Transcripts For CNBC Squawk Box 20160516

And germany markets there closed for a public holiday. Oil prices are rising this morning. A longterm bear at Goldman Sachs now says the market has ended two years of oversupply and flipped into a deficit. The firm says this allows or follows disruption supplies from nigeria, venezuela, the United States and you can see wti is up by about 2 points. We were at 30 now its back to 50 and youre doing the super spike. The super spike came out a while ago. Remember the London Office . The supply has been shrinking. Is it ready to go up to 60 or 70 . Because they already missed the move from 27 back to 50. Yeah. But remember the super spike, that came out of gold mans London Office at the time. Yeah, i guess. But goldman they have many analysts. Other analysts will say its going down and some say up. Just another brand. Have you noticed three straight weeks since that person was here to say we are at an important level. What happens in the next weeks decides. Right. We are at factory data in china was weak. We have to watch that all over the world to see what can affect us. When i saw the dow, i thought, wow. Then i looked at the s p, and it is 2046. And it is the kumbayah moment. John williams says the u. S. Economy outlook is definitely looking good. He said two to three rate increases this year still makes sense in the next policy setting meeting, which is coming up on june 14 and 15. We have a lot of guests saying maybe once or twice maximum. A lot of housing data on the economic calendar. Today we get the National Association of Home Builders putting out their monthly sentiment survey. Tuesday look for cpi, Housing Starts and industrial production. On wednesday we get the minutes from last months fed meeting. On friday look for existing home sales and more retailers reporting including home depot, lowes, target, walmart, and get numbers from cisco and salesforce. Com. In Corporate News the kill graph reporting that google could face a record antitrust fund of 3. 4 billion from the european commission. That could come in the coming weeks as google has been accused of the eu by breaking laws by unfairly dominating the search market. How come home depot and lowes post one day and the next day just to prove the other one is better than the other. But all the retailers how can airfares at Different Airlines be 412. 15 and then you call the other place and it is 412. 15. How does that happen . How does lowes i think there is more collusion going on in the airfare side than on the earnings. Why do the two big competitors because they both end on the january 31st calendar. But there are a lot of to other retailers these are one day we get home depot, the next day we get lowes. Would it be weirder if it was the same day . If i was lowes i would move. I would, too. Because lately it hasnt been holding up. So go first and get the news out of the way . I just think you need space. For a while when home depot lost its way and lowes it was softer, more genderfriendly and everything. And now back to home depot. Mainly. In auto news, im lost. I have to find the first person i can find where are the nails . Light bulbs. Thats all i can handle. South koreas fining nissan for manipulating emissions tests on the suv models. The automaker denies allegations and says it will continue to work with south korean authorities. Have you talked to this guy . I did. We have an update right now on the attempt to sell itself. Reports on friday said quicken loans founder dan gilbert is teaming up with Warren Buffett to make a bid for yahoo . And berkshire is going to be a corporate partner this the bid. Buffett said im an enormous admirer of dan and what he has accomplished at quicken loans. Yahoo is not the type of thing id ever be an Equity Partner in. Hes offered investor advice to g 3g. Hes been a partner in heinz and kraft. Should we out him . I havent talked to warren but other sources, if you will, this is all out of yahoo . It has to. My guess this is yahoo bankers are not getting enough. We are headed into the second round of financing and they have to get names thrown out to get names to bid things up. Yahoo must not be getting the bids they want. But this story always was that warren was just talking about financing. Yes. Originally some of the headlines first came out they were partnering. It didnt sound like that. He may not be the finance arm. No money has changed hands. They have offered to do it as long as the proper terms and protections are in place. You have to admit it doesnt sound like his normal ibm was as techy as he gets. And that is not techy. It has to be yahoo s bankers looking for higher bids. I am a little tired of andrews negativity on yahoo . If i were watching and worked at yahoo i would be mad at you, over time. You know what i moo open . If i was a shareholder at yahoo i would be mad at them over time. Thats what i mean. What is fascinating you always say it is not worth as much as they get. When there was an article they were throwing out the number of 8 to 10 billion, yes. Shareholders would like to get that. Yes. When you say 3 that makes people upset. 6. 5 if you are delusional. And there are delusional people out there. This is what i am talking about. I rest my case. There are people what is interesting about the process, there are so many former yahoo people around the table trying advise dan gilbert. The former coo, Ross Levinson who was at yahoo hes advising another team. You know. It is probably Tim Armstrong with aol, they might be able to get some value from it. Tim armstrong has said that. Strategically that would make the most sense. It is worth how much to them youre talking. He should double pin more than anybody else. Which would be 4 or 5 to you . Probably. 6. 5 is the top. The question is, is yahoo worth more than aol . Hard to up imagine. I dont know. The dan gilbert people, hes a very smart guy. Maybe hes got a strategy. Maybe hell figure out something with the eyeballs. Maybe he has an idea we dont know. Okay. Im finished and done. I dont think i can talk about it again. This is a baby company we are talking about. Lets check on the markets this morning as we showed you the futures. The stock market futures are higher today. Well check things out, dow futures up 22 points. Again, it has been three weeks in a row of down marketed. So at this point green arrows look like good news to bulls out there. The s p 500 up 3 points. The nasdaq up by 3. 5. If you check out the tenyear note, that yield continues under pressure. Right now at 1. 712 . Thats higher where it ended at 1. 705 . Taking a look at currencies, the dollar is down against the euro trading at 1. 13. The yen is at 108. 87. And looking at gold prices this morning, youll see they are up 11. 1,283. 70 an ounce. The markets are opening for a firmer week after three straight weeks of not so great action for the bulls. But the dow and the s p was three in a row, but the s p is doing better than the dow. Here now with a look ahead, Christina Cooper from allianz gobl inve global investors. And the bow tie is back. Remember last time he had on the he had on a straight tie and we thought something was terribly amiss. The market was toppy. Was that strategic . Strategic. If i was going to wear one, i want one to spin around. They dont make those, but that would be so great. Talk about stocks and have it spinning around. That would be so its monday. We have a 3 45 wakeup every morning. Anyway, so hans, no recession. And a couple of numbers that came out, retail sales and both of those convince you this is pretty good where we are . Yeah. If you look at the numbers, definitely no recession. In fact, last week the gdp line of fed is where we are tracking q2, close to 3 . I think it is 2. 8 , Something Like that. So you definitely if you look at consumer activity, you look at, for the most part, business activity, Small Business confidence, no recession in the u. S. This year. So that should be off the table, which means, i would think, that every fed meeting should be a live meeting. There are people who think they missed their window. No. I dont think so. If you think every fed meeting should be a live meeting, how come the tenyear is only at 1. 7 . Because the market missed their window. Having said that, its not too late. And we could agree that we think chances are higher than what market probability is currently. Fed funds futures, last time i checked on friday was well less than 10 for june rate hike. We think theres the potential for negative surprise. Im seeing headlines now that dollar weakness is a big concern. That jack lew said something that was probably the biggest concern the fed had with the multinationals and the slowdown of the dollar. Now we are back to where they could probably move a couple of times and it wouldnt you wouldnt see the euro back to 106 or 107 again. Right. But they are worried about a market disruption created because expectations of a june rate hike are so low. That could handcuff them. So our expectation is that if june is live and it should be, they should be out talking it up. And were starting to see signs of that but they need to be a lot more vocal. All these traders are big babies. They have to know exactly what the fed is going to do. The fed has to absolutely it cant be a surprise to get a quarter point, a Second Quarter point increase might throw these guys off and they might get upset . There was a negative reaction in december. So the fed seems to look at probabilities before they act. And whether or not its the right thing to do, we think that they are going to have to Start Talking it up more in advance of the gdp. Do either of you think the economy is going to be stronger to support higher stock prices . Over the weekend, i kept seeing evaluations. The average stock is so overvalued. What was he saying, 100 overvalued by some evaluations . If you look at the individual names themselves 5 . Or 85 . If you look at the Earnings Growth, we have had five consecutive quarters of declining earnings. Four consecutive declines in revenue. Thats not a market to trade in 18 times. And it is not just energy. It has bled out the other broad sectors of the market. And i think its em bblematic o something that you cannot turn around very quickly. Was it three when was the last time we had that . Better stick with two, hans. Lets say 2. 25. But still, you can grow at that and not have it flow through to earnings. Interestingly enough, Small Cap Companies still are showing Earnings Growth. But the evaluations there are reflective. I saw something in usa today that said something about a year ago the s p set a record and now it is stuck in the muck. Thats what it feels like, doesnt it . It makes sense given where earnings have gone since then. Absolutely. So we need an earnings rebound before otherwise well be in a volatile trading range, typically given the election and all the thing that is are coming in the next few months, including the potential for a brexit. Right. Boris is out pounding the pavement trying to get people on his side. I dont know if the mayor has an opinion. I think the pc people want him to stay. The traders are worried about the implications. What is best for the uk is the question . Thank you. Talking about traders, heres a trade for you. The Hedge Fund Billionaire david tepper dumped his investment in apple. According to the new sec filing, joe dumped it a long time ago. You havent been sending him the emails you have been accepteding me for quite some time. No, thats true. Youre going to get another one soon. I bet i will. Tepper used to have 1. 2 million shares. He took a new interest in facebook. Also he got into bank of america with 6. 9 million shares and is following karl ikans lead. And apple ceo tim cook is on a Charm Offensive in china visiting apple stores and meeting with chinas top App Developers. Eunice yoon is here with more on mr. Cooks visit. Reporter thank you. Tim cook is on a Charm Offensive. Today he visited one of apples main stores in downtown beijing and was accompanied by the president of did, chuxing. This is the company that specifies in taxi hailing apps and is also the one apple just invested 1 billion in. And today tim cook got to get a up close and look personal on what he paid for. Both he and the president of didi took a ride in a didi taxi. And he was posting pictures of his experience on his wabo account to his 800,000 followers. Once they got to the store, they ended up holding a roundtable with App Developers including the founder of another important chinese company, they ir versio of groupon, and tim cook was stressing the importance of the governments role in developing the internet. Now, of course, tim cooks visit has been widely expected. The company has been coming under tremendous pressure for a variety of reasons including the slowing economy, a lot of competition in the smartphone industry and then finally, of course, the government clamped down on some of its services, such as ibooks and itunes. As well as the fact they lost a trademark dispute here. Theres an expectation that tim cook was going to come here and resolve all of these issues. And so far the Chinese Media have been reporting hes expected to meet with high level government officials as well as Internet Companies on this trip. All right. Eunice, thank you very much. Our eunice yoon. When we come back, a busy weekend in politics. President ial candidates campaigning in kentucky ahead of tomorrows primary. In the meantime, president obama takes shots at donald trump in his commencement address at rutgers. Ben white will join us with the highlights, next. The first stock index was created over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Welcome back. President obama taking a few swipes at donald trump over the weekend in a commencement address at Rutgers University without mentioning the gop president ial hopeful by name. Suggesting that we can build an endless wall along our borders and blame our challenges on immigrants, that doesnt just run counter to our history as the worlds melting pot, it contradicts the evidence that our growth and our innovation and our dynamism has always been spurred by our ability to attract strivers from every corner of the globe. Thats how we became america. Why would we want to stop it now . Joining us right now to talk about it all, ben white, politicos chief economic correspondent and cnbc contributor. Becky quicks alma mater getting the obama treatment over the weekend. Were you there, becky . No. A couple things happened over the weekende. There was that and the New York Times piece of trump on women. And new pieces about trumps tax returns. Which one do you want to take first . We can take Obama Joining the fray in the campaign without mentioning trump. Hes done that before, though. Thinks crystallizing the message hell deliver on the campaign trail, which is this guy is divisive and blaming illegal immigrants. Joe is already over there and cannot handle the president saying trump is devisive. You think obama is divisive. Oh, no, no. Im not commenting on the accuracy of it. But this will be the Clinton Obama message, which is we cant blame our problems on immigrants or illegal or otherwise we cant have this sort of debate. You know, anyway, so the obamas are on the campaign trail. But it is interesting the amount he could spend on the campaign. The journal says his annual income babssed on this is 160 million. Who can live on that . Hes got to raise money. Would you spend your own billion dollars on a campaign . Well, taking Campaign Contributions means youre in the back pocket of donors, then i probably how do you explain that . Is that not hypocrisy to say youre finding to take money and then take money . Wow, youre acting like jeb after low energy. Okay, all right, nevermind. Go ahead. How do you explain it . Youre right. I am right. What do we make of the New York Times piece on women . Which to me was actually a very mixed picture. It was not a straightup picture. The headline suggested more than necessarily that sort of i thought it was pretty balanced. It was pretty balanced because he promoted women in his organization and women in positions of power. There was a balance. And there were instances troubling about how he dealt with women, particularly in this past year. Do you any that changes the game . No. That doesnt change the game. Unless there are more revelations this come out with his relationships with women. It wont help him with the female vote but it is not a game changer. One of the things you have been talking about in Morning Money is the numbers, in terms of where the race stands. Realistically where donald trump is today versus hillary in what could or could not happen. And you talk about both the prospect in the good camp for trump that he could take florida. Florida and ohio are the two big ones he could possibly win to put him in a position to win the presidency. But it is an uphill battle on georgia . Georgia is neck and neck. Now its a dead heat. If clinton and well, bill clinton was the last won to win georgia. If she takes those, its hard to see trump to get to the electoral votes because the Electoral College favors towards democrats. Lets talk about the democratic issues. Bernie sanders says he plans to take this to a contested convention. If he cant win it outright, he would like to see five things include in the platform including Free College Tuition, including the expansion in Social Security benefits. Including a lot of things hillary said shes not in favor. What does that mean for democrats . Bernie sanders presents a problem to Hillary Clinton right now given hell continue to fight her to the convention. Meaning she has to spend resources on him and not focus on the general. And it is also difficult for her to pivot back to the center if she has to contend with these demands he has on Free College Tuition and expansion of government programs. Thats not where she wants to go. He says he wants his entire platform included with her platform. She wont be able to say yes to that. No. Hes not finding to get everything that he wants but hell continue to push her left and cause her to spend money and time in a period when she wants to focus on trump and cant do it. You wonder if bernie is fighting in the end how energized his supporters will be to vote for her. If they stay home. Is he the ralph nader of the 2016 campaign . Do his supporters go third party, gary johnson or somebody else or go to clinton . Or do they stay home and not vote . Right. Ultimately Bernie Sanders gives the fullthroated endorsement of Hillary Clinton to try to bring his people over. But if you keep winning primaries, you have a sense your message is resonating and your views should be reflect in the platform. Theres no real incentive to say im out, its all hillary because he keeps winning. So he wants to assert his positions in the platform at the convention. Its a huge headache for the Clinton Campaign. No question about it. Its already been written. Nevermind. What is that . I was thinking ben could go against the grain and write hillarys man problem versus you know, everybody in the trumps women problem. Its already been done. Wow, i see it is all over the place. Nevermind. I just wanteded to give you something against the conventional wisdom that you could write and get yourself on the map other than stuff that everybody else is saying. Theres no question hes going to do better among the white voters. She has a problem with men. How do you mean . Hell do better with business voters, no question on that. What is the negative its got to be 40 among men towards Hillary Clinton. Higher than 40. He will win men big. Shes going to win women. She has to keep the coalition that the president had in his reelection. She needs a big win in women. Right. But those people vote in big numbers. And the male white the percentage of the electorate is not i have no idea. With the primary season i have no idea. I should caveat this to say i got trump completely wrong and didnt the he would get the republican nomination. Could we all be wrong about the general . Yes. There are so many factors between just the republicans and the primary. But then some states you can cross over and some it is so confusing. And theres also it is very accurate to say Hillary Clinton faces a lot of potential problem miss the general. Her email scandal, all of this stuff could blow up. The Clinton Foundation i dont want to say she doesnt have huge problems in the general because she does. Its not a lot shell win. If the Electoral College favors her, but trump could make it go in ohio and florida. He does have a shot. I dont know whether trump posing as this no, its not close to saying we got to ban people from a country in a certain religion. Hes done things so far that Reince Priebus is right. Im not convinced the taxes are going to be i think the Clinton Campaign could use his refusal of releasing the tax returns as a weapon. They said over the weekend trump should release the taxes and it became an issue. I know. It should be put to rest. But it would be a good idea to put it out there. And to be honest, put the taxes on obama gave over his birth certificate. Its like his life began when he announced anything before that is like people dont care. On the posing as his spokesperson front, its the 80s and 90s, everybody did weird stuff. But just opt to it. Now he says i want wasnt. You listen to the recordings if it actually happened you wouldnt comp to it . You say, i did that and wanted to talk to the journalists, not necessarily me. But it would be a good idea to say that. Good times. Thank you for coming in. Thanks. New rules allow nonaccredited investors to get in on the equity crowd funding game. So now when you support someones startup online, instead of getting a thank you note or a tote bag you can get equity in the company. Kate rogers explains what it means for Small Business. And as we head to break, heres a look at last weeks s p 500s winners and losers. Okay, so you launched your banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. The crowd funding game as changed. Investors are getting in on the equity crowd funding game. Kate rogers is here with more. Good morning. Good morning. You no longer have to be rich to get a startup. Startup investors had to be accredited meaning they had an annual salary of 250,000 or more or a net worth of 1 million. But now equity crowd funding will be open to smaller investors. So for Small Businesses, it means a larger pool of potential funders. Companies can now raise up to 1 million in a 12month period for both accredited and nonaccredited investors. Now under title 3 individuals who make less than 100,000 can invest 200,000 or must have a net worth of 1 million. How can you find the opportunities . They have improved several portals. As of friday, regulators warned investors to do their due diligence. These are risky ventures to lead to the investment possibly. Since the initial regulations kicked in september 2013, so far 1. 3 billion has been committed to 6500 vendors in the equity crowdfunding space. Its exciting that all investors would get in on the windfall or early investment on these things, but when you start to hear about the evaluations that have gotten out of control in the premarket in the early days of some of these things, you wonder if this is coming at the wrong time when people could then be approached or cold called by brokered dealers and said, invest now and may not understand the risks. Absolutely. Thats why the sec is saying you have to be careful and prepared to lose your entire investment. You may not get a payout for ten years and may not make any money at all because some of the companies and many of them will fail. But what is interesting on the Small Business craft side, a lot of people critical of the title iii regulations say they want to see the cap at 5 billion instead of 1 billion. They want the companies to access more money. And two big crowd funding players these days are not getting into equity. I can understand the companies needing to feel like they can get more access to capital. But again, its the idea of brokered dealers calling, cold calling people. Preying on people who are mainstream and dont understand the risks. Dont understand the risks and maybe you have to sign one paper that says you could lose all your investment. You dont read it what is interesting is that you have to provide audited financials in some cases. If you are raising more than 500,000 and it is your second time doing that, you have to go through a full audit and present it to the sec before youre able to do it a second time. Because there are certain protections in place but it absolutely is risky. Kate, thank you. Thank you. Well, the four seasons restaurant is shutting its doors. And everything must go. The owner of the famed restaurant will be auctioning off everything inside from bar stools to silverware. In an onsite auction on july 26, also included in the sale thats a bad video. Thats of Four Seasons Hotel there. Thats not the restaurant. Well, good. Yeah, the four season is staying open. We have had great stuff in the past from there. Like we were talking about individual retirement accounts and ira, we had a guy with a gun. Look, people are staying on constantly i get invited or people say ill meet you for lunch at the four seasons and you go to the hotel or the restaurant or the wrong place. They should work that out. Theres a bar at the four seasons that is really packed. Too big to fail, a movie was there. Thats a very popular bar at the Four Seasons Hotel. So the owner says in a year they will open it within a fiveminute walk of where it is. And we hope absence makes the heart grow fonder and will put in a Phillip Johnson restaurant at the site of the four seasons. So it is not really it needs to be updated. That place is kind of in a time warp. I kind of love that. You do . I do. Its kind of like breakfast at tiffanys. There are very few spaces that look like the playboy club. It is not like the playboy mansion. No, i dont mean that. Its like going back in time. Yeah, it is. But that is what is cool about it. Not cool enough, apparently. Well, because they raised the rent so much. The dow and s p closed below the 50day moving averages for the First Time Since february. Mark grant is joining us next with a look at the investment safe havens he suggests as we go to break. Heres what is going on in european markets right now. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Theres no one no one surface. E. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 359 a month at your local mercedesbenz dealer. Turning the tables on the former do you think the fed will raise rate hikes again . The trend for the tenyear note is at 1. 71 . Joining me is mark grant. I read your note yesterday about the black swans all around and this is a time for caution. Want to talk a little bit about what youre seeing . Sure, becky. One, in america we have the president ial election. I happen to think that donald trump is going to be our new president. I think its the very american tradition where were voting to throw the bums out. We have the same issue in europe with brexit and weve got oil prices, weve got the greek problem, brexit, weve got major slowdown in china. We have any number of issues that are causing some concern. And then, of course, we have the s p 500 that is flat for the year. I mean, its gone nowhere. So what does this mean . When we start thinking about the events, how they pile up, how its a time for caution, what or where does that lead you as an investor in terms of what you should be doingwith your money . I have a really good idea. As a matter of fact, im in conversation with about three of the largest Money Managers in the country about this. And these are called closed bond funds. And, in fact, they are equities. Youre buying an equity like General Motors or ibm. I picked 11 of them that i like. The average yield as you just said, the tenyear treasuries are at 1. 71. The average yield on the 11 funds that i like is 10. 29 . They give you a monthly check, not quarterly like stocks or semiannually like bonds. You get a check every month. They have some leverage. You have to know what youre doing. But i dont know the better place to invest money right now than the closed in bond funds. What would you be telling people that are thinking, okay, im going to go ahead and dabble in equities. Is that a fools errand at this point . Well, becky, if you are in an index fund, you have made nothing for the year. It is midmay and you have made nothing. If you own the closed in bond funds since the beginning of the year, you have made a very nice piece of change. And these things, in fact, are equities. They trade just like General Motors or ibm. But instead of owning a piece of a company, you own a piece of a bond portfolio or a lot of these are ones that i picked say if its trading at, you know, 7 less than the nav its called, that means youre buying a 1,000 bond portfolio but only paying 930 and getting a yield of 10. 29 . I dont know where else you can do that. Mark, i dont know, weve been waiting for five years for this horrible super spike in yields where everybody rushes for the door at the same time. I guess it will never come at this point. But if anyone ever did the efts or closed in funds, youre selling it as a benefit like its a stock, but its only worth what someone is willing to pay for it on any given day. The same supply and demand as shares so that can be a negative if everybody is trying to get out at the same time. It could sell for 30 below midasset value at a time like that theoretically. Even if with a decline in value, youre getting your money based upon what is in the bond fund. So, in effect, its a hedge against rising rates. But joe, as you know, i have been saying for how many years now, no rising rates. And my opinion hasnt changed. Right. Do you think china, they are throwing everything at that economy now, and its not going to work . No, its not going to work. Thats not good. My calculations are that the chinese economy is growing 2 , Gary Shilling came up with 3. 5 . But the numbers that chinas providing, if you look at chipping, electricity, any number of factors, they are just pie in the sky. And they are trying hard, right . I mean, meanwhile, they are jacking up the lending again. And they are getting less and less bang for the buck, which is always a bad sign. Sooner or later they just say, you know, we got to stop doing this. Then it goes well, joe, the other thing you have to consider is that their building up a tremendous amount of debt. And as the economy declines, debt to gdp ratios start going through the moon. And theyre probably at a real debt, the gdp ratio right now is around 200 . Its just not a good situation. And we could also see a major surprise there along with the president ial election in america along with brexit and Great Britain. I dont know i dont know whether Great Britain leaving is necessary i guess it could cause a disruption. I dont know in the long run if it is good or bad. Does a black swan have to be bad or just unexpected . Well, my opinion on this, and i stated this before, is if i was a british citizen, i certainly wouldnt want berlin and brussels in. I would want out. Its a british empire. Theyve got, i dont know, i dont want to be carrying the rest of anyway, do you think things will go fudder whacking if they leave . Thats his term. You just like saying it because it looks like a really dirty word. I get stuff from you every day, you just like saying that because its so close. I mean, im nervous to say it on the air, by the way. Fudder whacking . Its actually a dance. From johnny depp in alice in wonderland. Which is what i call the world today with the Central Banks around. Okay. Mark, thank you for joining us today. Thank you, becky. Great to be with all of you. You too. Now pfizer is announcing a multibillion dollar in cash or total of 5. 2 billion. And specializes in socalled small molecule therapeutics. Pfizer doesnt know what to do at this point. 2. 9. Its a 64 stock. 3 billion market caps out at 99 and probable real actual equity. Coming up amazon and tucker gamble . Need to work about amazon . Yes. Their going sell their own products. Theyre going to manufacture it. Every level of the supply chain. Making a Science Fiction movie, there would be one company left. This is it. There would only be one company. Amazon does everything. It continues to be the quest for the one stop shop. Rolling out a private label. Rolling out a private label. Thats next. Welcome back. Amazon will reportedly launch the new line of privatelabelled brands the next few weeks. It will include names like happy valley and momma bear. According to the wall street journal. Items will include diapers and laundry detergent. Taking it to proctor and gamble and the guys who make the big staples out there. I read that amazon is the second largest retailer of clothing second only to walmart. Which explains why Department Stores have seen struggle. Its amazing. It is. Hes in his 50s. Yeah. Young 50s. Do you think it will go to one company. I dont remember if it was an email we asked an analyst about this. Do you think theres a risk to that company . Probably. Given i dont know. It depends on where we go with it. Hes 52. What . Hes 52. I knew it was young 50s. Because hes older. Jealousy . Oh, you know. Hes an overachiever. The rest of us dont think we need to do that. Hes an overachiever. You think youre going to blow by him. Hope springs eternal. Youre not. Coming back active managers fighting to stay relevant as investors have turned to lower cost benchmark funds for reliable urn ares. Petter kraus has a message for active managers. Searching for a buyer. Quicken loans founder making a bid for yahoo with a little help from Warren Buffett. The details on a possible sale and the players involved straight ahead. Apples tim cook going on the offensive to woo the Chinese Governmenter. Hes meeting with App Developers and going to an apple store as he Shows Chinese officials hes serious about doing business there. A live report from beijing minutes away. And basebrawl. The fists fly in the Lone Star State between the rangers and the blue jays. The highlights and low lights as the second hour of squawk box begins right now. Welcome back to squasquawk were watching the futures this morning and were losing some of the gapes that we built up earlier today heading toward the flat line. Dow futures in positive territory. Up by about 7. 5 points. Nasdaq holding on by. 22. Lets check on oil prices. Youll see now that Energy Prices have been higher throughout the session. Up by about 2 this morning. 48. 78 for brent. Triple header of m a news pfizer Just Announced in the last hour a deal to buy anacor. The price 5. 2 billion in cash. Thats well above the friday Closing Price of 64. 03. Erang resources buying Memorial Resource Development company. All stock deal valued a5. 4. Getting about 14. 65. And crane makers have cancelled the all stock americaner they struck last august. They will sell the Material Handling unit for about 1. 25 million. Thats also leaves ter rix free to continue talks with other suitors. We have an update on yahoo s attempts to sell itself. The quicken loans founder is teaming up with Warren Buffett to buy the company. Gilbert made a bid for yahoo . Berkshire offered to be a potential Financing Partner for gilbert in the bid. Buffett said you take a look at shares of yahoo that have stocks trading around 37. Up to 37. 70. This is where theyre trying to again up the bids there. Well see. You know, good luck to dan gilbert whether he questigets i not. It seems to throw buffetts name out there when hes only semi attached. Joseph . Yeah, can you imagine a 1. 4 million acquisition getting a mention in i dont know i think its 1. 4 billion. Do you think about that . I just dont think you would sell anything for 1. 25 billion. You dont wake up for less . Yeah. I think it was 1. 3 million. It didnt sound right. It didnt. Okay. Oil prices rises this morning. Goldman sachs said that the market has ended almost two years of oversupply and flipped into a deficit. It follows production from venezuela, nigeria. Its shocking, actually. Hang on to every word you say. Not usually but thank you. I do. I expect hes giving you carte blanche. You have to oh. Okay. Youre asking no. I want him to. Let tell me you got a little bit more news. We have a couple of things to tell you about. Im all ears. Representing about 40,000 striking workers will return to the bargaining table. It comes after thomas perez met with both sides in washington yesterday. And, becky, one thing that crossed as we speak. Annette increased the all cash offer for the Tribune Company up to 15 per share. You might remember they had a bid out there for 12. 25. Tribune said talk to the hand. We dont want to do business with you. Well see whether the new bid moves the needle. Take a look at the stock in a moment. San francisco fed president John Williams said that the u. S. Economic outlook, in his words, is definitely looking good. Therefore, he suggests two to three rate increases this year. Definitely still makes sense. The next policy meeting is june 14th and 15th. Cue music but different williams. It doesnt hurt. You need a background. You can do a lot of stuff with John Williams. Raiders of the lost arc. Thats what i mean. Pick one and do it. Back to the markets this morning. You know how popular not real news is among millennials. There you go. Put a little music in. Joining us now is peter kraus. Investors cant make any money and cds and now we find out Wealth Managers maskly in responding to this environment really havent helped that much either. And i think your contention is, you know, theyve try toddy verse fie in so many areas and theyre the master of whatever that expression is. But Wealth Managers have been going into service to clients and Money Managers have been closet index guys anyway. And they havent returned anything. Its very cynical viewpoint. I dont know what your answer is well, i think that we started out as industry many, many years ago believing that we could provide a return to investors, and i think for many years we did. As savings grew, the amount of dollars that managers managed also grew, and, you know, i think that there is a point at which you have too many dollars to produce a return. Its hard to know when that is. But the industry grew for many years. I think its at the point today where weve shown for the last, say, ten years theres been a challenge to produce returns. Right. So i think that the industry has to take a hard look at itself. And our job is returns for investors. Thats what were supposed to do. If were not doing it we have to ask the question youre getting paid, charging a fee. There must be some value added but there hasnt been. I think theres value added in many managers. The large percentage or the average, as weve seen, doesnt actually produce a return. Is it too many Money Managers . I believe theres too many Money Managers and i believe too many managers are managing too much money. And i think that we have an assumption that active management can manage all the money out there. Actually, i dont think thats true. We need passive. Theres a role for passive. That role is not 100 of the market, either. And active managers have to be more cognizant of capacity constraints. And capacity constraints are difficult to enforce. Because youre basically saying to yourself i can only imagine x amount of dollars and i cant manage more than that effectively. Knowing that point is not easy. I believe thats what managers have to do. They have to do it more consistently. And we have too many managers. Open architecture which was thought to be a great asset for the investor. You can pinckney manager you want, actually its too much choice. And creates too much diversification. And then people actually buy at the top and sell at the bottom persistently. They evaluate managers as what is the best manager i can find. They look at their three or maybe five year track records. That drives their returns. We know by looking at the numbers people sell at the wrong time and buy at the wrong time. That costs them, on average, between 1. 5 to 2 a year which is a huge expense. And buy someone with good three to five year performance as theyre getting ready to go back down to the mean. Theyre heading to the you buy the standard and theyre headed down a lot of good managers cant perform forever. They have periods of time where they underperform. If youre buying at the end of a period of outperformance youre taking a bigger risk. The idea is to actually arrange a set of active managers that are complimentary, that do different things, and stick with those managers and presumably you hire manager that are good managers, persistent, that have strong capacities and high conviction, and then you stick with them. You cant change the managers all the time. Its too difficult to do. And i think people have proved that. The answer is not to go 100 percent to passive. Thats giving up the return that is possible. That is possible. Then you think i remember the old analogy for big versus small. You have a herd of elephants and theyre trying to move around and they cant. You would like to be a mouse running around. If you get stepped on by one of the big ones you get squished. I dont know whether its good to be big or small. Its nice to follow the big guys but then they probably start under performing. I think its clear that managers that have a tremendous amount of money struggle to produce performance. I think thats clear. Thats not true for every manager, im sure. What should be the cut off. It youre an investor and you walk into a firm like yours and they have a platform and say we want to put you in x hedge fund. You ask what number they manage. At what number do you say i dont want to do that . Every manager has a different capacity constraint. Every managers philosophy is different. Does the manager have a capacity and what is it and how close are they . Have they capped the capacity before . What is the behavior . If they dont have answers. It they dont have a capacity constant. They dont know. That would be a question i would have. That would be something you ought to ask. Quickly, what do you think about the markets in general. There are so many questions. We havent made much progress. Yeah. The markets have been challenging. And, look, i think theres a lot of uncertainty and that continues to weigh on the markets, for sure. But, look, i believe the United States is actually growing. I believe the economy is recently strong in the United States. And i think that will probably act as a leader for the world as we go forward. Corporate earnings have we corporate earnings are likely to be challenging. But not negative. Just hard to see a significant amount of growth on the top line. Stay long yeah. Come on. Thrift up. Joe, you got to get this watch. I got get there you go. Deep yo keep your hand there. Thats a watch. Dont you have 20 . I have a few. A few is not 20. Is it more than 10 . Oh, easy. Its easy more than ten. Okay. Less than 20 . Yeah, less than 20. Thank you, peter. Coming up talking tim cook arrives in china for a farm offense. Hes visited one of his companys stores there and taking a ride in didi car. One of the Ride Sharing Companies he made an investment. We have a live report from beijing in a moment. Before we go back to the breaking news that we talked about that hit the table moments ago before we talked to Peter Gannett increased the cash bid. They are now offering 15 a share up from the prior bid of 12. 25. Gannette increasing their bid. Back in a moment. Welcome back. Apples tim cook is in china according to officials after set backs in the companys biggest overseas market. Good to see you again. Thank you. Tim cook got a closer look at what his 1 billion paid for. He and the president of didi took a quick ride to one of apples main stores in downtown beijing. Didi is a car app company that apple invested a billion dollars in last week. It has 300 million users. Today tim cook joked now it has 301 million users. He posted his experience on social media on his own account and some of his postings were the most popular today. Now of the once he and didi ended up at the store, they held a round table with App Developers. He was talking about how important chinas App Developers are to apple. He was saying the governments role has been crucial in the development of the internet. His visit has been widely expected here because of the fact that apple has been facing so many challenges including a clamp down by government regulators of the itunes and ibooks services. Now the expectations is that hes here in order to meet with several highlevel officials in order to work out the issues. Where does he ned next . It looks like hes heading to india. Reuters is citing resoure iningg hes going to be meeting with the indian Prime Minister later this week and hes heading there tomorrow. Its going to be his First Official visit to that country, if the reports are true. Andrew. Thank you for that. Were going to talk about didi and the business it is moving overseas. Were joined by ed lee. Is this a business play . Its all a business play but how much is actually an economic play and how much of this is a play on its relationship with china . I think its more of the latter. Its political play. So apple has had issues with the Chinese Government saying, hey, look the whole Media Business you have here selling stuff we dont like it the way youre running it. I think that what is interesting is that apple has invested this company didi is sort of a Smart Company in terms of how it dealt with the Chinese Government. Its a home grown player. Thats what the Chinese Government likes. When do we know whether it whats the measure of it working . Meaning youre going to see itunes and ibooks back on or is that what it is . Wait a few weeks and now i dont know. If its a few weeks, year, i dont know if its, you know, in terms of how the phones are structured, privacy things on the phones, conversations that might happen not now but 12 months from now. How do you look at it go and go that was a successful investment . Tim cook is going to say we want didi to succeed and do well. I think it will. Its doing well as a business in china. In terms of apples relationship to the government thats harder to measure. When does it happen . When does a restriction lift on the media sales stuff in china. Do iphone sales increase . You look at this Time Next Year if media sales or iphone sales pick up thats probably a good one. I want to get to the implications of the ceo of uber in a moment. To the extent this is part, also, of apples efforts longterm to develop a car. Is there anything related to that, in your mind . I think thats the secondary aspect. I dont think its primary. I think its primarily a political play on the part of apple. But in terms of, you know, its a car. Its a big win in 2020 if they announce theyre not only doing the cars but didi is buying a billion of them. Its interesting because uber is invested in technical for automatted cars or selfdriving cars. Its the ride hailing industry that is edging closer to this than anyone else at this point. Partly because they want to eliminate the driver. Right. They dont want to take a fifth of the fare. A policy perspective because whether its lyft or uber one of the things they do from a policy perspective they go around the world and say were going to create jobs. In ten years or whatever you think the technology is going to work thats the concern that the Chinese Government had with didi. Youre taking away our taxi industry. Youre cutting into it. So, okay, well pull back and do way you wanted. They ended up having a Good Relationship that way. He had no idea it was happening. He was supposed to be going to a meeting at apple that week. Exactly. So uber app on iphone. They have a relationship. Its not as if they dont have a relationship. What is interesting is that apples investment in didi by approximately end up being an investment in lyft. Invest are lining up on either side. Does it complicate things . They said if didi plans to make a play in the europe or the United States, i dont know if they do, if that complicates things because uber or others will say youre trying to help one over the other and youre a Platform Company and get into the antitrust issues. What is interesting with the didi investment its everyone but uber. So didi and lift and theres a Ride Hailing Company in india. They aligned themselves with each other. Sort of like access powers. Everybody versus uber. Right. Its not antitrust in terms of didi expanding. Travis was joking about this on twitter yesterday. He said my girlfriends investment in apple now makes her a competitor. Investment in a competitor. Thanks, tim. Exactly. Its getting more complicated but its definitely anyone but uber. Right. Thats where the things are alliances are lining up. Ed lee, thank you, sir. Good to see you. We didnt get to talk yahoo yeah. Well chat about that next time. Amazon being and crazy. Theres a lot of stuff going on there. Right. Coming up bad blood between the Toronto Blue Jays and the Texas Rangers boils over. Highlights after the break. Later stub hub teaming up with the philadelphia 76ers to be the first sponsorship in Major League Sports history. We hear from stub hubs president about the deal in a bit. We head to break take a look at futures. Todd spaletto, president of the north face, we are working on the prototype to match customers to gear. Watson, lets give it a try. Say its midjune and im backpacking in yosemite. Of our 353 jackets, i can recommend nine. Watson, what if it rains . There is just a 3 chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. A Perfect Choice watson. No wonder our Customer Loyalty numbers keep climbing. I believe we can do even better. I like the way you think. Im spending too muchs for time hiringnter. I believe we can do even better. And not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer6 you wouldnt order szechuan without checking the spice level. It really opens the passages. Waiter. Water. So why would you invest without checking brokercheck . Check your broker with brokercheck. Oh, no. The bad blood has been building for months. Last night it boiled over when the Texas Rangers and the Toronto Blue Jays got into a brawl. After big hit by a pitch jose but ati bautista slides into second. He didnt take kindly to the slide. He punches him in the face leading to an allout brawl. Eight coachers and players were ejected from the game. You dont think it happens new baseball but it does. You hear about a hockey game breaking out yeah. They got a great he slid hard. He had gotten hit earlier in the game. This one here. This one here. Oh and down he goes. No, he got back up. Whoa. Okay. Coming up dan gilbert making a bid for yahoo s core Internet Business with Warren Buffett. And the president speaking at beckys alma mater over the weekend. Well talk politics and the bid for the white house. Take a look at the u. S. Futures. Squawk returns in a moment. Welcome to squawk box. Among the stories front and center. Several economic reports coming up on the calendar as the new week begins. Well get the new Empire State Manufacturing index out in about an hour from now. 10 00 eastern the latest on Builder Sentiment index. Also, a sale of store locations by Sports Authority currently not going that well. Wall street journal reported they did get some bids from dicks sporting goods. But the bids were considered disappointing. Amazon talked about it earlier. Reportedly now rolling out a new line of private label brands. It will representative amazons first wide spread mood into perishable foods. The first brands may appear on the website as soon as the end of the month and could give proctor and gamble and other companies a run for their money. An update on yahoo s attempt to sell itself. The quicken loans founder dan gilbert is teaming up with Warren Buffett to buy the company. Gilbert has made a bid for yahoo and berkshire offered to be a potential Financing Partner for gilbert. In a statement buffett said take a look at shares of yahoo . Youre going to see that company is trading at around 37. 20. What happens in second round bidding and how high they can get the bidding partners to bid things on. President obama taking couple of swipes at donald trump during a commencement address yesterday. He didnt mention the gop president ial hopeful by name. Suggesting we can build an endless wall along our borders and blame our challenges on immigrants. That doesnt just run counter to our history as the worlds melting pot, it contradicts the evidence that our growth and our anyone elevation ahas been spurred by our ability to attract strivers. Thats why we became america. Why would we want to stop it now . In politics in and in life, ignorance is not a virtue. [ cheers and applause ] its not cool to not know what youre not talking about. Thats not keeping it real or taking it like it is. Thats not challenging political correctness. Thats just not knowing what youre talking about. Voters go to polls tomorrow in kentucky and oregon. Trump is the last republican standing. For the democrats Hillary Clinton cant seem to shake Bernie Sanders. Joining us this morning to talk about the race for the white house is steve forbes, the chairman and editor in chief of forbes media. And john rainish a democratic strategies. Good morning. John, why dont we talk about the democrats. They still havent seemed to wrap things up. Bernie sanders plans to make it a contested convention take it there and would like to see at least five core issues incorporated into Hillary Clintons platform at this point. Sure. I thinks like Free College Tuition, increase Social Security, and a lot of things she campaigned saying im not in favor of. What happens . I think i dont see a contested convention. I think thats something hes raising money off and using to continue to energize his base and his core supporters. Its exactly what they want to hear. The reality of a contested convention, though, i think is my newt. If we dont get to a con vested convention, the idea its late and Bernie Sanders is still making arguments about this. Raises the questions as to whether his supporters would actually show up and vote for her. Right. Listen, he should, by all means continue to campaign through california and give his spo supporters a chance to cast their vote for him. Hopefully theyll start to make it about the issues. The issues hes raised so forcefully. The more he dings her, the less its about progressive governance winning out. And the more it sort of egodriven. What do you think, steve. Donald trump is the last man standing for the republicans. Some of the republicans are starting to coalesce around him as a candidate. The times this morning points out theres another flank of the gop that used to be against him in favor of him. How do you feel about the candidate and where the party stands now. It goes to show that predictions are utterly wortless. Two weeks before the indiana primary would predict that the Republican Party presumptive nominee would be the democrats have the dog fight. Ic i think in terms of we dont know what is coming out of the fbi thing. Bernie sanders is serious about going all the way. On the republican side, i think the thing now is going to be very interesting to see how paul ryan makes his peace with donald trump in a way that protects republican ballot where he can disagree on certain issues and not look like you think thats an Important Role for paul ryan to be playing now . Yes. Paul ryan is very serious about issues. Ive known him for over 25 years. And so on things like taxes, immigrati immigration, on things like trade there are some things that have to be ironed out. Get trump pinned down more on what he wants to do on a tax side in a way you can have a Program Platform and seen as the party of the future while the democrats look to the past. Youve talked about wanting a flat tax. You talked about supporting donald trump at the same time he talked about raising taxes potentially on the wealthy. On this show, suggested its been a lot of debate about what he was trying to say, but his ability to either try to renegotiate the debt or what the value what the credit of the United States would ultimately be. What did you take of those comment comment s . I think it goes to show once he became the presumptive nominee he has to change his Campaign Game plan in the sense you cant toss off comments anymore. It doesnt change your view . No. I think now and i think this negotiation will ryan, which he wouldnt have done two or three weeks ago shows he knows he has to bring this party together. You look wistfully what the would have been . A man with no political experience. You tried that and it was a different time, i guess. Yeah. Timing is everything. Yeah. You were just a good candidate, right . You didnt say that at the time, joe. You think i keep seeing the sound bite, steve, you think it is i dont know i havent seen bush weigh in on a single election anywhere since he left. Do you think its good i mean, its very important for president obama that Hillary Clinton is able to continue his legacy. I thought it was a commencement speech for rutters students. The class needed to see that stuff . He does what he wants. Yeah. Hes going out of office what does he care . And rutgers cant complain. They got plenty of publicity. I want to run it every 15 minutes. And everyone else is, too. Right. Right. In the key in the campaign who is going to end up winning it. First of all, among democrats, i was with some this weekend theyre pining maybe joe biden could still come in and rescue us and get somebody to truly unite the party. I think democrats are very happy with Hillary Clinton. Shes ahead by 3 million votes. Almost 300 delegates. Shes sprinting to the finish line. Oh. Onethird of the democrats say theyre going to vote for trump over hillary if shes the nominee. I dont see any democrat voting for donald trump. Everyone has a problem. In the sense of whoever wins the election has a forwardlooking platform. Hillary identified with the past. Trump has a chance to take the reagan mantle. Bill krystal didnt call you . I would pick you before mark cuban. It sounds like to me whoever wins, you know, we keep saying what is going to in six months from now its going to get figured out and life will get better. I wonder, you know, if hillary wins 50 of the country will hate the president. Its going to be terrible on both sides. The next four years. Then you feel like we came together the past eight years. Hard to imagine it gets better. No. I dont see how it could get worse. No. Thats why were in this. This is all about leadership. This is somewhat the campaign is about. Can we pull out of the rut . And whether you define the rut as 8 years or 16 years. The country feels were on the wrong track. What do we do to pull out of it . Continuing what were doing is not working. Whether its by the fed, the federal government thats why we had mark on saying he thinks donald trump will win. Vote anybody who has any experience out. If any of the winning campaigns of the past several cycles show its the Optimistic Campaign that wins. And donald trump, just like Bernie Sanders, is running a negative Campaign Based on grievances. Hillary is in happy warrior mode. Ting residence maonates with pe. Interestingly you were talking about paul ryan. He has that same reagan optimism. He has that reagan optimistic conservativism and, you know, i kept on thinking just since i dont think there was much of a negotiation, actually. No one knows what was going on in the room between donald trump and paul ryan. I think one paul ryan is thinking about 2020, so is nikki haley and probably marco rubio. Theyre looking ahead to the next cycle. I think that theres no great optimism in the respect party, that i can see, that it wont be a disaster with trump at the top of the ticket. And you quinnipiac. Theres a huge group that havent made up their minds. The primary season has been interesting. I think its going to get more interesting from here. A little humility is in order. About 20 . Because 40 i can tell you 40 will not vote for hillary and 40 vote for trump. Well try to get the middle 20. So fighting for those right. Can i tell you there were headlines flashing about Berkshire Hathaway taking stake in apple. Well talk about that. When we return stub hub a stake in ibm. No way. Yep. Stub hub teaming up with the philadelphia 76ers as a First Company to have their logo on a Major League Sports team. The president of stub hub and the 76ers are here to discuss. And the futures still positive . Yes. Theyve been a little bit volatile but thats the best weve seen it. Got to record that show. woman now we have to wait forever to see it. jon bon jovi with directv, you dont. You see, weve got the power to turn back time. That show you missed, lets just go back and find. And lets go back and choose spicy instead of mild. And maybe reconsider having that second child. See, thats the power to turn back time. vo get the ultimate all included bundle. Call 1800directv. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive back in april the nba accrued logos on jerseys giving prime real estate to corporate sponsors. The 76ers announcing theyre the first team to take part striking a deal with stub hub. Joining us this morning is scott cutler the president of stub hub. Scott oneill is tceo of the 7 76ers. I see it. Its small and not i didnt even notice it until i realized thats what were doing here. Lets check it out. Here it is. Yeah. Fresh on alan iverson iversons iversons jersey. Wow thats cool. It gives you a different feel. Who is manufacturing that . This is a tailor i use. There might be some Serious Business fans tim cramer might buy that suit. He might. I can see all of you in one. I think thats a great move. Wow what are the restrictions on how many and how big they can be at this point . In terms of the logo . Its small 2. 5 by 2. 5. Thats the guidelines. How many can there be . One. Only one. Only one. But i think, you know, stub hub is an incredible partners. Theyre leaders. Theyre enindemmic in the space. Theres no better place to buy tickets than stub hub it fits. Who is the manufacturer of the jersey . Nike. The swoosh will be here. Stub hub we were talking about last week in reference to the hamilton tickets. I think its phenomenal, but we came to the conclusion in both systems, whether you have a system where theres you dont allow prices to rise above a certain level or allow them to go at 800 per ticket only the elite end up with the tickets in both systems. At least in one system, you know, you can actually buy. Theres not a five year wait to get in. Yeah. Its not the elite. Anybody who wants to go to any event at any time can go to stub hub and get access to the 76ers. You cant hold the prices down or no one will get any tickets. For as many events we have that are a high price ticket. We have a lot of events that great value for people to get into. Essentially the intersection of supply and demand. Ive never used it. Its one of the few things ive done on the internet its an opportunity. You can actually look at the value of just too little seats youre getting and you can see what the value is unbelievable they werent expensive and they were floor seats. Yeah. What Major League Baseball has done. I used to go to the yankee games. Major League Baseball has been a big partner for a long time. Were in discussion with the yankees. We like the franchise and we hope to be able to come to a good resolution. Its been a few years. Yeah. Literally this is this is a gound floor with the sixers. Do you have eyes on a High School Steph Curry somewhere . Do you have it . Yeah. Its ground floor. We have the nba lottery is tomorrow. We have a lot we have the best chance to get the number one pick, which would be helpful. Who would you pick . I cant talk about it but ill get fined 1 million. But i can tell you its 1 million matter to a guy like you . [ laughter ] it does. Absolutely. Absolutely. Thanks, guys. Thank you. Good luck. Thank you. Folks, we can tell you a little news this morning out of Berkshire Hathaway. New stakes that the company has built up and sold down. In other instances, this will probably catch investors attention. Apple is new stock owned by Berkshire Hathaway buying 9. 8 billion shares of apple. It was not a purchase that Warren Buffett made. It was made by one of his two lieutenants that are responsible for about 8 billion each. This is either todd combs or ted. This is not a stake that buffett himself took. When you think about buffett being mentioned as a potential suitor for yahoo . You hear that berkshire is taking stock in apple. Those are not companies that i think buffett himself vaevaluat. They increaseder that stakes slightly in ibm. That was stock warren was buying. It was increased slightly. Berkshire hathaway cut the walmart position by about 950,000 shares to 55. 2 million shares and eliminated the stake in at t. My guess would be that the at t stake was after direct tv maybe they figured they made money with that. Im not sure about that. The walmart he made positive comments the weekend we were in omaha. Yeah. He made tough comments about walmart and how they were pressuring their suppliers as a result because theyre facing increased competition from amazon. Right. Its not much in terms of the increase of ibm its next to nothing. Im mentioning it because its out there. Its next to nothing. But i dont know. If you can buy something for 30 less than do you paid for it and you were sure it was going back to what you paid for it you would buy a lot. Correct. If you thought it was going down you would get out. No. When youre holding off the stuff at higher levels showing people youre getting out. You sell one share people would think youre getting out. He has to hold on for dear life . I do. For how long . You cant get out of the stock now . He holds things forever. How long has he had coke . Since 1980. And hes been proud of it. If it gets back near. He paid 1. 3 billion. Its worth about 17 billion. Anyway. Those are the headlines coming out of that. When we return ganette increased the bid for Tribune Publishing. Take a look at the futures this morning. Theyre holding on but barely. S p by up over 3 and the nasdaq close to 12. Stick around squawk box will be right back. G anette raised the offer to Tribune Publishing to 15 a share. It increases the value to about 479 million. Thats excludeing debt. Well see whether that moves the needle for tribune which shows theyre not interested. Also worth noting that gannet is going to mount a withhold campaign for the board of directors. Williams is suing. Terminate the deal because of tax rules have changed since it struck that deal. And jp penny has been upgraded to outperform. A 30 pull back from march highs represents a buying opportunity and that there is a credible turn around story at the retailer. Also, in captain america and iron man face off on the battle field all other movie seems to take the backseat. That was the case as captain America Civil War topped the box office for a second week. The Marvel Super Hero movie earned nearly 300 million in the United States and canada. And 645 million worldwide. That makes it the number two highest grossing movie this year behind zoo taupe ya. Coming up joining us to talk about what investors can expect this week in markets. Take a look at the futures now. Dow up about 20 points. Back in a moment. This just got interesting. So why pause to take a pill . 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Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. And that what goes down doesnt always come back up. [ toilet flushes ] so when you need a plumber, we can help you get the job done right, guaranteed. Get started today at angies list. Time flies when youre having fun or making money. One year since stock hit alltime highs. A long way from home. Tim cook travels to china. Will the apple ceos offensive open new doors for the company. And super mario comes to life. Forget hand held devices on the wii. They could hit the movie business. The final hour of squawk box begins right now. Announcer live from the most powerful city in the world new york. This is squawk box. All right. Welcome back to squawk box. We are on cnbc first in build worldwide. Our data point of the hour is the may empire state survey. Thats due at 8 30 eastern and rick will join us with the number and the market reaction. U. S. Equity futures right now indicated for a slight up about 20 points or so. European equities this hour germany is trading but you can see spain, france, ftse, italy. Only italy slight gains. Did we think about that when we were other people seem to be able to manage it. I dont know. Its just mike and rick might be. Yeah. Thats true. Goldman sachs says that the oil market ended almost two years of oversupply and flipped into a deficit. The firm said its change of opinion follows supply disruptions from nigeria, venezuela, the United States, and china. Check out oil prices and theyre up. For wti a gain of over 1 to 47d. 24. For present thats up over 1 toto to 48. 88. Tim cook is in china meeting with one of his stores and meeting with developers. He tweeted these photos a cab in beijing. Speaking of apple, Berkshire Hathaway has taken a new stake in apple. It owns 9. 8 million shares. Thats according to the 13f. The shares were beought by todd or ted. Not by Warren Buffett himself. We should say you can see stock is up by about 1. 69. While we were talking about this this morning, this was bought in the first quarter. If you look back to the lows for the quarter, the lowest it got was 93. It could have been as high as the 31st, you know the very beginning. 108 or 109. Over here it was lets see it was about 112 at one point. It was higher for the most part. It did have a pretty good drop off, if you remember in january, it got all the way down to the low 90s. It didnt break under 90s until the last couple of sessions. Berkshire increasing the stake in shares of ibm but there was a slight increase just under 200,000 shares were added. The Company Already berkshire already owns 81. 2 million shares of ibm. Dissolved its stake in at t. Again, i believe that was a purchase that either todd or ted made at some point. That was before direct tv and purchase had done very well for them. Berkshire hathaway cutting its stake in proctor and gamble on more than 99 to 315,000 shares. Okay. Stocks to watch this morning. Pfizer buying annacorp. Also, we talked about it earlier gannett increasing to 15 per share in cash from the prior 12. 25 per share after they reviewed tribunes latest quarterly filing. Well see if it pushes tribune to the negotiating table or not. The all stock deal valued at 4. 4 billion. Bank of america downgraded to market perform from outperform and kbw the firm calling it a quality banking franchise but said it needs to do more to improve returns and drive shareholder value. Jp p jc penney may presen an attractive. And a record 3. 4 billion fine. That will reportedly be assessed in the next several weeks. We have an update now on yahoo s attempts to sell itself. Dan gilbert is teaming up with Warren Buffett to buy the internet company. We can report that gilbert made a bid for yahoo and berkshire offered to be a potential Financing Partner for gilbert in the bid. Warren buffett said you can see yahoo shares are up. Now to the broader markets. This week marks the one Year Anniversary of the all time highs for stocks. Here is usa today one year after the peak. S p 500. They decided this would be a great find. You in usa today. I had this on the way on thursday or friday. Did you look at the guys here. They have traders. I see them every day. Its not a down 400 day. They usually find them. Its up this is were not sure what is going up. One guy looking up, one guy looking down. They found the generic trader thing for were stuck in a rut. Is the rut going down into a bigger rut or suddenly go up . If you look at the market from the top down you would say nothing much changed in the year. Not level s p 500 down. The anniversary itself may 21st. Thats next saturday. If youre going to celebrate you have to do it friday. One year basis you basically obviously had those two little downward wiggles. Lost as much as 14 . Really, the story, to me, is what happened below the surface of the market. Youve had the parts of the market get hit as that Earnings Growth did not keep up with the markets themselves. You had the safe stuff. So if you want to look at the dow jones utility average and the transports, one is up 13 minute. 5 and transports are down 13. 5 . So money has kind of churned around the market and not really exited in any large degree. The evaluation of the market has not gotten any cheaper. You mark time in the market and youve not really gotten cheaper. If you look at the tale of the tape, so to speak, down a little bit in price. Here is the thing trading at 17 times earnings forward earnings a year ago. What we know the estimates, at that time, were about 7 too high. It was more expensive than 17. You didnt know it at the time. Now at 16. 5. If youre going to make those numbers currently projected not as expensive. People say evaluations are stretched now. They should have said that even more so a year ago. All though earnings it hasnt been the case. Youre slightly less over value. The problem is the average stock is still not cheap. Its not as if you have the carnage. If you look at the stuff that did look cheap, you got killed. Department stores look cheap. Airlines look cheap. Theyre down, actually, in the last few months. Its been a value trap city. And multiples contract when the fed is in a tightening phase. Were at all time lows well, that to me is the selling point. Were at 2. 2 on the ten year treasury a year ago. 1. 7 now. The s p 500 dividend yields 2. 2. You have stocks playing the roll of bonds. Theres no exciting story behind it. Its a much better time than a year ago when we didnt think it was right. And now investment great corporate bonds. 3 then and 3 now. Youre not getting it back. Can you make the numbers you basically been kind of churning near the high levels not really realizing theres going to be more economic erosion. A lot of value. Over the weekend i said im seeing overvalue everywhere. Right. People are telling a you a story why it didnt go up. We didnt think it was a ceiling. It may or may not be now. Had a good market soothe sayer now. Oh, wait. Wow. You owe me for koesterich. You heard what we were talking about. More or less overvalue than were a year ago. Probably about the same. We were expensive a year ago. Were not e grgregiously expens. And then that leaves it up to earnings. If were in a world of slow gdp and environment where u. S. Margins close to a record, its hard to grow the earnings. I think thats why we havent done much over the past 12 months. Backing in the past its been good. And, you know, we didnt most things over time theyre appreciating and, you know, if youre able to buy something at the same price a year ago it normally means things are cheaper. But it means things are overvalue more than a rhetoric at a year ago. I think people are more concerned. Part is technical. You had a year and havent made any progress. It makes people nervous. Look, were a emperor longer into the bull market. Its the second longest bull market in history. It makes people nervous. I think you have to pick your spots. I cant point to the part of the market now that looks particularly cheap. So it comes down stock. And probably also comes down to looking outside the United States. I dont know. I think you see a period where everybody is saying over value and theres no reason for the market to go higher and, god, this is dull. You had, you know, the public has been pulling money out of stocks very steadily. More so than any time in 2011. Youre not seeing people willing. Because the market has worn them out. Those are bullish things, russ. You get bogged down in fundamentals youll never catch these. Its also about the other side. You think about risk adjusted terms. Were focussed on the returns. Its about managing the risk. It means doing some things that might seem a bit counter intuitive but bonds a good example. No one likes bonds. Its expensive. True. But one thing they have done over the past year is provided the hedge against equity risk. Theyre expensive but having some duration to hedge out the equity risk is one of the things you probably want to be thinking about. The head wind of it will get easier for the multinationals because the dollar has gotten not as strong. I think the dollar is probably ended the period of extreme appreciation and thats going to be one of the head winds that was keeping inflation down. So, you know, my mind the solution there is you think less about nominal treasuries and more about chips. One things that looks cheap now in a world where oil is going up and the dollar isnt appreciating and wages are rising a bit. It probably looks too low. Did your bond task masters get to you this morning . Youre pushing our Interest Rates im talking about huh . In a world where equities are not going anywhere, and they havent gone anywhere in the last year, thinking about carrying a portfolio, getting a mid single digit yield with low invol volatility thats what you consider. When i look at the bond market i say its attractive risk of return. What i say is, you dont like the message of the treasury being down to 1. 7. You like the message of a flat yield curve. Thats what were getting. All though again multiples shouldnt if you dont have to worry about rates going up in the next 12 months. Lets be clear. One of the reasons u. S. Yields is not necessarily because the u. S. Economy has fallen off a cliff. Because 10 or 20 basis points in germany and negative 10 in japan. In that context 1. 7 starts to look not so unreasonably. 10 to 20 in germany and youre bushing bonds. No. Im talked about credit and spoken about tips. All right. You like those. You do not sound very positive at all on equities. I think it depends on the market. There are opportunities out there. Joe, i think japan right now looks interesting. Its not a market people have liked this year. But the fact is if youre talking about where do you see value in the world Japanese Equities are trading of a price basis about half of what they are in the u. S. You have a central bank likely to provide more accomodation, and rising r. O. E. Its not an easy market. Its a volatile market. But in a world where theres not much where stuff is cheap you have guys talk to 20 years for all the time and some that are pretty savvy. Any saying this is a you know i think the message im getting back it seems like a tactical market. Its about where the sentiment going. You dont have a lot of people i think the problem is the stuff performed really well in terms of sectors of the stock market is extremely boring. You cant have a fundamental edge of buying another food stock. I think people have thrown up their hands. Ting might be the final capitulation of people think you can fundamentally beat the market. I think longterm might be bullish. Ten years 1. 7. Couldnt you buy some Decent Company yielding 3 or 4 . I think thats a lot. Thats a trade a lot of people are making. Thats why the stocks traded. Thats why most earn a big premium. They look fur the rates exactly for that reason. How about close thats what mark said. Yielding 10 . I see 10 and its too good to be true. I would be afraid to buy some yield at 10 . Well, there are level. You make a bet. And there are closed in. When people want to leave they go at the same time. I think the bottom line if youre in a world where a policy rate is zero its shifting the Capital Market line down. Getting 10 youre taking some risk. Do we have meetings over there do you have meetings with think and the other guy . Who is the other guy . Rob yeah. We have all of them on here. Rosen berg. Theyre all there. Theyre talking bonds. Youre totally biassed. You try to stand up for equities . We have found that the vast majority in equities. Longterm the return on equities will beat on bonds. Its about what the portfolio looks like. All right. Appreciate it. Are you leaving . Im out. Nice so see you. Go down to the New York Stock Exchange and see my friends there. Yeah. When we come back Berkshire Hathaway buying shares of apple in the last quarter. In the meantime david stepper is dumping his stake in the company. Well have more in a moment. First, as we head to the break check out the dow. Its down against the euro. Its up against the yen at 108. 84. Stay tuned. Youre watching squawk box on cnbc. First in business worldwide. politely wait, wait, wait you cant put it in like. That, you have to rinse it first bakedon . Its never gonna work. Alfredo. Dish issues . Cascade platinum. Powers. Through. Your toughest stuckon food. So let your dishwasher be the dishwasher. E . Told you it would work. Cascade. The welcome back tow squawk box. Watch shares of square tomorrow. Theyll be able to sell more than triple of the companies shares. Square news Magic Johnson was a board member stepping down from the company saying he has an Infrastructure Project fund hes raised over a billion dollars. He wants to focus his attention on that. Berkshire hathaway has taken on a new stake in apple. It owns 9. 8 million shares. It was in a 13f filing. Meantime Hedge Fund Billionaire david tepper dumped his investment in apple. He previously held around 1. 3 million shares. It shows that tepper took a new position in facebook buying 1. 6 million shares in the first quarter. Also, bank of america 6. 9 million shares. Even in and out of bank of america. I dont know. He had a year he was he did the contouring move on banks and it did well. Shes moving to florida. Yeah. He was new jerseys largest taxpayer, i believe. Yeah. Serves them right. Yeah. In other Technology News this morning. The New York Post reports that facebook is testing music videos in an attempt to try to keep view frirs turning to youtube. The social network is said to have started talks with music labels about licensing songs that users can upload such as vacation or birthday videos. Donald trump weighing in on the Brexit Debate and calling the e. U. A disaster from migration. We tel you what the presumptive nominee said. Next. Tomorrow starts today. We believe all across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov amazing sleep stays with you all day and all night. Sleep number beds with Sleepiq Technology give you the knowledge to adjust for the best sleep ever. Its the semiannual sale save 500 on the memorial day special Edition Mattress with Sleepiq Technology. Know better sleep. Only at a sleep number store. The eclass has 11 intelligent it recognizes pedestrianss. And alerts you. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2016 eclass. Lease the e350 for 499 a month at your local mercedesbenz dealer. More political news Donald Trumps wading into the u. K. s Brexit Debate aslamming the e. U as a disaster for migration. In an interview with pierce morgan for Good Morning Britain he calls the e. U. Bureaucratic, difficult for business. So would a vote to leave impact trade between the u. S. And u. K. In the Trump Administration . Here is what he had to say . They have to make their own deal. Britain has been a great ally. To a point where britain has been such a great ally they went into things like they shouldnt have gone into like, for example, iraq. With me, theyll be treated fantastically. Will you be front . I wouldnt say front. Ill treat everybody fairly. It wouldnt make any sense whether theyre in the e. U. Or not. As for David Cameron trump said hes unlikely to have a Good Relationship with the british pm after cameron criticized trumps proposal for a temporary ban on muslims entering the United States. A new Quarterly Survey of the cnbc global cfo council out this morning calls for a clinton blow out over trump in november. It represents some of the Largest Companies in the world. 83 of u. S. Respondent ends say they believe Hillary Clinton will be the next u. S. President. It is worth noting that the council comes late to the game. Not one thought he had a chance of clenching the gop nomination. When asked about the most important political issue at Corporate Tax reform. For full survey results check online. When we come back super mario and zeal data coming to devices. Well give you the details next. Take a look at u. S. Equity features. Dow looks like its going to open up about 18 points higher. Back in a moment. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. There is only one place where real and amazing live. Seaworld. Real. Amazing welcome back to squawk box. Everybody, here is headlines this morning. Berkshire hathaway has taken a new stake in apple. Berkshire owns 9. 8 million shares. Warren buffett said the decision to buy into the tech giant was not his. He said either ted or todd, two of his lieutenants, one of those two made the decision. Apple shares are up today. But the purchases were made in the first quarter. I think it was just under 93 during the first quarter. Had much higher periods. Right now 91. 95. He know which is one. He didnt tell us. He said not his decision. Depending on how it works i remember we asked during the meeting, you know, was there any stake that you wanted to signal or identify or Great Success and he didnt want to oh, for todd or ted. Yeah. The shareholders asked. He did give todd lots of kudos for bringing the Company Precision which i think is the largest or second largest right. 37 billion and didnt give the other guy kudos. It was one of todds companies. Last year he gave ted kudos for bringing him a german company. They do more than just invest dollars. They have a portfolio of about 8 billion. You cant read anything in. No. They will cotake over eventually all of berkshires funds. These are his guys. Hes in on all we should point out that berkshire increased the stake in ibm. It dissolved a stake in at t, i believe was either todd or ted and cut the stake at proctor and gamble by more than 99 to 315,000 shares. Ouch. Yeah. The latest reading on home Builder Sentiment. Its coming this morning at 10 00 eastern time. The month lly index is expectedo come in slightly higher. San francisco fed president John Williams said the u. S. Economic outlook is looking good and the two to three Interest Rate hikes this year would make sense in his view. However, williams said hes not yet decided on exactly when the next rate hike should come. Its time for the Empire State Manufacturing index. Here it is. Rick santelli. The numbers well, minus 9. 02. Its basically down nine following an up 9. 56. Last time we saw negatives this negative around valentines day at minus 16 and change. The response in the marketplace isnt much. Interest rates moved a little higher after the preweekend buying. Of course, the dynamics of the week are going to be pretty much set. Monitoring some of the topics youve talked about brexit, as many ceos seem to be looking at the other side of the mountain. And, of course, the ongoing discussions of negative Interest Rates. Will it be likely of mortgages in a negative Interest Rate environment will stay home and start cashing their checks. Questions we need answered. O, what do you think . Think were going to sit home and at some point get money for buying a house . Sounds great. Ill buy a few more if i thought that was going to continue. What is it about its weird, rick, you do you necessarily think that brexit would be a political disaster or trading disaster . You know, joe, im going to do a spot about this. My only person feelings i didnt think they would vote to go out. It doesnt mean it would be my recommendation. Right. I think when you go down the wrong road, like we have with negative Interest Rates and Central Banks that think theyre mr. Universe, i think brecks itd is one of the stories where i dont think its a good idea. I think that theres people resuming and making laws and regulations in the u. K. That people in the u. K. Dont actually get to vote for. So i think it would be better not to be personally. Ting will be painful to back down that road to get back to the last intersection and take the right road. And i think that goes to a lot of things in life. And, you know, whether youre dating the wrong person and you stay because you have so much time invested. Its hard to sometimes back up and do the right thing. And nothing in our country would be more appropriate than the road to Interest Rates. William said two to three hikes this year. Give me a break yeah. Two or three. Come on. Especially when you dont know yeah. Theres another analogy and that is you get on a bus, you know, youre down like somewhere in south america and its headed to i dont know i guess im thinking of like that Michael Douglas movie. If you find out youre on the wrong bus. You dont wait until you get to the place where its headed before you get off the stupid thing. I mean, you take a 12 hour ride. No. Youre saying you back it back the way you should have turned right and turn right. Off the bus. Get on another bus. Thats right. With brexit bureaucrats unelected bureaucrats in some country that, you know, across the channel, you know, next to france why should they be making laws for the u. K. . Right. But see this is the problem, joe, we get used to the smell of natural gas and it becomes normal. Whether its the signing up for a program and not getting out of it because, man, we might they definitely will experience get off the bus get on the one heading to where youre going. You said they should 0 no. I didnt think they would but i think they should. And now im starting to think that theres a lot more traction that theyre going to get out of it. Yes. Theres no doubt their data will suffer. Their economic fundamentals suffer for awhile. They become integrated. They signed on to regulations. Theres different structures in place that would have to be reversed. But in the big picture, i think they would be better off. But, you know, most people in any country in this year 2016 dont want to take the time necessarily to pay any price to get on the right bus. And this is the problem. In rulers and people in power understand this. They understand how fast we assimilate even junky things. Right. Right. You know, it would be totally different if we were to try to do the pan american union. I just try to think if we had venezuelas currency, you know, and we tried to have an Interest Rates of brazil. Think if we tried to do a union over here. Its absurd. Its not that much different over there with the differing multispeed economies. Look at the issues we have now with bathrooms in this cub. Im not taking a side one way or the other. Oh, my gosh. To think that the federal government is really and the board of education is trying to come down on these municipalities. Take to the next degree. If it was brexit we would never have a right to vote for some of these people in the federal government. People that go to the senate, the president. Imagine the same scenario where theres people making these rules. We want to get rid of the board of education. Not me but many people do. Imagine if you had no say so. Even more toward the analogy of what is going on with the u. K. And the european union. Right. All right, rick. Im not going to the bathroom. Right now im not and im not going im not going to go to the people go wherever what . I think in europe theyre unisex. I thought you meant go wherever. And im scarred by germany the park in germany where everybody is naked and theyre just on the banks of the river like spread eagle. And so i dont is that what you were expecting im okay, you know, whatever. Live and let live. The body is a beautiful thing but you cant get too hung up, can you . I am hung up on it. You are . Not at all. Were going to continue this conversation. This exact conversation, no less. Geopolitical risks surrounding a potential brexit. It concerns japans threat to depreciate the yen giving the fed pause over timing of the next rate hike. With multiple global macro factor fears. Joining us now on this and the Global Landscape is the cochief Investment Officer of the 6 billion hedge fund. Good morning. What do you think . Do you agree with him . About the bathrooms . Yeah. Did i say mariner. Mariner. All right. I thought you knew. My head was so on the spread eagle in germany. Its hard to concentrate at this minute. Anyway. So i think were in a difficult economic environment. I think weve got dueling forcing here. We have a u. S. Economy that is looking to take off and taking off gradually, and the fed is trying to patiently react to that. And weve got a Global Economy where the global deflationary fears, global deleveraging is taking place. Youre having a tough time getting any Economic Growth out of europe. And a tougher time in japan. And these two forces are meeting heads and creating a lot of volatility in the world. And as a result youre doing what . Were trying to take advantage of this on two fronts. First of all, youve talked a lot about the reduction secondary market liquidity and the equity and bond markets. Were looking for opportunities to structure relative value trades that profit from those secondary markets. What does that mean . We go long one asset, short another asset. We may go long on a treasury bond of one maturity, short of another maturity. The sign of a spread . Were trading on the spread between the two assets. Theres been a lot of selling on one of the assets and able to provide liquidity to abade some of that selling and structure it with a hedge against it and capture that profit as those two securities. You think its a value played with the hedging to make sure just in case. I would say extend its trying to put the hedge back in hedge funds. What do you think the fed will do this year . I think the fed will be on hold this year. I think despite all the way through. Despite what mr. Williams said. I think were going to be a patient marketplace. I think the geopolitical risk going up to brecks itbrexit ar significant. I think the Political Landscape in the u. S. Is going to create a whole set. Its going to be close election. I think the media will play it to be a close election until the end. I think that mr. Trumps poli policies are going to be hard to disearn. I think the market will add a risk premium. When you talk about the fed not coming into play, not making enough move this year, is it your macro view that determines everything you look at . There are all the people who are thinking, okay, eventually everyone will have to run for the exit because the fed has to rise. Youre making the bet its not happening this year. No. I think our view is its unlikely to happen as we sit here today for the foreseeable future. We think the events that happened in december were disruptive to the market. I think the fed is sensitive to that. Theyre looking more globally today than they were previously. We think theyre going to be patient with that. Our trades are not necessarily based on taking that vup. Our trades are reacting to what the market tends to over and under react we go through this. Is there a related to political election . Thats a tough one. Theres so much uncertainty around it. I think there are probably two areas you can play. I would bet thatincrease. A play with long volatility is potentially profitable. I think youll probably see risk premium increased in the world. That means that youll start to see longer rates start to drift higher relative to shorter rates. Weve had a flattening movement this year. I think that will reverse. And we teed it up we mentioned japan. How do you think about the yen . The yen was really a negative to us. The fact that the yen went from 120 to 125 is a bupuzzle. I think the boj will adopt policies that will start to weaken the yen going forward. Are we making a bet on that . We have bets on that. Okay. Great. Thank you for coming. When we come back unveiling the list of most creative people in business. Plus, well break down the money behind the hamilton treasury. Thats next. Welcome back to squaux bock. If you wanted to walk from Governors Island to brooklyn you might be in luck. Its gaining a bit of traction with more than 400 backers. It is the seventh prototype is nearing the 25,000 goal. What about the i dont know how it works. Is it liftable, maybe . I dont know. A drawbridge . I dont know. But what is that . Thats how you walk across. Thats pretty k it looks like t you go over the grand canyon. Glass underneath it. Your nightmare. Joe . All right. Mario cart movie could be coming to a movie near you. Nintendo is in talks with several companies about expanding the content including developing movies while the video Game Japanese video game maker isnt saying what future products would be announced. Theyre expected to be when its going to be announced for the next five years. I guess you have to give is that mario . We said mario. I wanted you to know i was listening. Do you have a preference . We call him mario omar omamar m mario. Do you give all these guys luigi you give them personality and they talk and plots . Yes. I think they tried this. I think they tried it. Mostly all they do is race, right . You have to make them rest up, dont you . They race and go inside pyramids and this and that. Its a race. Its like a mystery. Think of a story. Scooby doo. Yeah. Like a treasure hunt. Yeah. Last week andrew said that i cant use yiddish anymore because you have to be jewish to use yiddish. I didnt say that we decided that you can only do the broadcast now in yiddish. You cant use any you couldnt get past i must have a what is that . Over your head. Thank you. Dont call me that. Thats an right. I have to be careful. Guys. [ speaking spanish ] [ speaking in a Foreign Language ] it could be tough to find new ideas but how about a hundred of them . Fast company is out with the annual list of hundred creative people in business. Joining us now is the editor of fast company. You can see Lin Manuel Miranda tops the list. Hes so under exposed now. I want to say. Bob, thank you very much for being here. Sure. Its great to be here. I have to say, i feel ive heard so much about. Youre taking a slightly different look at him. Youre looking at him as a businessman and somebody who figured out how to make broadway work. Yeah. Listen, the creativity that is required to put on a broadway show is tremendous. Hes produced something that is a breakthrough, but really what has happened here with lynn manuel he revived not broadway but taken, in some ways, a heritage brand, if you want to think in business terms. A traditional brand you might think of as theater or history and made it relevant. The way hes done it and the way the show does that has lessons for lots of businesses that are stuck in trying to make themselves relevant. Right. And at a time when the world is moving fast. You point out that hamilton averages more than half a million in profit every week. Which is shocking in broad ye yeahway. Have you tried to get a ticket . You cant. Its not that the tickets are selling out. He found ways to use social media and video to reach millions of people who otherwise, you know, will not be able to find tickets, never see the show, but feel like they are part of it. How do you put the list together . What is the criteria . This is my favorite one of my favorite projects we do all year. Were finding a hundred all new people every year. People who have never on the list and we have never written about in any significant way. It forces us to find those areas where the innovation economy is moving most quickly. For example, one of the folks on the list is the woman who is the president of the largest Ride Sharing Company in china didi. Which im sure you talked about. Apple just put a billion dollars into it. In the time shes been there as president. Theyve done a bunch of mergers and gone from 500 employees to 7,000. The average age of the employees at didi is 26. This is an incredibly Fast Growing Company that is a challenger in a global sense and certainly a challenger to uber in china. Its, you know, and people like this that you can find that otherwise dont get talked about in a business sense. And tv up fronts are going on. Jill solaway who is the creator of transparent on amazon. You spend a lot of time watching. Transparent . Its great. Its terrific. Its terrific. Shes opened up alternative voices both in front of the camera and behind the camera. Shes indicative of a wave of new kinds of leadership and new kinds of entertainment. Explain this to me. Traditional company. Traditional company but really trying to lean into and embrace different ways of talking abo talking about themselves as a Mobility Company as opposed to an auto company. Opening a silicon valley. Yeah. They recognize that the future of their business is not going to be selling cars exactly the same way theyve been doing it. They need find new ways and mark is pushing that. Theres all kinds theres a gentleman on the list from any that in 2014 there was a risk of fungus undoing oh, beans. Coffee beans in south america, right . A starbucks gentleman named Carlos Rodriguez created a hybrid bean that was given away to farmers so that that problem could be averted, right . These are the kinds of things that when you look through across the economy there are tremendously interesting people. What are you looking at now, andrew . A friend of mines on the list, abby schneiderman, were very proud of them. The mortuary, the death business, theres innovation in it. Theres an amazing website where you can put your information into it if ever theres a problem its a very morbid thought but its planning. Its realistic. Some things we know are going to happen and we want to prepare for them appropriately. Not so fast. Well, i understand. Singularity. Theres a guy there who runs 365 at whole foods, its a smaller footprint piece at whole foods stores. In order to make them profitable they have to lower the cost for all of us to shop there. So this is what he is innovating through and trying to create. Even if you dont get one of those stores in your neighborhood, the lessons from that will trickle through to all of the whole foods so that the prices on what youre paying at whole foods will go down. Bob, thanks a lot. Interesting stuff. Great to see you. A lot of work. Finding a new one every every year. All new folks. Coming up, jim cramer joins us live from the New York Stock Exchange. His take on the days top stories when we come right back. Trolling for a gig with braindrone . Cant blame you. Its a drone you control with your brain, which controls your thumbs, which control this joystick. No, im actually over at the ge booth. Were creating the operating system for industry. Its called predix. Its gonna change the way the world works. Ok, im telling my brain to tell the drone to get you a copy of my resume. Umm, maybe keep your hands on the controller. Look out ohhhhhhhhhh. You know what, im just gonna email it to you. Yeah thats probably safer. Ok, cool. Lets get down to the New York Stock Exchange. Jim cramer joins us now. Jim, over the weekend i saw overvalued a lot. Goldman sachs overvalued, overvalued. And then it happened to be the oneYear Anniversary of the highs when we werent talking overvalued a year ago that much, i dont think. And we should be actually less overvalued than a year ago if weve done all this backing and filling and churning around. So i dont know, is that the word of the day, overvalued . Look, the narrative is is that people come on, they want to talk bullishly, they know the fed wants to tighten, it doesnt pay to be bullish. If the market goes up, you get no credit for it. If market goes down youll look like a genius. Much better to say everything is going down and point to a couple that went down than it is some are going up and not go up. I think the narrative it pays to be a bear. Pays to come on, look smart, say feds going to raise, things are going down, you should be selling. Such a compelling narrative, im trying to fight it but its not fightable. Its what people want to hear and you feel like giving it to them. I wonder what as we get, you know, bernies out of the way one of these days and this starts in earnest, i wonder what the market does as we start watching one of the most interesting political seasons ever, anywhere. And i wonder what the market do does. Stop moving around and get transfixed like the rest of us . You know, i think these are both heres something everyones going to just pill you on because thats what you pillar you, no matter what, two probusiness candidates versus president obama. They both like business more. They both talk to business people. They both are much more comfortable business people. Now, immediately that will be disputed, but you see its not. Its actually true. You and i have been around and we both know it. Were not supposed to say it. Youre absolutely right. Were not supposed to say it and be regaled by people who dont know jack saying what do you know. Ive been in the room with these people, theyre fine, they like business. Hillary said something that caught my attention the other day and that was im going to put bill in charge of the economy. And i went yeah. I mean, look, are they great for business . No, they got to talk about raising taxes i thought she wanted to be the clinton that was president. They know business. Theyve been in the boardroom, they take business peoples calls. Doesnt mean theyre going to side with business but theyre different from obama. Compared to what we have or bernie. Anybody. Thanks, jim. Coming up, ahead this mornings big movers. I take prilosec otc each morning for my frequent heartburn because you cant beat zero heartburn ahhh the sweet taste of victory prilosec otc. One pill each morning. 24 hours. Zero heartburn. One last quick look at the futures after three not great weeks. Who knows today. Theres green, but we got to trade until 4 00 once 9 30 starts. Anyway, its 9 00. Join us tomorrow. But squawk on the street starts right now. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. Stocks trying to shake off fridays selloff and the first threeweek loss since february. Weve got some pharma m a this morning, buffetts buying some apple. Well get you up to date. In europe german markets are closed for a holiday otherwise prices relatively steadily. Oils creeping up as goldman ups its price target to 50