box 20150519

The office . Asking for a friend. Obama actually returned good question bill clinton. The handle comes with the house. Know anyone interested in flotus. President obama picked up his first 1 million followers in a few hours. Ive seen other accounts that hes had. This is the first one at potus. Its cute. What happened in ramada yesterday . The fall of ramada. I saw this last night. I saw quite a bit of news on this. Where is that . Iraq . Iraq and its very close to baghdad. They have them too right . Put that twitter account. Bill clinton and first lady and hilary and all. Yeah. Anyway good morning. Good morning, how are you . Hows wall street . Not very tame. You read my column today. Its still unethical. Lawyers, or madison avenue or government or politics. Anyway. On the front page of the New York Times today they were talking about the revival of wall street. How many private email accounts do you have . How about you . 16. But i got really good stuff going on. Home depots Quarterly Results just crossing the tape. Adjusted corporate profit of 1. 16 a share. Revenue also exceeded street forecasts. Store sales rose 6. 1 compared to estimates of 5. 7 and home depot also raised its full year earnings and sales forecasts 114 now a share for that dow component. Come poen. Ponent. Yeah, home depot is there. Nikes not. I give you grief but have to go in and look. Nike is. Visa is. No. Apple. At t. No. What . Apple. Changes are coming fast and frequently. When you give that responsibility to i dont know. A couple of guys in a room. A couple of guys in a room. Although it was interesting when he came on and posted his defense. Apple back up to about 130 again. Its been like this saucer. Well see as it goes up and down. As apple goes so go the rest of the markets. Can you see it yesterday . I was watching the dow and every time the dow was up more apple was up more. If you are just waking up this morning lets get you up to speed on what happened yesterday with the markets. After yesterdays record close, check out the futures this morning. Youre going to see right now that things are look good for the bulls on wall street. Dow futures up to close to 50 points of fair value. Joe mentioned china, the shanghai composite jumping more than 3 . Among the catalysts, reform hopes. Beijing publishing guidelines that prioritize further opening of the Capital Markets and restructuring of state enterprises. Meantime in europe the ecb is a big driver today following dovish policy comments from a policy maker. Hinting that the central bank could be ready to front load its current Quantitative Easing Program buying up more assets and being more aggressive in the near term. The europe stoxx 600 up. Also check out whats happening with the euro dropping sharply against the dollar this morning but youre still looking at it close to 1. 12. Thats a big increase from a couple of months ago. Walmart will post its Quarterly Results this morning. Analysts looking for the retail giant to earn 1. 04 a share. Then on the economic agenda housing front and center april starts and Building Permits at 8 30 eastern time. Housing starts are expected to jump by more than 10 . The Global Markets are still nervous about greece. A deal is very close. He expects an agreement with bailout creditors within the next week but weve heard that before so im not holding my breath. Yeah. Individual names that we can watch this morning, include, urban outfitters. Retailer missing the mark on earnings and sales because of its anthropologie brands. The Company Expects more discounts in the Current Quarter as it tries to attract young women. That was keeping the whole place. Trying to attract young women. Thats hard. Elusive. Isnt it mark . Not anymore. Its not hard anymore or its impossible right now. Its not even part of the equation for us. A mixed quarter it was never that easy was it . Really . Anyway, Take Two Interactive erngs topping estimates driven by strong Digital Sales of its video games. Revenue fell short. Company increasing its stock buy back plan and missing on the top and bottom line despite what the Company Calls excellent order momentum during the quarter. Guidance on the weak side as well. Shares of mbia coming under pressure. Announcing a secondary offering of more than 27 million shares. Other Corporate News this morning to talk about. Starbucks and spotify teaming up on a music partnership. Theyll get access to starbucks music on spotify and have input on play lists. Spotify will be purchasing stars from starbucks and there will be incrementalty coming to starbucks customers. This is the first of many that we believe will create a significant new Revenue Source for the company but incrementalty in terms of other customers coming from other brands and companies. It will start this fall in the u. S. And well see if it rolls out from there. This is their attempt consider they sold cds for so long. But when they stopped selling the cds they did say they would still have offerings. I can understand how this can help them on the margins. Can you really get significant revenue off of spotify . I dont know how starbucks can get significant revenue off of it. If you watched the stock yesterday it was up only about. 5 . Lets look at the markets this morning. Check out the futures in this country. Yesterday didnt really tell us the whole story early on but today were looking for additional gains which would be more new highs for most of the averages up 47 points now for the dow. S p indicated up 6 and the nasdaq looks particularly strong up 15 points on the session. The dollar has been stronger and i was begging for 114 on the euro to be the intermediate top. Now you can see Dollar Strength there in terms of the way crude is acting 58. 91 although it had a nice retracement of a lot of the losses over the past year. I saw the ten year ticked up toward the end of the session yesterday. Back down a little today. 2. 2. Do i have 112 on the euro . Im looking for 112. Good, good good. How many times did i say good . Three. 1. 1194. Way overvalued at 1. 11. Says the man on his way to europe in just about a months time. Yes. I forgot about that. Wasnt thinking about that. I was not thinking about that. And then theres gold which is back above 1200. A nice rally in recent sessions but back to 1219. Another day another record run. The s p with its 9th record close this year. Housing and inflation data could weigh on investors mind. The cofounder and cio of island capital. Even the suspenders dont help at this point do they . With the younger demo. Not at all but as long as my wife is happy. Good answer. Shes young. Its a good selling point for marriage isnt it . You dont have to be a you don have to date. You dont have to exercise basically anymore. Dont have to watch with a you eat at the point. Dont have to watch how you look most of the time. But if you do those things it makes your marriage even better. I think youre right. Looking good too. Thank you. Good morning. You look good too. Yeah. We got it all going, huh. Hi becky. Lets talk after the segment. So listen mark were going down for First Quarter gdp and with your estimate for Second Quarter you have been optimistic. Are you tempering that now or do you have a lot of excuses . We have been below consensus for the last five years. We feel okay but we had 0. 5 for the First Quarter so they werent that much of a surprise. It will go negative . Mainly because of the moner the trade number in the month of march. What about Second Quarter . Second quarter is looking somewhere between 1. 5 probably. Our last forecast, the last run we had was 16 burt there seems to be a lot of down side risk to that. People think theres some underlying strength being masked by the thing out on the west coast ports or weather or dollar and everything is fine. Saying that the seasonal adjustments are off. Everything is fine. Its not a 3 year though. I dont think its seasonal. I dont think its seasonal because its a differ factor every year. There has been something that tripped us up in the First Quarter but you cant seasonally adjust the west coast port stop. The only thing recur as good china has become such a larger part of the economy and the Chinese New Year floats around in the First Quarter so it impacts the u. S. Economy differently each year and thats something thats been recurring and maybe that comes out with the benchmark revision that they release this summer. So its possible that when we get the benchmark figures in late july that well see that the under lying momentum has been better and we wont see the weakness in the First Quarter each year. Im going to summarize some of your poinltds here. Ts here. Theres a lot of noise and we treat each sound as if its the end of the world. You have the fed, greece weak gdp, Congress Lack of cap ex spending. On and on. But you say the two most important things that matter are oil and the dollar. Signals for what . Economy and stock market. Things that matter. Things that matter. Things that are going to really matter. Move the markets that we care about. And bond market. Sure. What are they say something. Oil is ahead of itself. Were in dallas. This is new york. Your firm is in dallas. Hard to believe you if you dont know where you are. Its always hard to believe me sometimes but thats why i wear a nice tie. The oil people love to drill holes and if you figure out a way to do it cheaper which the frakers frackers are doing. Theyll do it. This estimate of us cutting the rig count and oil coming down its not going to happen. Were going to see a lot more holes poked and a lot more production and thats going to put pressure on the oil price. Even if they dont complete it its like ready to go. Its almost like the minute it gets to a certain place they can bring it all on. It did cost money to continue to do that and thats why they have been raising a lot of equity and debt. Theres been a lot of money flowing into this situation a lot of it is going in energy right now. So theres a lot of liquidity and theyll use that. So that will be good for the stock market. Probably good for the bond market too because it lowers inflation expectation. What about the dollar . The dollar is attached to the whole thing. The situation with the dollar is that were in a long i think, bull market and it has to have a healthy pull back. Thats what this is. It could go a little bit more. We were talking today about the euro, et cetera et cetera but fundamentally, structurally everything that we see as far as the different monetary policies around the world, whats going on in the u. S. And china, et cetera, et cetera is good for Dollar Strength. Although it basicicly, everything, every market depends on what the fed does. The reason youve seen the dollar retrace and come back is we think the fed is going to wait longer before it raises rate which is is why you see stocks trading at such high levels. It was the most crowded trade we have ever seen. Right now as far as the biggest crowded trade was the long dollar and in this market in this kind of world anything really crowded when you start to push it the other way it gets very ugly. So its hard to read too much about the fed into this technical move. The move in the ten year has been very technical. You say oil and the dollar are both drags. Theyre certainly drags on growth. The abrupt strengthening of the dollar hit the Manufacturing Sector and you see that when you get away from oil in the factory sector. You look at the ip numbers we got last week. Outside of recessions we have rarely seen Industrial Production as weak as it has been over the last five or six months. Its been weak every month since november. Europes economy surprised up to the upside in the First Quarter. Theres been a little bit of a role reversal there and i think that all the focus that we have on the Technology Side and Services Side people forget how important manufacturing is. Thats where the economy gets its impulse and thats what is behind a lot of the moves that we have seen in Exchange Rates so far this year. We think the dollar will strengthen further. Theyre still mainlining the fed. If its past september theyll run the market up if they dont move in september. You know the september data is an interesting one. Everybody has been built around september, september and the fed has been trying as hard as they can to get away from being date specific. We were all June June June until we became September September september. If you look at the data theyre likely to see in september its going to be a gdp number less than 2 in the Second Quarter. Gdp number negative in the Second Quarter and no reading on Third Quarter gdp yet. It may be uncomfortable to raise rates. I think its very uncomfortable to not raise rates. They should have done this already. The lift off is two kinds of people in the world. Its amazing. Exactly. You theres two sides to this trade. Theres the saver sitting there having to save much much more because rates are so low. Lets raise those rates and help the saver not have to save as much. Thats great for the economy. I did a story over the weekend how about europeans are suddenly worried about the savers and the retired people who are going to be hit hard by this pollty weve been through for a long time. Its a great point becky. They have much more savings than equity. Their Balance Sheets are differ than here. Qe doesnt work as far as the economy is concerned. We have gotten everything we wanted. You cant get a mortgage anyway so theyre not getting anyone to do anything except bid up asset price which is may not be the way to run an economy just on asset inflation. You know, it does work for the wealth effect. Were seeing it in japan and china. Certainly in china. The stuff going on there is unbelievable as far as a signal. I think china is the other massive signal im focussing on and what theyre doing with inflation but it doesnt theres a certain point where it just stops working. It doesnt reach the right part of the economy. Yeah the wealth effect kind of just effecting the wealthy. Its the ultimate trickle down economics on steroids. One of the things that we hear in the Housing Market right now is that yes, we have plenty of preapprovals but theyre all bidding for the same home. They like it and then on the other side people love trickle down in terps of lowerms of on the lower taxes but on the right they dont like it. Love it and hate it just depending on which kind. Some people like trickle down government. Other people like trickle down growth from the private sector right . Yeah we need to try trickle up. We need to try to trickle up. We have to build a stronger base. Thats whats missing. You talked about it a lot on the show. We havent done anything on the tax front. The last time was in the 80s when the berlin wall was still up. It was a totally different world. Did you notice that in hindsight we were trying to figure out how they were worth 2 billion for tpg 4 years ago and its worth 8 billion now . Tell you whos buying it an irish company. A totally different valuation this they can put on. Maybe the ceo has done a great job obviously but 2 to 8 in a couple of years. Thats pretty good. And who can pay more. Was that 2 billion in equity . I think it was even less. All right. Who are you wearing there . I dont know. Its a blue sport coat. Thats not just a blue sport coat. Youll like how you look. We do too. Good to see you guys. Thats warehouse. Not a problem. Thats the hair. I know who is that. I said many times this is real human hair. Its beautiful. My wife wanted to know if its real. Its real honey. Certainly is. Did you pull on it . No i just touched it. Its real and its fabulous. All right. When we come back this morning well get the street reacting to better than expected Quarterly Results from home depot. The retail analyst will join us on set. First as we head to a break take a look back at this date in history. Y. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Tu city ranks fitness among the top 50 u. S. Cities. At the top washington d. C. Do you believe that . I dont understand it. I was trying to figure out a Big Government angle as to why people were exercising there. Indianapolis holds the distinction as the least fit major metro area this year. I will say that when we go back used to go back to my hometown in cincinnati go to the zoo and tough stuff there are full figured people and individuals walking around. There are lumbering around. I know why. Its a very young town. People that work there are working there from probably 20 to 30. Theyre not fat. Theyre prefat. Well youre young and exercising. You have time to do those things. About what indianapolis. Not from indianapolis. Indiana yes but not indianapolis. Colorado maybe. . Colorado ive seen. Denver also wins. The rankings are based on outdoor exercise options. You dont need to go outdoor. Also rates of smoking, obesity and diabetes. Theres some criticism of that index however. Places like indianapolis doesnt have the outdoor green space that a place like denver has and that hurts itself. Thats the office. Our producer. Look, were behind them. Can you see that . Oh yeah. Thats todd. What are they doing . This is scary. Uhhuh. Do they do afternoon yoga every day . Without commentary now he cant get back up. Hes falling down. He looks good. He lost a lot of weight. He does. All right. Lets tell you about another story this morning too warren buffets secret Millionaire Club announcing grand Prize Winners for the grow your own millionaire. Heres what he had to say to them. Born in 1930. Im glad i wasnt born later because i would hate to compete with the groups i saw out there. It was a lot easier when i started in business. They made a study many many years ago of what was the greatest predik to of success in business in the future . It was how young you were when you started your first business. That was the best single predik predictor. All received 10 shares of berkshire hath berkshire b shares. Earnings in revenues both beating the streets. Joining us is the Senior Equity Research analyst. Theres a lot of good news when you start digging through the headlines. They talked about their same store sales up 7. 1 . They raised their guidance for the year. What do you think about what you saw . You said it well. A lot of good news here. Another solid report from home depot. I was digging through the results today and what stands out to me in the United States it is 7. 1 comp. Thats impressive. Particularly against a backdrop a lot of retailers have been missing lately. This is one more indication that theyre spending but more and more on their home. Is this happening . Its been a strange thing to watch but it hasnt translated at the apparel retailers . Is that a done thing when you look at the electronics and home and other places theyre eating out . It takes awhile for the consumer to get used to having extra money in their pocket. Theres different spending shifts. So were seeing home eating out, maybe eventually that translates into apparel but it just takes awhile for the consumer to get used to having extra spending money. I dont understand why you would go to the restaurant but you wouldnt buy you dont think theres something funds mental happening in the marketplace around fashion and aparallel. Fashion is not my expertise. I work with people that do follow it and i hear them say theres been a significant lack of fashion and newness. So these retailers arent given the consumer much reason to spend on clothing. Lets talk about home depot in particular. Up 7. 1 . Very impressive. Is it something about the strength of the Housing Market . Something about them in particular . Or is this going to translate for strong numbers for lowes too . The report is going to look good. Probably not as good as home depot but it will be good. I look at these home depot results. Theres very much a macro piece to it. Housing is improving and driving better results at home depot but theyre executing perfectly. Its internal and external. Do you like it better than lowes. Theyre the same stock. But you said theyre executing better. The opportunities that lowes has, well see this tomorrow and over the next year is theyre still more depressed. So i like to say theres more slack in the Business Model versus home depot. Home depot is executing better but it may be an opportunity over the next year. The one thing home depot may point out is theyre unable to discuss the data breach. Does that concern you. It doesnt matter. The market is going to look through that. The real key is howell they handled the data breach and protected their consumers. So in terms of whether you would tell people to buy this stock. Id buy it. Youd buy this and lowes. Thank you so much. Thanks appreciate it. A fugitive highlighted by cnbcs own american greed has been caught. Those details next and later a green lineup of news makers gordon gund. The ceo of ad giant and Top Executive of kellogg. But first heres a look at yesterdays s p 500 winners and losers. Losers. When youre not confident you have complete visibility into your business, it can quickly become the only thing you think about. Thats where at t can help. With Innovative Solutions that connect machines and people. To keep your internet of things insync, in realtime. Leaving you free to focus on what matters most. Theres some facts about seaworld wed like you to know. We dont collect killer whales from the wild. And havent for 35 years. With the hightest standard of animal care in the world, our whales are healthy. Theyre thriving. I wouldnt work here if they werent. And Government Research shows they live just as long as whales in the wild. Caring for these whales, we have a great responsibility to get that right. And we take it very seriously. Because we love them. And we know you love them too. Well there is something to be said about american greed. It chronicles tales, sorted tales of things that go wrong. People that get greedy and the amazing thing about american greed is it has a record at this point of capturing some of the people they talk about. We want to talk about a new fugitive thats been caught. Who was it . A man named jim that was an alleged fraud, financial controllers in kentucky. Playing around with things. He took off was on the run. American greed came out and as a result of that american greed showing they have captured him. This is the 6th wanted person featured on american greed the fugitive thats been caught as a result of doing this. The amazing thing is somebody saw the program, wrote in to his estranged daughter and said he had seen the show and was certain he had travelled with the same man on the appilachian trail for seven months. They sent a picture of this guy goo int the cincinnati fbi. Wow, no flies on that guy. He was with him for seven months. You know this might be the same guy. Can you show that picture again . I cant way for sure. Youre missing the entire point which is that we can go from criminal to fugitive to american greed to White Collar Crime too. There you go. Were building our own franchise for you to go. Now you have to visit this guy. Yeah. White collar convicts one and two. Theyve already been caught. I know. But were manufacturing some new ones. Manufacturing some new ones. Well talk to them when theyre caught. Every step of the way. If we could only get in when theyre committing the crime. Even better. Just go to any wall street office. It han been tamed. Do you want to do that . No, no i dont. I know you do. In my column today dont you sell enough papers . Theres a study that the university of notre dame did interviewed 1200 professionals on wall street. Heres the question for you, if you could do Insider Trading and guarentee yourself 10 million and not get caught im telling you in advance youre not going to get caught what percentage of people on wall street do you think would do that . Is it higher than the general population . I dont know. My guess is there would be a percentage of people that would say yes. My guess is it would not be higher than the general population. A quarter of wall street says that. The thing by the way on that particular report that is nerve racking, 46 say theres stuff going on inside the firms they dont think the government is able to regulate or understand at all which is nerve racking. 10 have been asked to do bad things and a third say either they have seen or witnessed otherwise illegal activity. 10 say they have been asked to do really bad things . 10 say they have been directly asked to do things that would be considered either illegal or unethical. Did they do it . Unclear because you don know from the report. It was like conscious is that little voice that reminds you that someone might be watching. Is it your horiscope. No its not that you think it would be wrong. O we have to do this quickly. Youre not a big who fan. I do like the who. This is the tour 50. If we juan to look at a guy that does look like a wrinkley rocker its pete townsend. He doesnt look like a rocker. It just looks like grandpa. Dont play it too hard. I dont like this song. I like some of them whats the name of that. Teenage wasteland. Yeah. Bob oreilly. Thats what i like. Not bill oreilly. Bob oreilly. I dont know his brother. Regarding the kids are all right townsend said when i wrote this none of us had kids so it was about us. When we had kids it was about them and then we had grand kids and it was about them and now its about our Great Grandkids. They have Great Grandkids . Yes. Meanings change. That was the greatest super bowl. I dont have a good excuse. They love it. And his voice is arguably its still good. Its coming back. Coming up everything you wanted to know and were afraid to ask about bitcoin. Why more than a few investors are betting big that the currency is here to stay. Well talk about it when we come back. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Welcome back. Bitcoin finding legitimacy on the new york stock exchange. The nyse launching the first calculated for the currency. And he is out with a new book today called digital gold bitcoin and the inside story of the misfits and millionaires trying to reinvent money. Its great to see you. I get to see him at our office all the time and we talked about this book about a year ago before you wrote it. You were an important part of the inception in this. Its my favorite topic because i always try to ask whether its a good idea or bad idea and we had a lot of people on the show with lots of different opinions. I think we were told that bitcoin one going anywhere fast. And others have a different view. You take people inside the story of how this whole thing got created and the question i really ask is where do you think its going to be five years from now . Where do i think it will be five years from now . The most likely outcome is that to the degree people are interacting with this its in a way theyre not even aware of. Its a sort of infrastructure. So were not going to really use bitcoin. This was the debate. Are we still going to use American Express and mastercard and a lot of people realize credit cards work well. Paypal these are good systems and thats not needs to be replaced. Its not what is not functioning well currently. My biggest concern has always been it seems like a great idea for people trying to hide their tracks. For people that dont want you to know who is using it and doesnt want to be traced and that leads to a lot of problems down the road. Most system at a cut somebody out of the middle usually theres somebody in the middle watching things and keeping charge of things. That was the case with the postal service. You had the u. S. Postal police that could watch where mail was going and you had to adapt when email came around and there one the middleman that could watch things anymore. Thats where the money is saved but the dangers come. But because of not being able to trace some of this stuff if it becomes big enough the us. Government or another government would step in and say were not going to allow this to happen because we cant catch the bad guys. Right. In the travels for this book one of the most interesting things i saw is the places where it was being used and the government didnt want it to be used. Places where the government had decided that and unique qualities of this Technology Made it possible to still use it. Argentina being the most fascinating case where ordinary people are using this technology, people there are the people in this book are just fascinating because they found a way. They dont care about the politics of it. They dont care that its a libertarian ideals. They dont understand the technology but they found a way to transfer money when getting money from tourists abroad. These things arent necessarily illegal. They are in argentina but its a place like that that gives you a sense of how this might evolve for useful purposes rather than law breaking. Does it up end the banking or Payment System at all . It may well cut out. Most likely are Payment Networks that the fees collected by Payment Networks visa this sort of companies, that whole system gets they may, in fact integrate it into their own systems but i think that thats the most likely place where you see margins compressed and businesses effected. Would you bet on the currency itself or no. My mom asked if she should buy some yesterday and i told her not to. Are we any closer in figuring out howwho that guy is . I like to think so. They have their bet its a guy in california. A reclusive guy. Not the guy in newsweek. Everybody agreed within a day of that coming out that that was probably wrong but theres a guy out there thats been working on this project for 20 or 30 years. Theres a lot of interesting hints that point in his direction but this the most interesting is this project has been going on for two decades. Its not a bolt out of the blue. Its a cool book. Thank you for coming in this morning. Coming up, trade fight hits a new level in washington. The ceo of hsbc u. S. Tells us why theyre taking note, next. Re taking note, next. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. The Technology Changes the design evolves the engineering advances. But the passion to drive a mercedesbenz is something that is common. To every generation of enthusiast. The 2015 dream machines, from mercedesbenz. Todays icons. Tomorrows legends. Visit the dream machine event today for up to 3,500 towards purchase. The trade debate heating up with Mitch Mcconnell threatening to cancel memorial day recess vowing to pass fast track trade legislation before the long weekend. Facilitated half a billion dollars worth of trade last year. President and ceo of hsbc usa. This, i mean, ive heard the fringe of both sides seem. In this argument can you cut through, you know, all the background noise and how do we get a decent trade deal . Most people like free trade as long as you can satisfy concern. Not surprisingly hsbc is a eprotrade policy bank. We do a lot of trade everywhere throughout the world and i think the underlining point of this is you have so much Economic Growth that is tied to trade that is very important for companies to be able to expand and grow in the markets. They need to actually have trade agreements that work for them and allow them to participate. Youve seen what happens when even the president dismisses some of the concerns say Elizabeth Warren or harry reid and you see ethe back lash that can come from that. What are, are there genuine concerns about u. S. Workers that result from a trade deal that is not negotiated properly . I think the way you have to look at this is it is about growing the pie. One thing that trade does throughout the world is actually generate more economic activity. If you want to tie jobs to anything in particular, i think trade is one of the major areas that we need to focus on. Something that ben fits everybody. Its a win win argument. You can go to different parts of the country. You can go to the states that have big carmaking presence. You go rob portman normally a guy that is a pretty consistent free trader but hes in ohio he has found a reason not to so are you saying the only people that are against this have their own course in the race . Is that really what youre saying . That they know whats good for the country, but their own constituencies theyre trying to dissatisfy. You have to look at this at the best point of the view for the country and the aggregate. You dont think eElizabeth Warren wants the best thing Elizabeth Warren is saying look she came out swinging yesterday and said look you look at what happened with our existing tradebacks and there are countries that are violating what they have agreed to in terms of child labor and in terms of Union Leaders who were murdered in other countries. What do you think about that . Economic activity is occurring everywhere in the world. If you think about the United States in that process, you want to make sure we participate where we can. Recognize trade today. So the Southern Hemisphere trade, thats actually growing at a much faster rate than what were doing in our typical east west trade. You have a lot of interasian trade that is taking place today. That activity is going to take place no matter what we do in the United States. The question is, really what do we do from the point of view of actually participating in that trade. That is important for u. S. Companies to remain dynamic and adaptable to the way the world is trading. Very specific. But the weirdest thing is watching the love fest between obama and mcconnell which, that is like some weird, thats like something might happen bad for all of us. I mean, the universe might end with those two guys. It happens. I think its good. Its good for the country. Its important, actually that we partis pot. Something for everyone to like and hate in those two guys. Thank you. We all cnbc i mean its a global marketplace. You need to do this. It is a global marketplace. Think of the consumers. We dont want 2 billion consumers. Worse for our consumers. Sort of not logical. Thank you. When we come back walmart is to set Quarterly Results. Well have the numbers and instant analysis straight ahead. Welcome todays guest host gordon gund will be joining us. Stick around squawk box will be right back. Ideas come into this world ugly and messy. They are the natural born enemy of the way things are. Yes, ideas are scary and messy and fragile. But under the proper care, they become something beautiful. With xfinity from comcast you can manage your account anytime, anywhere on any device. Just sign into my account to pay bills manage Service Appointments and find answers to your questions. You can even check your connection status on your phone. Now its easier than ever to manage your account. Get started at xfinity. Com myaccount market alert. European stocks sharply higher and u. S. Equities trading at alltime highs and he is here to explain why the rally isnt over yet. Guest host gordon gund. Well ask him about consumer trends, the u. S. Economy and his fight to find a cure for blindness. Earnings alert. Dow component walmart set to report. Well bring you the numbers and reaction from the street. The second hour of squawk box begins right now. Live from the beating heart of business, new york city. This is squawk box. Welcome back to squawk box right here on cnbc first in business worldwide. Im andrew rosssorkin. Our top story a Global Global market ral ey. Chinese stocks soar oing more than 3 overnight and the biggest oneday gain there in four months and european shares are up sharply. Hinted that the central bank could be ready to front load its current Quantitative Easing Program and that could mean a more aggressive, nearterm schedule for asset purchases. The euro dropping sharply overnight. Going a lot of places. Going a lot of places. Cheaper for you. You dont want to tell them. No. Youve seen what happens. You dont want to get mobbed over there. Very difficult. Piece of clothing, you know. Take a look at the german bund. You going to been germany . Identify what countries youre going to be in. Give a look at u. S. Equity futures. Looking better after a big day yesterday. Dow looks like it will open up 15 points higher and the s p 500 up about six points. Some other stories were following today, as well. Home depot reported 1. 16 per share and that was one cent above estimates. Comparable store sales rose 6. 1 that compares to estimates of 5. 7 rise and that home depot also raising fullyear earnings in sales forecast. On the economic genda, housing is front and center. April starts and Building Permits 8 30 eastern time and Housing Starts expect today jump by more than 10 . The other story of the morning, apple scrapping plans for ultrahigh Definition Television sets. They scrapped those plans more than a year ago, according to wall street journal. Redesigning the apple tv box according to that report. Story coming out afters carl icahn released an open letter to apple ceo tim cook saying he expected to see the Company Release a tv next year. We all were expecting a tv of some sort and not not a physical tv, but a box of some sort that still has a tvlike function. Let me tell you about earnings that are out. Walmart dow component out. Those earnings worse than expected. 103 versus 104. Revenue also a little bit light. 118. 3 billion versus what the street was looking for. Looks like the stock is trading lower on this news. You can esee right now, its down by about 1. 1 . This is perhaps the Shortest Press release ive ever seen from walmart. About two paragraphs. One paragraph after four bullet points. They do talk about how currency negatively impacted earnings per share by about 0. 3 eor by about 3 cents a share. They also talk about their 1. 1 comp in the u. S. Samestore sales in the u. S. Up 1. 1 and it included positive track for a second consecutive quarter. However, samestore sales overall including not just the u. S. , but international and with the web was up only 0. 2 . Think about what we just heard from home depot. Comps here up 0. 2 . They have a guidance for the Second Quarter which includes a 4 cent impact and theyre saying 1. 06 and 1. 18 and 1. 17 is the estimate. Thats not bad. So that is at least 1. 17 in the guidance. First take. I dont even see that. Maybe im not looking at the full press release. I just like that number though. We say it so quickly, 114 billion. In a quarter. 115 billion in a quarter. But they make 3. 3 billion. So, you can see its not like its not a highmargin business. Thats for sure. Well be talking to walmart analyst in just a few minutes. In the meantime our guest host for the morning has a unique read of the u. S. Consumer and economy. Gordon gund is the founder of Gund Investment corporation and cofounder and chairman of the Foundation Fighting blindness. Gordon, great to see you, again. Thank you very much becky, great to be back with you. You are somebody who understands a lot of what is happening with the consumer. Youre lead director alkellogg. Youre invested in a lot of different areas. Lets talk a little bit about what youre seeing in the u. S. Specifically. News from walmart, again, they are showing that they are higher traffic visits that are coming into the stores in the u. S. Little bit of concern what is happening with the consumer. What do you think . I think the consumer is moving around and making different choices. I dont think the spending is up quite as high yet as it has been in the past two. So thats part of it. But i think the millennials are really looking at a lot of Different Things about how companies that they purchased products from what kind of values they have and what they care about. Not that that should affect walmart. They have terrific values. Maybe just largesize businesses that they are a little skeptical of. Thats been something that kellogg has dealt with as well. Changing consumer tastes and changing habits. How do you deal with that big company on the end of trying to pick up where these changes are coming from . Well you dont want to leave your base altogether but you do want to have lots of opportunity for those who are more who are more concerned about carbs or about protein or about any number of healthy ingredients that you are there to serve them too. That you can provide them with the kind of food theyre looking for. As well as people who really dont want to pay up for that. But still want very healthy food. How quickly, by the way, do you think that business is transitioning . Meaning we had Warren Buffett on the show talking about cocacola and kraft and some of the other businesses hes been in. Youre in kellogg. He suggested, look its a big world and the world may not be changing as fast as sometimes the conversation. I think the business is i mean, the cereal business is off. And well talk some more about that later this morning and i think that really is a factor of having the company having to maybe find some other ways to meet those needs, which its in the process of doing. I think innovation is key and theres a lot of very good innovation going on. I think this year for that business is a particularly important one. Fed is going up too. Sure. Millennial fad is the question is. Here to stay. Companies need to the customer is always right. If the customer says i dont want this, i dont want that. And then subsequently evidence shows that all these things were just ridiculous knee jerk i dont know how many people are not affected by gluten and if everybody in the world says i need gluten free. Customers are fickle. Gmo, you have to say, yes, youre right. Oh right, preservatives. Doesnt mean it will be that way in three years if people ever come to their senses and read some literature. Do you think were ever going to go back to remember when pasta was fat free and it was wonderful. Carbs. It was a big deal. One of the great moments. I know pasta can make you fat. Thats never going to go out, thats unless fatness comes back. I dont know andrew. Right now, you are really in. Thats all im saying. With that skinny body of yours. Thank you, sir. Gordon how do you deal with that as a company . How do you not alienate your longterm core . That is a tricky strategy. It is becky. I believe kellogg does it very well. Theyre constantly improving their products. So they dont want to alienate them, but they also want to make them better tasting, if they can. Having fewer calories if thats possible, without losing the good taste of them. And, also texture is huge. So, you keep working on it all the time and try to improve it not only for the main stream but also those who are on one side or the other. Lets talk about your views more broadly on the economy. What do you think is happening right now . I think what is going on internationally has a lot to do with our economy, of course. A great deal to do with it. Thats unclear. China could be in a bit of a decline. Not that theyre going to stop growing, but theyre not going to grow at the same rate. That looks like that is coming. And that has create uncertainty. Interest rates are very low. We talked about housing and that hasnt been coming as strong. I was happy to hear you predict, andrew, that it could go up by 10 on a yeartodate basis. Not my predictions. But that was a warning. Thats in terms of what is happening with eevaluations. Youre a venture capitalest and we heard things are thrown out of whack by qe set into place by Central Banks around the globe. Is it harder to find deals youre interested in because of valuation . Very much so. We are not, we dont chase these valuations. And wont. And dont believe that theyre really making sense right now in some cases. Theyre way out of whack with reality. So, i do think that. But its a part of the market, not all of it. And we do a lot of venturing and you can find very good opportunities. But only early stage at the right value. If the value reflicts the risk well go ahead. But as it seems to be in a lot of cases, with some of these billion dollar plus valuations on companies that have almost no revenue, yet alone any earnings. That doesnt make a lot of sense to me. How long have you thought thats the case and how long do you think it can continue . Well ive seen it before. We all have in the 2000 year with the telecom bust. So its not the first time ive seen it. But this affects, it seems like different, a whole different sector. Still internet related. But also the biotech field has gotten, i think, a little bit out ahead of itself too. Well talk more with gordon throughout the show. Hes our guest host with us and well be here for the next two hours. Retail giant walmart just reporting and well dig through those numbers with an analyst. And Market Strategist tom lee thinks the rally in stocks is not over yet. Were back in a moment. Financial noise financial noise financial noise financial noise welcome back. Walmart just posted Quarterly Results. Joining us now to break down some of those numbers is bud who is the director of Furnishings Research at Raymond James. Good morning to you. Help us just try to understand this. You know were looking at home depot numbers, which were you know really quite good. Can you explain what happened at walmart . Well, certainly. I think that walmart numbers were impacted significantly by fx. That was by 3 cents in the quarter and i think 2 cents from the wage in training impact and also 2 cents from their e commerce investment. So about 7 cents there. Without affects and those items beaten on the top line and the bottom line. You also have a lot of other moving parts for walmart and Walmart International. That was a little bit of a challenge on the fx line and i think sams club was a disappointment in the quarter. Can you get happy about 1. 1 comp in terms of samestore sales. We dont get overly excited about it. Walmart is a very big business as you know. 1. 1 is, in fact the third consecutive quarter of positive comps. And they did have positive traffic. Also Neighborhood Market was up i think the comps will prove to be about 7. 9 in the Neighborhood Market and even the mature Neighborhood Market stores were positive. One of the conventional wisdom that seems to be get upended here was or is that gas prices as low as theyve gone. Well see more foot traffic in these stores. That doesnt seem to be the case. That was something that wall street got overly excited about at the end of last year and something that bothered us. We think there were some other issues that the consumer would face. Increased Health Care Costs and obviously, putting some money back in savings and reducing debt. So, we didnt get very excited about that and to that effect walmart actually made our number for the quarter of 1. 03. Missed a little bit on the revenue side but fx probably accounts for that as we dig through those numbers. To the defense we can look at walmart and extrapulate retail broadly and well see target and others later. What do you think . I really cant, i think its very hard to extrapulate that. Were seeing retail with the retail numbers that came in just in the flesh, retail is a more challenged and i think the street is getting, getting the wind of that. The valuations however, are reasonably extended. Were still positive on walmart as an overweight item overweight issue, but, overall, were fairly cautious because of valuation on the retail sector. Okay. Bud, were going to leave it there. We appreciate your time this morning. Thank you very much. When we come back this morning, well be talking sports with our guest host. He is the former owner of the Cleveland Cavaliers and former coowner of san jose sharks. Stick around, well be right back. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Welcome back to squawk box, everyone. Look at the u. S. Equity futures. Right now the dow futures up by about 41 points above fair value and s p up by five and nasdaq up by 13. This is coming after the dow and s p set new records yesterday. Let us talk sports with our guest host gordon gund. Former owner of the cleveland cavs. The cavs start the Eastern Conference Finals against the Atlanta Hawks tomorrow night. Cleveland drafted lebron james when gund still owned the team back in 2003. You know when we talk sports gordon a lot of times people say its a business network. Think what lebron does for not just for the, for the team but even the city in terms of economics. Its been huge. Sports franchises tend to do that when theyre going well. For any region or any city. In this case its just fabulous. Hes a hometown boy and came back in a great way, i think. And awfully glad he did. Ive been out for some games. I dont go to too many any more. I used to listen to every one of them. But hes just got everything everybody on fire now. Its great. It seems like yesterday that we were all trying to figure out what team he eis going to pick. Remember that . When was that . How many years ago when he finally picked miami. The first time he left. How many years ago was that had he left . Six years ago. Was it six . Yeah. I mean that was called a decision, i guess. And i think, unfortunately, he had some wrong advice on doing that. Thats not who he is. And the way he came back. It was impressive. And its hard to imagine taking a town that has been so angry at you and turning it around. In such a big way. What whats going to is it the draft tonight, gordon . Yes, it is. It is at halftime. The lottery is. The lottery is. If you were still in charge would you have your is there anyone that you think would go on the top five . Im not the one to ask. Not the one to ask. How did you know about lebron . Did he have to be from that area for you to know . No joe. He was pretty well known, actually. I think he was. I want to know, were you furious when he left . I was very upset because it didnt seem like the lebron james i knew and had gotten to know. Did he ever come to kiss your ring or do something to make it all better . No. But we emailed and we corresponded a bit, but, no. He knows that i think very highly of him and i believe hes, you know, a great leader. It didnt seem like his, like what he would do. But it happened. I think, fortunately, it did come back in the right way. As you say it defused. How much can eeffectively one player change the dynamic in terms of the value of a team . Huge. And lebron, i think, for us certainly, made a huge difference to the valuation. Even before we started making the playoffs. What has been amazing is watching the valuations for these sports teams just over the last few years. Its its incredible. Well, of course, what drives it is the media revenues. And whats happened to those over the last one or two decades. I mean back when we bought it the team and i had the principal interest back in 1993. There was very little cable. Think of the difference what teams have gone through in terms of Revenue Sources. When you bought it did you buy it as a business or buy it frankly because you thought it would be a fun thing to own . I bought it as a business. I just dont do a lot of very expensive things just for fun. So no. We, we owned the building. The richfield coliseum between cleveland and akron, which is another story woo can talk about. But because we did and they were the prime tenant they were really on the ropes. And had been badly the own o ownership had trade away a lot of draft choices. Without four firstround picks throughout the next four years firstround picks. And you have to have a first pick. Do you think were in bubble territory in terms of the sports and Team Valuation based on the media . I think its out pretty far right now. I dont know about bubbles. But i think its valuations are quite high. Microsoft. And you have a lot of people to your question andrew there are a lot of people who do who own sports teams now not because theyre a business but because theyre a hobby. Pay 2 billion. Yes. I think youre going, you saw but you might be wrong on the dodgers, too, for guggenheim. How much are the dodgers worth now. They have done very well with that media deal. Think about it always something that changes the eequation of why its doing better than you anticipated. I remember guggenheim. Didnt you write a column on that too . I was anxious how they funded that transaction with insurance premiums. But probably worth twice as much as they paid for it. People believe dodger blue. These insurance premiums which i didnt feel great about. Sandy colfax. Don drysdale. Do i need to paint you a picture here . Let me make another comment. When we decided to sell a team and was then the principal owner. Evaluations were up and i wanted to spend time on fighting blindness, which is doing some very exciting things. Ive done sports for 30 years. We got i involved. When i say we me and my brother, george. We started with the San Francisco seals and moved them to cleveland to try to make seps out of them and merged them with the north stars. The minnesota north stars for 11 years and then started the expansion of the san jose sharks. But, so weve been at it for 30 years and i wanted to really help push the Foundation Fighting blindness across the finish line and happily were getting there. As we are going to see all right coming up stocks reaching alltime highs. Strategist tom lee says the rally is not over yet. Hell join us right on the set, next. Its part adrenaline and part adventure. Its part geek and part chic. Its part relaxation and part exhilaration. Its part sports car and part suv. And the best part . The 2015 gla. Its 100 mercedesbenz. Welcome back to squawk box, everyone. Two major retailers out with earnings this morning. First up home depot reported quarterly profit of 1. 16 a share a penny better than the street had expected. Revenue and samestore sales came in better than expected. It was the opposite story for walmart, though. It missed by a penny with adjusted quarterly profit of 1. 03 a share. Revenue and Comp Store Sales were also below what the street had been forecasting and check out those two stocks today. You see walmart down by 2. 5 and home depot had been trading higher. Exchanges taking precautions like its 1999 and thats because a leap second is coming. Every few years an extra second is added to an account for a mismatch between clocks and the earths rotation. One coming on june 30th. Mark your calendar just before 8 00 p. M. Eastern time. The concern is that if the time change isnt properly coordinated it could reach High Frequency trades at that time. The commission has requested that all exchanges turn in a plan of action by friday. What markets are open at 8 00 p. M. . I guess the futures theyre still going. Theyre still operating. What are you looking at me for . I just wonder what causes this . Climate change . Thats like ten second in human years, right . For High Frequency system. I dont know im pretty sure. You think its an el nino situation. Winning session on wall street with the dow and the s p 500 closing at record highs and our guest that just sat down next to me u. S. Markets continue to rally. Here with us tom lee and head of research at fund globaled a vdz ed aadvisors and gordon gund. You figure were up 3. 3 year to date. We get to 10 based on everybody else reflating. Yeah. Im thinking 10 additional from here. Oh, you are. I thought you meant ten total. Well do 13 for the year. 23, 25 target on the s p. Yes. You know in some ways thats a catch up. Europe has done great this year. Japan has done great. In response obviously, to qe but signs of life there. I think what we have to remember is the u. S. Consumer is still one of the most important engines for growth and theyre showing signs of employment life not necessarily spending life yet. I think once that turns, especially seeing it in housing, i think the focus comes back to the u. S. And theres a nice earnings story. Even though this latest earning season was, what . It was positive which was a surprise. 2 or 3 . You say there was some i dont know, some nuggets or some seeds of positive like what . Like margin you say . So if you piece through it. I think the first thing you see is evidence that oil was a dividend in the quarter. Because, you know even though sales beats werent great, the margin beats were substantial. And then the other is that the domestic Oriented Companies posted highsingle digit growth. You have a healthy u. S. And then you have a lot of companies benefiting from lower oil. So, i mean to me thats positive. Those are continuing effects that the u. S. Is healthy and the oil dividend will continue as long as oil doesnt go back to 115. Some Things Holding down the number too. In spite of dollar and energy changes. The guys at dreamworks before. People out there never thought about financials before. They thought it was a character on star wars. You know it does sound like it, doesnt it . Like rdd2. Now they supposedly i saw that. You saw that quote . I saw that quote. At the bottom of a New York Times story. Oh, no. You know me. You know where i got that from. I may have seen it there. Youre right. I think greece is like nothing good is happening there, is it . Yes. Are they going to default and then leave . They just brinkmanship that keeps happening and they just never really knuckle under, do they . Its interesting. I think its quite uncertain. The good news is markets dont think there is a Systemic Risk from it. So, if somehow that were to happen i dont think we have the calamity. I see certain. You see websites that are financial websites and could greece, if it goes could that be the next and they love to ask the question, right . Theres no way. You dont think so. Not systemic. Its been well telegraphed. If some bank has exposure that they havent tried to seek protection, this has been building for years. Do you think, tom, just because we talked earlier that mark vitner one of oour guys said oil and the dollar still sees it as a negative for growth. It doesnt necessarily mean its a negative for the stock market. Were back hoping its not september and the market rallies when we dont think it is going to be september. Is good news good news yet . You know id say good news is good news because everybody is expecting bad news. I mean id say this is still like the least loved sixyear rally, you know in history. Weve been hearing that for a while, too. As long as rates go up for good news. It would be nice if we got some good news. If they only go up because rates go up in europe and thats not good. Thats true. If markets are going up in anticipation of good news were in trouble. But i think you have to reverse the logic and say, the market is really good at predicting changes in trend and i think the market is telling us the cadence of the data in the next couple quarters is going to be quite good. One thing gordon pointed out earlier when you start looking at private equity deals. Valuations look out of whack. I heard that from several private equity guys. Theyre concerned about getting near some of this stuff. How do you talk about where their concerns for evaluations are . I think its a very pertinent point because more held in Portfolio Companies than public publicly traded. Its bigger than a midcap universe. I think public equities are trading in a big public to private discount. One way of looking at it. What is your biggest concern or what bad news are you most concerned about. What do you think, tom . I say that the market just doesants like extreme. I think if we have a development of accelerating scenario hyperinflation in the u. S. It would be hard to imagine taking route and the other extreme is deflation. I think right now were in the middle road where nobody know physical were inflating or deflating. Can we go back to private equity point for one second. Ill flip it around a little bit to say if the private equity guys think their private world is overinflated. Why would you say the public world would be underinflated. Meaning theyre trying to sell the private stuff to the Public Markets. Its an interesting development. And i cant predict the future on that. But i would say when you look at the publicly traded universe they have conservatively structured Balance Sheets. The Large Cap Companies have tons of cash. Maybe the exits for the private portfolio could end up being in instead of an ipo selling to a large, publicly traded blue chip. Maybe its at a discount. I dont know. Its interesting because its not as if the publicly traded companies are eager to sell either. There are quite a lot of price tension today. All right. Tom, thank you. Great. Good to see you instudio. Good here, isnt it . Its nice to see you. Great to see you. Im close and i love this location. Coming up when we return well talk to advertising. Leo burnett is with cocacola, Procter Gamble and gm. May remember the commercial from the super bowl inviting select customers to pay for their food with calls to mom and hugs. We live in a pick and choose world choose choose choose. But at bedtime . Why settle for this . Enter sleep number. Dont miss the memorial day special Edition Mattress with sleepiq technology. Sleepiq tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow now we can all choose amazing sleep, only at a sleep number store. Save 500 on the memorial day special Edition Mattress with sleepiq technology. Know better sleep with sleep number. What if there were only one kind of dog . Then it would be easy to know everything about that one breed. But in fact, there are over three hundred breeds of dogs. Because no one can be an expert in every one. An app powered by ibm watson will help vets tap Specialized Knowledge in the cloud for every breed. And whatever else walks, flies or slithers through the door. Ibm watson is working to make medicine smarter every day. That was an awesome ad campaign. That like a Girl Campaign that aired during the super bowl and has been viewed more than 80 million times online. Created for Procter Gamble brand online which has huge clients like cocacola, samsung, General Motors and, yes, kellogg kellogg. Ceo and chairman Tom Bernarden is here along with gordon gund and we appreciate you being here. I know you guys are all pals. How do you guys know each other . Oh, geez it goes back almost 20 years, i think. And it was a chance. I had somebody come into my office here in new york about the foundation and it just so happens that i have a nephew and twin nieces that have stargart and launched an interest in it and a personal one and ever since then it has been working with gordon and the foundation to do what we need to raise the funds to prevent blindness. Hes been terrifically helpful as leo burnett. They designed a new logo for us. It has been terrific because it really shows the impact of degenerative diseases of the retina. Lets talk a little advertising. We showed an awesome commercial. 80 Million People have seen that commercial, which is amazing. But more broadly and we talk about it all the time when it comes to dramas and tv the way we watch, we often skip the commercials these days. It really feels like were constantly skipping commercials. Maybe not with sports and maybe were going to find other commercials in other ways. How is that changing the business . I like to point out that you notice the great stuff and you watch it and you talk about it. I think you have to break through because thats exactly the environment that we all live in. I dont watch tv the way i used to either. Having great ideas that break through and get peoples attention and deserve their attention. Do you think a lot of companies are wasting money, though . Advertising. Companies that waste money on ideas bad ideas that people and those that get the ideas in the social buzz are the ones that benefit. What do you make of procter and gamble a client that cut the tv budget in a big way. Is that an impact on you . It impacts on everybody, sure it impacts us. What Proctor Gamble wants is more value for their dollar. Thats where the creativity part comes in. They want more for less. Thats what were in the business of doing. It challenges us and our Business Model and everything else. En your definition you said you have to break through the clutter and have a social buzz that is created. Hopefully a positive one. The old way of doing thing is just having tv as a platform. You think thats gone . There has to be that internet connection. It is tvs and so many other things in the world. But the most important thing is just having the idea that really breaks through and connects with everybody. Thats the beauty about media today because there are so many different kinds of touch points to connect with people. So a great idea gets out there like a girl and it connects to everybody in a very positive way. Still content. Its content. But easier or harder to find the right person . Because you can argue in the age of facebook you should be able to find that person pretty easily. However, maybe harder to break through to that person. Well, it is harder than ever because people can switch you off. You know without any effort at all. So, we have to be very respectful of intruding in peoples lives and media today. It has to be something relevant to their lives. The brands purpose and its purpose must be relevant to peoples lives and interest people and make them want to watch and participate in the brand. Sometimes a talent game. And more and more it seems, why are people why is talent attracted to leo burnett and how are you so capable of keeping them . Well, one of the great things about leeo burnett is it about our people and our talent gordon, for sure. If you combine our people with the kinds of brands the client that you so nicely named and then our creative reputation it is a great place to work. We have been named the agency of the year in network of the year in six major creative judging shows around the world in 2015. That draws talent to us because it knows that we have the culture to work with our clients to get the quindkind of ideas get noticed. Things that move people. Who makes the most money at your firm . The guy that comes up with the idea or you must have a whole staff of people that are like trying to figure out big data and push advertising and all the stuff that and i see some weird stuff happen. People, my wife mentioned it the other day where she gets ads. A discount on something she didnt buy. Like two weeks ago and all of a sudden the same thing comes. This is on osale now. Thats spooky. Are the people that learn how to do that more highly compensated and are they increasing versus the larry, remember larry and darren stevens. Usually Elizabeth Montgomery would come up with from bewitched. Yeah. Of course. What was, darren stevens, are those guys still really important . The guys that come up with the ideas . The guys that come up with the ideas are still the core. They are asked who gets the paid the most. The people who come up with the best ideas who get paid the most. The pipes are important. Data fuels the creativity now. Data fuels the idea. Thats really cool. But it is all about interpreting the data. One thing to have trillions of pieces of data. Its a whole other thing to be able to really understand what it is telling us and act on that. Go ahead. Just very quickly. The canary and the coal mine. Understanding where Companies Feel comfortable putting money and where theyre willing to double down. What can you tell us based on the Global Economy based on what youre saying. The Global Economy, as we heard already in this segment is looking positive particularly in the u. S. But not on fire really anywhere. And i think that its never a return like it used to be. People waiting around for that just missed what is going on in the world. There are going to be challenges particularly globally in every major market at some time. This is the reality were dealing with. Real quickly, we have to go. Facebook versus twitter. Twitter ever catch up . It certainly will. It certainly will. I think it probably could, yeah. You see how i thats a big question in the marketplace about whether who knows, really. But anything is possible in this day in age. The only advertising show i could think of. Thats how i feel about millennials. Bewitched. Did you watch the finale of mad men . Not yet. I watch when i can. Are you a mad men efish noto . I am. I saw the premiere. I saw the very first one. I get asked which one of the characters am i like . I always say, none of them. Thank you very much. Good answer. Tom, gordon thank you. I think we have a logo that you developed which were going to show. I love this logo too. Because what it does it says both things it says what were trying to prevent and also what were trying to restore. The fact that it fades in and out to me was a very important aspect for developing that logo for the found agdzation. Thank you for coming by. His quest to raise 100 million to fight blindness. And later take a beef patty. You rest it on a bed of kettle cooked potato chips and you top it off with a hot dog. This is the latest offering from hardys and carls jr. The ceo will join us on the set in the next hour. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. Welcome back everybody. Our guest host gordon gund. His life mission finding a cure for blindness. Gordon lost his vision more than 40 years ago and cofounded the foundation for fighting blindness with his wife. Gordon the last time you were here, you told us about your envision 2020 campaign and challenge match. Remind us what that is and give us an update on where it stands right now. Id be glad to. The Foundation Fighting blindness is the leading funder of research around the world to find treatments and cures for retinol degenerative diseases. Diseases like the one i have. Agerelated maculer degeneration. And they affect more than 10 Million People in the u. S. And many times that number around the world. When we started, there was almost no research being done. When i lost my sight and very little known about the retina and about these diseases. We had to populate the field with people. First of all, very good basic scientists and clinical researchers and got going very fast with that. Fast forward to now, thankfully we built up the Knowledge Base both of these diseases and of the retina and were now, we now have 20 Clinical Trials under way in different fields in genetics and gene therapy and Stem Cell Therapy or cell regeneration in pharmaceutical or biotech therapies and even something called opto genetics which is fabulous. And retinol prosthetics. Is the idea of going scatter shot and trying so many different approaches because youre fighting so many different kinds of blindness or just because youre still not sure what is going to have the best chance of working . The latter i think, becky. Really what we have our secret weapon weapon, our world class Scientific Advisory board. They know very in depth about all of the kinds of disciplines that are needed to focus on this because you cant, you cant be sure that any one of these Different Research for us is going to work for everybody. Or even for everybody. Fortunately, now it is. They are. Gene therapy are working with a severe disease that affects children. They are born blind or go blind in early childhood. They are now over 100 people who have been treated with the gene a normal replacement gene therapy that has restored sight to almost all of them and its significant ways. Well hear more about that later. But because jean therapy can work only if you know the gene mutation and then you have to be able to deliver the therapy to the place that it is needed. Thats one form of treatment. I think Stem Cell Therapy is going to be very important where you can make a person, take a persons skin cell or blood, a cell from their blood dna and change it into a potent cell that can then be turned into a cell of the retina. One of the photo receptors. So theres a way, thats the holy grail. And thats coming fast and theres a couple of trials going on. We have someone from that is the gene which will be great. And then a lot of novel medical therapies that slow it. So the match, shall i go ahead . Were going to come back to that definitely. As soon as we take a quick break. Kellogg Ceo John Bryant joins us next. Stick around. Well be right back. Well be right back. The network that monitors her health. The secure Cloud Services that store her genetic data the servers and software on a mission to find the perfect match. And the mom who gets to hear her daughters heart beat once again. Were helping organizations transform the way they work so they can transform the lives of the people they serve. The call of the consumer. New numbers from walmart disappointing wall street. The stock dropping right now. Why are investors down on americas biggest retailer. A squawk newsmaker can tony the tiger make this American Company great again . Kellogg ceo is here to tell us how hes turning around the cereal giant. Streaming with your friends. If youre sharing a netflix account with a buddy, you are not alone. Now the company and its competitors are taking notice. The final hour of squawk box begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. 90 minutes from the opening bell and should have a decent start to the session based on where the futures are. Continuation of recent action which has put mostly averages at alltime highs. Up 51 in the dow and the s p also called higher and higher on a percentage basis not just because of this but thats a nice rally in shanghai. Over 3 as you can see. Led by financial names. Among the catalysts, reform hopes out of beijing. In europe the ecb is the big driver today following comments from a policymaker hinting that the central bank. Want me to try it . Is it pronounced like you know. Tomato tomato. I tell you, if i were french id go back to the drawing board. Benoit, pick some other letters. You know really it goes against all you want it to be beni front load its current Quantitative Easing Program. Buying up more assets and being more aggressive in the near term. The euro yes dropping sharply against the dollar now. 1. 11 1 1. 11. Coming hopefully heading over there would be nice. Euro zone bond yields. What is the german . We dont have the german one there. The bund at the bottom. I always thought that was cake. 65 what is closed around yesterday. That has rallied. Two major retailers out with earnings this morning. Home depot beating the street. You have earnings and revenue and samestore sales all coming in better than expected. Oppenheimer analyst was here and broke down the numbers earlier this morning. What stands out to me in the United States is 7. 1 comp. Thats pretty impressive. Impressive particularly against a backdrop that a lot of retailers have been missing recently. One more indication that the consumer is spending but spending more and more in their home. Is this shift in spending happening . A different story at walmart. Earnings missing by a penny and revenue can Comp Store Sales were below analysts forecast. Heres how Raymond James analyst summed up walmarts picture for us earlier today. I think without those items that would have beaten on both the top line and the bottom line. You also have a lot of other moving parts for walmart and Walmart International and that was a little bit of a challenge also on the fx line and i think sams club was a disappointment in the quarter. Well talk more about the consumer with the ceo of kellogg in just a moment. In the meantime a few other stocks on the move. Dicks Sporting Goods posting better than expected earnings and revenue and Comp Store Sales were short of estimates. That stock looks like it was down by 5. 8 . Urban outfitters sales there under its anth ropology brand rising at the lowest rate in 15 quarters. Earnings topping estimates driven by strong Digital Sales of its video games. Revenue falling short but the street likes what it sees. The company is increasing stock buy back plan and the stock is up close by 5 . Missing the top and bottom lines despite what the Company Calls excellent momentum during the quarter. Stock down by 3. 8 . Shares of under pressure after the Company Announces a secondary offering and that stock is down by 8 . Starbucks and spotify teaming up on a music partnership. The loyalty members will get access to starbucks music on spotify and the collaboration will start this fall and u. S. Company, just the u. S. Companyowned stores at this point. Some other media news. I want to know if you guys actually do this. A new survey today find that nearly 60 of u. S. Broad band households that Access Streaming Services but almost one in ten arent actually paying for the services they use. Thats because they are sharing an account. Thats the nice way to put it. Netflix users are likely or are the most likely to be sharing of only 5 of amazon climb streamers share. That number is likely lower because the password of course gives access to more services than just streaming. Netflix had capped streaming at two devices per account before offering a family streaming plan two years ago. I share a spotify account. I should say, with my wife. But the bad news is they now cut us off. If she listens to music during the day, my thing stops working. Its only one. The question is are you really supposed to be sharing . And everybody gives their friend the password and i dont know. John, are you sharing your netflix account . Im showure my kids are enjoying the netflix account. Looking at the bill each month there is healthy usage of the account. The largest restructuring in the companys history right now. The company pivoting towards healthier brands trying to spruce up its image and fight hard for the top spot at the breakfast table. Stock is down more than 4 in the past year. Kelloggs chairman and Ceo John Bryant joins us and thank you very much for joining us today. Great to be here. So its a difficult time not just for kellogg but for any of the old Food Companies who are watching consumers change pretty rapidly. A strug tool try to keep up with. What are you doing . I think were seeing progress in our company. Were executing the largest restructuring in the companys history. Some very difficult decisions there, but that enables us to save about 425 to 475 million over the next four years. And invest that back into our business. Were investing it back in our business and were seeing a good response. We grew our market strongly in the First Quarter and we saw doubledigit growth in latin america and doubledigit growth in asia. Improving results in u. S. Business behind the kellogg brand. Gained about 30 basis points a share in the First Quarter. So, actually quite positive on some of the trends were seeing in our business here more recently. Just a story here in the wall street journal that target called in many of its suppliers, yourself included. They said they didnt want to spend the same amount of money promoting some of these brands that i guess they see as a little oldfashioned. Maybe not quite up to snuff with what millennial tastes are looking for right now. What will that do in terms of momentum, if other retailers do the same thing . I think every retailser looking for growth. Our goal is to provide foods and enable them to have growth. We have a number of products around the table here today that are right on trend with what consumers are looking for. We have special k gluten free. A lot of gluten avoiding going on right now. We have special k protein bars. Big protein seeking and then granolas are growing around the world. All grew double digit in the world last year. People looking for real foods, less processed. Foods that they can see, they understand. So absolutely the foods we have around here are on track. Is it your conteng thattion that tastes are changing and this is not a fad. Kind of a moving target and that this isnt something that people will change their mind. Consumers arent going to be fickle and say forget about this two years from now . Theyre focused on health and wellness. It continues to eevolve and we need to evolve our foods with it. In the past definition being low calorie, low fat, today its more about transparency, i know whats in my food and my food is evident to me. These new special k bars much more evident ingredients. We can absolutely grow as long as our foods are online and on trend with what consumers aric looing for. Thats all the changes you see around the table here this morning. What are some of the things youre cutting in order to get this money to reinvest and the brand that you think will do well. We had to make some tough decisions and significant decisions. Something called Global Business services which is talking about having much more centralized and we also have some highcost facilities in our networks and we have to close some plants and open some plants where were seeing more growth. Were opening plants in asia and in eastern europe. I ask that because people look at 3g this partnership that Berkshire Hathaway and 3g has when they go after kraft. Thats the same thing that 3g comes in and does pretty rapidly. Do you follow what they do and do you worry about a company like that. Berkshire hathaway are interested in additional targets. What would happen if 3g came knocking . I think they have extreme Cost Reduction program and our goal as a company to execute this largest restructuring in the companys history and were taking a very aggressive position there and were going to continue to watch very closely what works for 3g and see what could apply for us. So, one example is zerobased budgeting is having good response from companies in our industry. Which is something that 3g employs. We had a few in that company and we think we can adopt more of that and that part of our business which can get the most benefit. Gordon you have been at the table for a long time as lead director. 1986 is that when you started . Yes. What do you think about these changes that are take place now . Is this really a more dramatic and fast change not only at kelloggs and with consumers, but something no new stories, just people observing. I think there is some fads but also some real trends. And its up to kellogg and its Management Team toioid identify which are real and which are temporary and really focus on them. I just asked john there has been some softness in the ready to eat cereal category. How are we addressing that . How is kellogg approaching that . Were excited about our Growth Potential in cereal. The great news is that cereal is a low calorie, newterant. They tend to have lower body mass index than people who dont. The ben fits of the milk with cereal gives you the protein, the calcium and vitamin d and 45 of all the milk consumed by kids in the u. S. Is through cereal consumption. The great thing about cereal its versatile and convenient. So adults are snacking on cereal in the evening and kids are snacking on cereal after school. A lot of Growth Potential. What is gordon talking about in terms of softness . Soft the last several years and the category is down 4 5 last year. It grew through the 2000s. But the last four five years head wind such as gluten free proteinseeking. Thats where youre seeing us inovate and change. What is the margin like on some of these newer products . Something like a granola. The Gross Margins are lower than a traditionally flaked product, but the profitability can still be quite good. But its a different economic model. More of the money goes into the food and less in traditional brand building and still good operating margins. How about Something Like this. This is the kashi over you dont cook this overnight . This is a unique product. This is a product that you put coconut milk in overnight and put it in your fridge and let it seep overnight and in the morning, very different its terrific. I got to tell you. Very good. It has to sit for holg . Just overnight. What about obeseityobesity . A lot of that still evident and still a real problem. What does cereal have to do with that . Again gordon i think were part of the solution for the obesity concern and people who eat cereal for breakfast have a lower body mass index than those who dont. On trend for those sorts of concerns and i think thats why youre seeing more snacking on cereal throughout the day as people see it as a better alternative. What are the Growth Opportunities for the company now . Well, in the First Quarter we grew latin america double digits and asia double digits the emrnl emerging markets, we acquired the biggest biscuit manufacturer and gives us access to an 82 billion person country and to export 20 countries in a free trade zone. Emerging markets, snacks pringles. Weve grown the business 7 8 a year. Still selling every can we can make as soon as a new production line comes online still automatically. Real healthy food too. Its great. Terrific. All right, john thank you very much for joining us today. We appreciate your time. Thank you great to be here. Gordon will be with us for the rest of the show. John rogers swapping out all three of his picks for new stocks. Youre not going to want to miss what he has to say. Later a man who runs hardees and carls jr. An unbelievable new menu item. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Progressive insurance here and im a box who thrives on the unexpected. Haha shall we dine . [ chuckle ] you wouldnt expect an Insurance Company to show you their rates and their competitors rates but thats precisely what we do. Going up nope, coming down. And if you switch to progressive today you could save an average of over 500 bucks. Stop it. So call me today at the number below. Or is it above . Dismount oh, and he sticks the landing welcome back to squawk box, everyone. The futures in positive territory all morning. You can see the dow futures still up by 47 points. S p futures up by 5 and the nasdaq up by 14. 5. Among our stocks to watch today, vodafone announcing First Quarterly sales rise in three years and the numbers still fell short of estimates. Vodafone is predicting 2016 Earnings Growth after seven straight years of decline. Royal caribbean upgraded at Jpmorgan Chase from overweight to neutral after an analyst there says the company will benefit from new ship introductions and more profitable markets like china and Asian Pacific region. The squawk platinum portfolio heading into q2 on a strong note. Outperforming the s p 500 by about 3 year to date so far. Lets take a look at our leaders. Kevin landis is up almost 33 . You want to follow him followed by navellier and Jim Oshaughnessy up. Hes looking to make some changes to get into that top five. Good morning to you. You have three new picks. Were kicking out the old and coming in with the new. Its time to have Spring Cleaning and freshen up the portfolio. Before we get into who youre adding, lets say, tell us who youre saying goodbye to. Well, i know one of our favorites that were lightening up a little bit on is metal. A new Management Team and we still like them a lot. Mts is also the industrial side but, as you know the economy is sort of a little sluggish here lately and some of our Industry Companies have continued to lag. And i think there is one, there is a third that were missing. Thats true. Well we decided to switch to lazard and feel like that is one of our favorite names right now. We want to make this change today. So were adding lazard and then you have international speedway, which youre adding. Exactly. Theyre the largest nascar track owner in the United States. Really its become a business that is just growing very very rapidly now as sort of the lower income consumer is starting to spend, again. Being able to travel more effectively with a lower oil prices. I think that is really going to help the revenues and nascar. Im fascinated by your third pick, which is kkr. Explain. Well we just met with the Management Team recently. They have over 99 billion under management. A number of investment committees and everybody is putting more and more money into alternatives and private equity continues to be a great place to invest and their best position to benefit from that and at the same time theyre diverseifyingdiversifying. More into real estate and Energy Products and really having a full sweep of equity alternatives and some retail customers, also. One of the conversations we had this morning with tom lee was whether actually the private equity market given that we dont always know the true valuations but he was arguing that the private equity market might be overinflated. Where do you stand on that . We dont think so. We think there is still a lot of value there with these extraordinarily low Interest Rates and historically low Interest Rates. We think companies can finance these acquisitions and a great robust Public Market to be able to sell their prior acquisitions. We think this is really a sweet spot. Again, more and more people are following that model and putting all their money to all the different asset classes. We think kkr will be a beneficiary of that movement. Just to circle back on lazard which you mentioned at the beginning. You added them. Thats a planned m a . We watch cnbc every morning and you guys are always announcing more and more mergers. Merger monday and lazard really ben fits from that phenomenon. Well leave it there. John, thank you. A reminder you can go online to cnbc pro and track all the picks of our Portfolio Managers in realtime and read their exclusive analysis there. Merger monday and takeover tuesday and a something wednesday. Wedding wednesday. Thursday. Friday. Ill think of something. Give me a commercial break. You love this stuff. Give me a commercial break. Well come back. What do you have for friday . Is it dirty . Oh. F. Okay coming up. A car crash at 221 Miles Per Hour and its all caught on tape. That video, next. Tonights episode of the profit takes a look at the past investment. Some of them great, some not so great. A sneak peek at some of the big successes and some of the nailiers snail ier failures after the break. Es after the break. Here at td ameritrade, they love innovating. And apparently, they also love stickers. Whats up with these things, victor . We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. [ 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. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Welcome back everybody. Marcus lemonis invested 20 million of ohis own money in Small Businesses featured on the profit. When each episode ends each is just beginning. He returns to four companies and develops which have flourished and which have floundered. Your call has been forwarded oh, what a surprise. Its been forwarded. Wheres rrbs my printer at . He sold it . Who did he sell that to . Im dead serious. You just saw somebody come and pick it up . I knew things werent on the up and up with sal. But selling a 27,000 printer that doesnt even belong to him, thats a new low. Oh, boy. That sounds like problems. Check it out tonight. The profit airs at 10 00 p. M. Eastern time right here on cnbc. Coming up when we return breaking Economic News and the housing start to Building Permits when squawk box comes right back. Right back. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. Welcome back everybody. Were just second away from the release of the Housing Starts for april. Weve bipartisaneen watching the futures all morning and in positive territory all morning long. Rick santelli is standing by. Rick take it away. The april data coming in a bit better than expected on starts. Youre looking for 1. 01 1. 02 million. 1. 35 million and last month advised from a weak at the time up to 944,000. Lets see, thats a 20 increase from the revised number to the current number. Lets look at permits. A bit of a different story on permits. Now, the headline number were looking for, 1. 06. So, close to the start. This one came in better at 1. 14. But last month pretty much lateral. When you look at it in the context of sequential. This is where the rub is. We moved lower. Even though the data was a bit better. We moved from 1. 038 down to what . 1. I take that back. I apologize, folks. It is higher on both the counts. Last month it was negative. Sequentially both are higher and both are better than expect. Youre looking at 20 on starts. 10 on permits. Last month was originally minus 5. 7 and now stands at minus 5. 5 on permits. Thats what got stuck in my brain there. How are the markets reacting . This is fascinating. The market and Interest Rates already did a uturn. It seems dragging the ecb or trying to use holidays to get a little more demand pushing yields down saying, hey, we might all be gone on vacation in august we might before that. We might buy more after that. It helped push yields down here and abroad. We did a youturn. Right back up again. And this data better than expected. Actually for the moment makes a lot of sense. Turning yields a basis point higher than they were when we came in. We were just at 3 before the day and now its about ready to tip 3. 03. Well continue to watch how rates affirmed and if the reason was a stellar economy and constant spray of strong data that would make sense. Really the data was sparse on the strong side, but today is the exception. Housing data today better than expected. Back to you. All right, rick thanks. You say sparse. Well talk spark. Spark therapeutics is racing to find treatment for debilitating diseases. Moved into phase three clinical with one of their treatments for blindness right now. You are looking at a video of an 8yearold patient enrolled in the study. The video on the left shows him navigating through a sight Obstacle Course before treatment and the video on the right shows him after treatment. Here to show us more dr. Jean bennett also the cofounder of Spark Therapeutics and the ceo of spark. Jeffrey, also gordon gund our guest host. And we had a discussion earlier this week about companies that have neat symbols to describe what the company does and spark has one of those. Because the symbol is once. One treatment enough to cure certain diseases. Got that right . May not always be that way but some of them. The promise here is by fixing the underlying blue print of what a cell needs to function properly, you can actually restore, potentially restore in the case of this young boy, as you just saw. Restore their functional vision. And do so potentially in a longlasting effect. And what weve seen in patients like that subject was it over many many years is that we actually see the ability of that improved restoration of functional vision, as well as retinol sensitivity maintaining it. If gene therapy is correcting a defective gene, it would make sense maybe if it was taken up by a cell that was going to continue to live. It would have that new gene type. It is something that to shoot for and its feasible. Absolutely. We think this could lead to a onetime treatment. Or at least rescue vision for many many years, as weve seenen our patients. Cure blindness. Exactly. Thats our goal. Almost sounds like were way into the future in science fiction. I wish we had an hour, but just for my own knowledge, most blindness involved does it involve the retina which is part of the brain, the front of the brain, right . Does most blindness from birth or the blindness that comes progressively as a person lives . Is it always the retina . Some of it is maculeia. The macula is part of the retina. Most of the blindness involves the back of the retina the cells in which begin the whole process. There is a defect in one of the genes of those . Yes. How many of the rp we heard the ads that you dont have to be a scientist to know about retinosa. How many are candidate for a onegene fix . Well there are now more than 260 different genes, which have been identified which causes disease. And many of those are now candidates. Theyre at least two dozen. Just because there are 260, doesnt mean you couldnt identify it and put it into a viral vector and, what is it transvector and actually actually infection. And then actually have it taken up and work right . Each one will be different, though. In other words different size molecules, for example. So, the Delivery System is going to have to vary. Yeah, i think so. Also that number of genes that jean mentioned represents about 60 to 70 of what is believed to be the total number of these diseases that are, that have different genes. Its not all the way there yet. But one of the things about this very exciting treatment is that it represents a real collaboration between not only the Foundation Fighting blindness and the national eye institute, which is funded part of this and, of course the Childrens Hospital of philadelphia and the university of pennsylvania. So academic government, not for profit and at last spark therapeuticchise is a forprofit company which is a way these things will get to the marketplace in the last analysis. So, very exciting way in which this took place. Unfortunately, over many years as jean said it never happened fast enough. There was some controversy about maybe some of the effects werent permanent or werent long lasting and it wasnt with your i dont think it was spark. Someone else doing similar thing. Does it matter three years later or five years later if someone had to have like a booster shot or something . Gosh yeah. Change your stock symbol. It doesnt seem like i think the first key point to that. There were some questions about this over the last couple weeks. One was our trial wasnt our product. And i think most importantly one of the things that weve now been able to educate people about over the last couple weeks is that there are a lot of small details that add up to big differences. So things for example, like the formulation of the way we put our product together. We showed in preclinical studies you could lose up to 80 of your clinical product on a needle. We were doing that where others were not. Those details really matter. How difficult was it to find all 260 . Im sure theyre not all on the chrome zone unit are they in. Theyre all over the place. It sounds very difficult, obviously. But that work has already been done, right . Now the rest the work has been done as gordon was just saying identified what we think of 60 to 70 of the root causes. What we are doing and what you just saw in that video is one of those genes. Our first work is just fixing one of those genes. Specific to that child. Specific to that child and it emphasizes a couple of things. Certainly for us as a company it emphasizes the potential of what we could work on beyond that one project. Certainly from the investment community, there has been an excitement about the policy leverage we could take from the one project to the next project. This does emphasize the paradigm shift whether you call it Precision Medicine or the importance of genetics, the ability to actually understand and for patients and this is something we constantly talk about to understand their underlying gene otype is very important because at the end of the day i think we can fix that underlying root cause and it is very important. How hard is that . I mean, today, over the course of the last 15 years, that cost and time to actually sequence a gene or identify it has come back to you need to put the does the gene that is taken up need to be in the same location it was or can it just go anywhere . It needs to be in the cell which manifests. In the cell. But doesnt need to be in the exact part of the chrome zone. No in fact this does not integrate into the zoemchrome chrome. Sematic tissue you cant necessarily put a new copy in and have it be expressed. For example, we could do this also in Something Like the Central Nervous system. We could do it in a place like the liver where you dont have turnover in those cells. Were working on those areas, as well. Its great. So unbelievable to see the video and cure blindness. Its great. Thank you. Thanks for having me. Thank you. Thank you. When we come back this morning, carls jr. Is all about efficiency. Their new menu option contains a days recommended fat allotment in just one burger. The ceo will join us next to talk about the american thick burger and trends in fast food, as well. Stick around. music boys . music stop less, go more. The passat tdi clean diesel with up to 814 hwy miles per tank. Hurry in, and you can get 0 apr for 72 months on 2015 passat tdi models plus a total of 1500 in available bonuses. Right now the latest offering from carls jr. Called the most american thick burger. A beef patty topped by a split hot dog resting on a layer of lays kettle cooked potato chips between hamburger buns. While many fast food chains are offering healthier carls jr. Bucking that trend. Here to talk about that is andrew puzder. Good morning to you. You know i think the last time we saw you, you were it was december and you just introduced an allnatural burger and that was sort of going in the opposite direction. So sort of square the circle. Well we want to give our consumers what they want. And millennials really have this desire to get what they call clean food. They look where its sourced. I was talking to my 22yearold son and i mentioned how many calories this new burger the natural burger was going to come out with. And he said where is the meat sourced . This meant something to them. We got the allnatural patty still in the restaurants and exceeded our expectations on sales and you can get that allnatural patty on any of o our products. If you order the most American Burger with the hot dog and kettle chips, you can get it with the all natural beef patty instead of angus beef. It is on a fresh bun, we bake them fresh in the restaurants. Would the same person who wants the all natural beef also order this burger . You could order it with the all natural beef. But once youre ordering this burger arent you giving up . You dont have an allnatural hot dog and the potato chips, i dont think peopled with edd edwould talk about the source. You can get it with a turkey burger patty. What do you see going on with the customer . We seem to have this disconnect. We just had a conversation a couple minutes ago about kelloggs and what theyre doing and moving away from carbs and this and that and conversations with Warren Buffett about the future of cocacola and kraft. Now we have your natural burger on one side and then the, you know the burger that has 1,000 some odd calories on the other. Like i said the young people dont seem to be as concerned about calories. The fact that it is a lot of calories is not a big concern to them. The fact that we use black angus beef and fresh leaf lettuce all has relevance to them. We obviously, like any other company, we want to be responsive to what our consumers are demanding. We have turkey burgers because people wanted less calories and we dont use shredded lettuce. Any time you have consumers demanding products in a certain way, we try to adjust to that. By the way,s a delicious burger. Whether its all natural or not. When you say low carb, you wrap it in lettuce . Since our burgers are so big. Cant wait until we have one here in new york. Dont try to open it up on the upper west side. But, anyway we wrap them. So theyre wrapped in a paper, right. And we can do lowcarb style. No bun by using whole leaf lettuce because we dont use shredded lettuce. I get them that way all the time. I like to keep the carbs down. I want to talk politics with you, but before we get there. Mcdonalds. What do you make of their turn around strategy . Its horrible theyre a great company. They have a lot of smart people in it. They do seem to be a little confused about who they are and who they want to be. And, you know you cant be everything to everybody. You cant be the place that is for women and kids and old people and young. You have to pick who your target is. I think they had, theyve done everything from coffee to frappes to burgers. You dont really know who mcdonalds is any more. I think they need to get an identity. They are smart guys. Who is your target . 18 to 24yearold males is our target. A target that reaches a lot of people. I have a son, when he was 12 or 13 he didnt want to eat where the clown or the king or the pigtails ate. Im 64 i want it be a young, hungry guy. You had a western Bacon Cheeseburger with a sauce . Seriously, how about some spried zucchini sticks. You have never been to carls jr. I know the story. No. Great guy. You still have the western Bacon Cheeseburger. With the onion ring. Absolutely. You showed up with absolutely nothing, didnt you . We do have a truck in town. If you guys want lunch, we can arrange or bring it by. We are hungry now. I want to talk about this. You just wrote an oped in the wall street journal on walker and jobs in this country and you have sort of the conventional wisdom of the media on what he has done on jobs. I tell you, thats really what got me going is i read an article saying that wisconsin was ranked 40th in job creation and i looked into it a little bit and based on bureau of labor statistics report that looked at a oneyear period completely out of context. Didnt consider that the percentling of thepercent percentage of the populesation was really high. You wouldnt have for the same oneyear time period in north dakota during oil fracking. I went back and looked at the time and it turned out the employment ratio population improved and improved faster than the average rate. But the Unemployment Rate climbed more significantly and the Labor Participation rate the allimportant Labor Participation rate over the last year it had increased while unemployment had decreased. Which is exactly what youd love to see at the federal level, which we never see at the federal level. So, they had done extremely well with respect to all the metrics and in the state rankings comparing state to state it improved against the other states in every one of these significant rankings. Three elections in four years in a blue state completely blue state, which was really the father of unions in 1959. Right . Isnt that very true. This is a republican in a democrat state won three elections in four years with the whole, all your friends around the minimum wage . Yes. A lot of companies are raising wages on their own. Are you doing the same . Everybody has to raise wages which is how they should go out. The market should drive wages up. You will find businesses paying more for labor. Like any other commodities. Supply and demand. Instead of wage and price control it should be market determined. Im not a big fan of the government telling businesses how to run their business. Really, if the government could raise wages. The smartest people in society running the government, which we have right now. If that worked the soviet union would be the most powerful in the world. Thank you for coming in. My pleasure. The truck is coming up 6th avenue. Well have to ask where it is right now. I know it will be around here lunch time. Coming up find out what has jim cramer fired up this morning next. Could be anything. Dont miss squawk box tomorrow. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Lets get down to the new york stock exchange. We are talking walmart and economic numbers. Housing starts caused a big reversal in the bond market. Dont want to see rates fly up on this number. Walmart, i think, unto itself is doing quite poorly. Home depot had a great number. A beautiful number, some was from home goods. I dont like the set up as much as i did earlier this morning when it looked like everything was going hunky dorey. I dont like walmart and Housing Starts will make it feel like we have to talk about rain increases. What would we have to talk about if it wasnt all this kind of stuff. There were days remember years ago it wasnt this was it . It was individual companies and stuff like that. We are global and its all about Central Banks. Yesterday was a delight because it was about the individual stocks. It was about companies that were merging to get more scale. Then we get into this conundrum where you can have a housing start number that is a sevenyear high. Suddenly we are talking about how rates are too forward. Maybe we should not have so many people talk about rates. People could argue that rate talk has kept people out of a great run in the stock market. Yelp. Okay. Thank you. All right, jim. See you later. When we return gordons investment useds. Larry Larry Summers joins us here on set. Financial noise financial noise financial noise friday night, buddy. You are gonna need a wingman. And with my cash back, you are money. Forget him. My Airline Miles will take your game worldwide. What im really looking for is i got two words for you rewards. Theres got to be better cards than this. [ male announcer ] theres a better way with creditcards. Com. Compare hundreds of cards from all the major banks to find the one thats right for you. Its simple. Search, compare, and apply at creditcards. Com. First rounds on me. Our guest host all morning has been gordon gun. Very rude i cut you off. We were talking about your foundation and you were talking about some of the research thats being done. Which is now extremely exciting. We are delivering on our mission of finding treatments and cures for diseases. We wanted to jumpstart a campaign. Treatment costs a lot of money. We offered a challenge match for gifts over 25,000. Its uncapped of 1 for 1 match for people who will do that. They can pay it out over five years so by 2021. So far we started this about a year ago. Our goal was to raise incremental 50 million which would equal 100. So far we raised about 54 million all together. Very exciting. People can learn about it on our website website. There is more detail about the challenge match. Thank you for joining us. Now its time for squawk on the street. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with james cramer and david faber at new york stock exchange. Stocks going for their g