Transcripts For CNBC Squawk Box 20150529

What do you want . People were desperate to hear him Say Something about Lehman Brothers and his role in it. Same old same old. It was a little bit of the same old same old. I think people were expecting more on that topic and he didnt want to go there. So the economy and all sorts of things. It wasnt one way or the other but i didnt think there was a great revelation except by the way this whole thing clearly haunts him and possibly it was a loselose situation. He is one of those brands. What can you say . You cant move on until you addressed what has happened. And can you . I dont know. But i know you cant unless you do address it. Right. It is what it is. You say its a perfect storm. Wasnt bankrupt anything that you say, well look this is lets just look at what happened. You cant deny it. He wishes he could say you should have basically the best he could have done is said you should have rescued me like everybody else. There were some things selfinflected. Remember the way that they were holding what was that big Real Estate Holding they had . On the books it was valued as some ridiculous arch stone and there was selfinflicted stuff there. But his argument was if you saved everybody else you should have saved us. If there was one bank terrible and worse than the others it was lehman at that point. You had the opportunity to try to build and send value higher. He said no. He had some opportunities. He would argue that some of those opportunities seemed like they were on the table but really werent. You know. Nothing is black and white. Heres the other big stories today. Greek talks are progressing but no details on whether theres a concrete deal forth coming. Athens is due to make a larger payment to the imf. Intel is reported to do that. It expires monday and after that intel can launch a hostile bid and theres been predictions. Half as many chip companies. Someone said that a year or two ago and then we had avago which i told becky this morning, we should have brought this up yesterday. Singapore based company, 10 tax rate. After they came back. Much easier for them to buy. Theres another one. So we prevented our guys from it but anyone still over there is still cherry picking Great American assets because of the tax rates. Because they can pay more. They can pay more which is what people said. He was making an interesting comment about how moores law used to be fast about being faster and now its about being cheaper. Cheaper. Its the huge change and biggest consequences in the mergers. Jp morgan plans to lay off 5,000 employees over the last year. The wall street journal says the bank is closing branches and slimming down operations. A few stocks to watch this morning. Gamestop with better than expected earnings held by strong shares of new releases. You can see up close to 6 . Also ulta beating the street on the bottom and the top lines and the shares of that company also rising up by 1. 9 and u. S. Based Data Center Company is buying british peer telecity group. I like it but its probably telecity. Its british. Did you know it was biopic. Its a biological picture. A biopic. I always thought it was a biopic. Its a biopic. Sounds classier. Im an idiot and i thought it was biopic. You did . You would. Because it looks like biopic. The deal to buy it is worth 3. 6 billion. Lets check on that this morning morning. Were down 37. Never got too out of hand yesterday. Another one of those sessions where it seemed like no one had my strong conviction about what to do. We ended up down about 30 points or so. In europe this morning is it summer dulldrums . Its not really. Tomorrow is the 30th. Tomorrow is the 30th. Theres 31 days in may. So monday is june 1st. Europe not good. Lets take a quick look at asia as well. Interested in shanghai. Get a bounce today . No but not much action there after the pull back earlier this week. Oil was down at 57 or so. Now up 73 cents. The ten year continues to confound obviously but if we get a negative printd on gdp you wouldnt expect it to be surging the yield. The dollar 108 or so . 109. Almost 110. No. We have time. So that has recovered a little against the dollar and finally gold back under i didnt notice but back under now 1200 at 1190. And in political news former House Speaker Dennis Hastert is indicted on bank related charges. Hes accused of structuring the withdrawal of a lot of money in small increments to evade the requirement that banks report cash transactions over 10,000. Hes also accused of lying to the fbi. John harwood joins us on set. Do we know the details of who he was paying off and for what yet . No. We know that they describe it as past misconduct. Bad acts in the indictment. He was a wrestling coach somewhere at a high school or something too. He was a teacher. He was a coach. Any reason to think it has anything to do with that . That was suggested by how the indictment was worded. It notes his previous occupation. All of this preceded the contact preceded we should wait until we know something. The conduct preceded his political career and payments came after his political career when he was making money as a lob lobbiest. Its one of the saddest things i remember hearing. Very very well liked in the congress. Became the speaker of the house after the very turbulent times. Newt gingrich was a controversial and volatile figure and hastert was somebody that people on both sides could relate to. He was a calm presence and, you know yesterday in brooklyn with senior officials of the Hillary Clinton campaign doing a briefing and after we finished this briefing everybody saw on their phones that this had happened and thats what everybody wanted to talk about because we were so shocked by it. Theres still the hastert rule isnt there . It was a term for a speakers approach to when they brought something to the floor and denny used to articulate that he wasnt going to bring something to the floor unless it had support from a majority of the majority. If most republicans for forwere for it he would bring it to the floor even if it required democratic votes. Weve seen john boehner try to stick to that rule but have to violate it in certain cases when must passed legislation had to go and you couldnt get amajority of the republicans. I want to hear what you learned with the clinton campaign. Not a lot. It was senior officials of the Campaign Calling up reporters. Its preceded in a very cautious way. She has been under wraps most of the time doing her learning tour. Listening and learning. And they talked about the ramp up thats going to occur this summer. She gives her big formal launch speech on the 13th of june. Thats a saturday and after that she is going to start doing different kinds of events and pick up the pace a little bit although its not going to be a full out sprint for awhile. Theyre emphasizing the marathon aspect of this. There are, i saw Carly Fiorinas camp making charges yesterday about how when they hold a press conference they actually take questions from the press. Does stuff like that matter . Will it impact either her favor blt favorability or pressure her to start taking questions . It matters a little but not a lot. One thing to remember about Hillary Clinton which is the most important fact is she has been known for more than 20 years. So to change the image of somebody thats been that famous for that long it takes an awful lot. People have such an accumulated storehouse of impression. They already made up their mind about what they think. Thats right. However if she is getting flak constantly for not taking questions, for not interacting with the press and being responsive to the stories out there, that creates static that interferes with her message. So its a factor. I dont think its a huge factor. I know you wont really report on the flak from the right but she is getting it shes not talking about ttp and others and Elizabeth Warren. Bernie sanders. I talked to him last week he said she was hustling money. She should be pretty familiar as former secretary of state. She ought to have an opinion. Theres no question. That is a completely political situation. Hillary clinton, remember as secretary of state was promoting the Transpacific Partnership and its being negotiated she is hiding behind the idea that we dont know the final terms. It hasnt been negotiated yet but its being negotiated by her allies. People that worked with and for her. You wonder if it doesnt make more sense to just come out in favor of it rather than having both sides attacking you. Cant have it both ways. Entering a democratic primary. She has the heat from the left Elizabeth Warren bernie sanders, Martin Omalley isnt really to the left but hell act like he is. So thats coming when he announces and so the natural reaction of a politician is to give them as brief as possible. Shes not going to embrace a deal that hurts American Workers and shell wait and see when its negotiated. Thats a shield and a dodge and i would expect that ultimately when the deal gets negotiated she will be for it but she is going to as careful as possible. I understand the position she is in but while youre trying to make no enemies you can make no friends along the way too. I couldnt agree more. It is so transapparently political. We know where she is on this issue. She was trying to she was involved in the creation of the deal. So the idea that she is studying it and not sure what she thinks im fortunate enough to get mail all day long from media matter just so i know what theyre thinking and i know how theyre handling a lot of these things and yet it was that someone that said that the clinton wealth problem was going to be similar to the romney wealth problem but they went into full damage mode that no she has stated that she cares about the middle class and romney was an isolated rich business man that didnt care about helping anyone. I think hilary needs to sue rubio for age discrimination. He keeps bringing up this 23 year difference in age. That may not play well to him. Yeah. Becky i think youre right. He looks really young too. Thats the thing. I think most voters are older. New generation fresh face that has some appeal and some power and rubio has that going for him. On the other hand, you put him on a debate stage with Hillary Clinton, he looks like a schoolboy. But she would have to talk during a debate. Yes she would. But that can backfire too. If hes expounding on isis maybe hes getting into the president ial race. There you go. One more candidate. Democrat or republican. I dont know. You tell me. No. Well i can say this he did make this one little comment in a very strange way, we need new leadership. So i dont know could have been talking about congress. Is he a democrat or republican . He was not an obama fan. That was clear. You have some of the best hair in television. You do. You have some of the best hair in television. The other comes over here to my left with joe but, you know the deal has been for years people have wondered if his hair is a t toupee. I have gotten that too. We have a toy left over from yesterday. Were going to bring this over. We are. Were going to test it out and blow it off. The kernen challenge. Ill take it. Johns is real. Yeah. Thats the real thing. Its a comb over though isnt it. Its all real baby. Im getting nervous. I may back out. In is at the end of the show . Its at the end of the show. That thing is powerful. Let me call i want to call a consultant. Well see. Thats our plan for later today. Excellent. Great to see you, john. Now you look sexy. There you go. You do man. Rolling around in the hay or something. Come over here. When we go to break. Anyway when we come back today, awarning to anyone that uses wifi on an airplane. But first heres a look back at this date in history. Excellent. Researching a hunch, and making a decision. Time for a change of menu. Research and invest with e trades browser trading. E trade. Welcome back to squawk box. The hacking of america. We reported in the past on the dangers of logging into public wifi systems that could be trapped set up by hackers and cyber crooks but Security Experts are starting to sound a warning about accessing the internet through a commercial planes wifi system. Who else can see whats on your phone or your computer. Heres tom costello. Reporter if you have flown at all over the past several years theres a good chance youve gone surfing at 30,000 feet. You may assume the wifi is safe and secure but is it really . We should treat it like any other public wifi. It doesnt matter whether theyre encrypted or not. When you connect to them youre handing over your destiny of your Internet Connection to an unknown stranger. Because the airline wifi is offered by a third party through which anyone could gain access to your phone or computer. Even someone sitting next to you. This is the first screen that i noticed something was out of the ordinary. It is a red alert like this one that greeted him on a recent flight. The planes wifi wasnt surveillance cure secure. They would have gotten all the information. My user name and password potentially and then the data coming back from there. One of the largest in flight providers gogo in flight says the connections is secure but once youre surfing the web that connection is not encrypted. Past the Purchase Point gogo operates similar to any other public wifi hot spot on the ground. You may be as vulnerable in the air as on land. You can protect yourself by using something called a vpn. A Virtual Private Network that takes your information and puts it into a bubble and encrypts it. Experts say whenever youre using public wifi on a plane or coffee shop avoid accessing your Bank Account Information and sensitive emails and any social media sites with your private information and your photos. The reality is cyber crime is entirely opportunistic and every time you connect to the internet youre a target. Even at 30,000 feet its best to assume youre always being watched. Tom costello nbc news somewhere over the east coast. Thanks to tom for that. For me i use wifi on airplanes though we have talked about the problems with gogo. First of all its slow and then the more i thought about it i thought its probably not a great idea to use wifi anywhere. Right but thats the larger point. Whether youre on a plane or airport or on the street but i find myself connecting to wifi spots whenever i can. I dont. And maybe im crazy. Ill occasionally do banking things. Are you kidding . Ill send emails. I never even thought about it. So i dont know whether to turn it on our off. Right. I can get all of these but they have the block things. Why would i use somebody elses network. I would love it. For example, right around here you could be on Time Warner Cable. If youre a Time Warner Cable subscriber you can log on to wifi and get a stronger signal. Maybe im paranoid. Sounds like we should all be quite paranoid. A look back at yesterdays s p 500 winners and losers. You probably know xerox as the company thats all about printing. But did you know we also support hospitals using Electronic Health records for more than 30 million patients . Or that our Software Helps over 20 million smartphone users remotely configure email every month . Or how about processing nearly 5 billion in electronic toll payments a year . In fact, todays xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. With xerox, youre ready for real business. Hi, im Henry Winkler and im here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse Mortgage Works how much you qualify for the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today hello. Hello. Youre on tv. Good. Someone who is obviously bald and Misery Loves Company and others saying you can prove that its real hair but what about the dye job. Men dont die their hair. Do they . Why would i not want grey hair . People are small. Its the final trading day of may. A positive month. To this point, sort of. Anyway, thats where we are. The nasdaq the biggest winner joining us now managing director and instead of talking about those averages we just saw because you are now sort of a renaissance advisor, you keep emphasizing youre an asset aloe allocator now. The big short is now the bond market. Its not a new idea but what may be a little new is how big it could be and systemic. Much bigger than mortgages and subprime. Bond yields will raise in time. But i think in my view its not just central banks. Thats the biggest factor by far. But i think also theres a fundamental supply and demand story. Older people want to have safe secure sources of income but there is tremendous demand for fixed income product and the supply is not as robust as a couple of years ago as countries have reduced their deficits so i think rates will rise but i dont think very rapidly. I think 3 is the new 6. 3 will be normal or high in the future in the same way that 6 used to be normal or a little high. But you dont think its the big short . You dont think wow theres going to be a lot of money made by finally how long is this bull market in bonds . Like 1980 . How long is that . I would go back to the early 1980s when you had double digit ten year bond yields. So you had this tremendous bull market and that is probably over and i dont think youre going to get much return out of the bond market so we are very much underweight bonds in our Asset Allocation portfolios but to call it the big short is a bit of an exaggeration. Youll get weak returns but not a collapse because again if im right about this fundamental story that will help keep bond prices up. Keep yields some what low by historical standards for quite sometime. Thats the one thing that ive heard, we mentioned five other people that said this is the biggest trade ever and its so obvious and if its that obvious its probably not going to be right. We had too many people make the sam point simon made. Its going to take a long time to play out or longer than we think, right . I think we have this big issue is whats normal and those of us at a certain age remember the 1980s and you think about rates being 6, 7, or 8 . But that was the anomaly that if you go become further in the ball mark its more typical. If you have some what Slower Growth because of the demographic and other factors youre not going to necessarily get as high inflation as we have had in the past. A lot of places are still struggling with deflation so youre going to have some what higher rates indeed but not necessarily a dramatic rise in rates or sudden rise in rates that leads to a collapse in the bond market. At this point, do you have advice for people that are some what intermediate or shortterm . Or do you add money in the summer . Do you wait for a summer swoon . Or keep dollar cost averaging in the stock market . Well we continue to buy as we get new flows. Still overweight u. S. Stocks. Not as aggressively as a couple of years ago but were finding better value outside the united states, especially if you can hedge the currency risk. Okay. All right, ed thank you. We will see you soon. Whats that . Its real. It does not look good enough to be fake. Thank you. Thank you. Thank you for believing me. Thank you i think. When we return amazon adding its own line of milk baby food and other household products. Why this could be a game change for the retail industry. And we want to hear from you. What stories are you talking about today . Is it our toupee challenge . Tweet to us at squawk cnbc and use the keep squawking or post it on our book page. Well read them all and share the best of the punch coming up at 8 50 eastern time. 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. You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. Welcome back. A stock turn around story. Shares of amazon dropping more than 22 in 2014. But so far in 2015 a rebound of epic proportions. Up 37 and its not even june. Whats the ecommerce giant doing right and why is wall street falling back in love with jeff besos. Its great to see you this morning. Thank you for having me. What has happened . What do you think . Ecommerce we havent heard much about the fire phone. Really focus on what makes things want to go to this business. In particular, i think they have done a great job of making the prime membership more attractive for customers and sellers. Keeping the marketplace vibrant. We got our first glimpse of what aws looks like. Very profitable business with very intriguing longterm valuation implications as well. Thats what the company is doing right. Getting back to basis. You think that prime memberships grew by more than 60 after the quarter. How do you get to that conclusion . Whats interesting is you can actually back into the number of prime membership if you use the lines. Theres a deferred revenue line that you can get to it on the number of prime memberships. Right now its north of 40 million growing at a very healthy clip. Thats off of just 10 million a couple of years ago. Thats just showing how captive that platform is or how attractive that flat form is but the retention rates are above what you see at a costco showing people love their prime memberships. Just myself as a consumer i find myself going to amazon first because id rather get it shipped for free in two days. It loops you in and binges you into their ecosphere. Thats the point. Thats often times overlooked is they built an eco system at this point. What we have seen is consumers purchasing decision online shifted not from am i getting the best price here but am i going to get this product the quickest and nobody is right now. When youre a prime member i know were saying youre not looking at price in the same way but you are because youre looking at the shipping cost and the shipping cost is often significant and if you back out that cost then all of a sudden things get more expensive so the question that i have longterm is theyre investing in all of this infrastructure. Its unclear to me if you start doing the math whatever theyre going to charge for the products are going to be the same or ultimately more than other places and people will start shopping for price again. Thats a fair point. We start to see online pricing. They have built enough scale and efficiency in their latest generation of Fulfillment Centers that what we have seen is shipping expenses as a percentage of revenue start to leverage and come down so the company is starting to find a way to make at least keep cost within containment and they also have things where have you to have to certain thresholds on that. That limits them from getting too burned on shipping costs. Its probably the main concern in terms of the core business but theyre finding creative ways to leverage their shipping expenses at this point. They now have plans it looks like to roll out their own private label in a much broader number of categories. Things like grocery products milk along the line how does that change the situation and what risk is there in this play if any . Yeah its a very Interesting Development because what you see typically in the retail space is that a private label product can have between a 10 and 15 benefit to gross margin on that particular product. It will be interesting to see how widespread this is. They already have effectively two private label lines with Amazon Basics and amazon elements. It will be interesting to see how widespread this is but this could be potentially very lucrative from a profitability standpoint. The risk is do you push out too many of your key brands at a people are starting to recognize on the site . The key is find a balance between the branded and private label goods. Do you buy the stock here . Its up 37 already this year . We think shares are fairly valued right now. We have a 440 fair value estimate. Theres a ton of momentum behind it at this point. The second and Third Quarter when you see the heaviest investment ahead of the holiday season. Sometimes you start to see margin concerns start to creep back into the marketplace. Right now fairly valued. Be a holder of it. Probably not adding a lot of money to it at this point. Thank you. Thank you. Coming up when we return the ceo of Aes Corporation plans to team up with tesla on its new batteries. Youre looking at wti crude at 58. 36. Squawk box returns in just a moment. 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. Welcome back to squawk box. Powering up with our ceo call the president and ceo of aes corp and in town with the bernstein Strategic Decisions conference. The world leader in power and Battery Storage with more than 18,000 employees globally. Theyre recently teaming up with tesla on their new batteries. Aes 40 billion of assets globally are divide under to three main areas, gas, coal and renewables. This is the first time youve been here i think. Yes, it is. Im a big fan of the show. Pleasure to be here. Thank you for coming on. Tell us. Everybody is fascinated by tesla what this partnership is with them and what you think it means. Were the world leader in the youth of ion lithium batteries. You dont make the batteries yourself. We do not. Tesla is going to make this factory with panasonic. They will drive down the cost of batteries because of economies of scale. So were a consumer of their batteries. So, what we have together, we put a kit together which you can install on the grid. And whats very important about this. This allows you to have more renewables on the grid because the wind blows and gusts and, you know, the sun fluctuates according to the clouds and the voltage varies. With this battery kit, it allows you to smooth it out. It allows you to put a plant anywhere. Say here in manhattan, you may need a peaking plant for certain hours of the day. But you dont want to put a plant in the middle of the city. You can put the batteries. You can put them here. They can store up the energy when offpeak hours and then inject it when its needed. What is happening on the grid. A lot more solar in many places. During the day, you get a lot of solar and then the peak hours are at night when people come home. With the batteries, you can charge them up using the solar power during the middle of the day and then inject that power at night. Is this the real thing . Experts i talked to about this even recently have suggested that that is definitely the holy grail of transmission. But they doubt that batteries have reached that stage yet. I mean how sure of a thing is this . Well we have 86 megawatts in operation. We have been doing this for eight years. Wow. We make money at it. You do . We have it in chile and we have it here in the states. They dont depend on any subsidies. We have different applications for them but theyre working very well. So we have some proprietary intellectural Property Rights that we not only want to put it on our grid and our power plant but actually sell it to third parties. When you talk about a plant, what does that look like . A plant of batteries . Two things. When i talk about a plant, i am talking about a thermal plant and then you add it to it. These basically look like containers. Its module. This has a 40volt lithium ion battery. Do you make this one . He doesnt make the batteries. Okay. Sorry. Its just mogular. You can put them up. What is also very nice is that theyre actually mobile. If you put them somewhere and it didnt work out economically. You can put them on a tractor trailer and move them somewhere else. What is the determination . What situations has it worked and where has it not worked . We tested them in new york and quite frankly this is having to do with stabilizing the grid and they werent making the returns we expected. We put them on a tractor trailer and took them to ohio and theyre doing very well. When you look at solar broadly, you just said this whole thing works without subsidies. One of the conversations we were having yesterday was around subsidies in solar and wind and specifically winds seem to be more trouble. But solar does. None of these technologies really work without the tax subsidy. Is that right . That depends. The the first thing is the States Energy cost is much lower. Competing with much Lower Energy Costs here in the state. If you go around the world, energy costs are higher. The second you have to look at the solar radiation. It says something very important. You have to use the right renewable for the right geographical location. So for example, the first was germany. Deuce thats not where youre going to be putting solar. Thats very different than if youre going to northern chile which has fantastic solar radiation and it rains once every 20 years. It depends on what the energy costs in that country. It depends on the resource. How much wind and how much soleperp we ehavesole solar. We make money at it. Real quick before you go because gas is such a big driver of your business. The price of gassen your mind where do you think this is all going . I think Natural Gas Prices will be elow inlow in the states for quite some time. An industrial process. People know where the gas is. You can put more fracking and more rigs in and you increase the demand. But that has been the real change in the sector. The decrease in the price of gas. So were actually bringing in gas to other countries at u. S. Prices and it has made huge differences. For example, the Dominican Republic last year we saved them 500 million. Versus burning liquid fuels by bringing in lng at henry hub u. S. Prices. Wow. Okay. We will leave the conversation there. We appreciate it very much. Hopefully you wont get blown off the set by his blower. There are ice bucket challenge. The leaf blower challenge or the toupee leaf blower challenge. A lot of people would not agree to do that. Now i am hearing i have plugs. That hurts. No way i would hes good. Coming up this mornings top stories. Hes worried his hair is about to get blown off. Plus former House Speaker Dennis Hastert indicted. When youre not confident your companys data is secure the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. We monitor Network Traffic worldwide, so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Your last chance to sell in may and go away. But, are you prepared for a june swoon . How to summerproof your portfolio. Reports of the death of the Shopping Mall have been greatly exaggerated. I love the smell of commerce enthe morning. Its all about live events. Gamestop surprising the street. You throw that ball up in the air and, oh, geez there goes the tennis racket. The stock up after posting an earnings beat. Well check in with the companys cfo as the second hour of squawk box begins right now. Lisk 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 Ross Sorkin along with joe kernen and becky quick. Dow futures down 50 points and were a little in the green. Dow open up about 15 points higher and s p 500 and the nasdaq up a little. 2. 25 and now 2 points. There you have it. Top corporate stories at this hour. Jpmorgan planning to lay off 5,000 employees over the next year. The bank is closing branches and slimming down operations. Shares of altera this morning. Intel is close to a deal to buy the chipmaker or about 15 billion. Intel signed a socalled stand still aagreement earlier this year which expires on monday. After that intel can launch a hostile bid. Were watching shares of gamestop today. Better than expected earnings helped by strong sales of new releases. The stock getting a boost on that news. The companys cfo will join us at 7 40 eastern time. In political news former House Speaker Dennis Hastert has been indicted on bankrelated charges that Illinois Republican is accused of structuring the withdrawal of 952,000 in cash in order to evade the requirement that banks report cash transactions over 10,000. Hes alsoaccused of lying to the fbi. At this point its weird because it has nuthothing to do when he was speaker. We dont know for sure. But the indication is that these are things that did happen. They did say it was before he was in politics. He had to pay someone off to not talk about something. Which they call what is the phrase they use for the misconduct or bad behavior . Bad behavior. Lets, thats where that stands right now. And put the media on this and im sure were going to find out what it is that hes accused of and what he was paying someone off for. If youre a believer today is your last chance to do that. But is this just a patternseeking or june swoon something that is likely and on the horizon. Don joins us now with more. Dom, i can help you with this. June starts on monday. It does. Put that into your calculus of what were talking about here. All right, so it does start on monday. Yes, it starts just in the next couple of days here. Obviously, were looking at whats happening in june. Also that Summer Season kicking off. We wonder if these stocks will hold up. A percent from record highs. Not like were in panic mode here. Lets just take a look at the numbers. We asked our partners to look at the numbers and how the s p, the dow and the nasdaq performed typically in the month of june over the past decade. Just for some historical context. Lets start here with the nasdaq. Not good. Its down 70 of the time. Seven out of the last ten years. A near 1 decline for the nasdaq. So, not a good situation here. The s p 500 maybe the better if you want to look at it that way. I want to paint it as positively as possible. Its been down six of the last ten years and the average return here is minus 1. 3 . So 1. 3. And the Dow Jones Industrial index, really the big loser if you want to look at the june events over the course of the last decade. On average down 80 of the time and off by just 1. 5 . So, if you are looking for an excuse to be a little bit more skiddish about this market, even though were hovering near record highs. These numbers may be one of those things that you consider when ayou take a look at the overall scheme of where the markets sit. Typically in the month of june, guys. At least over the course of the last decade not favorable for stocks and might give some reason for traders to give a little more cautious is the best way to look at it going into this particular month. Remember the usual cavuates apply here becky. This is historical performance. Doesnt mean it will do it again. Still this is one of the things traders weigh if they want to keep the position long or not going to june. Back to you. A lot of things to consider. One thing that joe is bringing up that year to date. Incredibly anemic in terms of the returns weve seen. Different than what weve seen the last four or five years to this point. Look at some of the trading volumes. Big stories of whether trading volumes have been contributing to the volatility overall. Remember, were not seeing this flood of action one way or the other. So its a little too early to say its going to be this massive swoon. But, still, something to consider as youd kind of put all those data points in your head for what you would do over the course of innextthe next month or two. Watching todays Economic Data to get a feel of what they might think. Gdp to be revised to a contraction of 1 . Darryl is wells fargo Investment Officer and joining us for the hour is Rebecca Paterson with bessemer trust. Shes a managing director and cio there. Welcome, both of you. Thanks for being here. Just to what dom was talking about. It does make people nervous, but, rebecca, you say that you think everything is overvalued at this point. Its concerning not to be in stocks. I think the world feels kind of expensive right now and partly because of that whether youre looking at highend real estate art, equities bonds. A lot of people are fearful. A number of investment banks tell people to go into more cash in recent months. When you look at fund flows over the last couple of years, etf mutual funds. Twothirds of the capital has gone into fixed income. Only a third has gone into stock. So if i can take a slightly longer term view not the next month, but the next year. If there is any dip in the market in june id be inclined to buy it. I think the market is underowned. The valuation suggests markets are overpriced. I think the economic backdrop is still supportive. We have a ton of liquidity out there. It doesntmatter if the fed goes to under 20 valuation points. Decent economic backdrop for equity markets and i think well go higher for at least another year. Darryl, you agree with that . I agree ewith rebecca over the longer term. The important thing, you have to look at where youre at in the point in the cycle. I was just looking yesterday. Twothirds of the s p 500 Companies Free cash flow yield is above their Corporate Bond yield. When that happens, it sets up very well for an m a cycle. It is still half of where it has been longer term. When you have half on a half on a relative basis. And typically you dont get stocks to peak if you go back and look at past cycles until about nine to ten months after the m a cycle has peaked. So, you couple that with look at q1 earnings and where were tracking earnings. If you take out earnings again. Thats a good quarter. Right, i mean you have to take out the noise around the energy side. But 9. 5 Earnings Growth is not a bad number. But i think thats the question. Determining what is noise and what is not noise. What is material . Do you look at things like the dollar . Being material or not. Absolutely material. Has to be. But, again, weve faded a lot. The dollar has found a nice comfortable, stable range. Now understanding joe wants to go to europe and you need the dollar to strengthen the euro to weaken. The reality, i dont think it is as much of a factor in q2 and the data we look at. When you look at sectors like industrials and technology theyre trading below the average multiple to market. The things that are richer are the bond proxies. Things like utilities felcom telecomes. The things that are bid up conservatively. You dont get the tide rising all ships. You have to separate and look at the areas of the market that can play offense. Has the dollar gotten Strong Enough to where what you said is coming through with protection sentiment. Were seeing some of it with the trade. A little bit with the trade talks and i think it is interesting you got talks not talking up boupthe japanese yen, but slowing down the weakness. I think they want things to be quiet on the japanese front. Until we get the talks done. Its a political move. They like it. You want the currency off the front pages of the newspapers until the talks are done so it doesnt become an issue that can derail the talks. But in the case of the euro i think youll have a great vacation. I think the euro is still headed lower. I thought it was really interesting a week or two ago when the European Central bank announced it would front load some of the quantitative easing this summer and i dont think it was a coincidence that it was made as the euro was rallying. Fund flows and the fact that so many banks have told people to take money off the table. Much more shortterm focused. Then the question becomes, you believe it is a mistake. They have to also decide it was a mistake and they have to change their view for this to all work. It is going to be a time frame. Im investing on behalf of clients that are tax sensitive. If im getting in and out of the market every month, ill have a tax bill at the end of the month. If i could take a slightly longer term view my total return after taxes, if i make some decent calls is going to be better. Lets talk about the numbers today. The gdp revision. It is expected now to be at this point a decline of 1 . Does that have any impact or we knew that this was coming darryl . I think we know it is coming. Unless its materially different than that 1 . The challenge is obviously, we end the second month of q2 you know today. And so youve got two months in the books of q2. The data is now just starting to come in and strengthen. We saw three housing numbers this last week and, actually if you back them out of month over month numbers and look at year over year numbers. The pending sales were up and Housing Starts up 20 year over year. Youre starting to see that pickup that we have been anticipating. The market is more concerned about today and looking forward. You know q1 is a long time in the rear view mirror already. But it does where it will impact is the math. Right . The fed still has 2. 3 to 2. 7 target gdp for this year. If you start factoring in minus one and then you dont get it in q2. That number could come in closer. Do you think that prevents them from raising rates even though they know this was out there . Ill take the counterintuitive argument that a lot of people wont take. Duel mandate and youre there for employment. If you look at the core inflation number and not the headline with all the noise and energy. Core in the first four months of the year is running at an annual annualized and thats compared to 1. 6 in december. So its picking up the inflation story is picking up mildly. They have the ammunition to do what they need if they want to. You get 2. 5 core inflation and september and or december is probably the date. Its already largely priced in. And ben bernanke did a great analysis which our team has just kind of redone suggesting when rate hikes are expected the shortterm impact on the equity market is basically nothing. Insignificant, statistically. Even on a shortterm basis. I think thats exactly what the fed wants. He wants to telegraph this. Rates go up and nobody cares. The tree falls in the forest. Exactly. Rebecca will stay with us. Thanks for coming in today. I dont have any hair. Youll be here rebecca. I can pretend im on bay watch. Thats an idea. No hair. You cant blow anything joe. It wont move. He doesnt even have a tie that you can blow. Smart man. Okay when we come back we might, well i was going to Say Something that wouldnt sound right. The debt of the mall has been greatly exaggerated. Courtney reagan has a special report from San Francisco, next. And apple has moved to turn Science Fiction into augmented ereality. We have details ahead. Plus, one of todays hot stocks. Gamestop up big in the market after that Company Announced better than expected revenues and earns. Well check in with that companys cfo at the bottom of the hour. Were back in a moment. Priceless you are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Welcome back to squawk box. The futures up right now are positive. That was negative earlier for the dow and the s p and the nasdaq. Pretty good session yesterday. Just in terms of finding a bottom down around 70 or 80 and rallying to close down 30 or so and now indicated higher although we do have that gdp number coming up which i dont know. Do we want weak or strong at this point . I still think these people love the fed staying out of june until september. Temporarily. But it feels like we have more and more Market Players that tell them they would like to see them move. Those arent the guys down. But getting to rebeccas point. Look theyre telegraphing this and getting you to the point where you will expect it to happen. No way june. No way. No way, no how. But the press conference could move the market shortterm pup june were going to have a lot of little catalysts. It is going to be a fun month. Fun sound scary. We should also talk about malls and retail. Mall traffic slowing from the likes of amazon, smart malls are going after experiences online retailers cant deliver to entice more shoppers. Cnbc Courtney Reagan joins us now with more. Courtney . Good morning, andrew. While the strongest retail growth certainly is online. Most believe that stores arent dead and that the futures belong to digital experiences. Westfield wants to lead the way. Today the mall operator launches the spoke on the fourth floor at its San Francisco center mall. The 37,000 square foot space offers coworking space, a physical home for Innovative Companies from start ups to large brands most of which have a focus on the intersection of reality and technology. Custom shoe makers shoes of prey and angry birds creator. Tenants rent space for a day, weeks or months and with popup shops, event space and designated nemo space theydesignate ed demo space they can rely on feedback. Malls like this that are located in unbelievable cities, great locations have great retails. Those malls are actually growing and growing really well. Now he says the purpose is to inovate, which he says by definition will drive traffic. Westfield San Francisco center is already one of the countrys heavily trafficked malls. I have been there a number of times both for work and just as a shopper. Theres always a decent amount of traffic that goes through there and a lot of interest was sparked last night when they began to open it up and actually launch that space. Joe . All right. Okay courtney. Thank you. Thank you for that. Got the city by the bay. Thats pretty nice. Watching a little dirty harry. What a beautiful, beautiful city. Go ahead, make my day. You feel lucky pupgnk. Coming up apples, youre not safe either sorkin. The sneakers that youre wearing. Apples augmented reality play. The acquisition that could change the way you see the world around you. 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. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Scifi movies information overlay and if you can believe this apple is getting into the business. Tech crunch reporting that apple bought a company that makes technologies. It allows developers to overlay Digital Information on top of the real world. Microsoft and google already have similar projects going and there are rumors all over apple websites apple gossip sites that maybe even the new ios, which may get revealed this summer will have a service that would aloayou to effectively, we could walk outside, for example, and just look at the screen and the screen would say, oh, theres radio city and theres starbucks and it might even have a yelp rating on it. By the way, i believe that google may already do Something Like this. But with google maps wherever you are, geographically, if you hit what is around immediately it will come up and pinpoint each restaurant and have a yelp thing. If you can just point at something. I thought you talked about doing Something Else. I didnt know why you would want to add things into. I thought it was almost like cgi or something. You were making the point, when this really gets sophisticated what it would look like. Great for those of us getting up in age. When youre walking down the street you see a person coming down the street smiling and say, siri, who is that. They can recognize the face match it and say, thats mary jane. You met her last week. Oh, yeah mary good to see you. Military, medical uses. This is big. It could tell you, tell a doctor what what to do or what its looking at. Or military use. Youre looking at something and it can overlay a blueprint and say you cut this wire not that one. Its huge. I want it to get to where its not only telling you what to do in terms of traffic, but actually controlling the, it knows where the traffic is and a whole citywide system. So, you dont sit there just wasting your time. Im sitting there for my life is wasting away. Minutes at a time sittal alting at lights. When im at the burbs. 10, 15 years when we had the fellow from ibm on what youre having the cars will start communicating with each other and more importantly the infrastructure will start communicating with the cars. If you have both things communicating that same time. Youll get pretty close. I was on the parkway the uth dare and i couldnt esee any ofsee any of the technology that they were talking about. Think of the gas savings. Already platooning trucks. Trucks talk to each other and travel closer together just reducing the wind shear makes huge fuel efficiencies. No, its changing like this. That is very exciting. Its a good thing. Go america. Until the machines take over. You are just running for your life away from the machine. But then you get a zombie to protect you, joe. You have to cut out their teeth. You see i just know youre a zombie fan. Took out their jaws and had them on a leash. Two of them because you dont get attacked by other zombies if theyre with zombies. They couldnt bite. Theres a movie. Robots versus zombies. Spent way too much time thinking this through. When we come back this morning, the squawk ceo call is in session. The top heart Valve Company will join us right here on set. Edwards Life Sciences stock is up more than 100 over the last two years. The ceo is here right after a quick break. Melodic music in low tones. Heavy rock instrumental with electric guitar. Sfx engine sounds. Introducing the new canam spyder f3. With a cruising riding position and the most advanced vehicle stability system in the industry. Youll ride with a feeling of complete freedom and confidence. Visit your canam spyder dealer and test drive one today. The new spyder f3. Riding has evolved. The ready set summer sales event is on now. Save up to 4000 and get a twoyear warranty. 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. Welcome back to squawk box this morning among the stories front and center. Amazon reportedly planning to expand its lineup of brands. Grocer items such as milk cereal and baby food and household cleaners. Gasoline demand rising more than 4 in march. The highest level for the month since 2008. According to the latest information from the energy administration. Today could be a busy session for traders, especially towards the end of the day. Today is when annual tweaks to the makeup of the russell stock index has happened. 5 trillion investors try to predict which stocks could be affected. Check this out, folks. A volcano in southern japan spewing smoke and volcanic debris high into the atmosphere today. Vilptly e lyolently erupted. Government officials have issued an eevacuation order for the entire island. 137 people reside on the small island. No injuries have been reported. Very good. Aour next guest runs the number one heart Valve Company in the world and making major strides in the cardiovascular treatment arena. Shares of edwards Life Sciences have been doing really well as you can see right there. Up 100 over the past two years alone. More than 1,800 since its ipo. Now with us on set in an exclusive interview chairman and ceo of eduard Life Sciences and in town for a strategic conference and its good to esee you, mike. Everything would be nicer minimally invasive. We all know about the way angio angioplasty revolutionized things where you can go in through the femur and like a balloon catheter. I dont think people realize that heart valve replacement is moving to that technique. Nobody would have imagined this just 10 15 years ago. Youre right. Surgeons have done miracles. They open your chest and stop your heart. It would be nice to not do that. Doing the miracle without that. Theres the magic. What do you save there . You save the Recovery Time and the risk . How much highserer is the risk . There is risk associated with the procedure. Stopping your heart. A lot of Clinical Trials to do headtohead. Today these procedures are only approved for the highest risk patients. We would like to have more experience with this before we open it up to everybody. Because, obviously, very popular with patients. By going with the highest risk patients doesnt that automatically sway the results . If youre dealing with highrisk patients they may have had a harder time no matter which way they go into it. Thats true. But these folks have a chance for a better life. If we look at the results going back it would be skewed unfairly against you. It does make it tougher. It is the tougher road. Thats the path that the regulators ask us to take. How much of a person that needs this is congenital and how do you damage your heart valve . There are four valves in your heart and the one that were talking about right now is the a ortic valve. The disease were discussing is a proseand they get stiffer over time to the point that they almost dont open. Other things that open congenitally with kids. Thats small percentages. There is damage to your heart valve. You can get an infection that ends up in your heart valve. Those things happen as well. It almost sounds like an atherosclerosis for the valve. Calcium builds up and makes it stiff. Its very similar. What happens is your blood flow gets restrictive and you have less blood flow into your heart and origins and it gets misdiagnosed. People think gee, im getting old. In reality if they have their heart valve opened up again, they would have new life. Are people predisposed . Its not understood what you can do from a prevention point of view. Probably 1 of the population over 65 3 or 4 of the population over 80 that suffer. How do you test to see if youre affected . Physicians can hear it on a stethoscope and they can do the ecolab and tell you definitively what is going on. You sneak it up like a catheter and its the size of a pencil and then you inflate the valve . Its very small. I actually brought one. I dont think you can do that. Probably not. Its about a quarter in size. It gets compressed down to very small sizes. When it gets compressed down to a balloon and then when its opened, again, it comes back to its full size and just pushes the diseased valve aside. That was the part that was a bit unthinkable because carefully surgeens remove all that disease tissue. No sewing necessary. The radio force stay theres and its up against this tough calcium ring that had developed. That valve stays. Actually the disease becomes a gift from an engineering point of view because you have a great anchoring point. Going forward, next five years. Do you see other valves being something that you can do the same procedure on. More noninvasive surgery e. How quickly can this grow . I think were almost in the golden age here. To be able to go in and do something structurally with the heart without completely eoep eopeningeoep eopening the chest. Particularly when you get into this tough Heart Failure condition that so many people suffer from. Other valves in the heart, holes in the heart and we can probably come in and do these things. We have a lot of aggressive research and Development Going on in that regard. We have a cool group of employees that work on just nothing but that. So the, just for this this is the aortic valve, you said . What is the market size per year for this . So surgical heart valves. Think about 1 billion market. This market today around the globe probably also has already grown to about a billion. We speculate that by 2019, it will be more than 3 billion analysts on the street have it much higher than that over time. I think it will take time for this to grow. It will be probably a tenyear effort before it gets full of all the people that should get treated, actually. Any of these things made of pig no at one time we used to make heart valves from pig heart valves. Now we use the tissue that grows around the sack of a cow. What is this tissue . Thats latex but typically what is used is the sack that goes around the tissue of a cow. It dozen get rejected. Its very tough tissue and when something is opens and closed hundreds of millions of times. How much is that . So that is made from a stainless alloy. It starts as a solid tube and with lasers we cut away everything and leave that frame behind. A lot to go eintointo these . The whole system to do the proerms is procedure is 30,000. Regular open heart surgery . For a highrisk patient may be reimbursed at 50,000 some dollars. Weve done cost effectiveness studies. The costs are falling fast because physicians are finding ways of getting patients out of the hospital now in just a few days instead of a week to ten days. Will it will be a minimally invasive cardiology company or just valves . Or were going to stay focused. So, structural heart disease. Thats going to be our thing. People want it minimally evasive and they want results. We also have a very important Critical Care business. But thats where were going to stay focused. From the guy who was named edwards, too. The first guy. Yeah. Actually a great story. Partnering with a physician came up with the very first heart valve. He had a dream to come up with the first artificial heart back in 1958 and the physician said lets just do a heart valve for starters. Amazing. So the side effects, can there be a clot form from this somehow . There is a risk. The newest generation with all the experience that clinicians are getting. Theyre getting the stroke risk down very low. Down in the 1 range of any kind of a serious stroke. And, so, all of the complications are falling pretty quickly as we gain experience. We had two cardiologists. I would say we had two cardiologists here watching and the one cardiologist sister is also a cardiologist coming out of our Something Else goes wrong with us were screwed. Its our heart. Places it to turn. Exactly. Thank you, great. Very, you love that andrew. Ive never seen you so excited. Like a merger. If you merge, i dont know what hell do. Yeah it is cool. I love that lattice. Anyone can do that and then the engineering into that lattice. The engineering that goes into, because it has to go in. In there and expand. Think about that part. You can imagine the latest generation get in a package this small. All of that is in here. You can go up if you could snake it up. I know even that looks a little coming up gamestop one of this mornings stocks to watch. The company reporting stronger than expected revenue. Cfo rob lloyd will join us to break down the quarter. Thats 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. Over 20 million kids everyday in our country lack access to healthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy affordable, kidinspired chefcrafted food. We looked at what are the aspects of food that will help set up kids for success . Making sure foods are made with high Quality Ingredients and prepared fresh everyday. Our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. Working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. We are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. Until every kid has built those lifelong eating habits, well keep working. Retail gaming giant gamestop beating the street big time after the bell. The Worlds Largest retailer posted better than expected earnings and revenue thanks to strong sales of hot new titles like evolve and mortal combat x and a rise in mobile game downloads. Stock jumped as much as 8 in after hours trading. Joining us now to break down the quarter is rob lloyd. Cfo of gamestop. We always give you a hard time because we made comparisons, if you will to blockbuster. But it doesnt seem to be going that way for you. In fact it seems to be going in a much better direction. What, what is happening . Well good morning. We get that comparison a lot. And i think the difference is that were giving customers what they want. For us that means that we recognize that theres a growing digital component to the video game business. And that video games are cyclical. So, in terms of digital, we expect to do about 1 billion in Digital Sales in the next year. In terms of the business being cyclical, we know we need to diversify. We ehave about 550 stores now selling at t and apple products and services and well grow that store count by about 200 in the next three months. So you closed on those acquisitions. How much, i mean when you think about diversifying your business. When we think about gamestop as a company, two, three, five years out, how much of it is legacy gamestop versus all these other new businesses . Well, i would say a year from now we would have 15 of our store base that is nonvideo gaming stores. Five years out, i think the goal for us is to have about half of our revenue base come from something other than physical video gaming. You know one of the things that you did do, you shut down your streaming service. A lot of people thought that streaming service could be like netflix. Why did you do that and what does that mean long term . We have 40 million members in our Loyalty Programs around the world. And by polling those members, we found out that customers werent ready for that kind of a streaming service. And, so for us, it didnt make sense to continue to do that. Sony is introducing a streaming service which we will sell in our stores and we thought we could participate in the streaming market in that way. Do you think long term youll have to get back into the streaming business or piggy back on top of other people like sony . Is that the longterm strategy or just a strategy for now . We believe we can piggy back on people like sony and other companies that are introducing that. We are the aggregator for video Game Services in our stores and well be able to deliver customers and what they want by selling those services. One of the other things i thought was interesting is youre stocking shelves with sort of back catalog titles. How much of your business do you think that will represent . Thats a part of our preowned business. And what it does is helps us to fill in the blanks where were out of stock on hot preowned titles. Thats a part of our preown which is 25 to 30 of our business usually. One of the other things that were putting into our stores that customers want is collectible and license merchandise surrounding video games, Movies Tv Shows and other pop culture items. Weve seen a surge in that in the last couple of years and weve expanded the amount of shelf space were dedicated to it in all of our video game stores. You talked about the business being cyclical. Just look out for us over the next 12 months in terms of new consoles and new games that will give you this uptick. We dont expect anything in terms of new consoles. But were excited about titles like halo that is coming in october and a new star wars title that is coming in november and on the further horizon morfemor morfes from sony that are the Virtual Reality devices coming to the market probably about a year or so from now. And we saw it happen in video and i know when it comes to video games the amount of band width required which is so much more and one reason it hasnt taken off. But if youre going to be selling sony sonys service, for example. Youll do that in store. Do you always think people will come in store . When do you think people will just do it all from home . And then will they be able to bypass you . Well, i mentioned that well do about a billion dollars in Digital Sales in the next year and more than 90 of that will come through our stores. So, our customers recognize that our break and Mortar Stores are a location they want to go to in order to get advice on digital products, as well. In term its of streaming, one of the challenges with that that model is that there is a latency in terms of the delivery of the action on the screen to the game player. That has not appealed to core gamers because they want the screen to move as soon as they touch the controller. Hey, rob, its Rebecca Paterson. Question on the demographics of the folks coming in the stores. If youre trying to eexpand what is on the shelves with vintage items and pop culture items. Is this a plan to expand the Customer Base and who are you targeting here with those items . Were targeting our heaviest customers which are, our heaviest customers consist half of the type of the demographic which you would expect for us. The core video gamer. And the other half are the mom or dad buying on behalf of the family. We find that this collectible merchandise, which gamers caught loot is really appealing to both sets of customers. You know, the kids want the nintendo plushes and then the core gamers want the statues and things that might be more expenseive expensive. Fair enough. We really appreciate your time, rob. Thanks so much. Thank you. Coming up this morning, key data and well get the First Quarter revisions for gdp. Thats coming at 8 30 eastern time. Of course, a number of people who are watching because forecasters say the economy actually contracted by about 1 that initial read as you remember, was just up slightly. 0. 2 . Well get the numbers and the instant reaction. Plus we want to know what stories yourerre buzzing about today. Tweet it to us. Squawkcnbc and use the keepsquawking. Or post it on our Facebook Page. Well read them all and share the best of the bunch. Do your dance, again, buddy. 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. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. Take a look at a couple of stocks to watch. This morning, earnings at big lots beating the street by a penny, but the current quarter. Deckers outdoors. The maker of ugg boots giving a below Consensus Forecast while raising its earnings projections for the full year. Is it true that i have a pair of ugs and uggs and you dont. I have a pair. Really . You and tom brady. Good company. Anyway reuters reporting many of vodafone biggest investors say they would be open to a deal with liberty global. About a week ago a great fit for liberty. Did you see any of the statistics about the broadband coverage . 37 38 . Versus for twice as much as comcast would have had to at least equal or bigger. I saw lower numbers. For broadband. Not for, i saw it on check it out. Okay. In cosmetics and fragrance retailer ulta salon shares of that company rising. U. S. Database center equinix buying british peer. Telecity sounds like youre buying a tv set. I figure its a British Company so it sounds fancier. The deal is worth 3. 6 billion. Time for a quick final thought from our guest host Rebecca Paterson. Overall, you would think you would be in stocks at this point. A long retraction at this point, but we have some big issues coming up, first of which is greece. They expect a deal by sunday. Eu Officials Saying forget about it. What do we think as we head into this weekend. Theyre playing a game of chicken right now. Both trying to raise the stakes on the other as negotiating tactics. We would have that you do get a deal. We dont have a greek exit from emu. I think one thing that came out overnight is that their officials are now giving greece until the end of june to make payments. Wednesday, no longer matters. And theyve done that on purpose so greece cant use as gamemanship. It is an interesting ploy. I think greece will probably work out. I wouldnt use it as a reason to be nervous about european equities. I would watch the russian sanctions conversation at the end of june. I think russia is hoping sanctions will be lifted. If they are, another catalyst to support some Eastern European stocks. If it doesnt get lifted there might be a little bit of nervousness in terms of that of how putin reacts. Thank you for being here. Its been great seeing you. I just read the story. I guess before the merger. Have double. Double comcast broadband footprint. Less customers. But the physical territory, it doesnt mean that they actually cover it. They can get to them closer if they can build it out. Coming up reaction to some new comments from former Lehman Brothers boss dick fuld. Next guest is richard kovacevich. Stick around. We have a big hour just ahead. 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. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Wall street bracing for the big or shall we say small number of the morning. The latest read on the american economy. Gdp just minutes away. The number instant analysis and Market Reaction straight ahead. Plus, the future of banking. Income inequality and wall street recovery from the financial crisis. Well tackle it all with dick kovacevich. For years a squawk controversy. Does joe wear a piece, a rug, a toupee . We perform a very scientific and precise test and see if it can stand up to something similar to this. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york. This is squawk box. Welcome to squawk box right here on cnbc first in business worldwide. Im an true ross sorki, joe kernen, the hair is real. And becky quick. It was, it was, a bit of some red numbers earlier. Things gotten a little bit better but now coming back the wrong way. Dow looks like it could open up eight points higher and the s p 500, lets call it for now if you want to be generous. Europe we got some red arrows too. We can switch that board over to the oil and energy sector. Crude is the number and lets take another look at currency. Not much to say but joe is going to be okay on this trip of yours. And then the tenyear note is now at 2. Here are the story investors will be talking about. Les than an hour away from second read on Second Quarter gd. Among the factors the rough Winter Weather and the stronger dollar. But economists note that it has improved since the last quarter. The second month of the Second Quarter. European Officials Say that greek talks are progressing, but no talks on a concrete deal. Athens is due to make a large repayment next wednesday. In the meantime g7 leaders are in europe meeting about all of this. We are getting comments from jack lew. He is stressing the need to find a pragmatic outcome on greece. He says its possible that june 5th is not the real deadline so maybe were not looking at the edge of a cliff just yet. In Corporate News shares of altera reporting this morning. Intel is close to a deal to buy the chipmaker for as much as 54 a share or about 15 billion. Last month altera rejected an unsolicited offer following months of negotiations. You can see altera is up by 5. 8 . As we have been talking about all morning. Dick fuld speaking out for the First Time Since the financial crisis. While he didnt share much on Lehman Brothers he did share current eeconomy and income inequality. Income gap, income ineequality. Iio i know you dont want to hear this from me. But the wealthy are getting weltier and the belly of america is getting hurt. Why do i talk about this . Im a hardcore capitalist. Lets be fair. Capitalism only works if it starts at the top and filters down. If it doesnt get down were going to lose. Thats obvious. Just how do you get it to filter down . Thats where everyone disagrees. Our guest host dick kovacevich. Hard to filter down when youre growing at 6. 1 for six years and you have the fed priming the pump raising asset values. If we had a decent economy, maybe income wouldnt be so bad. Thats exactly right. We had the right policies. Fiscal and monetary policies. We should be growing at 3 given the difficulty of this last recession. We always get a higher and faster recovery from a tough recession and this is the slowest forever and i think its the policies that have come out of washington, d. C. That are causing it. We havent talked about this but he put out or his group put out a piece on if the Supreme Court strikes down that provision of obama care well hear about it. The one that will have republicans in big trouble. If they do that. His point is it could add dozens thousands, thousands of dozens of jobs because no longer would be you worried about keeping it below 30. No longer would you worry about how much it would cost. So many reasons it could be a boom for employment. Thats just one example of a lot of stuff that we have done. Regulations, all these things that have made it more difficult for anything to filter down because there is no growth. Exactly. Well this is the first time in maybe forever, but certainly in the last 50 years that Small Businesses havent led the employment growth. And the reason is very simple. Everything that has happened has been negative for Small Business. Including obama care. And dodd frank. They werent giving health care. Increased taxes. Corporate taxes diddant go up for big corporations. Went up for individuals. Subchapter s is 90 of all the profits from Small Business. They got increases in taxes. And then regulation. You know the real problem with regulation is it really helps large companies. Large companies can deal with regulation. Its a high fixed cost. Hurt Small Companies even more. Were the largest Small Business lender in the united states. Were doing surveys all the time. Its interesting Small Business patine regulation ahead of higher taxes and whats causing the problems in their company. Because regulations are, they never go away. We never get rid of the old ones. This is the highest increase in regulation in the last six years in history. On top of the ones we already had. Larry summers on saying that the small banks are not having its a demand issue. Not a problem with not being able to get funds. Well it is still, regulation is killing small banks. 1,500 banks so far since the doddfrank bill. More will come. Very unfair that the level of regulation is being put on small banks and Small Businesses. Lets return to one thing you used to say. A lot of pain from the financial crisis is also selfinflicted because of the way that we handled it. That would have been simpler to do other things. The Financial Sector has gotten a really bad rap and if you, when there is a vacuum of information, youre going to let people dictate exactly what caused it. All the big banks and wasnt fannie mae and wasnt the government. Lately, even with wells fargo weve seen this but 4x. Wells fargo did recently pay a huge fine for mortgages. These guys seem that they want to prove it was their fault. Of course they do. It is political. But the banks have done some things wrong, as well. Absolutely. I am i just cant believe this libor thats absolute. Someone has got to go to jail for this kind of activity. I mean fines and so on are not the answer to criminal activity. You just cant do this. Can they be caught . You wonder why you see these huge payoffs in the form of fines that the shareholders are paying but not the executives who committed these acts. Its politics. When you go to trial, its five years from now that the outcome. You can fine somebody today and get headlines on how tough were being on these banks. And no one is going to get do wru think they would win the cases if they went after the individual . I know the facts. Thats the question. Prosecutors feel that they cant and thats why theyre doing it. What do they do wrong then . If you cant prove that they did a criminal activity then why do you fine them for activity . What did you do wraukong if you cant prove its guilty . Everybody can hold each other ransom and hostage using shareholder money. You dont think thats what happened. The government said they can go after the banks and the banks are happy to pay. Its almost like hush money using shareholders. Youre making my case. You were arguing that you cant win the criminal case. I am just say figure you cant win the criminal case it means you werent guilty. You are saying you dont think they were no i think they will win the criminal case. But the reason they dont want to go after it you wont get credit for it. Five years from now, they will win. Youre talking about, you know structured cdos and going to jail for that. Of course they can go to jail for that. But it doesnt seem like theyre going after those individuals. Theres still time to do that. The reason theyre not going after them they dont get credit for it. You want to go put people in jail. For giving people a product they wanted. Im on the opposite side of that. 100 on the other side of that. Which guys for doing what . Im not sure that they should. Im not sure they should have and i made that argument repeatedly. Having said that. Let me ask you the comments about dick fuld yesterday. Are you surprised he went public . He didnt talk too much about Lehman Brothers itself. You cant be out in public and not talk about it. Once you decide youre going to have a press conference and have 1,500 people then by definition youre going to be asked about the issues. He had to know that would happen. Do you think hes to blame for Lehman Brothers problems . If you read all the headlines today, they all say that hes pointing the finger at everybody else. Hes obviously, lehmans brothers problems if leeman brothers had problems. Hes arguing they didnt have. Problems as turned out to be that they really werent bankrupt et cetera. He was mandated to go bankrupt in the same way you were mandated to accept harp funds. But i know i was mandated and you even had it confirmed by sheila that i was mandated. I dont know if he was mandated. I dont have those facts. But it wouldnt surprise me. If it happened to us and we werent part of the problem and it caused you know our stockholders terrible grief. 80 reductions for something that wasnt true. That means the government didnt care. Corporations or what it did to stock holders. They were going to tell people what they should do. All right. Yeah. Were going to have more up later. A lot more to talk about. Also tell you this morning former House Speaker Dennis Hastert has been indicted. In trouble for alleged hush money. More on this story. Good morning. Good morning, andrew. Youre right. Former speaker of the house Dennis Hastert indicted on two charges. The first one of currency transaction to avoid and the second one is about lying to the fbi when they questioned him. According to the indictment released late last night Dennis Hastert agreed to pay 3. 5 million to somebody who is identified in the indictment only as individual a here. What the indictment says is that that money was to conceal and compensate for his prior misconduct against individual a. Now, all of this andrew raises a lot more questions than answers because we dont know who individual a was. We dont know what the prior misconduct allegedly was and we dont know how all of this went down exactly. Except we do know that there were mamentpayments made over a period of time and at one time he was withdrawing large amounts of money from his banks and withdrawing amounts less than 10,000. When the fbi asked him about it he said he didnt trust the banking system. Thats why he was withdrawing that money and keeping it in cash. That andrew was not in fact true. A lot of questions here. Potentially ugly situation in illinois. Okay. Thanks for joining us this morning. Have a great weekend. What to expect of americans clinical oncology conference. We have meg terrell on the top players in the space in which Companies Stand to be Market Movers on monday. Checking the futures ahead of gdp data which is just a couple minutes away. You can see right there. Call it almost down in the red marginally down about three points. Were back in a moment. Welcome back to squawk box. Shares of genesco down sharply. The Company Blames west coast portrelated delays and gross margin pressure. The American Society of clinical clinical oncology conference kicks off and first shell join us right now to tell us which pharma and Biotech Companies investors need to watch. Yesterday and today, people will be descending on chicago. About 30,000 investors, researchers go to chicago for this huge conference and more than 5,000 data sets presented on what is going on in cancer. Of course the big theme is amino therapy. The big four are bristol myers, merck and astrazeneca. They are on the market with their drugs and people will be looking to see how they work on their own in different kinds of cancer and how they work in combination with other kinds of drugs. A big focus on amino therapy. But, of course the companies that move are smaller companies. Cloves will have some data on a lung cancer drug where werits competing very closely with astrazeneca. That could be a hot one to watch. Also in medivation they have a big Prostate Cancer drug. They are testing it in other kinds of cancers. Interesting to see what that does. Puma was an interesting one. The data sets came out a few weeks ago. Their Breast Cancer drug seemed to disappoint investors. Some analysts think that data may have been misinterpreted. How they communicate with their have esters at the conference. On monday three big stocks to watch. Another one is just pfizer. They launched this big Breast Cancer drug and interesting to see how that comes out. A lot of these executives on with us on monday starting early on crosswalksquawk. Chicago . Chicago. Every year. Youre going for the whole time. Im leaving this afternoon. You are . Got a decent room . I dont know. You dont check before its in the conference center. I stay as close as possible because we start so early. You want me to talk to logan. I would like you to do that. Do you have an agent . No. You dont have an agent . We should talk. Ill talk to my agent right now. He does nothing else. Meg, thank you. Well see you monday morning. When we come back today, a new report shows 139 new species of animals were discovered in the nicon river area in 2014. There is one that will freak you out. Well show it to you, next. Heres a hint think zombies. By the way, lets check out the futures ahead of key Economic Data. Gdp just a few minutes away. At this point, futures sitting flat. Stick around, squawk box will be 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. 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. 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Pring. It feeds off of its organs which are delicious. I dont know for sure but there is something called which the amazon native american used and its blocks that neuro muscular junction. You are basically unable to move. The neuro transmitter doesnt. Use them where . Yeah in a eblow dart. And you dont want to get, yeah. Because you know that muscles cause your lungs to breathe. So if you have no neuro muscular. If you are still with us and youre still eating breakfast, okay. Nchsh if you have a buzzi story that you think we should be talking about that we havent already. Go ahead and tweet to us at squawkcnbc and use the keepsquawking. Post it on our Facebook Page and we will read them all and share the best of the bunch. That is coming up at 8 50 eastern time. Coming up the number of the week. Watching gdp data very closely. Bring you that data which could be negative. This is an interesting number and im sort of interested to see what it is. And the Market Reaction next as we head to break. Take a look at u. S. Equity futures. This is a bee sound, not a wasp. Bees are member of the wasp. Theyre related. When you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. Thats where at t can help. With the tools and the network you need to make working as one easier than ever. Virtually anywhere. Leaving you free to focus on what matters most. Welcome back to squawk box. Secretary jack lew calling for a resolution to the greek crisis as quickly as possible. The worst impact will be for athens, but lew adds its unwise to think there wont be contagion. Vodafone biggest investors will and a week ago vodafone would be a great fit for liberty. Check out shares of gamestop this morning. The Company Posted better than expected earnings helped by strong sales of new releases. Becky . We are just a little bit aaway from gdp data. Rick santelli is standing by and Steve Liesman right here on set with us and, steve, lets talk about the expectations on this. You are expecting. See, its real. Nobody got to see that. Its real. So. Nobody knows what just happened. Its part of our toupee challenge. But, steve lets talk about joe agreed to shave. Hold on. For the right aamount of money. He would shave his head for charity. Get it cut short so you can see its all real. Folks, if you want to email in Million Dollar minimum. Ill shave it too, to double. Were looking for negative numbers and a lot of negative one is the cnbc tracking estimate. Our guest here from barclays is part of it. We did some work yesterday and we can talk about it later. It makes total sense, the productivity numbers are also uniformally weak in the First Quarter because the gdp numbers are weak. You cant believe that either. Not in this report but the july 30th report of the Second Quarter gdp promising to make some of those changes for the last three years. And what all this says to people is as investors, you have to take a much broader look. Not look at one data point from the single series and not look at a single series. You have to take a step back and get a view of the economy. Listen to what our ceos are saying. The guys from black decker yesterday, amazing stuff about whats going on. We had one guy in after another saying, im not feeling or seeing those negative numbers out there. Dick has a view on this. We only have 20 seconds before the number. In terms of negative 1 . Is that reflective of what is happening at the economy at this point . I dont think the economy is very strong. Still back to the 2. 3 and plus or minus a couple tenths. Which is a big deal if youre a policymaker. Lets get to the number itself. Rick go ahead, take it away. All right. First quarter gdp. Our second look dozen quite go to one. Its minus 0. 7. Thats been revised up. The consumption, the personal consumption, 1. 8. Thats about a tenth or two light. The price index, minus 0. 1. Steady in the rear view mirror and expectations. Personal Consumption Expenditure quarter over quarter is up 0. 8 e . The response in the marketplace really has been cumulative. A lot of it has dropped down over the last couple of sessions as were flirting with the lowest yield closes in about a month. Q1 corporate profits, of course its preliminary. Down 8. 7 . We need to get the revisionists working on that one, as well. Maybe the most interesting fact is, no matter what First Quarter debate goes on with regard to its accuracy what about the Second Quarter which is tracking under 1 at this point. We better hurry up and move to adjusting second third and fourth quarter, as well. Back to you. Rick, that is a great point. In fact its something we were talking about earlier this morning. When you have a negative read for the First Quarter and a low read already on what weve seen to this point. That starts to get in the way of what the feds are expecting and that has people wondering, does that provide cover for not raising or do they go ahead and look at the other numbers and say, hey, its time to go. Well from a forecasting vantage point, the feds know better than much of the street. Which is c plus deminus. C minus, d plus areas. Heres the real key. We see that jobs for the most part look good. And theres a lot of debate as to accuracy of gdp. Theres no debate as to the accuracy of the unemployment rate, which also figures in prominently to fed strategy. U6 is probably much more accurate and everybody pretty much knows it. If your goal is to have the economy look good versus having the economy actually be good and for every one of these Companies Like black decker that doesnt see anything but positive growth aahead. I keep looking at the announced layoffs, which seem to be picking up jpmorgan chase. Of course, the latest to announce the multithousand layoffs in the future. Rick thank you. Again, rick santelli. Steve liesman is here and he does have more on the numbers. What jumped out at you . Just sort of the adjustments we expected. A big surge in inports which is part of the growing trade deficit that people think were related to the easing of the west coast labor disputes that were out there. You went from 1. 8 to 5. 6. A little bit better on the equipment side. Not terrific. 0. 1 in the original report. Housing report a little bit stronger and no change in the big pieces of consumer spending. And Business Investment still down over the quarter. It was a lousy quarter and the debate now shifts to the strength of the snap back and that snap back right now is seen as modest in the Second Quarter at about 2. 6. But the work that i did shows that you have these weak First Quarters and you have a related bounce back in the Second Quarter. And almost immediate regression. So, what, what do we think . I mean dicks been talking about this all morning. I dont think theres any reason to think that dick is wrong on this issue. I would adjust what he said about the current state of Small Business hiring which is a fine point, which is better now than it was. Youre correct. Small business has tended to let it lead us out of the recession and it didnt this time but has now picked up and doing quite well. I dont see anything out there to change this idea that its a 3 economy. Its a 2, 2. 5 economy. Lets bring in our guests. It is gavin or gavin . What do you think you laid out on all of this the terrible expectations heading into it. Again, where have we come since then . I think the flavor here reflects what we have as well. You have to look through some of the noise in the gdp data and lets wait until july to see what the fix is. You need to complement gdp. Next week will be very pivotal week. We have personal spending. We have construction spending. We have both isms. We have the trade data and the report. But its a very pivotal week in terms of assessing. It is fair to say that jobs have been running at a rate that suggests stronger gdp number. A lot of evidence to suggest the labor market data and the isms are much better concurrent indicators. So, if you need to cast your net wider and look at those. Want to point out, barclays is one of the economic shops out there that took the idea of weak First Quarter gdp and seasonally adjusted it in a way. What did you come up with michael . 1. 5 better than what this number would suggest. As we have perennially weak q1s and if the data were properly adjusted and q1 would be stronger and q3 would be weaker but primary in the investment categories. Structure, federal defense, state and local. Really the discussion here last time with joe and steve that prompted us to go back and look at this. Lets pivot maybe and talk about the fed and what all this means. One thing that makes us important is weve been in everybody and the hangover from the financial crisis and dick back stage said something that was interesting. How the fed adds to that uncertainty through its statements. I think its very interesting and probably and absolutely true. But the wrish isissue is everybody is so nervous. So, every quarter we dont know. Is it real . Are we going back to negative growth . Right now were waiting for the data to clear. Is that where we are before the fed acts michael . What we find out about the unreliability of gdp is that the fear that is overblown. The later part of the year the worry that were breaking out to the upside and were behind. All of that has been a false debate. I think weve been a very plotting 2. 5 economy that hasnt changed much in the last four years. I want to know what dick thinks about adding to the uncertainty . The fed loves this transparency that they have been doing. Really the first time that they talk about the future and what theyre going to do on Interest Rates. Before you had to figure that out for yourself. Every cyst weeks the economy is terrible and well keep Interest Rates low forever. So whats the incentive for someone to take a risk when you know even if the economy does better since theyve already said theyre going to take longer, they dont like to be wrong. Right. The fed is never wrong, by the way. It could have been worse. Until theyre wrong. Dick you should add theyll say it was somebody else. Layer on that something which is proven by the research. The fed has a signal value. A sense out there in the markets. By the way its proven as well, the fed staff is the best forecasting unit out there. Not the fed officials, but the fed staff that we cant see. Their numbers are according to some research by romer and romer the best that is out there. Their actual forecast had been off by about 50 cents. The fed forecast. The signal value that is out there. When you hear and see a fearful fed, you pick up on that as an executive executive. The other thing we all missed a point. Monetary policy needs to be forward looking because the actual results dont really occur for a year. I think were missing that point. It isnt about what happened in june this year and july this year. We should be thinking about what about a year from now. Michael, it would have been wrong for the fed to act in fear of inflation in the next year over the past several years. Thats right. I think thats wrong. I dont think the problem is inflation. I think the low inflation has been a positive. Wage growth has been so slow. The only thing slower than wage growth has been inflation. So theres been real income for ordinary americans from lower prices. So, if the fed would have achieved 2 inflation, negative real income. Why is that good . Michael, what were you going to add . My interpretation of your statement was if they had acted preemptively to avoid future inflation, that would have been a mistake. So thats why i thought, you know delaying and being patient is the right move. But does anyone think a 0. 25 increase from zero has any impact on the economy when everyone believes now that the fed is going to act some time. Why dont we just do the quarter percent and get it over with and now lets talk about how we can grow this economy at 3 instead of being worried about all these maybe theyll do it in june. I could respond what the fed would say in that respect. Hes going to get the leaf blower out thats the problem. I will. What they would say is, why do a quarter . So we can get somebody take that away from him. Somebody take it away. Can i ask you a question. Remember when bernanke was saying everything is fine. In 2008. 2005. 2007. This last week he was saying things, again, its going to ebe fine. Its not going to be very what did he say . Done in an orderly way. Diant didnt you immediately think there is no bubble in housing in 2007. They had that wrong back then. Its the first thing i thought of. Theres a question. Whether they made any advancements. Thank you, guys. Coming up more from dick fuld. You think youre dick fuld now. More tape of his Public Comments from yesterday since the financial crisis. Anyone at Lehman Brothers deserves blames for that being the biggest bankruptcy in u. S. History. 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. Ends sunday know better sleep with sleep number. Hey, can i help you . Yeah, were interested in the iphone. We promised one to beth for her birthday. You know mobile share value ans now include rollover data, so the data you dont use this month rolls over to the next month. Wow, even better. So what are you gonna do with your old phone . Im giving it to my sister emily. She gets all my old handmedowns. Oh im into bedazzling too. And you admit that . Yeah. I. I used to be into bedazzling. Ill go get your phone. Get the iphone 6 with rollover data to share. Only from at t. Regardless about what you heard about Lehman Brothers risk management. That was dick fuld speaking yesterday and his first Public Comments and former chairman and ceo of wells fargo. You had some comments earlier on this. Weve all been saying that the headline in the journal lal it wasnt his fault. We are seeing that over and over again. I dont think thats winning any points with anybody. I want to ask you about the story next to it. Aims to cut 15,000 jobs but the larger sense that a lot of these banks that have historically i mean, this is sort of the age of technology are going to get smaller and smaller in terms of staff. You see this as a longerterm trend . Do you think that five ten years. Youre out on the west coast. Whether any of us are going to be going to all of these branches. What it means to real estate. I dont think so. I think whats happening today, which is worse is that theyre getting rid of sales staff and investing in technology and so on in order to pay for compliance. It is staggering. Theres, in our bank i think probably close to 10,000 compliance people. Jpmorgan. Its 20,000 compliance people. And its absurd that we are investing that kind of money on compliance that, in my opinion, way over the top. You think its just a swap. It is a swap. This isnt about the technology taking. The article here suggests that technology is taking these peoples jobs. If there were, i dont know how many compliance people there were in jpmorgan before doddfrank but probably 1,000. Those 19,000 people would be doing these things now. You have to offset those costs somewhere because Revenue Growth is nonexistent in the banking business. I had not thought about it from that perspective. What are you going to do . Little less sales at the beginning until Interest Rates will increase and revenues will start coming in. You look longer term. There is literally a bank on every corner. From a real estate perspective. Five, ten years from now do you think well go to branches at all . Yes. You do . 70 of our customers visit a store, we dont call them branches. Visit a store at least once every six months. And the number of transactionsen our stores last year versus the year before are about the same. Now, you know were different from others to some extent. So, you know others would probably be seeing what has happened, which people dont understand. What we got rid of is separate brokerage offices, mortgage offices, insurance offices and so on and we had tellers in those space before and only bankers. Now we have a mortgage person in there and we have a Small Business. So total Square Footage is being reduced in the Financial Services industry but not in something that we call a bank. We should not call it a bank any more. We should call it a Financial Center or Something Like that. Thats whats changed. All replaced by blockbuster and photo mat and Record Stores. Remember Record Stores . I used to love Record Stores. They had incense. Amazon is opening stores. Think of it. All this technology and whatever. Right. Amazon is opening stores. Brick and mortar. But they have a physical product. But im in a bank a lot more frequently. We got to go. Up next the stories that you think we should be talking about and then jim cramer wraps up the short week on wall street. His take on what investors should make of that gdp data. Heres the futures. Well be right back. G a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Verizon say neversettle. Tmobile agrees. Never settle for verizons overpriced gimmicks. Try the uncarrier riskfree for 14 days youll love it, or well pay for you to go back. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Earlier we asked you to send us the stories that are buzzing. Now its time to share responses. Victor tweeted us about the fifa scandal. Soccers governing body plans to elect a president today. One resigned after charges of Money Laundering and fraud. Blatter who has been president since 1998 is widely expected to be reelected. Results should be released around 11 00 a. M. Eastern time. We had a big heavyweight weighing in on this yesterday. Vladimir putin from russia claiming this was american imperialism trying to insert itself. This isnt real corruption. You want real corruption im too afraid of him though. Its fifa but fifo accounting. First in, first out. This is fifa. I need your help with this one. This is me and pronunciation. You mispronounce a lot. A lot of social buzz this morning about the swelling bee. For the second year in a row, there are two top spellers in the country. There was one word left and that means it ends in a time. One winner was asked to spell the following word. Scherenschnitte. Hard for me to even pronounce, of course, never mind spell. Im going with scherenschnitte. They spelled it wrong on the prompter for you. Lets get help from the little guy. Scherenschnitte. Scherenschnitte. The other winner got nunatak. Nunatak. Nunatak, nunatak. Correct. Impressive. Youve got to know german . You need to know latin. I could never do this. I didnt know they could use german words. Jim cramer joins us now. We promise we would ask you about the gdp, if you have comments how to play it. Im trying to figure what i disagree with this right and nothing. Hes my hero. I disagree with Steve Liesman. Small business has been constrained by the government. We are not going to see the growth we need until the government recognizes Small Business needs help and does not need to be crimped. Its really unbelievable listening to man. Wish he was running the country. Is it avago . Avago. You knew all along it was singapore. You knew it was a 10 tax rate Company Buying 5 . Its tax motivated. Its the valeant of the semiconductor industry. As long as we have a ridiculous tax code avago will buy anybody and move up. They can instantly make more money than broadcom and get back a lot of the space they might be losing in samsung or could be losing in apple. He need to do it to compete with sky works. Wins business not by merger by fought. Is xilinx gone . No. Altera and xilinx are around. Is it field programmable gatorade . Exactly. Altera, i thought, had the edge with the relationship with intel. Everyone needs to be part of the netflix on your watch. Youve got to watch house of wards on your watch. Broadcom can make that happen. Okay jim. Well be back in a couple of minutes. When we return its been a controversy brewing for years. Is joes hair real . Viewers always asked about it. We never had a good way to test it until now. Thanks to that black and decker leaf blower, the big test comes next. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Say one word to anyone i will kill you. You understand me . It looks real. This is joes turn. That was david spade. Everybody asks. Everybody asks. This may usher in the era of the toupee challenge. If it does i challenge brian sullivan. His hair always looks suspect to me. This will not solved whether its dyed. Faber says he doesnt get the toupee much. You need to dye it right in here. All right. Lets do this. Im ready. Im not afraid. Youll be able to see if its plugs. People with plugs have rows of plugs. I dont have that either. Protective glasses. Do it. Go ahead. Youve got to get in there. Give me down to their hair shoulder length or longer hair i need to go to super power. Thats not working. Hold on. Put it back on joe. Is it back on now . There we go. Much better. Sorry about that buddy. You had to put it on super power . There you go. Thank you for being such a trouper. Thank you for being here. Have a fantastic weekend, everybody. Join us on monday. Right now. Its time well done. For squawk on the street. I dont know how well follow that. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. Its been the second best month of the year but limping to the finish line. This mornings lackluster revised gdp number not going to help. Moodys Investors Service upgrading morgan stanley, goldman, b of a and city