Transcripts For CNBC Squawk Box 20160602

That is not going to take place because of the slowdown in china and what that could mean for the economy. Also lets look at european equities at this early hour. You will see now things are in the green. Dax up about. 2 . The ftsi about. 3 . And opec ministers meeting. A live report in a bit. And todays squawk planet. Waiting to hear from the ecb. Decision due at 7 45. Followed by a draghi News Conference about 45 minutes later. The central bank expected to keep rates on hold but perhaps raise inflation forecasts. Two notes. Adp private payrolls due this morning. The private sector forecasts have added 170,000 jobs in maybe. Adp not always a reliable indicator for the jobs number but last month correctly fore shadowed. And a pair of central bankers to watch. Fed governor jay powell and rob caplan both speaking. In Corporate News uber in the biggest 3. 5 billion. That is just the total in saudi arabia. The total i think 5 billion. Ride sharing most recent funding gives uber a valuation of 68 billion. And a whistle blower hitting oracle with a lawsuit over cloud accounting. Claimsing she was terminated in retaliation for complaining about improper Accounting Practices in that unit. And shares falling after hours down over 2 . And apple reportedly plans to raise up to 4 billion from a bond sale in taiwan and australia. As of march apple had a cash pile of 233 billion. 90 of that is held abroad. They need dont need that back here. And expected to help fund apples Share Buyback and dividends. And other news, Goldman Sachs is trimming estimates and price target for apple on lower smart phone growth. I would like to know. I would like to know to where. Where were they . And where are they now . Ill look it up for you. I had that report in my email box. Facebook chief operating officer Sheryl Sandberg taking center stage with recorrodes kara swisher. Commenting peter te. I know this is actively discussed here and it should be because issues of independence and the media are key to democracy and key to all of us. It is what you are about. It is what the conference is about. Peter did what he did on his oen. Noz as the facebook board member. We didnt know about it. And . And you should talk to him. Swisher also pressed sandberg about her future with facebook. You could be a ceo of disney. Did you want to be the ceo of disney . I love my job. Dont want another job . You dont want to are run for office. I love facebook and my team. We will have more highlights from the code conference throughout the morning. 1. 24 from 136. I want to know what the high was. And put a market cap on you ought to go out. Take week or a month. And do the math and come up with what you should be known for, which is your law of large numbers. There is a place and there is a level. They get there and i it is a sell number. It is either 750 whatever that number is. They never they reach up against it. It is some percentage of total corporate profits. Some number. It is theic r ii ii iic ras ear there is an expression. Jack and the bean stalk. That wasnt real. In reality no tree. Climbs to the sky. And you county even need to know anything else. It i dont need to do any research. I just if you could pinpoint the number where they get to some percentage of the total market cap. I get it 5 they never could sustain that. 6 or 700 billion and cant sustain that. 600. Most companies. Cisco. Microsoft. Any google. I dont know there are some that have made to it 600. Who was it . Kevin landisch yesterday . It was someones point. One of the stock pickers we talked to is the reason he doesnt like amazon right now is because he thinks its richly valued and anyone who made that argument before he said people use to give him grief about that with microsoft. Apparently think i saudi ramco already is so there has been one. Can be done. But when apple is at 130 and serve at 200 for a price target and when i ask i go thats 1. 4 trillion dollars. So. Analysts. Dont do the math on both sides. Tree. And then a forest the question, analysts or economists . No. Climate scientists. They are the lowest. Beneath journalists are higher than them. Yes. But second to the bottom. Opec leaders meeting in vooen that to discuss production levels. Vienna that to discuss production levels. High profile brian at the high profile meeting. Thats right. We heard from a couple of them this morning. They are in there now meeting trying to work out their differences, maybe come to some kind of production freeze or a cap. That is really the idea. Is it expected by the market . Probably not. But that does leave them the ability of opec to shock the market. If we get that it would be expected oil would move higher. You kind of bum rush in. Everybody talks to the Oil Ministers they are all sitting at the tables and you get a couple of comments out of them. The one thing weve gotten so far is that really the current price even though we are well off the low is not nearly high enough. Especially for more cash strapped nations liking an e iio la. Ang la ministola minister. They want higher prices but how do you get there . The only way is two fold. Either demand jumps which nobody is really expecting or you get some demand or cut. How do you do that . It failed at the doha meeting. So the venezuelan minister is proposing a per country cap. Listen. We are talking about some new ideas. The possibility to have like a supply production range per country. Not to have a definite number. To have a range of value for the evolution between minimum and maximum and have that band of production. So really at any time we could get the decision that opec is going to keep things the way they are, which may put downward pressure on oil. They could come to a keel. We dont know. Thats why were here. Thats a nice. Thats not a junket. Youre working. Vienna. Enjoy it while you are there. And tell you what. If i was a faster runner i could cover boast the ecb and the opec for you. Because the ecb is meeting like three blocks that way. Im just slow. I cant do it. Im not kidding. Wow. All right. All about vienna. Its total sausage fest. [ laughter ] to the broader markets now. Another check on u. S. Equity futures. Now down about 11. Yesterday it was wow. Crazy wow. Closed up two. The yield on the ten year now about 185 or so. You know, like watching paint grow. And lets take a look at the currencies. Quick 112 this morning. On the euro. 108. I dont know whats goin in japan. Well talk about it. Cant even put sales tax on. Raised from 5 to 8 and caused a recession so hes a little reluctant from 8 to 10 . Well, you know. 10 consumption tax. Not a lot happening over well see. Chief Investment Officer of the Portfolio Solutions at baj of america. Merrill lynchs Investment Management and guidance unit. Okay were out of time. Okay thank you. Anything else you need to where did you go to grade school . Kidding. I went to st. Mary star of the s p dow and our guest host for the hour, former chairman of wells fargo. And andrea always ask you is the market bottom . So im going to ask you what is your price target dick on the s p over the next 12 months no im not. For you. This is what i have for you here. Weve been in tightening mode. Markets gone nowhere. And its only a quarter point why dont we just admit this is not a time for equities. Goldman sachs said it. In a tightening cycle you are probably not going to make much money in the stock market. We agree with you. Our target is 2,000 on the s p, which is going nowhere. Is there a reason after how long a an easing cycle now the Inflection Point has been hit and its just harder . Part is you dont have earnings. We may be troughing. We have signs estimate revisions are going up but weve had the worst Earnings Period since 2008, 9. The market is not cheap. Volatility is low. Were seeing lending tighten. Economic growth is just okay. So we think the maybe what explains zero economic or zero Interest Rates is slack Global Demand that weve had for a couple of years which has made it hard for corporations. So why should the market go up at this point. When its been sort of juiced already. So we agree. And we also are expecting episodic volatility. Which weve been getting so we think this is a time to be more neutral on the markets but pick your spots. Not everything is bad. In fact the you look at whats working, it is whatever has income. So many of our clients, particularly the baby boomers going into retirement need income. They are not generating the income from the fixed income market they thought they would and they are coming to the equity market. So you are seeing even sectors like staples, reit, utilities, telecoms doing fairly well. The market itself it hasnt done anything but it is on alltime highs. Not far from there. And what is a pretty bleak scenario that we just talked about you would have to say the fed has orchestrated asset values to be at high levels. That was supposed to induce the underlying economy to improve. Were they successful or not . I think looking back at the old adage of you cant push a string. We are seeing that sort of play out here. More and more were leaning towards the limitations of Monetary Policy and how much impact we can have with those moves. Dick, do you think that leishman, you told me you get the animal spirits going. You get the asset values up. Make it so there is nowhere else to invest. I told you all that. It is true. The stock market goes up. Economy follows suit. It is true i told you that. The it is also true joe there is Something Like a 70 or 80 correlation between rising stock prices and rising investment. And dick would tell you why thats true. Right . Business investment . Yeah. When stock prices go up because the value of the existing assets people buy new stuff because it pays for them to do it. Thats different from the correlation being that if stock all this to stop talking about dicks answer and let dick answer. Thank you. When every six weeks for the last seven years, the fed says things are so bad out there were going to keep Interest Rates t zero forever. And the general public thinks the fed know what is they are doing. Which of course they dont because their forecasts are at about 50 . Economic forecasts up about 50 . And look at janets perspective versus everybody else. And when you keep every six weeks saying things are bad t Business Community decides that is the case so they dont have to worry about animal spirits and increasing constitutional right Interest Rates. The consumer is doing find. So we have a monetary and fiscal policy that is antigrowth basically. And its been that way for basically eight years. Weve been told the supply side has trickled down. And 4 and 5 by doing the things that have worked in the past this is different did you read the piece today. I did. He said it started much earlier. Started earlier but not going to be solved by keynesian policies and different because of what were talking about right here. Im not going to agree but im going to have to least take a nod that were rewriting the economic textbooks now about the impact of the Monetary Policy and keynesian stimulus and how to get things going. The idea that the central bank cannot pick a inflation rate. It was the one thing we thought they could do. And they cant do it. Why would you want a 2 inflation rate . That is a discussion im hear interesting the control and we dont have time to have. But there is a reason for it because it is not one and because it is not three. That is essentially why they picked two. If we had 2 inflation our economy is growing less than 1 today. What target do you want . I dont want that target. I think you let you need a target. You need some sort of goal. Hitting it. Fair enough. Stay long . The equity markets. I think one of the challenges now is whether what is your alternative . You have low yield and fixed income. Where else do you go . And you are aware that the s p is above where your target is right . Yes. I do. That means but were not a end of the year, joe. It is not at the end of the year. So it could be going down. It could. You are at bank of america, Merrill Lynch and you are saying dont buy stocks. No we love stocks. We think we are in a secular bull market with a period of when do i start seeing better earnings thats hard to forecast. The easiest way is to look at earnings estimate revisions what arnlss are doing with their numbers. Were just starting to see avnlss start raising numbers but we need to see that continue. Because if earnings dont come through the markets really cant go up. You have to have the revenue growth. And theres been no revenue growth. And no margin expansion. Im afraid in response to the recent lackluster revenue that what we are going to see is a another round of cuts and that is going to have a negative impact if we yeah. All right. Thanks to chris and mary ann. Im not going to say read your title again. People can use a vcr if they have to. Coming up. Much more from our guest host dick kovacevich. And squawk box is coming right back. singing you wouldnt haul a load without checking your clearance. So why would you invest without checking brokercheck . Check your broker with brokercheck. She once topped forbes list of americas richest self made women with 4. 5 billion. Now her net worth forbes says has fallen to zero. Lowering the net worth down to zero based on the fact that the current worth of the company. Their response. As the privately held company we declined to share confidentiality information with forbes. As a result of this is based on speculation and press reports. Dick, this is something weve talked about in the past. But obviously the tensions have ratcheted up. There is a criminal investigation, the sec is looking into issues and there is just questions about the basic Lab Efficiency and effectiveness at theranos. What do you say as the board member given the circling attacks that are coming . Well i still believe in the vision of elizabeth and theranos and the technology and, you know, i think well see what happens in the future. And the information that will be coming out. But i believe in it. You believe in the vision of edison. But does it work . What weve heard lately is that the company has stopped using edison, which is the finger prick technology that was supposed to be this great promise where you could take less blood and have just as accurate testing. There is a lot of miss information lets just stop at that. And as i said i think there will be some information coming out in the next few months that will be much more accurate. Why is it taking so long . Well what you do in again im not an expert in this. But the Scientific Community brings in experts. And testing the equipment and activities. And then there is a peer group that comes in, checks to see if that information is correct. And then there is articles written in scientific magazines. So it is about a six month process as you go through the peer review part. Because that will verify indeed that the information is correct or help verify the information is correct and that process is going on. The Cleveland Clinic told us in the past they would be involved in with some of this. Are they still. I dont know the specifics of whos involved. But there are a lot of people involved. And the medical board is doing the analysis internally and the peer review is by different people. The president and coo, stepping down as well. Saying he retired but hes 51 years old. And that raised questions because he had been so close to elizabeth homes for so long. And there are some personal reasons why he decided to do that. But again, you know, i think these are all normal things that happen with a start up. And it is just theres been excessive publicity for something that is not unusual in start ups. There were financing rounds 9 billion. And now she with whats left she doesnt have claim to any of it. Now claiming there is 800 million valuation. Doing this pace opd 723 million raised she was worth 4. 5 billion. And we looked at that and thought wow it would be tough to catch her. And now i think im above her. And you will be too. If the people this is income equality. Shes no longer worth 4. 5 billion. And now were tied at zero but were all equal. And is there no story that you cannot link back to some democrat republican liberal conservative . This is about start ups. It is a medical issue joe. It is not a political issue. I tied her. I know. Income inequality. You have it all wrong. The big thing about the election is blood testing. That is really the big issue. I tied Elizabeth Holmes net worth and well done. Thank you. And this is a conversation i dont want to have. And dick, one final question about this. The huge issue, is it safe for patients . People who have been going in and getting results a lot of results have been thrown out. And there are questions answer patient safety. Can you say patients are okay with these testing results . All but one of the stores where consumers come in is in california where the lab determined to need work and it did. The arizona lab has passed all the tests and that is where 95 of all the tests have been done. And they have passed that test and they are accurate. Dick, were their discussions among Board Members of the notion this whole technology is so proprietary that we cant let anyone try to reproduce our results. It has to be this black box things. You have to take our word for it that it works. Most of the time and peer review, you need to know what the technology is. You cant go like original recipe chick on something. Have they shared the technology . Cold fusion didnt work, remember . You had to try to see if it really did before you believe it does. The medics side of the board. The people who really understand this have been involved in it from the i dont know from the get go but certainly since ive been a board member. So the rest of us are not exactly expert bus the medical part of the problem we point out you got some of these 90yearold guys with great reputations that are on the board only for star quality is when you ought to have some scientists. On the medical board. Who den this may have not worked but then they refine and it it eventually works. That is yes. I believe that. Thank you. Dick kovacevich is our guest host. And going to be with us the rest of the hour. And up next. Human scientists human and primal. These robots. I hope that is not what this this is next. Because who wants really . Im on my own on this . You are. Spl plus elon musk says humans could landed on mars again. As soon as 2025. Because matt damons been there. We have his comments from the code conference next. And here is a look at the yesterdays winners and losers. Ok team, what if 30,000 people download the new app . Were good. Okay. What if a Million People download the new app . Were good. Five million . Good. We scale on demand. Hybrid infrastructure, boom. Ok. What if 30 Million People download the app . Were not good. Were total heroes. Scale on demand with the Number One Company in cloud infrastructure. Plumping surface cells for a dramatic transformation. Without the need for fillers. Your concert tee might show your age. Your skin never will. Olay regenerist. Olay. Ageless. And try regenerist microsculpting eyeswirl. It instantly hydrates to plump and lift. Time now for executive edge. Google engineers are teaching their self driving cars the art of honking. Engineers have reportedly been programming the Cars Computers to understand which road situations require a honk, which in my book are every road condition. The company says its self driving cars aim to be polite, ooh. Considerate. Uhoh. Yeah that may not be and only honk, what . When it makes driving safer for everyone. What is the point . Its not i, you know, that. I have had horns replaced many times. I know. I do. I have never in my entire life. People drive in the left lane. All the time. They just figure its optional. There are two of them. I like this one. A lot of them just have no idea. Just figure this lane is as good as any other. That you werent like this off camera. No this is true. It is definitely true. Can you teach the car to honk when sunday drivers and i never knew. There are definitely weekend drivers. There are people who dont drive during the week when you have to get somewhere. And sometimes i think they are getting paid by the hour too some people. Where they may have to be somewhere some time. But if they get back to where they got to go work they are going to be whatever they are doing. So driving and waiting at a light and not turning right on red. Why rush . Why. And you know you dont have to turn right on red if you dont want to. It is an option . Yes. Because i got really mad at someone. I actually got pulled over i got so mad at the person in front of me. Did they write you a ticket in. I stau guy oh yeah. No we dont have to. No we should talk about this. No this week. Really . No. Within the last six months. Did they arrest you . No i didnt get arrested. Not then. Arrested or convicted . Whichever you choose to answer joe. When you have to write down on a job application they mean convicted. Yeah youre fine. Annual code conference last night this elon musk in interview said he expects apple to have a car available by the year 2020. I think they will probably make a good car and probably be successful. The car industry is very big. So it is not as though there is one company to the exclusion of others. There is like a dozen Car Companies in the world of significance. And the most that any company has is approximately 10 market share. As for other potential competitors musk says hes not worried about google because in his words it is not a car company. Although apple he said maybe could make a good product. If we create some digital super intelligence that exceeds us in every way by a lot, it is very important that that be benign. Musk argues the main danger is highly evolved technology could be used exclusively by a small group to the detriment of humanity as the whole. Also the ceo of space x the Company Plans to spend a mission to mars on the flying dragon two rocket starting in the year 2018. I wouldnt recommend traveling to mars in that. It has the interior volume after large suv. The trip for dragon would be on therd of six months. That is a long time to spend in an suv i think. You know. Can be done but not probably not ideal. And it also doesnt have the capability of getting back to earth. Right. Musk expects the first rocket carrying human cargo will launch in 2024. Continuing coverage from the code conference all day right here on cnbc. I dont think were quoting him exactly. The fear isnt that a human would use this incredible it is that the true Science Fiction people have been writing about for years. And it is fascinating of when the singularity occurs and when machine knowledge is a billion times the sum of all human you worry about the machine itself. And in asphyxiatiscience fic are two things. Two benign evil or doctor somebodys got keep the power running at some point. Maybe refuel something from time to time. Weve already created a existential threat with nuclear bombs. So a small group of people already control an economics joke im sure you have been waiting for. That joke about the factory of the future has a man and a dog. The man is there to feed the dog and the dog is tlo make sure the man doesnt touch anything. And that is where were going here. Or worse. And there is a whole subculture of Science Fiction. Well weve seen it. 2001 had it. Robotics could bring manufacturing back to the United States. True. Chinese economy showing new signs of strength but the trade winds of america are shifting on both sides of the aisle and it could change relationship between the two nations largest economies as we head to break a quick check on european markets right now. Weve got some green. Thats marginal. 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. The country still wrestling with slowing growth and softer consumer economy. Dr. John rutledge is chief Investment Officer at saf nad. I think a lot of people misread last chinese pmi but you see it as positive. Why . It is about same old like the month before. The official index is up a little bit. The dmes the private one is down a little bit. Official index is big companies. Government owned. The private one is small ones. The stimulus is still pushing the soes. State owned enterprises. And the Small Companies are still having trouble getting credit which has been chinas problem all along is they have no Banking System for Small Companies. Ive always think things were at least for the last several months trading on two different dynami dynamics. We see stability at least in the manufacturing sector. Idea of the crash of the chinese economy seems to be less discounted. Manufacturing is deflating like a balloon in china and probably will so for the rest of our lives. Economy grow, six for them is eh. And the story about will china crash is a story thats only talked about outside of china. Inside the story is capital flight. Everybody wants their money out. It isnt because there are no good investments. It is because they dont want somebody to steal it. And how much is leaving the country. A trillion in the last year. Last month our two has been down because the governments turned every lever they have to stop it. But it is leaving down and it is because the government has become more repressive. Democratic reforms have been back slooiding. They are tightening down in the media. So this is a different government than they had before. People are worried about that. There is one way to stop it. You talk about which is the idea of including china in the Morgan Stanley international index. Is that going to happen. They are definitely in. What level . 20 percent . 5 initially. 20 of the emerging market index. And the 20 will come in and the irony is that its Foreign Investors who are going to come in doing the work of the Chinese Government for it because that will allow the domestic investors to get out because they will have a buyer. So dont buy the stuff when it comes into the index. Are you saying you should follow china into the index as an investor or not make that play. You should follow chinese guys into the vancouver Real Estate Market or chicago, san francisco, los angeles, new york london any place with a non stop flight if shanghai. You were recently in the middle east. Whats happening there. O saw four sovereign wealth funds a bunch of investors. Money is leaving. It is not capital flight like china but walking to the exit. And because of the instability. But they are bringing the money here to a place where they are also a little perplexed about the stability of the political system. Perplexed is one thing and machine guns is another. So they are bringing it here because it is relatively safe. Right. And what do they want here . Real estate. Real estate interesting in the u. S. Now does not charge you for inflation protection. You are getting good current yields. Free. But because of those airplanes we talked about not central cities. So not downtown manhattan. You have to take second tier rel state, outside of major cities, niched rel state but you can still do 8, 9, 10 yields and inflation is not being priced in at all but it ought to be. Have so the political contest here stt United States is not effecting Foreign Investors and their desire for u. S. Assets. It is effecting their dinner conversation. They dont like it. They think we look embarrassing. They say to me how is it possible the greatest country in the world can end one these two people as your choices or president. They believe the u. S. Abandoned them with the iran deal. So the instability in the middle east goes up. Is so they are not going to take that you are money out of here. They are no else to put it but big capital inflows in the dla which of course means stronger dollar and not a weaker dollar. Thanks very much. Next time i think well get you a first class flight. When we come back, parting shot there is our guest host today. Dick kovacevich. And dont miss the data point of the morning. Adp private payroll report numbers come out at 8 15 a. M. Eastern time. Squoox squawk box will be right back for decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Of fixodent plus adhesives. They help your denture hold strong more like natural teeth. And you can eat even tough food. Fixodent. Strong more like natural teeth. Fixodent and forget it. 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. Vogue is introducing hair care. Personal care products. I dont know it, either. Im going to look into that. Im not sure what they offer. Hairdo. Lets get back to our guest, dick kavocevich. You said earlier this morning you think the economy is doing pretty well. Can you tell us where you see the consumer, small business, big business right now . When i say pretty well, i think its continuing at a little over 2 growth which is pretty good compared to the rest of the areas. I think it will continue, and i think it will cause the Unemployment Rate to at least stay where it is and probably go lower. And if that happens, theres a reason i think that the feds should be moving in june. And the reason theres several reasons for that, one of which is it gives them the option then, if they want to, and if supported by the data, to move in september and even december. And some of the fed governors have said that its possible to do two or three moves. So i think they should move as early as possible so they have more time to wait and see the reaction to it before they decide to do september or december. Thats not what the market thinks at this point, although the market thinks june is definitely a live meeting, there is still only a 10 chance that it will hike in june. In february it was 1 . Sure. I started saying this then. Its just that this is the right thing to do, in my opinion. What is your confidence rate that we could grow again at 3, 3. 5 if they did the right things in terms of deregulation, in terms of Corporate Tax reform . What is your confidence rate . Is it 90 . Niits in that category. Weve been doing it for 50 years. If you go back to the fiscal and monetary policies weve used for the past 50 years, you will get those kinds of results. So its not a new normal. We can get to a point, i believe, you know, in terms of turning into an entitlement state with the european stock, we can go to a point where we cant get 3. 5 . We might already be there. You dont think so . I dont think so. What are we going to do, get rid of obamacare . What are you going to do with that . At the moment, i think the great reason were not growing is the incredible deregulation thats taking place. Are you talking about doddfrank . Im talking about everything. Theyre complaining about regulation on them, not taxes or anything else. This is an extraordinary and theres been a study that has shown that if we had the amount of regulations that we had in 1980 which, you know, we had clean water, everything was reasonably well, versus today, it would have added. 8 to our gdp annually. Now were at 2. 2. Can we just ask you about doddfrank which is a place you had personal experience with. There is a talk of an amended revision to it coming up. What do you want to see done with doddfrank . The cumulative impact is in describable. It is so excessive that you need to you know, there probably are some good points and capital levels are certainly one, liquidity, but even those have gone to extreme levels. Whats happened is they start out saying we need to fix a few things, and i would agree with those, but then they take it to excessive levels. Jp morgan supposedly has 43,000 people of their 220 that are involved with compliance and risk management. This is ridiculous. Its over 10 of our gdp now is in regulatory costs. And that 10 causes our productivity, which has been at 2. 2 for 50 years, to be. 6 in the last eight years. The last two quarters have been minus 1. 5 . You cant have wage growth, you cant have Economic Growth when productivity is at these levels. Dick, i want to thank you for being here. Its always a pleasure seeing you and we appreciate your time. Thank you. Coming up, two hours with fiscal manager jack welch. A look at the economy when we come back. 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. Every year, the amount of data your enterprise uses goes up. Smart devices are up. Cloud is up. Analytics is up. Seems like everything is up except your budget. Introducing comcast Business Enterprise solutions. With a different kind of network that delivers the bandwidth you need without the high cost. Because you cant build the business of tomorrow on the network of yesterday. Because you cant build the business of tomorrow no, youre not yogonna watch it tch it we cant let you download on the goooooo youll just have to miss it yeah, youll just have to miss it we cant let you download. Uh, no thanks. I have x1 from xfinity so. Dont fall for directv. Xfinity lets you download your shows from anywhere. I used to like that song. Red hot rhetoric in the race for the white house. Donald trump under fire for trump university, Hillary Clinton hammering the gop nominee even as she struggles to fend off an email scandal and Bernie Sanders in the golden state. He is trying to scam america the way he scammed all those people at trump u. Lessons from the master of management. Business visionary and executive chairman of the jack welch management institute, jack welch is here to talk politics, jobs and the state of the economy. Hurricane season is here. That could mean big business for generac. Well get a business forecast and talk Energy Prices with the ceo, straight ahead. And a mission to mars on a flying dragon. The tech giant speaking about his big ambitions. His comments are coming up as the second half of squawk box begins right now. Announcer live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box, everybody. Im Rebecca Quick along with steve leaseman. This is basically where we left things off yesterday in the market, gaining just a couple points for the dow yesterday. If you take a look at oil prices, this is all happening as that opec meeting takes place in vienna. We have seen oil prices slightly higher. 49. 04 for wti. Steve . In headlines this morning, some key Economic Data ahead this morning. A report on private Sector Employment is out at 8 00 a. M. Eastern time. People look for jobs more than they do in april. We look at initial jobless claims. 200,000 new claims for next week. 17 have joined giving the pledge, the bulk of their fortunes among them. Wife line and airbnb founder john chefsky. Now, whats better for society, that shes its probably better that you stay a billionaire and then give it rather than just taking her down to zero, which a lot of people the money goes to money heaven . Its good to see this income equality with her, anyway, because were all even now. We tied her, me and you. Were good. Stocks to watch today. Costco sales rose 3 in may as the warehouse operator benefited from one additional selling day due to the timing of memorial day. Same store sales are flat, and given the price of gas and currency swings accounts for 4 . Box reporting First Quarter revenue. Rose 34 , beating forecast. More customers, however, billings rose just 9 and that was short of assessments. Alibaba brought back 2 billion of its own large shareholder. Softbank, which was selling billions of dollars. Gic which bought, and founders bought another 400 million. Uber haili ining saudi arabs its latest investor, raising 3. 5 billion, giving uber valuation of about 68 billion. Joe . Lets get to our guest host here to talk about everything. Jo jobs, the economy and the race for the white house. Jack welch is economic actixecun of the welch institute. He wrote the real life mba guide. Also author of winning. Stupid charlie sheen, he took it from you, i think. You know what i love . Let me count the ways. You know what i love about you, you come ready. You come prepared. I see your notes over there. You always have something youve been thinking about. I think you used to do this at ge with management meetings. Im not saying its all from susie, although shes very smart and some may be your own stuff. What is front and center for you today . Is it just about here we are, 5. 5 growth again, and we got obama taking victory laps for the economy . Im just not sure where we are. I dont know if you can take a victory lap if you havent won, can you . My frustration comes from the lack of growth. What weve got now is a habitualized low growth environment. Weve become habitualized to it. I recall all the ceos who work for us in a private equity portfolio before i come here to try to get a feel for each business. Which private equity . I call them and the words i get are, gee, its a little better than last year. Orders are up 2 or 1. 5 or 2. 5 . Most of these guys havent been ceos in good times, so they habitualize to this sort of satisfied with low growth. So on one end you got every big business thats involved in oil is getting smacked, and theyre getting smacked in a way you dont quite understand. Theyre getting whacked because the people that have been running the oil business, the purchasing agents, et cetera, have been very happy to quickly get supply, whether it be in montana or the oil fields of pennsylvania or wherever to get availability. Now theyre in a cost pressure. So the squeezing of prices, oil rigs, helicopters to go to oil rigs, the squeezing is beyond belief. These are not just down orders. Its the price. Ive gotten 20, 25 price cuts for supplying to these industries. So youre getting squeezed on volume and youre getting murdered on price. The only things that seem to be going are things related to the internet. For example, we have a company that builds lowrise buildings, four stories or a twostory, a warehouse. So data in warehousing is booming. To get these small buildings up in these rural locations, to get supplies to fulfill for the internet. So that sort of business is going very nicely. But the idea of industrial america, it is brutal out there. And youre not seeing Manufacturing Industrial america go anywhere right now. So there are pockets of services here and there that are doing quite well, but the coside is doing badly. We had kavocevich on. I dont know if you had volume in our posh green room or not, but i asked him, can we get back to 3, 3. 5 , is it possible to do that, and what do we need to do . Is it a kansan answer or a deregulation answer . Its all of the above, its deregulation, its taxes, its all these Different Things. But kwe can get back there. Can we . It depends. We have an election coming up, and well talk about that, im sure, sometime in the program. You cant have eight more years of this. This is clamping every day you wake up. You have a Greenhouse Gas law, okay. They want to reduce Greenhouse Gases by 0. 1 . It costs 70 billion a year to do that. That tradeoff is not right. And the idea that Climate Change is our number one, from that spills all kinds of policies throughout the different agencies. That Climate Change is our number one problem in this country, thats the biggest threat we have . Get out of here. Thats just radical behavior. We can use the word inured again. We hear it now and its like, yeah, yeah. Most people sit there, yeah, yeah. Its been eight years, but slowly and surely it was global warming, now its climate thats all the stuff where were nodding instead of just the bully pulpit could be used for all kinds of things right now and its not. You dont realize the overarching spill to all the different heads of the cabinet when the number one objective is Climate Change. You get a reduced military, you get an air force that doesnt have parts, you get all these different you get an economy that wont move, you ghetto zone regs that are wacky, 75 parts per billion to 70 for 2 billion a year . Come on we have analysts that have come in the last couple days who recommend defense stocks. You have to get it back. You cant be faced with the real threat of caliphate and iso and that in your face. You cant be talking about Climate Change as your number one. Not Nuclear Proliferation or isis or the middle east. Its ludicrous. Its almost unbelievable, okay . But enough of that. And the media, just lap dogs. Yeah, yeah, yeah. They lap it right up, which is unbelievable. Where was i going from there . So thats the economy as i see it. Back to one point on the economy. Where you talked about Energy Prices, and its not just the decline in volume, its also getting crushed on the prices to the suppliers for this industry. Even though weve seen prices of wti come back in the last couple months, that doesnt mean youll see that pricing. I remember three or four years ago, you were coming in saying energy would be what saves us. Have we lost the ability to use that as the next thing that brings back manufacturing in the United States and provides goodpaying jobs . It depends who is elected president whether we have an allout take advantage of what we have in this country, or whether we have cracking regs and skwaqueeze that to peanuts, whether we have taking over the land. All these things created together, they all come from one thing. Climate change is the number one threat. The Vice President says it in california you can be i think there is legislation now that you can be prosecuted if you you may already be arrestable out there for even saying this, for even thinking this. The other thing i was saying, apple just raised some money with the taiwan bond offering. Theyve got 35 billion in cash for some number, almost all of it overseas. Theyre not alone. Theres all this money. Couldnt that do something wouldnt it be better brought home here even if wouldnt it result in some jobs, wouldnt it result in dividends, wouldnt it result in something positive . How much is it, a trillion . When we think about growing the economy, youve got to think about jobs. Its all about thats what you get. When you get jobs and you dont get handouts and you dont get dependency but you get jobs, you get a whole different set of confidence, if you will. And youll get more buyin. Right. Its almost the difference between earned success and learned helplessness. This is what you get. Arthur brooks has written about this. The only thing about this word called progressive which they cleverly have designed as a word, you progress to more dependency. Thats what thats all about. I mean, come on. We didnt like liberal, so now were all progressives. And progressives, what do you get . You progress towards a liberal agenda, which is more dependency. Thats what thats all about. If there was ever a phony, its progressive. You are heroic for saying these things. I dont even want to look at the Huffington Post after what you said about Climate Change. Im not saying im not a Climate Change denyer. Youre just pointing out the cost. The cost of doing it. Its got to be more balanced. Ill be the denyer if you dont want to be. Coming up, Hurricane Season has started. Experts are expecting 14 names. Well talk to generator suppliers about a burnup in business. We find out whats powering profits after the break. What are you doing . Getting faster. Huh . Detecting threats faster, responding faster, recovering faster. When your securitys built in not just bolted on, and you protect the data and not just the perimeter, you get faster. Wow, speed kills. Systems open to all, but closed to intruders. Trusted by 8 of 10 of the Worlds Largest banks. Shoshow me more like this. E. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. There could be major hurricanes if you live on the oceans or water that leads to ocea oceans, youre in danger of meeting up with a hurricane. Now, the Weather Service is working on a new storm surge watch system. They will know 30 hours when a storm is expected and a storm surge warning would come about 36 hours in advance. The system is expected to be operational next year. I think we already have two named storms even before the hurricanes, right . You have firsthand experience with storm surge, dont you . Storm surge, yes. Ive never stayed on a beach in any of these hurricane places, but yes. You know the last category 3 to hit the mainland, right . You dont know this . For the longest in recorded history, its been nine years. This is 2016, so its now 10 years. Its the longest hurricane drought in recorded history. Is that good or bad . If youre attributing i dont attribute storms to global. I do not do that. Were having a below average tornado season, too, but you dont want to talk about that. Generac, which is the maker of generators, are on a high. The struggles of the oil and gas industry are taking a toll on their business. Joining us right now to take us inside the company is generac ceo eric yagfield. Thank you for joining us today. Thanks for having me, becky. We see private equity has supplied the oil and gas industry, and i know its an issue for you as well. How much of your business was going to the oil and gas industry . It was a range of equipment generators, riding towers, pumps that provided heat and power. That business was 10 back in 2014 of our total revenue, so it was a good chunk, and we actually got a lot of questions in our q and a release about how much it is today, and we basically tell people its nonexistent, almost, which is unfortunate. We believe in the longterm, but certainly in the short term, its been tough. But its not just the oil and gas industry that the company has run into headwinds with. It was also a much milder winter in the northeast, and bad weather for most of us is a terrible thing. But for you all, bad weather leads to more businesses and consumers saying, wow, we really need one of these generators. Where do you see things sitting at this moment and how dependent are you on bad weather . Obviously the core of the business is still a generator. Were a backup generator company. As you indicated, weather creates about outages about 70 of the time, so its a situation where, as i think joe was mentioning, we havent had a cat 3 storm in nine years, we havent had a landed hurricane of any significance in the last three years. Florida is an example. Its been a decade in florida since theres been a hurricane down there. So clearly, that has had an impact on our core generator business. But oddly enough, i think what is interesting is that i think businesses, and in particular, there are a couple verticals within business backup. Telecommunications has been a great market for us for a long time. You talked about the weather system, the advance alert system for storm warnings, tornado warnings, theyre sending people texts today across the telecommunications system. Those cell towers need to be backed up, so providing backup generators for cell towers has actually been a bright spot in the business. Thats been an area, again, along with nonresidential, thats been the bright spot for our business. Just the other day, and i have one of your things. You made me pay for it. I got it bring really knew you. Of course. Im not endorsing it, but two days ago, no reason. It was hot and sometimes the lines just i dont know, the entire neighborhood was down, and immediately it started up, and we were the only house with lights. Its a great feeling. Yeah, it is. I cant imagine not having a you feel better because they yeah, i guess. What scares me is the disaster of one of the big power stations going down where you dont have the equipment to replace it after a solar flare. Who knows, maybe someone who doesnt like us hacks into our grid or something . Can you help back up supermarkets . How long would food be okay if the entire city had no power for three months . How much food would be around . I tell you, joe, this is a topic right now that has gained a lot of prominence. There have been documents on parts of the grid, i think there is a substation outside the Silicon Valley in california about a year and a half ago where it was actually under physical attack. I remember that. The substation was off line for Something Like six months because these huge transformers that are big components in these systems are custom built, and they have to be delivered by rail car. So its not an easy thing, logistically its not an easy thing, its not something on the shelf they can put back on line real quickly. So i think the prospects of an extended outage due to extended weather or a cyber attack is real. I didnt realize that, that once the power was out my neighbor just had a gas connection set up so he could get a generator hooked up. Which model should i get if i have that done . You want a guardian model 22 kilowa trkt whole house generat. Because that keeps filling i dont know. I have no idea, joe. If i was transported back 20 years, i would be helpless. You need one, steve. Guardian model a gas generator, you should see a couple years ago, aaron, the lines at the gas station, there were 50 people that looked like refugees pumping into their can. I think thats what people dont really understand, is the infrastructure in this country its all powered by electricity. Without that, the mundane things we take for granted go away. Gasoline delivery, everything. Aaron, i want to thank you for joining us today. Good to see you. Amazing. Great to be on. Thank you. Guardian model 22 kilowatt . I wanted to ask him why did the stock do this in 14 . What event took place . He was talking about the oil and gas, how it took their revenue at that point. Youre right, it was the storms that were here, too. What do we have to get to get this again . Thats a good question. We just lost him. Maybe welch has to make an investment. His peak was 60. Hes selling out i bet it does go down with oil prices. I was working in the yard, my chest started hurting and i thought, well, you need to go to the doctor. I was told that is was cancer, and i called Cancer Treatment centers of america. Dr. Nader explained that they can pinpoint the treatment. Once we identified that there was this genetic abnormality in her tumor, we were able to place her on very specific therapy. Our individualized care model gives each lung patient specific Treatment Options with innovative procedures that are changing the way we fight lung cancer. We have Excellent Technology that will allows us to perform very specialized procedures for patients who have lung disease. To learn more about these targeted therapies and advanced procedures for lung cancer, as well as the experienced physicians who deliver them, go to cancercenter. Com when he showed me the cat scans, i was so amazed. With this treatment, she had a dramatic response. Call or go to cancercenter. Com. Cancer Treatment Centers of america. Care that never quits. Appointments available now. Social media and ride sharing at the conference. Coming up, a rise in Interest Rates. What will mario drago say about inflation . As we head to break, take a look at equity futures. Welcome back, everybody. Among the stories that are front and center this morning, the white house will announce new rules today aimed at regulating the payday loan industry. Right now regulation of that 38. 5 billion market is left to the individual states. Mcdonalds could be changing addresses soon. The fast food giant is reportedly near a deal to move its headquarters from oak brook, illinois to the former site of Oprah Winfreys harpo studios in chicago. Were just a few minutes away from the latest Interest Rate decision from the European Central bank. The bank is expected to leave rates unchanged. President mario drago will host a conference that comes at 8 30 eastern time today. Discussing production levels, Brian Sullivan covering the event and brian joins us with more. Good morning, brian. Thank you very much. No word out of opec. They are meeting in the building behind us and we are waiting. It really could happen any time now for some sort of unified statement from opec about which we dont know what they might say. They could carry on like they are which is kind of every country for itself after the dilhof failure, it could come as a freeze. Its unlikely they would cut production, but really what the rumor is and what everybody seems to want is a cap on production. The reason is even though weve bounced 80 off our lows back to 50, most countries we talk to say its not enough. Listen to what the oil industry from cutter told us this morning. For the interest of the oil industry, for the interest of longterm security of supply, certainly 50 is not a fair price but a fairer price is needed so that investment is to be reinjected into our industry in order to secure the supply long term. And obviously the word fairer is code word for higher prices. They said they would like to see 60. But there is another angle to the opec meeting which is, just how powerful does opec remain . Remember, the u. S. , although were down, Still Producing about 9 Million Barrels a day, russia about 12 Million Barrels a day. Europe continues to pump, so how much power does opec really have . If they come out of this with no decision or agreement or some sort of animosity, its going to be a lot less. We briefly got word with a Nigerian Oil Minister before he ran into the meeting, and he says opec does realize they are not necessarily the oil power they used to be. Our feeling is that we have to balance this with also the fact that opec has begun to realize its capacity to be main producer is very limited. You really have two big story lines, guys, a, oil prices which they all seem to care about, and b, does opec really have any power . That is a good question. Brian is in vienna. Well be checking with him throughout the day about this opec meeting people have been watching and waiting for. In the meantime, our guest this morning is jack welch. Hes executive chairman of the jack welch institute, and jack, before we Start Talking politics, just a quick point on what brian said, that opec doesnt exist anymore . What do you think about that . It hasnt existed in some while, and now we have Geopolitical Forces hampering its behavior also. How can you have a saudi arabia philosophy against an iranian philosophy and end up without getting more oil pumped by them . And the producers like the United States at this point really producing so much more. Youve got the u. S. Producing more, the saudis having an issue with iran and trying to punish them, if you will, and so thats a recipe for no more cartel. You cant take saudi arabia out of the cartel and still have a cartel. I know youre reluctant to talk politics, i know thats something you dont like digging into, but the last time you were here, you were still supporting ted cruz. We havent talked to you since donald trump locked up the nomination. What do you think about donald trump as your nominee, and are you behind him . Well, i still remain a jobs, high growth, security, Supreme Court voter. Okay . Thats how i came out on ted cruz. I thought he was the best. I liked him. He wasnt able to pull it off. He went a long way but didnt get far enough. So im into i know what im getting with the current candidate of the democratic side. I know they want one wants eight more years the same. She speaks about, im going to follow through on the last eight years. I know the other guy doesnt think the last eight years were, quote, progressive enough. And hes asking for more things. Her opponent. Both of those positions i dont want. Policywise. Im not talking people now. On the other hand, i dont know exactly what i might get with the republican candidate, but i know i got a better shot at jobs, less regulation, he talks about more security, he talks about stronger military, and he put out a list of 11 Supreme Court candidates that, from all i know i dont know them all personally at all but from what i hear from right center people, they like him. So on my screen, i vote for that nominee. Donald trump mentioned you about a year ago on msnbc about a possible treasury secretary. Yeah, well, thats the last thing im going to be. Would you hold out for commerce or state . Tsa. Tsa. Veep . No, thank you. But i think, really, that come on, jack, the president calls and says, i need a treasury secretary. Thats happened twice in my life. Yeah . Which two . Twice in my life. Which two . Twice in my life. Which two . Lincoln and jobs in the cabinet, reagan and bush. And you said no . I said no. You might have done better for the country staying where you were, at the helm of g. E. Who knows, i did what i wanted to do, and i think i enjoyed it very much. Do you think that most republicans are assessing things like you are, where theyre kind of looking down the checks and then comparing who their options are . With the lack of practicigma by the right i supported romney, as you know, to the nth degree, and im so disappointed in his behavior now. Thats a pathological. Thats like some weird i dont know what happened, but Brett Stevens is someone i read every time hes on, and Brett Stevens says we need to lose badly to teach him a lesson. Come on whoever these people are that backed him, they need to be taught a lesson because brett knows better. I cant believe Brett Stevens has gone over the side like he has. Hes one of the great writers. Youre going to like the guy we pick. David french, are you serious . Thats just an elect hillary move, thats all that is. Thats an elect hillary move. I was going to say, it looks like the Republican Party is changing. It looks like some of the social issues are becoming a little bit unhinged from the financial issues. There have been changes in some of the philosophies of the Republican Party. Are you in favor of this . Hes always been a social liberal. In some sense its more moderate. Well, im not dont ruin the cliched idea of a republican that is antigay marriage, anti Birth Control im none of those things. In terms of the party itself, thats one of the interesting things about donald trump. No, its always been about private sector jobs. Its not always been about that, theres been a big social aspect. Am i wrong . They cling to their religion and their guns. Our president has said that a few times, too. Jack, youre not clinging to your religion and your guns anymore . Did i bring up a social issue in my criteria . You did not. But i think its an interesting change and i think both parties are changing. I think the Republican Party is ahead of the Democratic Party. Both parties are going through something. Thank you, becky. When you think of Bernie Sanders still running on the democrat side this is what happens. Look at the last time when hillary was going head to head with barack obama. They know how to coalesce better than the republicans do. This independent streak that we all talk about that republicans have, now we have this incredible these sort of elite, if you will, thinkers crystal, stevens, et cetera. I mean, theyre off the wall. There isnt an ounce of pragmatish in their bones where democrats do a beautiful job. Bernie sanders, i guarantee you, will line up behind her so fast. Im not sure his voters will. Hillary had already stepped out at this point and conceded to obama. From your lips to gods ear. Thats how the Republican Party used to be, now the democrats are more stepping in line. At least stevens and others are noticing that maybe the Republican Party is progressing into the 21st century, but if you were to ask a democrat, are you going to start leaving behind the idea of an entitlement state and complete income equality and socialism . And instead that whole party but im saying are you behind the socialist tendencies of the Democratic Party when theyre moving full on into it. Im interested in the Democratic Party changing, im interested in the Republican Party changing. The republicans are not the substance of what the democrats are proposing. What bothers me is this complete lack of practical behavior on the part of these guys. Both sides. We have to go. 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. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Becky calls that flat. Thats down four points on the dow, down 1. 3 on the s p and plus zero. 08 on the nasdaq. Lets take a look at european markets as well. They were up earlier, and now they are pretty much still up just a little bit, the ftsf at 1. 4, and heres 11. 19. The ecb keeping the rate unchanged, and the deposit rate is at minus. 4. Thats the only information. Thats all we get right now. Sometimes we get some information and the conference comes up at 8 30. Lets look at the german 10year boon. There it is. Jack, your opinion on Interest Rates. Never been there myself. But you like it, as a corporate executive, to be issuing. It would be nice. But the impact on so many pieces of society from negative Interest Rates is really painful. People have planned their lives and they retire and they dont have the luxury of having a lot of savings, and they were counting on a certain income. Its painful. Sorry, chuck, one more headline from the ecb that it says Corporate Bond purchases will begin june 8th, and that was expected. Implementation aspects released after the press conference. I think the other issue, too, there are so many unknowns. I honestly dont know the impact of this. What is your assessment . Look, its one of those situations where it makes a lot of theoretical sense, but practically, its a disaster. Maybe not a disaster, were using that word too much these days, disaster. But it makes sense that the central bank should not have a zero lower bound in terms of being able to stimulate the economy and what the market demands, but when you think about what happens with negative Interest Rates, i think what you end up doing is you end up weakening the banks and what you want in a situation to turn around. In economies you want strong banks, you want banks that are unshackled to lending. What im very interested in is next week Jeb Henserling will come forth with visions on revising doddfrank, and id love for congress to put a bill in front of the president saying here are reasonable changes to a law, and id love to see a republican conference come up with that and veto it. The problem s onis once you into negative Interest Rates, how do you get out of it . Were already complaining at zero Interest Rates. Theres no reason to go higher in the economy. Theyre going to raise it and well go through the same problem. Strong banks . Bernie heard you talk about this . I think strong banks are a good thing for america, good thing for the country. What . All you need to do for doddfrank was put capital regulations on. How about elizabeth . She doesnt like strong banks, no. Youre wrapped in a riddle. Wrapped in a blini. I usually do not come on air with embargoed material. Everybodys got it. No, they do not. No, they do not. Other people have it. Joe, do you know were going to celebrate their tenth anniversary . I have a perfect record with embargoed material. Perfect record. Over or under . Not taking the bait. The biggest names in Technology Continue to gather for the annual retail conference, many of them making news including teflons elon musk. Julia is in california with the latest. Its still dark there. Hi, julia. Thats, elon musk says he hopes to hit half a million for cars in 2018, maybe a million in 2020. He also says were two years away from fully autonomous cars. Tesla licensed their technology with google and said they would face more direct competition from apple. I think theyll probably make a good car and probably be successful. The car industry is very big, so its not as though theres one company to the exclusion of others. Theres like a dozen Car Companies in the world of significance. And the most that any company has is approximately 10 market share. Reporter musk also raised concerns once again about the direction that Artificial Intelligence could take. He said it would be incredibly dangerous if one company in particular developed extremely powerful technology. If we create some digital super intelligence that exceed us in any way by a lot, its very important that it be benign. Reporter even with all these Different Things musk is thinking about, rocket ships, ai, autonomous cars, he said the thing that makes him most happy in the world is hanging out with his kids. As for a political debate, he said he didnt want to weigh in on politics, but he also said he didnt think he wanted to do anything in the political arena, that it wouldnt make a difference and this is not our finest hour in democracy. Julia, back to you. Check out the european markets at this hour after the ecb decision on Interest Rates. You can see, markets there, some of them have paired some of their gains. We were looking at the dax, its holding out at. 05 of a gain, so a slight gain at this point, and the cac has actually turned negative. Ecb president mario drago will be speaking in a little bit and well be monitoring his comments. Squawk box will be right back. And 3 back on gas. Kenny used his bankamericard cash rewards credit card to join the wednesday night league. Because he loves to play hoops. Not jump through them. Thats the excitement of rewarding connections. Apply online or at a bank of america near you. My m. About my toothpasteice. She eveand mouthwash. Ice. But shes a dentist so. I kind of have to listen. She said jen, go pro with crest prohealth advanced. Advance to healthier gums. And stronger teeth from day one. Using crest toothpaste and mouthwash makes my. Whole mouth feel awesome. And my teeth are stronger too. Crestpro health advanced. Is superior to colgate total. In these 5 areas dentists check. This check up . So good. Go pro with crest prohealth advanced. Moms right. Again shoshow me more like this. E. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Ciena shares are rising. The maker of hardware and software recorded 30 profits, 7 revenue. Its almost 10 on this news. Profit margins expanded as well. Joy global raised nine points. They say, though, Market Conditions continue to be challenging. That looks like a lot of mining stocks right there and thats not even a yearly chart, is it . Thats only maybe it is. Oracle is being sued by a former Senior Finance manager. She says she was threatened with retaliation for questioning the companys Accounting Practices for its cloud business. I wouldnt know where to start. How do you account for the cloud . Its in the cloud. How can you account for it . Unaccountable. Still to come, adp data on jobs coming up. The numbers and reactions straight ahead. Check out the futures at this hour. We were at flat or near flat. Repeat after me, discipline trumps conviction breaking economic news. The adp employment report just 15 minutes away. The numbers and what they could tell us about tomorrows big payroll release, straight ahead. New this morning, the ecb holds Monetary Policy steady, but its what the central bank is saying about the future that could be the key. President mario draghi answers the tough questions later this hour. And the race for the white house intel. The ceo cancels a fundraiser as the facebook ceo speaks out about political bias. Squawk box begins right now. Announcer live from the beating heart of business, new york city, this is squawk bo. Welcome back. Squawk box here on cnbc. First in business worldwide. Im joe kernen with becky quick and steve leaseman who is sitting in for andrew. Today our guest host is jack welch. Our counting down to the adp employment report. He already knows it. A forecaster said they likely added 170,000 private sector jobs, steve. Yes, joe. People are saying 170,000. Is that a decent number . You know what i found in 40 years of reporting . People say a lot of things. People say an awful lot of things. Is it greater than, is it less than . You know what im also thinking this morning, joe . How much i like that tie shirt combination of yours. Its a really nice tie shirt combination. Changing the subject. The futures right now have been around the flat line. Last i looked, they were all red, though. That could change so easily. Down 1. 33 on the s p, 4. 67 on the dow jones and less than 1 on the nasdaq. Well be monitoring Mario Draghis comments and bring it to you as it happens. Disagreements between members are seeing keeping the cartel from striking a deal on output. You can see at this point wti is unchanged. 48. 99. Also the u. S. Is the focus on jobs here. Ahead of that adp report we just mentioned, a private survey finds that u. S. Layoffs hit a fiveyear low in may. Steve . A few stocks on the move this morning. Beating the top and bottom lines, but the companys billings fell sort of short of expectations. Apple reportedly plans to raise up to 4 billion in debt in taiwan and australia, Goldman Sachs trimmed its earnings estimate for apple based on slow growth for the smartphone industry. Goldman cutting its price per share. I think thats a good number. Just the way you read that, it sounded to me youre going to get in trouble. Could you get in trouble for an embargo . It moves the markets. Im really enjoying being on set with becky. And phil is also here. Phil is here, jack is here. Twins. We look good. Phil sheis here, jack is her. Im having a good time. Three days in new york. I got to watch my white sox win. Things are good. The cubs are on a roll. Whats up with that . What do you mean, whats up with that . They built a great team. How about alvarez last night. He was lumbering to second and then he came in on a second base lag. He was lumbering but he scored the winning run. He did. Hes an old red sox guy. A new report this morning finds the average auto loan has now topped 30,000 for the first time. This is why youre here, i see. Ph phil labeau. We look at millions of loans, and weve seen this number trending higher but weve gotten to some thresholds here that people will look at it and say, okay, thats how much you have to have to buy a car. Its now topped 30,000 for a loan. 500 has always been the threshold where you hear people say, i dont want to do a Monthly Payment with that. Lets extend the loan so we can keep it below 500, and thats why you look at the average loan length. It is at an alltime high of 68 months. The amount loaned, 30,000. You look at this new data, a couple things are going on. You have higher auto prices. Thats whats driving people to buy more. That 73 to 84month loan, 70 of people who took out an auto loan in the First Quarter, theyre stretching to go buy one right now. Look, the average age of the fleet on the road is so high that youre going to see more and more sales coming in, but if people are taking out longer and longer loans, theyll be driving those cars longer. Think about it. If you go into a dealership right now, on average there are still a lot of people paying it off in 48, 60 months, on average youre not paying it off until 2022, 2023. Maybe we need to change our entire expectations of how car sales down the road are going to continue to come in. Weve heard that for 100 years and that hasnt changed. You hear people moving into leasing. Theyre extending those loans as well. Who will get blamed if this causes a bust . Who will get blamed . Will it be the consumer . Im blaming phil. Youre blaming me . Yeah. For the cheap Interest Rates . Seriously, where will we go to find the villains if this ends up coausing a bust . Probably the frackers. Gas is so cheap that everybody is buying expensive suvs again. Thats driving the cost. I think what jack is getting at is there Systemic Risk. If you can put up that screen again that shows the number of months and the value. Is there negative financing built into this . In other words, when im done with 68 months of paying off my loan, what is the value of the car . Is it its paid off by then or 68 months on average, you have paid it off. You may buy a bmw and say, im going to pay it off in 48 months. Your value will be a little better because after 48 months the mileage is lower. You go out to 92 months which is not uncommon, people do it. Is it a bad move to finance for that long . I dont think its a good move. Why not . You go out past seven or eight years, go back and buy a 2009 model right now. Would you feel good driving it around . Im driving a 2008 model right now. Its not a bad model, but if you buy a new one, the change in technology is so much better. If its not a good deal for the consumer, why is it a good deal for the banker to give the loan and why doesnt it cause Systemic Risk if all these bad loans are out there . Theyre not bad loans. If you look at the repo rate, if you look at the delinquency rate, theyre still below historic averages. We arent seeing a bunch of people turning them in. If you look at the cheap financing that is out there, you can turn around and sell these vehicles into the used market. If i have to repossess your vehicle its going to be relative to the loan. Right. I want to add, the Consumer Debt numbers, the Service Numbers and the amount of debt, consumers continue to shed that. Their Household Finance situation is better than its been since 2005. Its been one of the good developments in the economy. If the consumer wants to borrow to spend, he or she has the wherewithall to do that. Back to jacks point, this is like negative Interest Rates. When you change the terms, when their loans are so much longer and so much bigger, there may be some ive seen guys come in giving me a pitch, its the lowest its ever been historically. One blip and all of a sudden it isnt the lowest youve ever had historically. Weve had that with mortgage rates, weve had it with car loans these are not variable rate loans, jack. These people who take these loans out, theyre not going to get a hit on the Interest Rate. You build your manufacturing factory around the idea that this is what youre going to be selling. If the life of the cars is longer, people do not need the car. The cars dont go to heaven. They could decide not to have this car, but theyre deciding they want the car. Absolutely. This is definitely driven by want, not need. Thats a different thing. People can decide not to buy cars, but instead theyre stretching and reaching for what, really, in my experience, the safety features, i want my kids driving in a 2016 vehicle much more so than i want them in a 2013 vehicle. Thats why im considering getting rid of my car. And thats what the Auto Industry is counting on, and i think the Auto Industry is right in certain regards. You got this beep thing when you back up you were talking about autonomous drive vehicles. Its coming. Has the Sticker Price ever declined year to year . You will see it come down. Before it goes back up and were all driving those little cars again if you saw a huge spike and everybody rotated back into cars yes. Phil, you and i spoke on the phone. Car sales are crashing. I wouldnt say crashing. A bad word in general for cars. We were at 17. 5 million last year. This year were going to be a little over 17. 3. Truck sales. Youre talking cars versus trucks. Thats a societal change. People see the cheap gas and they see the utility. They want crossovers and suvs. Car sales are down. It used to be 52, 53 . The other day i got a number of 46. It was down 6 year to year. Versus april . I think versus april it was relatively flat. I would have to go back and check. Big differences in the mix. You also had fewer selling days. Are theres more cars. Here or in florida . In florida. Youre still driving around . Yeah. The movie was casablanca. You do still drive . Very happily. Joe doesnt. He takes a car here. You have a nice car in the driveway and youre not taking it to work . No. You dont enjoy driving . Thank you, phil. Nice to see you. You, too. In other Corporate News, uber changes everything, too, phil. Selfdriving cars combined with uber . I think thats a factor in why we see fewer car sales, especially in urban areas. A lot of people in urban areas you get one of them zip cars or whatever . Is that what theyre called . Thats one of them. In other Corporate News, uber raising 3. 5 billion from the investment arm of saudi arabia. You know these guys, jack . You must know the saudi funds. Absolutely, and theyre a big part of our private equity company. 35 billion. Are you surprised at that with uber . I dont know the value of uber. Thats beyond the scope of my experience. The Company Actually raised 5 billion, 3. 5 from saudi arabia, but theres the valuation, 68 billion. Everything is going to change between selfdriving and uber. Apple just got one. The selfdriving cars are teaching you when to use the horn. The criteria for when to use it was way too lax for me. Maybe there is different settings on the horn thing. Mad, angry, very angry. You could also have road runner. A whistleblower hitting oracle with a lawsuit over cloud accounting. A former accounting manager says she was inappropriate for talking about inappropriate account recording. Finally, the adp reports just minutes away the numbers in the employment market. Stay tuned, youre watching cnbc first in business worldwide. We built our factories here because of a huge natural resource. Not the land. The water. Or power sources. Its the people. American workers. They build worldclass products. And that builds communities. And a better future. For all of us. Because making something in america means so much, to so many. Weathertech. Proudly made in america. Welcome back to squawk box. We are awaiting the adp report. Down 18 points on the dow, 3. 6 on the nasdaq and the s p, down 3 points. Adp out, the number is 173,000 in may. Right in line with estimates of 170,000. The april report revised up by 10,000, 266,000. Theres your estimate there. Goods down 1,000, services up 175,000. And the nonfarm payroll estimate is for an extrication of 150,000. You look disappointed. Good thing i made a big deal about it or we would all be yawning. We built it up, at least. Why dont they give us a participation rate. Theres question whether or not they can actually do that. They do have some other stuff, though, some wage stuff which is interesting. Well ask sandy about it. Right now take a look at business by size here. Small leading the way, less than 50, up 60,000. Large business up 34,000. Thats been a weakness thats been out there. To the extent job growth has been down, its come from large business. Take a look by industry, construction up by 13,000. Thats been doing quite well, but manufacturing again not crashing but were not adding any jobs in manufacturing in this country. It stinks. You say it stinks, jack . Yeah. I think thats a good word for whats happening in manufacturing, although its stabilized in stinking. Its not doing worse. Thats what i was talking about before. The habitualization of that. Being washed out, these lower levels with ceos who have never seen better levels. The market took a gamble, it looks like, looked at what i was saying and decided it was more negative. But i dont think that was really warranted right now. The market is down about 15 points on the dow, 3. 5 on the nasdaq and 3 on the s p. For more on these numbers, lets bring in mark zandy of market n analytics. Joe isnt happy about this. Joe is never happy. Youve been telling me well break six for the last five years, and now were at 170 and youre going to say thats great. One technical point. This does not include the effect of the verizon strike, so that will be in the bs number. Its not in the adp number. So the reason we might see better than what the adp is indicating . It will be worse. It will subtract maybe 25 k. So you think that 156 is overly optimistic for tomorrow . No, thats about right. 156 is about right. I would say 160 is a good estimate, so thats about right, yep. Lets talk about this number. The construction number is doing well but manufacturing stinks, according to jack welch. I heard jack. Yeah. Well, theres two manufacturings. Theres the auto manufacturing and anything auto related. No problem, adding lots of jobs. You were talking about that earlier. 17. 5 million unit sales, thats about as good as it gets, and then theres the trade sensitive manufacturing sector, and that does stink. Thats the Global Economy, thats the strong dollar. Its this dichotomy in the manufacturing base. Weve had the dollar come off its highs. I know jack is going to accuse me of not having high enough expectations. Thats what you were saying before. But still, we have the manufacturing that went up a little more than expected, 51 and change. Can we expect growth in the manufacturing sector, mark . Yeah, i think so. As you pointed out, the dollar has stabilized down a bit from the start of the year. The Global Economy has a firmer tone to it. I wouldnt expect a lot of jobs in manufacturing. Its the most productive sector of the economy, productivity growth year in and year out is 3 . So youve got to get a lot of output growth to get job growth. Even in the best of times, were talking thousands of jobs per month, not tens of thousands. Its not going to be a major source of job creation. Good jobs, very important middlepaying jobs, but not a lot of jobs. Mark, i did not have a chance to look at the error rate of adp recently, but tell me how you think its doing in terms of giving people a heads up on what the numbers are going to be tomorrow. So far this year, great. The average absolute monthly error is about 20 or 25 k. Since weve been doing this, since ive been doing it, its coming in about four years now. The average is about 41k. There is no bias here, meaning some months its a little higher, some months its a little lower. On that the error over time, over a year or two, is zero. Some describe it as the best of the lot on indicator numbers. There really isnt anything great out there, and if you can come within 40k on average over time, youre doing about as good as you can do. Steve, can i make a point to joes thing . On Climate Change . Just kidding. Just kidding. On slowing job growth. This economy cant continue to create 200,000 jobs per month. The working age population is growing 100k, so the fact that job growth is start to go slow at the same time that wage growth is starting to accelerate with a Record Number of open job positions suggests its more of a supply side issue here. But some of the wage growth is, like, legislative thats still weak. Joe, its well if you look at the adp wage data, and you look i hope it sdrdoes, but its n slow. Steve explains why yellen says 150 is enough 100. 100 the influx into the work force is part of it. If those people had not come into the work force and you did job growth at this level, you would be at 4. 1 or 4. 2 Unemployment Rate. Instead youve had people come off the sidelines. That is one of the most profound developments, i think, in the last several months. Another thing is the number of parttimers that want more hours, thats declining as well. Were very close to any definition of full employment. It was for krueger or against krueger . Against krueger. Mark, thank you very much. Coming up, Cheryl Sandburg on the production that facebook has a political bias. Well look at that next. Announcer youre watching squawk box on cnbc, first in business worldwide. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Intel ceo brian zandy plans to host a fundraiser for donald trump at his house this week. But you can imagine he is hosting questions about the event from the New York Times. The event has been canceled and intel didnt give a reason, but lets see. Its based in california. It didnt say why, but trump is going to hold a rally of his own in san jose on the same night. He is known widely for his efforts to improve diversity in the Silicon Valley. The company spent 3 million. Theyve been a frequent part of this. They want to host a fundraiser in Silicon Valley. I can see putting his money where his mouth is, but i understand why you cant, in this day and age with shareholders and all, you cant i would say ceos have been quiet on both sides who have not jumped in. Believe me, you dont think a ceo can hold a hillary fundraiser . Are you kidding . You would get a medal for that. Even hillary supporters have been quieter than they have at times. You dont think you can call the ceo and say, hey, were holding no way. Its a different election and i think people are afraid of holding these things. I think its apples and oranges. Ceos can hold them. The New York Times have lost it on trump. How about the daily news . The daily news is trying to survive. The last two sundays, we had women one sunday, thats been discredited, and then imagine having a picture of hitler in the article on trump. I mean, you talk about crappy journalism, biased, sick journalism, thats its awful. Did you get a speeding ticket recently driving . Yes. I just heard he has a lead foot. Coming up, the battle for Hillary Clinton barnstorming. Golden state Bernie Sanders is turning up the heat. Well be right back. Ok team, what if 30,000 people download the new app . Were good. Okay. What if a Million People download the new app . Were good. Five million . Good. We scale on demand. Hybrid infrastructure, boom. Ok. What if 30 Million People download the app . Were not good. Were total heroes. Scale on demand with the Number One Company in cloud infrastructure. This clean was like pow. Everything well . It felt like i had just gone to the dentist. My teeth are glowing. They are so white. 6x cleaning , 6x whiteninga in the certain spots that i get very sensitive. I really notice a difference. And at two weeks superior sensitivity relief to sensodyne i actually really like the two steps step 1 cleans and relieves sensitivity, step 2 whitens. Its the whole package. No ones done this. Crest healthy, beautiful smiles for life. Welcome back to squawk box. Breaking news, initial jobless claims for this week, 267,000. That is a drop of 1,000 from a nonrevised 268,000. If we look at continuing claims, they moved just a smidge higher from 2. 16 to 2. 172 million. Of course, everybody is seeing that we had the 173,000 on the adp jobs report exactly as expected, and if we look at the preopening equities not changed much, a little bit under. Interest rates, we held basically the 50 area which was from the 198 high yield close to low yield for the year in february at 166. Thats around 182 if you take 50 of that. Many traders trading these markets, the fixed income futures markets, are paying very close attention to a key level that was wednesday and thursdays settlement in the s p 500. We opened below yesterday. When we went above it, all the markets changed a bit. Were all in this together literally in every country and equity and fixed income markets are pretty much all rising. Mario draghi speaking right now. He says hell keep levels at current levels or lower levels. They kept the refi rate at minus. 4, and he says rates will stay at these levels well beyond the horizon of asset purchases. I cant remember off the top of my head, sometime in the spring of 2017 is when asset purchases run out, so sometime beyond that. Lets see what i have here in terms of headlines. I thought you said 2018. Was it 2018 . I just cant remember. He said the economic recovery is gradually receding. Were interested in what the staff said about the growth forecast. There was some anticipation they would raise that and that would be a good sign. Well continue to monitor mario draghi. Not big changes. What were looking at after the press conference, becky, is well get details of their Corporate Bond purchases. Theyve gone further than the fed ever went in terms of assets it will make in their quantitative programs. They basically ran out of assets to purchase and so now theyre going down the spectrum of Corporate Credit into Corporate Bonds. Another habitualization of low growth. He rolls it out, there we go, more of the same, low growth, low growth. Look at france when france comes up this time, the fight on the 35hour week. Strikes everywhere you look. Once you put these things in, its so hard to get them out. Jack, yesterday the odc described it as a low growth trap where they said businesses dont see the growth, so they dont invest and they dont hire. And because people because the businesses dont invest and dont hire, they dont see the growth into the circle, and their prescription yesterday from the ocd man who was on the show, not really a conservative economist, i would say, said the answer is the government needs to invest in spending. How do you feel about that . I clearly think we have to have agreement in some way on infrastructure, there is no question. There has to be government spending, but i think it has to go hand in hand with a demand cycle for more job creation, real job creation. I mean, you guys just had a nice conversation about jobs, but the facts are greatpaying jobs are not growing rapidly. Im sorry, go ahead. Were going to continue this conversation in just a moment. In the meantime, lets tell you a little about facebook facing criticism in recent weeks over allegations of political bias. Facebook said it will renounce its trending topic feature to try to minimize the effects ful individual influence. Chief operating officer Cheryl Sandburg addressing this topic of conversation with julia. We have an open platform that has to be one for all ideas, and i think there is a concern out there that the Silicon Valley has a liberal bias. So thats something we took really seriously. We clarified what trending topics was, we explained to people that news feed, the biggest product on facebook, issis based on algorhythms. Cnbc contributor, that was an interesting story coming from san jose also, the intel story was interesting. Youve got a race between a couple candidates. I dont see how a ceo of a fortune 500 company with as much of a lightning rod as donald trump is, im not surprised he had to cancel a fundraiser at intel. We were just saying, jack and i, this is the wackiest election season ever. Weve talked about this on the show a lot. For somebody to do a fundraiser with trump who is a big ceo is going to alienate half their work force, so you have something youve never had before. We really didnt talk about this as much on air, jack, but there are certain people who probably wouldnt cop to a vote in public on trump, but do you think its possible for trump to win this election . Of course its possible. In fact, its even possible more so for hillary to lose this election. In other words, i think she would be a good president , but she is one of the worst candidates for the tenor of our time right now, which is both antipolitician and against people who dont seem to be forthright and blunt or total lack of ethics, for example. That could be a problem, too. Well, trump is not exactly my paragon of ethics, either. One of them in the private sector didnt make much of a foundation you can find five of his businesses that didnt do well, but its all in business and in the private sector. I was looking at his business at trump u. Go to any broker firm, go anyplace where youre trying to close a deal and there are somewhat unethical practices just because everyone is doing it. Thats a wonderful defense of trump. To use a private foundation to line your pockets, using your influence in a cabinet level position and then to pull it off which is worse, walter . You either do it with a chartable foundation or do it with a private sector. Im not going to provide a premise. Why do you think people doing this in the private sector, making deals and whatever, makes a better president . I dont have any private sector experience. I dont agree. I think people misunderstand government in a big way. Government is government because its not business. Government is designed and created to do things theyre not supposed to do. It doesnt mean you dont follow the money truck. Its not about efficiency. Its about equity in the first place. If there is no accountability accountability only comes from the government sector or the private sector. The thing that keeps it going is money. Infrastructure and things like that, there are things the government can do that the private sector cant do. Ill be at the world science festival where the brian green tracy day thing thats happening in manhattan, talking about everything the government did from the beginning of the internet to accelerating the telescopes. Its a more fundamental thing to do than saying lets hire a businessman who can run the country. I think think of the fire department, the patent laws, private property rights. I can think of a lot of useful reasons for the government, believe me. But thats not to say you cant overdo it where in parts of europe youre at 50 of gdp spent on Government Services and you see the kind of growth they get over there. And the stagnation you were talking about with mario draghi. The idea of intel is very interesting to me. Is there corporate Reputational Risk right now thats represented by Backing Trump that does not exist with Hillary Clinton . Yes. Of course. Is that because of trumps message or because of the media . I think its because trump alienates and defends large sectors of our population more than most more than any politician i can remember. I want to ask jack the same question. Jack, you sat, obviously, legendary ceo of a legendary company. If you were there right now, would you have a problem Backing Trump and being a corporate sponsor of the Republican Convention right now because of this issue of inclusiveness that surrounds donald trump . We had a pact and it pretty much came out 5050. Where the money went . Where the money went. Ive never backed a politician using corporate facilities. I stayed out that far whoof tha. Now that ive retired, im not out of that game. The Reputational Risk, do you see that for a company right now . You said you cant do it. It is a media issue. Theres substance to it. I think you offend a lot of your working you know, people who work for you in a different way than you have before if youre out there backing donald trump. But you also have a problem with the clintons. You have a real problem. Thats what certain unions have a problem with clinton. Thats an interesting story. Its clear as day to me. We have 30 years of this. They both have a problem. Im not sure its equivalent. Im sorry. Dont have my back. Thats the difference between private sector and someone supposedly in public service, to use that to be the vehicle its unbelievable. Walter, thank you. We have to run again. Do you want to ask him one more thing . I think we ought to hear from walter. As you get down to this election, what do you see as the determining factors on the next six months . Which party is going to coalesce around which candidate . They both have highend favorables. Where do you see the election going . Well, first of all, you have to get through california. I think if Hillary Clinton loses california big, theres going to be a real, like, okay superdelegates go . I think you just have to say, okay, she cant win california, she cant win michigan, thats a problem. If she goes to california and does fine, then i think the democrats coalesce around her. Fine. And i think its going to be this very strange election thats built on a lot of anger to the opposing candidate as opposed to positive feelings about the candidate youre going to vote for. I guess the question becomes, if she loses california, how ugly does the Democratic Convention get . If she loses it badly enough, you have the superdelegates. They really have one or one and a half options. Shes not going to lose california. Gary brown, scott shearing. Theyre very liberal but theyre pragmatic to some point. Youre going to get a lot of email that you called californians pragmatic. I dont think sanders can win. No, sanders cant win, but could you have a fallback where a joe biden or maybe a kerry, but i think joe biden is more likely. I think thats a one in five shot, but its a big enough if she loses california in a serious way, it shows shes not connecting to the tenor of the times, especially peoples frustration and anger, and i think, you know, some people say elizabeth warren, you cant really do that. Harry, though, huh . I think biden is more likely. Biden must be biting his tongue. Hes got to be so mad. Biden has said publicly, and im sure privately, every single day he regrets his decision not to run, and in some ways, whatever you may think of biden, he connects more. Its like, okay, i get it. No question. If you say no question, thats absolutely right. People say, okay, i get it. He can connect with me more. You may think he talks too much, but he is really a decent and honorable guy, and that may be an antidote, but i dont think its going to happen. 25 is higher than i would have assigned it. Thats interesting. I know joe doesnt think so, but dont you think california could upset . When you go from 10 points to 2 points, yeah. Im afraid to hope for it. I would like that to happen. I wouldnt, because youre worried about biden. Im worried about biden. Biden would be great. Biden would be a good president. If i want the things i want, i wont get them from biden, okay . Youre more likely to get than trump . Yeah. Walter, on the east coast, hillary would be a good president. Based on what . What other than secretary of state gives you that idea . Shes a very smart person Vice President biden is smart. Ill let you do this with andrew when he comes back. Steve, come on. Im trying to get out of here. Ive got 15 minutes to go. Walter said on my side, thats what i wanted him to say. I know, finally. Im a journalist. Walter, thank you for coming in today. Its great to see you. Great to see you. When we come back, another wellknown name joining the giving pledge. We have the details after this. , watson, lets review the Electronic Medical record of the next patient. No problem. Its a pretty huge file. Done. Sorry for the wait. That was quick. As part of our research, i also compared lab results with notes about prior treatments, then cross referenced it with thousands of medical journals. And i get the benefit of much more data, and a lot more time to plan the best treatments. I stay focused 24 7 and never sleep. You sound like a lot of medical students i know. mamost of the show. We missed i stay focused 24 7 and never sleep. woman and theres no way to restart it. jon bon jovi with directv there is. You see, weve got the power to turn back time so lets restart the show that started at nine and while were at it, lets give you back your do and give her back the guy she liked before you hey, thats the power to turn back time. vo get the ultimate allincluded bundle. Call 1800directv. Is. The prince encouraged wealthy arabs and muslims in joining him to give their wealth to general causes. It was founded by bill gates and Warren Buffett back in 2010. Since then more than 150 billionaire and see their families have taken the pledge. When we get back, jim cramer will join us live on the nyse. Well get his take, after this. Looking for balance in your digestive system . Try align probiotic. For a nonstop, sweet treat goodness, hold on to your tiara kind of day. Live 24 7. With 24 7 digestive support. Try align, the 1 ge recommended probiotic. Every year, the amount of data your enterprise uses goes up. Smart devices are up. Cloud is up. Analytics is up. Seems like everything is up except your budget. Introducing comcast Business Enterprise solutions. With a different kind of network that delivers the bandwidth you need without the high cost. Because you cant build the business of tomorrow on the network of yesterday. Down to the new york stock exchange. Jim cramer joins us now. What do we want draghi to do, jim . Do we want more . We want him to focus on Climate Change. You like that, too, right . If were going to focus on Climate Change, why dont we focus on the chinese. I listen to jack and im like here we are talking about something that puts us at a disadvantage to a trading partner, china, and we never talk about them. We talk about us. Thank you for being heroic. Im not sure theres any laws in new york state yet where he can be taken away. Its a religion, jack. You got to be careful. Youre an atheist. Youre right, draghi, theyre buying everything. They just want the dollar up so they can take our jobs away. Thats really what it is. At this point their business is pretty good. Spains got 3 growth. This is literally about taking our jobs. Everybody wants to take our jobs and we have a lot of guys who want to give them and theyre called politicians. Just one of the buzz stories was that weve all heck, you must be a lot richer than Elizabeth Holmes at this point. 4. 5 billion to zero from year to year on the forbes list. But that presumes she has no debt. Why do we stop at zero . We presume she doesnt have one of those 40 million houses out there . Right, thats the wrong kind of giving on the rich and famous houses, if she owns one of those, why do we stop at zero . This isnt stock. Youre right, it probably isnt zero. But hes still a believer in the company, like theres something there we dont know about. You asked him that question, like do you still believe in the technology and he does. I dont want to give anybody bad advice on what to do but i can understand kfc. Coming up, more from our guest host jack welch. And later today, suzy welch, the real star welch, shes going to be on power lunch, live at 1 eastern. Will the latest jobs numbers stay Strong Enough to move the fed for a rate hike . Our guest host this morning is jack welch. Jack, weve talked to you about a lot of issues but in the New York Times this morning there is a story about tpp, this is do or die for it. Its something we talked about on the show from here and there, that trade at this point is something that all three candidates that are still running for president are not in favor of and are not in favor of the tpp. What do you think about that as a Business Leader . Well, i think they may not be in favor of tpp in the current form and theyre afraid of how its been negotiated, but obviously anybody with my background would want to have a trade agreement of some form negotiated better than weve got now. And i dont know all the details of what theyre fighting about and i dont know each particular point, but this administration, whether it be iran or anything else doesnt seem to do a very good job of negotiating our tal deals. Its a political hot potato. Because youre going to jobs and you got nafta as an example of what happens to some jobs, even though without and a half nafta, youd have had a much worse situation in terms of global competitiveness. Give us some that youre excited about now. Anything with health care is just hot. You cant believe technology or regulation or which part it have it . Technology, obama care and some of the changes that are available now that people are outsourcing, theres consolidation of hospitals and hospitals are looking for more efficiencies and they are drive being some more of their inhouse stuff outside as they source. So lots of services are available that were not there before. What else beyond health care . Whats another sector youre interested . You like services. You just like services. Lots of customers, spread a risk and less trouble. Less cyclicality. Last time you talked about how anything related to housing well, its booming, lets face it. And we had a great run with home depot supply which we took public, we took our Roofing Supply Company public. Has that topped out now . No, i dont think so. I keep upgrading homes from better household you got to make room for your kid to live there. Thats because they cant get the good paying jobs. Right. I am all about jobs, steve. And in this economy i want jobs and i want to focus on growth. I cant stand this acceptance of low growth. I just cant. Great having you, jack. Thanks a lot. Enjoyed being here. Wow. Make sure you join us tomorrow. Lets get to squawk on the street. Thats next. And a good morning to everybody. Welcome to squawk on the street. Carl quintanilla is at the conference in california. Lets get a look at futures this morning. We are looking for a lower open but we will