Transcripts For CNBC Squawk Box 20170417

Markets in hong kong, united kingdom, germany and france all closed for easter monday. If you want to take a look at crude oil. Down by 44 cents. Wti looking like its trading at 52. 74. If you take a look at the currency markets, the florida is down. Dollar yen at 108. 28. The yield for the tenyear sitting at 2. 205 . A lot of things on the economic agenda today to think about in addition to geopolitics and whether youre willing to get 10,000 to get bump on a department that flight. Today, the National Association of Home Builders puts us its survey. Tomorrow and then wednesday, weve got the feds, facebook followed by the survey on friday. Friday, existing home sales. As for earning, heres what turns out. Nine dow compovnent and 63 s p 500 Companies Reporting this week. Netflix out for the day. Goldman sachs, morgan stanley. Other big names, united health, j j, ibm, travelers, verizon and ge. Also President Trump set to fill a key post. Randy quarles is expected to be named the feds vice chair. Quarles runs an Investment Firm in utah but was a Top Treasury Department official under president george bush. Created by and overseeing the u. S. Banks. Former fed governor dan tarullo has been the acting chair. Some on wall street did not like dan tarullo thinks he was too tough on it. Putting quarles there, its not like youre putting somebody who disapproves of the agency or any rules at all. Its probably a different way to enforce some of those rules. Right. But not somebody who is going to throw out every rule and say were starting from scratch. Right. Like putti ting gruden in che of the epa. Right. That was one of those things, dan tarullo knew where he stood. Also by the way, the other news in politico this morning, richard kwad dry is going to be pushed down. Go the easy way or the hard way. He said that he didnt make it quite as definitive, at least the reporting goes that he doesnt make it quite as definitive because it sounded like he wants to run for governor of ohio. Nice way out . Well, although theyre worried about making it much easier for him to run if they give him a lot of publicity by forcing him out, it sounds like. Here is the story that weve been watching for over a week at this point. United making a policy change. This is change is aimed to try and prevent incidents like the one that happened this week when a passenger david dao was forcibly moved to make room for a crew member. United is saying that crew members will have to check in 60 minutes prior to departure to make sure that incidents like this dont happen again. However, i dont believe it takes this long for a public change when somebody like delta doing what they should be doing in this situation, too. Ive been so fired up about this story. You have . Youve been on vacation. Ive been on vacation. Delta is changes its policy about bumping passengers off flights. The agency now authorized to offer 2,000 for voluntary boardings up from 800. In some case, delta has authorized agents up to 10,0000 for being bumped. Although they have the rules about the higher amounts including authorization from supervisors. We talked just to explain this, the 1350 cap is not really a cap, its a legal limit for the most the government requires the airs to pay before you involuntary if youre involuntary temporarily pushed no, if youre involuntarily pushed awe the plain, not voluntary. They could offer you 5,000 or amex points. The airline is overbooked. United has been particularly bad about overbooking they say they need to do that to make sure theyre profitable with people showing up. Theyre terrible about overbooking. Even if you look at Chris Christie laying out the case that united controls 70 of the takeoffs from newark so youre bound in these situations. United should be doing what dealt 25 is doing. Delta just took the steps that united should have taken based on what they saw happen in another airline. If you can go ahead and convince people if they want to get off the flight, great. Same story. If your entire message is that youre going to say okay, my fix is now that if were bumping you, we need to do it 60 minutes before hand so you never get on the plane and not on the plane but youre still involuntarily bumping people, if you offer 10,000, trust me, you will get people voluntarily giving up their seats. But those employees and those Airline Pilots dont get on that flight how many other people are going to be delayed . It doesnt matter. Pay for it. Its your problem for overbooking. As opposed to be dragging people dont be kicking them off. Heres my question. This was our dinner table discussion over the weekend, several dinners actually, how much does united have to pay the doctor to settle the case in advance, such that the public effectively turns against the doctor for not taking the money . The stories are piling up on united. Right. They dug into it with oscar munoz saying this is a belligerent passenger. I would have been belligerent, too. Is it 10 mr1 10 million, 2 million i woke up the night that the ceo put out the statement i was so mad. I was up from 3 00 to 5 00 in the morning just fuming about this. Thats insane that youre blaming the passenger in this situation. At what point does if an authority asks you to do something, whether its security and they ask me to move its not security. I want you off the flight because i need it for my employees. For the united employee, was it an air marshal or some deputyized agent he was belligerent because they made him belligerent. I mean, its so bad. The Customer Service. Hold on, i want your number. We all talked over the weekend, whats your number . This is going to become the issue because for united right now, they want to end this. They need to end this. They have done everything not to end this. The ceos response is what set this off the deep end. Im not the ceo i was on a united flight coming back on saturday. You know what i read, oscar munoz letter to the public that was already out there printed before this incident happened about how we fly the friendly skies, blah, blah, blah. By the way, i stuck by united when they kicked the girls off for wearing the leggings because they were supposed to be following the rules. The idea that this is a belligerent passenger, its not your employees fault. Its your stupid regulations that you still have not changed on this one. Or the married couple i believe going to costa rica. This is just the latest. They got booted off for going economy plus. This is not the united employees who are at fault. This is the united regulations that were followed. They followed the guidelines. Delta has just come up with a very reasonable change, an at kerrati alteration saying if its a bad situation, you can offer up to 2,000 and with an agent, 10,000. Videotaping this, its a horrific situation. Every step of the way, they compounded. If they asks for 10 mr10 milli for it. If he asks for 20 million, go for it. He was stupid our argument at the dinner table is 30. 30. I think hell get 10 to 15 in court. In court, a jury would give him 10 to 15. Ask for 30, theyll give him 25 . If you offer 30 and you dont take it then you look like enough united for now. Sorry, had to get that off my chest. Some breaking news last night, Vice President mike pence visiting the Demilitarized Zone between north and south korea. He said that any use of Nuclear Weapons by north korea will be met with an overwhelming response. Cnbcs shachery kang joining us from north korea. Reporter talking about the strategics with north korea so far. Thats when the key with the north korea policy with the Previous Administration in washington declaring that its over. This comes after north korea fired yet another missile on sunday. Yes, it failed, exploding seconds after the launch, but certainly succeeded in terms of getting the globe attention, and also getting u. S. President Donald Trumps tweets over the weekend. And one interesting tweet over the weekend coming from u. S. President donald trump was that emphasized chinas role in all of this. Talking about why would i call china a currency manipulator if theyre working with us on the north korea problem. We will see what happens. I think emphasis on chinas role in all of this is what sets the Trump Administration north korea policy from other administrations in the u. S. In the past. And here is a Vice President mike pence talking about how hes confident now that beijing will help out. Take a listen. Now, what issues like that remain, the president and i have great confidence that china will properly deal with north korea. But as President Trump made clear just a few short days ago, if china is unable to deal with north korea, the United States and our allies will. Reporter and this emphasis, of course, comes out of this understanding or belief that washington does need beijings help in putting pyongyang in check. Here is National Security adviser to the Trump Administration mcmaster speaking on abcs this week. Take a listen. Were going to rely on our allies like we always do. But were also going to have to rely on chinese leadership. North korea is very vulnerable to pressure from the chinese. 80 of north koreas trade comes from china. All of their Energy Requirements are fulfilled by china. Reporter and i think its sad, weve been seeing interesting reports or responses out of beijing in the last few days or so since the summit between the leaders of the United States and china in maralago, florida. Suspended flights, the only existing one between beijing and pyongyang by air china. And also return something coal imports from north korea back to north korea. And also suspended some tourism packages, basically blocking chinese tourism to north korea. So, was there some kind of a big deal between the two leaders in florida . That is the question. And how far is beijing willing to go and how well will kim jongun take all of this is the question, guys. Thank you very much. In the meantime, were going to talk moore about this weeks top political stories which so many are watching. Eamon javers. Heading into this week, gary cohen, the head of Economic Council for trump petrae. Hes say guy that worked for goldman sachs. And emerging as one of the top figures in the administration for 2017. A big reuters profile out for him yesterday. Take a look at some of gary cohns fingerprints. Others are down, and the signal that hes open to keeping janet yellen on at the federal reserve. That appears to be at the behest. And something that you just heard it plays into the g geopolitical situation as well. A couple other changes that gary cohn has had his stamp on, with abandoning ideas from the campaign trail. And politico is reporting as you guys mentioned earlier in the broadcast that gary cohn pushed to hold off on firing the head of the Consumer Protection bureau. And who subpoena, who is down, clearly cohn one of those who is up. Down would be steve bannon. And also up, jared kushner, thats the president s soninlaw who you see in that picture. Jared kushner is somebody as a ascendent in the picture here as well and he was mocked on saturday night live, although saturday night live does have insbiegt wigh insight. Of course, jared played by jimmy fallon. With the jacket and sunglasses on there. And steve bannon there was the skeleton there. When it comes to tax issue or tax reform now thinking about Health Care Reform all over again. I know he keeps intimating that he thinks Health Care Reform is something thats happening first. I thought it was off the table, on the table, where is it on the table right now . To be honest with you i was off last week so i dont have up to the minute reporting on this clearly, this is an administration that doesnt want to completely let health care go. One of the essentials is that obamacare was a disaster. They fought on the first go around on this. The question are these dynamics that block the deal and removable object. Is there some deal they can cut that could allow them to say that theyve repealed obamacare. That is very difficult politics as they found out the first time around. They dont seem to be able to totally walk away from it. Its not clear where all of that is going. Eamon javers, great to see you, my friend. Lets get to the markets this monday morning. The dow and s p 500 coming off their first trading day in three weeks. Joining us now the head of short Term Investment opportunities at ubs management. And also the Portfolio Manager at fed rated. And the cnbc contributor. Todd, where do you think we stand right now, just in terms of the momentum, and what the most likely path is from here. Sure, i think the sentiment has clearly shifted, i move to one long holding, the rest is very defensive. Its been that way for a couple weeks now. As you guys know im a shortterm trader. I can change that in a dime. We were having a nice discussion in the green room become for now, sigh thinow sh now, i think theres way too many macro fees. With gold up, gold down. Thats been the case in the last couple weeks but in the last couple months even through plate 2016. The one technical thing ill throw out to you we just lost the moving day average which is basically a twomonth average price. We have done that two times since 2016. That equates to a 63day period of consolidation. Were only in day three. We just lost the 50day after the extended period of time. I think for the next coming of months. Do you agree with that . Most likely, yes. Very positive macro globally. But the politics are ugly. I think when you juxtapose this, you end up in the scenario he just described. So a little more hesitant, not leading so much with your trade . Well, you can pick up the downside if traders are moving on both side. I think defense cash. Bombs are moving up. Does that mean that earnings are going to be lousy . I think earnings are better than we thought or is that a black swan drive . I dont think thats the drive here. I think its all about trump, the first 100 days theres so much built into that rally. All of a sudden, the challenges of reality is hitting him, yeah. Steve what do you think. I think its interesting when you go back to the beginning of the year theres so many optimism around the trump agenda. Euphoria turns into rallieealit. Weve gotten that. Weve reached the point where markets are getting interesting again. Meaning, you think its time for a buy . Yeah, earning season, we had a good start with the earnings season. We do think health care is going to come back on the agenda. We think thats to pay for instead of the bat. And following an overall scenario. We think that some of the blues in late march and early april could turn to optimism starting against once Congress Returns from their recess. I know you have the opinion that there are better opportunities in other places. Thats right. But mark grant had a really interesting note this week when he kind of laid out the days against europe. Hes very concerned about the vote in france, what happens there. And if there are other countries that might split away from the eu. Yes, barring the french rule which is rule running, the polls are basically saying its not le pen, its melenchon. Thats truly extreme. Away from that there is more value there and if the macro scenario across the world improves europe is well placed to benefit from that. Yes, with opportunity comes risk. So it will be more volatile it usually is. His concern was not only the french election, he took a look at greece where he thinks greece will either choose to leave or be forced out. If you have italy decide to make a decision like that, then the entire eu splinters then youre talking about Serious Problems cropping up all over the place. This situation becomes much worse if growth is worse. If growth is better, people are happy. People dont vote for these parties you know, people are saying something. Across the world, when they vote for parties like this, theyre contesting. Thats a very strong focus, though. Its shown up in a lot of elections. Thats true. From the markets perspective, the underperformance of the european stock market is dramatic. So this is very much a valued pickup play thats dependent on a lot of fundamental forces f l falling in place. One you have to was that is japan. Japan keeps falling but the earnings picture in japan is really very positive. Thats why the reality, with the way the market is trading is very conflicting. With the inflationary pressures, you cant ignore that no . Well, the same story. The risk aversion is driving the yen up. Right. Guys, well leave it there. Thank you for coming in. Todd is with us for the rest of the hour. Coming up, earnings alert. Netflix set to report right after the closing bell. We take a look at the original content and whether its going to transcribe into stronger growth. Squawk box continues in just a moment. I joined the army in july of 98. Our 18 year old was in an accident. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family, and we will be with usaa for life. Its not just a car, its your daily treat. Go ahead, spoil yourself. The es and es hybrid. Experience amazing. Early risers in times square hanging out with the squawk gang. Joining us the senior median internet analyst. Hes going to tell us what to watch for ahead of the companys First Quarter report. Whats going on . Whats going on . Whats going to happen here . We have proprietary research that shows that app data is going to be strong. Particularly in market where is netflix has been for at least three years. Hold on. I got to stop you when you have proprietary data. Where are you getting the data from . We work with a third party. Its a loose proxy. But basically what youre seeing netflix is doing more and more of its marketing, more of its signons coming from the apple store and those are attractive. Does that mean theyre giving up more than a third. Sub . It can mean that. We dont know if its a full third. It can be beneficial to netflix and other providers. Were struggling to get a hand on how things are going in the short term, we feel cough accident with International Subscriber growth. The real story for netflix is the longterm story. This is the market leader. The world is moving to internet video. You see that by all of the moves by the media companies. Netflix is by far in terms of viewership and terms of usage, right . The big worry on the competition side is of course, jeff bezos and amazon. I figured youd ask me about that. You can answer before i ask you. Okay. My view on that is that the market, the svod, subscription video market is big enough to support both of these agreements. 6 billion in content . Yes, in the median term, amazon is building up the cost of condent in the near term. Youve got this arms race actually in the near term hurting the netflix free cash flow. Do you think theyre spending too much on each program . Or theyre buying too much content that they cant surface to their subscribers given that you go on to netflix and theres so much original content . Yeah. You cant even find half of it. Yeah. I would say two things. Id say first they need a broader row of content to hit a customers individual taste, right . Thats one. And the second thing is they cant afford to do it because as they scale dramatically they can amortize that cost over so many subscribers. Heres my question, why do you think this is a shortterm problem have, the arms race between amazon and netflix . Its a fair question. I do think amazon is all in. I dont think theyll screw that up. Its a situation where its a longer term arms race. But i think over time, even in the situation where you have a higher you have two major bidders in terms of content. As you get from 100 million subscribers to 200 million subscribers that youll still benefit. Youre talking about this as a twoperson race, what do you think about hbo . And the cost . Hbo its a Smaller Player . Well, how much does netflix spend on content a year, do you know . 5, 6 billion and netflix is spending about 3. But its about to be acquired by at t. Does at t use its capital to get into this battle . Im not convinced that at t is going to increase programming investment levels. I dont know. What about like comcast, im just trying to think of all of the traditional players . Okay, the traditional players view, theyre ensconced and invested in the meekia ecosystem you see it time and time again zbloel th they dont want to can balan cannibalize the growth . Exactly. How long do public investors allow netflix to liver at razor th in an environment where amazon obviously is playing a completely different game . And the guy says i need my margin hold on. First the premise of the question, because in the u. S. , netflix generates on a fully loaded operating basis almost 25 margin. The problem is youre seeing the overall number which includes international. Its called looking at the business. Right. But what margin does amazon operate at . Amazon is operating at razor, razorthin markets, too. Yes, but theyre in the Cloud Business as far as im concerned. But theyre amazon media, do you think theyre at a fat profit margin . No shot. No, theyre losing money. You got to look forward to five or ten years, the cable grid, the way people are watching tv are really changing. People want to watch it over apps. You think its about 3 billion just to put a point on it, you think these two big players can both continue to do this and both be winners because theyre going to quill all of the traditional players and win all of their subscribers, a much big number of subscribers . Like i said before, i definitely think theres enough viewing hours to support these big players. All of the growth is in internet video. By the way, ive got to make this point. Look at what the other internet and tech platforms are doing. Mark zuckerberg said video is the number one priority. Play the takeover game with me for a second. You love this i love this. I always thought disney should buy netflix and allows them to effectively piggyback off of netflix to get to espn, the consumer if they want to. And apple you also said apple is going to buy disney apple may one day buy disney. Id like disney to buy netflix. Have disney buy netflix, thats a 6 60 billion for them. I think theres a financial aspect there. I think they have looked at it by strategy. But apple and netflix makes sense. Im frustrated that the apple board has been very conservative in management when it comes to getting into it. And what about facebook . Or google. I dont necessarily i dont see facebook getting into it as much. Because think facebook is more about as supporting video. The deep last five quarters what do you think, do you like them . He always likes his company. Theyre playing us out anthony, thank you. We appreciate it. When we come back, the u. S. Air strike on syria putting a damper on the relationship between russia and the United States. We will take a closer look at the fallout that never happened and what it could mean for your money. Right now, though, as we head to break take a look at last weeks s p 500 winners and losers. Hey ron theyre finally taking down that schwab billboard. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. 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The Trump Administration weighing options in russia after senior white house officials accused the kremlin of trying to cover up last weeks syrian chemical attack. Lets bring in the policy director and fellow at the Foreign Policy initiative. David, thanks for being with us today. My pleasure, becky. So, where do we stand with russia at this point . What is our relationship versus where it was, say, a year ago . Well, its just as bad as a year ago, perhaps worse. The most interesting thing is where we are visavis two months ago. Now with donald trump in the white house, now we have trump and his secretary of state saying weve hit a low point. I think there may have been a measure of optimism in the kremlin for once when the americans talked about making things better, theyre going to follow through. But now i think they must be questioning after all of this talk that trump is going to have a better respected relationship, suddenly, the missiles are flying over the most important allies in the middle east. Wait a minute, lets back that up a little bit. Sure. You say that russians were hopeful that things would be better. Wouldnt the russians have to come to the table and behave in order to get together at this point . Well, they didnt seem to be needing much to get indicationings from donald trump theres a famous interview where they say hey, some putin a killer, and well, america is not so worse either. When assad steps out and used chemical weapons against his own people, when he gassed them, the russians kind of backed him up on that and tried to say the same thing. That it has not been using these weapons. Theres evidence that points to the contrary. So what does donald trump do other than reassess with that information . Well, i think, you know, its sort of looking a little bit like the cold war where you have two different versions of reality. With sort of the press conference with tillerson and his russian counterpart saying this we think this is all fictional. Where the democrats and republicans are trumping his critics. What do you think the real facts junior. No, i think the evidence is extremely strong for whether there was a chemical attack, whether its the rapid proliferation of first hand videos from people on the ground. I have confidence in the Community Even though donald trump was casti aspersions on te credibility. That is this a gas attack. Which gets us back to where we stand with the russians society, syria in particular, to nato to the middle east to all of these different places. Where is the road ahead, where does it lead us, best case scenario. Sure, if my view, best case scenario, the administration realizes that assad is big part of the problem. The line has been isis first, in response to questions after this attack people saying are you changing anything, is there new strategy . Every one of the officials saying were still focused on isis but this is abouis chemica weapons. The Previous Administration realized this even though they were hesitant and timid on syria. The mentality makes sunni arabs in syria believe that isis is the least worst of the options theyre favoring. Or al qaeda. Thats a Big Conversation of what people arent paying attention to. Al qaeda has had a tremendous resurgence. Even while isis is being hit by American Forces on both sides of the border with iraq. Al qaeda is entrenching itself in the population even after a way of a setback. David can i ask you a economic question. How much money do you think well be spending on the next coming of years on these issues that were talking about here . Well, one of the biggest questions there is a defense budget. So what does this mean for that . Trump has promised a substantial buildup. But right now, were heading towards a potential government shut down april 28th, a continuing resolution with budget levels continues from the Previous Year with no change. That can actually be bad for the military because they move things around from account to account. So if they cant get things around to an account, they get cut. Trump said hes rebuilding the military and even said its begun. The fact is, it hasnt begun. We need to get a supplemental budget. And then move on to the 50 plus billion even then isnt going to be in that time because of the sequestration of the obama rare. Ann winblad is joining us. And joe crowley weighing in. Later, uber opening up its books for the very first time. Revealing its Revenue Growth outpaces losses. Ed lee breaks that down on squawk box right here on cnbc. Kevin, meet your father. Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin trusted advice for life. Kevin, hows your mom . 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Thats amazing time now for executive edge President Trump following up on a promise from democrats to restore the exim bank. And now joining us with more. Good morning, andrew. The president has been all over the issue, first he opposed the exim bank and then supported it and one of the banks biggest critics to lead it. Scott garrett is a congressman from new jersey call the freedom bank part of crony capitalism while he was office. Trump nominated a more moderate to the board, Spencer Bachus was chairman of the House Services committee. Both sides of the aisle already angry about this move. On the right, representative just justin amash from michigan tweeted xm Corporate Bank is stealing. And nominates garrett is what democrat steny hoyer called the ultimate form of sabotage. And one of the most vocal advocates said she has refer nations about the nominee. Without a full board the bank cannot make loans larger than 10 million. Sony and caterpillar have fought to keep this bank alive. Guys there could be fireworks when the nominees face the senate. Thank you so much this morning. When we come back on squawk box, a recordbreaking box office debut. We have the numbers from the latest fast furious next. Right now, though, as we head to break, a quick check of whats happening in equity futures. Things looking higher. Dow up by 15 points. S p up by 15 point. And nasdaq up by 6 points. Squawk box will be right back. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of an. Welcome back to squawk box, everybody. Check this out. The latest installment in the fast and the furious franchise zoomed to the top of the box office this weekend, bringing in an estimated 532. 5 million worldwide. Thats projected to be the biggest global opening of all time. Just ahead of the star wars, the force awakens. The fast and the furious, which was called the fate of the furious was produced by Comcast Universal pictures. It made 100 million in north america. Down from some of the previous movies in the franchise but more than made up for that outside the United States and canada where it brought in 432 million. That includes 190 million in china. This is the first movie in the furious series to open on the same weekend in china as the rest of the world. And, yeah, about 100 million over the expected takein total. I would like to selfishly promote a new film that just came out over the weekend with richard gere called norman, which you have to go see. Its about a fixer in new york city. A banker in new york city. But if you go see it and you wait until the very end, theres a cameo from a reporter you . That you may know. Youre kidding me. Its sold out in every theater that was in this weekend. Its a sony classics picture. Sort of a woody allen style film done by a good friend of mine who is a director. What question did you ask . I reported on something. From the squawk set, no less. Wow so maybe next weekend i think its in wider release. Thats one more thing that you get a residual payment for, isnt it . I might have done it for free. Joe is a friend. In the meantime, apple has secured a permit to test Autonomous Vehicles in california. The permit authorizes test drives for three vehicles, all 2015 lexus crossover suvs. Permission to test selfdriving cars doesnt mean apple is building a car. The test could be for software or hardware. Apple has recruited dozens of auto experts in recent years. Now time for some parting shots from our guest. Do you have a parting shot ready to go for us . Todd gordons been here, of course. Yeah. You may have an invitation back on friday given you told us tell the public what you just told us during the commercial break so we can hold you to account. If i return on friday, in either case whether the market was higher or lower from today im going to receive a b according to Andrew Ross Sorkin. No you wont deserve a beating. You said it was going to go down. I think the market is in for some sears volatility. Serious volatility. 5 over under. 5 lower thats going to be a pretty big move. I think were going to see serious volatility. These Macro Markets have been warning signs coming in 17. The uptrend has been lost. I think europe has come back. But that stock market, those stock markets in europe have a long way to go. Im concerned, i think we have our hands full on the geopolitical front. Were dealing with syria, russia, china, north korea. I think a lot of potential black swans that if nothing happens, lets say not even this week or the next if we kind of make it through some of these concerns, then what . I really, i think the financials need it to really. The earnings were not that bad. Jpmorgan was solid, wells fargo was not good but overall i think financials started off earnings season well and financials are some of the worst performers. Small caps are dropping. Financials are dropping. Ive gone to a defensive posture. I think theres asymmetric risk. If im wrong i think ill be wrong for x on the upside. But if im right i think ill be right for 1. 5 or 2x on the downside. We kind of dont want you to be right. I want to be wrong. I dont want to see the stock market well hold you to it and see you back here hopefully on friday. Todd, thank you for joining us. Thank you, guys. When we come back this morning, wilt is standing over here waiting to come right on. Plus a read on Technology Stocks from the squawk market master ann winblad. Shes going to join us son the squawk set. Right now, take a look at the 10year yield. Still sitting just at about 2. 2 . 2. 213. Squawk box will be right back. The power of iovative thinkiki. The wer of 1 t t worlds top companies. Thpower aetf. Thwe qqq. The thinng wput in, clients get out. Power yourlients portfoli at powershares. Com qqq. Before investing, consider the Funds Investment objtives, risks, charges and expenses. Ll0090903 for the prospectus containing this information. Read it carefully. Distributed nvesco distributors inc. Tensions mounting over north korea. Investors are in a wait and see mode as the white house weighs all options. We have the details straight ahead. Tech talk with ann winblad. A look at the names that could be market movers. Weve got her picks coming up. And pedal to the metal. The fate of the furious roars past baby boss. The second hour of squawk box begins right now. Live from the beating heart of business, new york city. This is squawk box. A little fast and furious for you this morning. Good morning and welcome back to squawk box right here on cnbc. Were live at the nasdaq marketsite in times square. Richard bernstein our own fast and furious, ceo of bernstein advisers. Take a look at futures after what was a threeday weekend and lots to chew on. Geopolitically and otherwise. Dow looks like it will open up higher shrugging off some of the geopolitical news of the weekend. Up about 16 points. Nasdaq looks to open higher as well about five points, and the s p 500 looking to open marginally higher as well. Today the first chance investors will have to react to fridays Economic Data released when the u. S. Markets were closed. March retail sales were down 0. 2 . The second straight monthly decline. With Consumer Price index fell 0. 3 . Retail is getting hammered across the board, guys. Dont know if you saw that number. 89,000 people have lost their jobs in retail just this year. Thats more than the entire coal industry. Somebody making that poingt over the weekend. Also one of todays early losers is drugmaker eli lilly. The fda declined to approve lillys new Rheumatoid Arthritis drug saying it needed more data to determine appropriate dosages that could delay market debut for a year or more. And well be joined in just a little bit to talk about that. That stock down 5 in the premarket. Also a redone deal. Abbott labs will officially go ahead with its deal to buy ahere but now at a lower price than previously offered. The deal worth about 5. 3 billion or 51 per share compared to 5. 8 billion. Abbott had tried to back out of the deal because of concerns about the accuracy of aleres Financial Data. They did say over the past few years was inaccurate and they will be restated as soon as possible. Meantime, President Trump plans to nominate a vocal critic of the u. S. Eximbank to leave the agency. The white house announced friday he will nominate former republican congressman Scott Garrett to serve as president of the bank which helps overseas buyers get financing to buy u. S. Exports. Garrett voted against renewing the banks charter while in Congress Calling it corporate welfare. President trump reversed his stance on the exim bank telling the wj he believes it helps u. S. Companies gain business. And President Trump set to fill a key post at the federal reserve. According to the wall street journal Randy Quarles is expected to be named chair for supervision. He was a top Department Official under president george w. Bush. The position, which requires Senate Confirmation was created by the doddfrank law to oversee big u. S. Banks. President obama never nominated anyone to the job. Former head governor dan terrello had been the acting vice chair. This is significant for the banks, not least his stance, which is thought to be pragmatic on looking at the regulations but just to get to the stage of a nomination and approval will be significant to fill that post. How do you think its going to change the dynamic in terms of what he does . Were talking about the stress test in the last hour for example. I think we need to learn more about him, specifically and the wall street journal reporting today that hes probably not someone that ideologically wants to tear up doddfrank but is someone that wants to take a pragmatic approach. Sort of middle ground approach. The most significant thing is we will get that position filled and again a reminder that once he gets senate approval, if he gets it, that theres a lot that someone in this position can do without the need for various laws to pass congress. Clearly were not talking about a rollback of doddfrank which would require legal changes but there are simple changes that can be done by tone and leadership at the top. Thats something the banks have been looking to fill. Since youre hanging out with us can you weigh in on the news about Richard Cordray at politico, out of the Consumer Protection bureau . Clearly this is something thats been on the agenda for awhile. Straight away after the administration it looked like his days were numbered and over the past couple of months feel started to realize its a harder thing to change than people expected. If it does come about i think it will be a surprise and significant but i dont think were talking about significant change to the cfpb anymore. Thats something thats harder for the administration to tackle and probably something that would just cost too much Political Capital for them to do. Because the democrats would be very heavily against it. Okay. Were going to continue this conversation. Markets kwr s grappling with gl conflict and after the threeday weekend markets looking to open slightly higher. Joining us equity strategist and managing director of jefferies, rich bernstein ceo of Richard Bernstein advisers our guest for the hour. Why is it . This is the thing i cant figure out about all the geopolitical risks out there, it used to be when you heard an announcement about a bomb going off that the markets took that very seriously. Yeah. And usually it would drop somewhat meaningfully. Right. We seem to shrug this stuff off as if its nothing. Are we right now or were we right before . I think you know, honestly, weve started seeing volatility come back to the market. We had a nice little jump last week on volatility. I 24i that continues here. Were finding out the world is a dangerous place, and that probably shouldnt be shrugging it off. I think the bigger thing is that the Economic News has been a little bit more mixed. Weve seen, you know, gdp forecasts come down. Weve seen retail sales nums beur numbers as we talked about before being a little bit weaker. This is going to be a big test with the earnings season on what were going to be able to come up with. I think what we found out, though, is that u. S. Companies have been pretty resill yept. In being able to put up pretty good earnings numbers regardless of, you know, sort of the economic environment. I think for my small caps, though, that presents a problem when the economy is not growing nearly as quickly as sort of the multiples. For the last eight years we talked about uncertainty. I would argue potentially today is more uncertain than it was in many years. Well. Am i wrong to say that . Well, theres real uncertainty and perceived uncertainty. Right. Real uncertainty is bombs are going off and people are testing yeah. But if you go back seven, eight years ago were talking about people perceived that the world was coming to an end but perhaps things were getting better. Right. Today i think people are a little more realistic about the prospects for the economy and the prospects for the global economy. But you do have the uncertainty going on whether its north korea or whether its syria, or whatever it is. Does that factor in to your thinking, though . I would argue, i think i disagree a little bit with steven here. I would argue its a distraction. Distraction . It ultimately, what you want to look at is fundamental. Assuming that were not going to have some kind of major war. Lets just make that assumption for a second. Rational heads will prevail here. But, if its if its a bombing here or bombing there, bombing there, thats actually been going on for a long time. The question is how much of a fanfare did it all get. But, the underlying, what steven said i think is very important. U. S. Profit fundamentals, forget economic fundamentals for a second, profit fundamentals remain quite healthy and, in fact, i would argue getting healthier. And i think thats what investors should really be focusing on. Not the geopolitical issues that are what about the policy implications of things being passed or not legislatively in washington and how much that weighs one way or the other on any of this . Not to hog the camera, but when dont worry. We know air time is oxygen. We understand. When becky was interviewing steve munnuchin, i was here tha day. You asked me a question, i said the most important thing he said is they wanted tax reform done by august. And if it wasnt going to happen, the market was going to have trouble with that. Because what they were doing was setting expectations that there was going to be additional fiscal stimulus in one form or another, that was going to happen reasonably soon. And with a republican congress, a republican senate, republican in the white house, the markets assumed that that was going to be reasonably easy to get that done. I think even they assumed it was going to be reasonably easy to get it done. Thats clearly not whats going on right now. And i think thats why youre seeing the volatility in the marketplace. Well i think its also the fact that, you know, you were planning on it, and actually performance for the market. Absolutely. In the Fourth Quarter really reflected the fact that it was going to get done in 2017. And you have elevated valuations here. And so you have some of the good Earnings Growth sort of priced in, especially as we get down cap where small cap was up 11 or whatever it was in the Fourth Quarter. Right. Its really priced into the stocks. And now its more of a showme situation. So we do have to see policies start to lead here. And we really need to get better information. Is there still a premium built into the market that some of this policy stuff happens . Certainly a lot smaller or are we growing into it now . Its a little smaller than it was. To some extent earnings are going to grow into this. Thats definitely happening. Look, if nothing gets done, were back where we were. So the argument i would make is, that with earnings improving we wont go back where we were in the stock market. But you cant expect a major, major advance to occur here. Although i just want to reiterate. Fundamentals are still improving. Its not like were looking at a bear market. I think thats a big difference. Steven whats your view on the renal nal banks at the moment. Fridays earnings will be interesting. Right. Wont be on the eps line but the only share price that performed was emc im overweight on the smaller banks. I think youve got more upside with them. Obviously its not going to be a Straight Line like we saw in the Fourth Quarter where theyre up 30 . I think roes have been so suppressed that a little bit of good news here youll start to get to revalue these companies and move up their valuation. We could see m a activity really start to pick up. We dont need whatever, 6,000, 7,000 banks in the u. S. Who can see consolidation. So with that i think, you know, for a 12month time horizon i really do like financials. Richard, on the flip side the big banks where we had citi, wells and jpmorgan all on the eps line, some quite significantly but share prices declined. Does that show you how much is priced in . I think to some extent a couple things are going on. The financials are improving but theyre right in the forefront in terms of the cyclicalty of the economy, how much improve mant are we going to see. People dont like to think this way and Bank President s, theyre very, very deep cyclical stocks. And people forget that. And so if you think that the profitability is going to slow as we go through 2017 into 2018, theyre right in the forefront, and thats why i think youre seeing that volatility right now. Would you guys buy stuff in europe right now . Everybody seems to think europe is on sale. Not everybody. But our firm our firm viewpoint is that, yes, we like europe a little bit better than we do the u. S. Because we are seeing ax acceleration and valuations are still pretty cheap. The fact that everybody those valuations are cheap for a reason. Absolutely. And you could be looking at not just the french election. You could look at a situation where greece, either decides to pull out of the eu or get pushed out where italy same thing, decides to pull out of the eu. And if one more country pulse out then that brings up all kinds of questions and look out below for the banks. Absolutely. Right now, the earnings numbers and the revision trends have been better. The Economic News has been a little bit better. And they really have lagged more of the u. S. Markets. So its sort of that catchup trade around that. Worth finding out on that becky that the main french banks down about 7 in the last two weeks coming up to the french election. Theyve been the biggest movers compared to europe. Ahead of the election. Mark grant said this weekend he wouldnt touch anything in europe at this point because theres too much at risk. Well, i would just say if youre looking for earnings oomph, i dont know if thats a good word to use. The oomph is in emerging markets right now. If you look at emerging markets which emerging markets . In general. You dont have to be that picky. The earnings fundamentals are much better. Im not sure i would run to turkey these days but in general emerging markets are the earnings power is much, much greater right now. Weve got to leave the conversation there. Steven, thank you. Thank you. Richard bernstein is staying. You get to keep the middle name even though joseph is not here today. In the meantime coming up when we return what to do about north korea. Thats the question the white house weighing options after its allies with its allies after last weeks failed Missile Launch. Were going to discuss the Global Implications right after the break. And after a record run, the nasdaq suffering its first threeday losing streak of 2017. Weve got tech investor and stock picker ann winblad. Shes going to come and help us sort through all of this when squawk returns in just a moment. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade the power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back. The u. S. Continuing to pressure china to help control north korean dictator kim jongun. Satellite images show north korea is ready for another nuclear bomb test. Joining us with more Dennis Wilder former senior director for east Asian Affairs at the National Security council. Good morning to you. Thanks very much for joining us. We talk so often about President Trump wanting to work with china on dealing with north korea. Specifically what is it that china can do that can exert pressure on north korea . Actually, china has a lot more options than people think it does. If you look at the parade yesterday, or on saturday, in pyongyang, what do you see . You actually see in that parade transporters that the chinese provided to the North Koreans for their logging industry. Thats just one indicator of the kinds of equipment that the chinese continue to give the North Koreans, that, frankly, aids and abets the North Koreans in what theyre doing. The chinese give them the jet fuel for their fighter aircraft. The chinese give them all their oil, in fact. The chinese could put more pressure on the North Koreans and President Trump is saying, china needs to make a strategic decision now. It can no longer engage in strategic patience with the North Koreans. Its clear its time to tell the north korean elite that they must take a different direction. And, dennis, how likely is kim jongun and his administration to respond . Clearly the main issue on the table is his Nuclear Weapons. It doesnt seem like hes likely to give them up. But you disagree. I disagree, because i think we ask the wrong question. We ask will kim give up his weapons . Actually, its the north korean elite that we need to send our message to. After all, the North Koreans have the 125th economy in the world. South koreans have the 11th largest economy. South korea has a 2 trillion economy. I cant believe that North Koreans dont want to live more like their south korean brothers. And my question to the north korean elite is, how long are you going to put up with this . Its not like he was elected, dennis. Hes not. But he also needs all of those people in his elite to keep his government going. This is not a government that operates without diplomats, without business people. If the north korean elite puts pressure on him, i think the man is more interested in survival than he is in Nuclear Weapons. Although, you know, theres stories that have been out there about how he fed one of his uncles to the dogs and things. If thats the case, youve got to think that he rules all of them with a culture of fear, too. Absolutely. And what he did in the airport in kl is an absolute example of this. Vxnerve gas. Can you imagine half brother. And he killed his half brother. He killed his uncle. Hes used quad4 aaa guns to kill people. But thats a man who is insecure. A man who is secure doesnt need to kill everybody around him who might be a potential threat. To me, thats a sign that hes actually a lot weaker than people want to think he is. Dennis, lots of question marks about what actually their military capability is at the moment. Whats your reading on it . And sort of the size of damage that they can inflict, and what distance from their bases . Well, the North Koreans, first of all, on the conventional side, have about 10,000 artillery pieces up along the border of the dmz with south korea. They could launch a devastating attack on seoul, the 10 Million People who live in seoul could come under attack within minutes. We have the United States has 130,000 american citizens who live in south korea. So we take this seriously. Im not diminishing even the conventional threat. On the nuclear side, the North Koreans are not yet capability of striking the United States with a longrange missile with a nuclear tip on it. Thats a good thing. Because that means we have time to work this issue with the chinese to then put pressure on the north korean elite. How much time . I think we have about four years. I dont think we have longer than that. But i think that it will take them about four years. Meaning that before four years before they can just have these weapons . I mean before they have a fully functioning weapon in the field. Now, one thing about the parade that you have to remember, a lot of what was seen in the parade were dummy missiles. A lot of what you saw out there has never been tested, is not developed yet and we know this quite well. Just to put a fine point on it, when this missile failed, you think it failed because it didnt work, not because of all sorts of speculation out there that somehow we were doing something that we dont that hasnt been reported yet . Well, youre going to have to ask the pentagon that question. From my point of view it could easily be that this is a new technology, its called a cold launch technology, which is hard to do. Its probably the same missile theyre trying to build for their submarine. And this kind of Missile Launch is difficult. So im not surprised to see some failures. What is our capability to prevent, through electromagnetic warfare, if you will, one of these missiles going off . Again, i think that youd better ask the pentagon. Im just not going to get into that question. Its its a question that i think others need to deal with. Dennis, throughout were always focused on what china can do to help the u. S. And its allies in dealing with north korea. Should there be a further question of what russia could do . Should this be on the bargaining something on the discussion table between the u. S. And russia . In the past the soviet union, at least, had close ties to north korea, but less so now. Oh, absolutely. This is an east asian problem, this is a northeast asian problem. There are a lot of countries that can get involved. For example you ask what countries could do. Well one thing you could do is stop air coreo from playing to different capitals. There are many countries that allow north korean shipping to come through their ports. Without really looking at whats on board those ships. So i think theres plenty for the International Community to remember that the russians are part of the sixparty talks process. So i think there are theres a role for russia. Theres a role for china. Theres a role for south korea, japan, australia, many countries in the region need to be involved in this. Dennis, thank you very much for joining us this morning. Dennis wilder. Still to come here on squawk box, ann winblad talks tech with us. Well cover it all. But up next, a recordsetting weekend for the fate of the furious. The rundown of the big winners at the box Office Straight ahead. Go to protect your vehicle . Im on it. Weathertech. Made right, in america the latest installment of the fast and the furious franchise zoomed to the top of the box office this weekend bringing in an estimated, are you ready for it, 532. 5 million worldwide. Over half a billion dollars thats projected to be the biggest global opening of all time, just ahead of the star wars the force awakens. The fate of the furious produced by Comcast Universal pictures made about 100 million in north korea and 432 million outside of the u. S. And canada. That includes about 190 million in china. Its the first movie in the furious series to open on the same weekend in china as the rest of the world. When we come back this morning, we have some tech stocks for your portfolio. And then, eli lilly dealt a blow on friday after a drug to battle Rheumatoid Arthritis is rejected by the fda. We have the details and what it means for the company, as well as for consumers. That is straight ahead. As we head to a break, u. S. Equity futures been in the green all morning. Dow futures up by just over 17 points. S p futures just a point, the nasdaq up by 4. Squawk box will be right back. T anything. Even a truckcicle. [second man] how you doing . [ice cracking] [second man] ah,ah, ah. Oh no [first man] saves us some drilling. [burke] and we covered it, february fourteenth, twentyfifteen. Talk to farmers. We know a thing or two because weve seen a thing or two. We are farmers. Bumpadum, bumbumbumbum good morning and welcome back to squawk box here on cnbc live from the nasdaq marketsite in times square. Among the stories front and center. The latest reading on home Builder Sentiment at 10 00 eastern time. Economists think monthly index from the National Association of Home Builders fell slightly this month. However last months reading was the highest in nearly twelve years. Dont look for Fiat Chrysler to be involved in any merge yo deals soon. Thats according to the ceo who told the annual meeting the automaker will focus on a business plan. Hes championed the idea of Auto Industry deals and tried to engage in talks with gm over the last couple of years but seemingly backing away from that. Down 1 this morning. Two high profile earnings reports set for release after todays closing bell, netflix and United Continental will be out with their quarterly numbers. United is in the news for reasons beyond its evgs and investors will be interested in further comments about the recent incident involving forced removal of one of its passengers on one of its flights over a week ago. Were still talking about it. And we will continue. In the meantime were going to talk technology. The nasdaq coming off its first threeday losing streak this year. Joining us right now with her top stock picks and much more is ann winblad. She is the cofounder of Hummer Winblad Venture Partners and ann, thank you for being here in studio with us today. Thanks for having me. I wanted to start with the stocks that i know is not one that youre with a company that i know is not one that youre invested in, uber, because it had some news out over the weekend where they talked about their numbers for 2016. Its always been really hard to try and figure out whats going on there. They now came out with these numbers where they say bookings doubled to 20 billion in gross bookings. Net revenue was 6. 5 billion. Which i still dont understand how you have 20 billion in bookings but only 6. 5 billion in revenue but the net losses were 2. 8 billion. Most of the press writeups treated this as pretty good news because the net losses were slowing, in terms of how big they were, relative to what theyre booking. But i still look at this and try and figure out how this makes sense as an investment. What do you think . Well its great that theyre disclosing numbers so theres something to look at. Which means theyre probably preparing in the future to be a public company. So its better to have those numbers, dissect them now, than the moment you go on the exchange. Its really hard to understand what they mean by bookings and revenue. Because they may mean gross bookings, and net revenue. If youre a Enterprise Company and you have 12 million in bookings, on an annualized basis you can only recognize revenue per month, so that would be 1 million of revenue. But they dont have subscribers so i dont know what that is. It may be that the revenue is net of cost to drivers. But without seeing its really hard to know. Do you look as this as one of the great transfers of wealth to us as consumers. In terms of the losses that they seem to be taking on virtually every ride . Its really hard to see in those numbers how they get to profitability. And i do think that public investors like to see growth. So well see how the revenue is growing, which theyre saying its growing a lot. But investors ultimately want to see a real business thats sustainable. And does have some profitability over time. They havent given us that time line. More complicated question. Is it a criminal is uber a criminal enterprise . Is uber a criminal enterprise . No i ask it, given the reports we hear almost regularly over the past month about all sorts of activities that could be described as fraudulent in terms of not just dealing with consumers, but how they dealt with competitors and whether you think some smart a. G. Out there wants to make a name for himself is going to arrest somebody . You mean stealing some of the map software . Theyre stealing software. Theyre putting out fake pretending theres fake consumers out there regulators to get lyft to pick up people that dont exist. Theyre potentially hacking or using all sorts of Different Technology to prevent regulators from being able to find out where they are. I mean these are things that, i imagine, somebodys going to have something to say about at some point. Well, you would expect that a company that depends upon having a good brand and trust as one of their key tenets of doing business, that this would be damaging to both the brand and that trust relationship with all consume consumers. It probably plays well to lyft, and you know, other contenders, at the same time, you know, i take an uber. I do too. I think the culture is terrible with that company. And its its really amazing that people want to work there. In terms of the reports of how they treat women, the engineer who wrote the big blog about why she left the company. Thats what youre referring to . Yeah, people are voting with their feet. And thats what happens with a company like that. If you have a bad culture. And overall, a good company in Silicon Valley depends upon having great talent. It wont be those numbers that wreck the company or any of these other antics, it will be their inability to attract great talent. What about the government structure more broadly. Clearly its getting a lot of attention but its not rare in Silicon Valley. Facebook and snap have gotten away with maintaining almost all of the voting rights. Is that something you stay away from . We do mind it. We shy away from it and its not the type of Voting Agreement that our investments have i think people are looking backwards now on facebook and say well it worked there so far, therefore lets let other Companies Get away with it. But i think its a really bad structure. I think it doesnt allow the board of directors to have complete governance and the job of the board is to hire or fire the ceo. And you know, you effectively create a dictatorship. Is that why you think snap is a vulnerable company . Thats what you said in the interview beforehand that you think snap is vulnerable. I think snap is in an exciting space. But its very competitive. And it could be transient. All the things that attract people to snap, whenever you have a Consumer Software company, which i think snap is, not a Enterprise Company, you rarely get an apple, and you frequently get a company that sort of loses attention from consumers over time. Snap really is a very tight set of customers. Age, demographic, type of user. How many of you use snap . I did for a little bit. Then i got bored of it. Well, youre aging out of snap. We do it to monitor our kids. Exactly. What you just said is very interesting, though, because i mean maybe dating myself a little bit here but are we sort of reliving the hype of the 1980s Specialty Retail companies . If you remember, you know, all these companies, malls were the greatest thing, and there were all these companies that came public, and theyre all gone, because it was the whim of the teenager or the whim of the shopper, the whim of the consumer and they found Something Better and theyre all now gone. Is that kind of whats going on here with the snaps, and the and Everything Else . Well in commerce space, amazon won everything. They won big. Mmhmm. And they have a lot of specialty commerce there. So specialty commercial didnt wasnt a bad idea. The timing was pretty bad because we didnt really have the internet as a platform. Right. And our job as venture capitalists is to be exuberant about the future. We try to tone it down. Right. Weve learned that overexuberance is a really bad thing. Yeah. But commerce and specialty commerce turns out to be great. And Many Companies survive. Priceline is no but im talking about the 80s. Way back. I dont remember the 80s. The charming shops she wasnt around in the 80s. Thats what i said im dating myself. Amazons valuation today justified . I believe so. I mean, amazon is a one of a kind company. Its not a singular product company. It continues to march into new spaces. The, you know, they have tons of people there working on Artificial Intelligence and Machine Learning, which is the big, hot new space of technology that changes everything. They certainly know how to operate commerce. They created the modern cloud with Amazon Web Services and that is a rapidly growing and very profitable business. Can i ask you about the euro as my cloud guru theres now only effectively three cloud providers in the United States, microsoft, google, amazon. Thats the whole game. Those are the top three. Top three. But theyre really the only players longterm, maybe alibaba in china. Theres sort of a bubbling up in washington of conversations about whether these businesses will ultimately need to be regulated. People talk about too big to fail with the banks. Theres only three providers that are effectively providing the back end utility for all of the internet, at some point does washington wake up and say theres something going on . And donald trump used to talk, by the way, about amazon as a company that he not that he worried about, but he thinks may need regulation at some point. I think theres always a tendency when someone completely dominates a segment, that amazon is probably more vulnerable there in the commerce space and cloud space. The cloud is still pretty nascent. If you look at enterprises, they are just getting to the cloud. And microsoft is the big winner here because of amazons success. And google is a big winner because of microsoft and amazon. And ibm has a business here because of the three of them. Right. So i think were very, very arely there. Sew if you look at anybody trying to attempt regulation, it would certainly be, you know, because of the commerce space where amazon is extraordinarily dominant. Very quickly, you spoke a lot about amazon but that is one of your three favorite picks along with microsoft, and alphabet. And the reasons i guess partially because of the cloud. Other reasons you like those other two companies . I like the enterprise. And the Enterprise Software segment, while not glamorous, and while not easy to talk about, because you cant talk about snap glasses or you know putting cats on your faces or anything like that, this year there will be about 351 billion spept on Enterprise Software and thats up 5. 5 from last year and accelerating in growth. So, 2018 is over 7 growth. And this is a space that is on fire. If you look at major companies, enterprises that are not Software Companies. Everyone is sort of looking like a software company. Companies are in this transformation or die mode, and its been a very, very big on Software Companies and thats why i like google, and microsoft, and amazon, and i like a lot of other Enterprise Software companies, as well. Great. But i think its a space to watch. We have we have new ingredients, also adding to the space, which ive mentioned Machine Learning and Artificial Intelligence. So this is a space thats very dynamic, and very much part of the fabric of every single major industry. Great. Ann, it is always a pleasure seeing you. Thank you for joining us today. Thank you. Thanks. Okay, coming up when we return, eli lilly stock just after a 52week high but down sharply in the premarket. Were going to show it to you right there after a promising pill to detroit Rheumatoid Arthritis was rejected by the fda. Meg tirrell is going to be with us to talk about what it means for the company. Later, new york congressman joe crowley is going to join us. Hes chairman of the Democratic Caucus to talk about whats ahead on capitol hill including tax reform and health care. Squawk box returns in just a moment. Excuse me, are you aware of whats happening right now . We facing 20 billion security events every da ddos campaigns, ware, malware attacks. Actually, we just handled all the priority threa. You did th . Weid that. Really. We analyzed millions of artles and reports. We can identify threats 50 faster. You can tt . We can do that. Then do that. Can do thatat. Wean do that. Ho its off to work we go woman on theulf ast, are excted to create over 45,0 jobs. Es and each job created by the energy indury supports two others in the cmunity. Altogether, the inryupports er9 million jobd these e jobshat natural s is helping make ppen, all while reducing americas emissions. Energy lives he. Wake up, everybody. Its monday morning. Welcome back to squawk box. Lets take a look at the futures as we get ready for this new trading week. Theyve been picking up steam. Ive been saying that theyve been in the green all morning. Wil corrected me. Apparently they were in the red in the very early, early hours before we started. Slightly in the red in about the a block as well. Started to flirt with green and theyve extended since you guys came on air. Theyve been pushing up ever since then. The dow futures indicated up by about 46 points. S p futures up by 4. The nasdaq up by 10. Meantime eli lillys latest drug for Rheumatoid Arthritis rejected by the fda. Meg tirrell joins us with why and what it means going forward. Good morning. This is stocks of eli lilly and its partner incyte pretty hard this morning because people expected approval of this drug on friday. So getting that surprise rejection from the fda, driving eli lilly down 5. 6 , incyte down about 12 . These guys are partners on this drug. The fda essentially saying in its complete response letter that it needs more data on dosing, and safety of this drug. Now we dont have a ton of details about what that will require and whether a new study is needed or whether theyll be able to come back fairly quickly. The company saying that they disagree with the agencys conclusions. This is a really, really big market. Rheumatoid arthritis is an autoimmune inflammatory condition that affects 1. 3 million americans. And there are already a lot of drug on the market for this indication. So analysts this morning are saying there are not just implications for eli lilly and incyte but also pfizer which has an oral pill already on the market. However not catching up to these real giants in the class. So implications all across that class, and also for Companies Developing another experimental drug which also was delayed, and the fda expected to have a decision in the second quarter. A lot of stocks to watch this morning on this decision. And one of the things here is we dont know why exactly it got rejected. The rejection letters from the fda arent public. Is it a rejection letter or go back and look for more information, and come back to us again . I was confused when i read through some of that. Its called a complete response letter and a lot of arguments happen around are they actually rejections . It means they are declining to approve the drug at this moment. Companies dont have to public the rejection letters or complete response letters from the fda. Thats something that scott gottlieb, nominee for fda commissioner said in the past he wants companies to do. We as journalists want that information. More transparency. So you understand why how big of a hurdle it is. Exactly. Youre seeing a couple downgrades this morning for incyte and lilly because people are expecting somewhat of a delay, maybe a year, maybe two years and this could have been a billion dollar drug in the next four years. So if there are already so many of these Rheumatoid Arthritis treatments out there how much theres so much demand for a new one . Its an amazing market and something i want to dig more into. This drug is a pill. The other drugs especially humira are injections or confusions. There were some safety concerns. Richard where are you on health care at the moment . Health care is always conceived to be kind of a sexy growth story. But the reality is its a defensive sector. Your profitability is heating up. The overall sector not individual companies but the kroefr all sector tends to underperform as profits heat up. Whats happened recently, weve seen people be scared of profits. Weve seen the Health Care Sector do very well. Perfectly normal. Thats right on cue. Sound like a doctor. Perfectly normal. Meg, thank you very much. Thank you. When we come back, we have some other stocks to watch ahead of the opening bell on wall street. Plus in the next hour congressman joe crowley. He is a member of the house ways and means committee. Were going to talk politician and issues that matter to your money. What can you expect from tax reform. What can you expect from Health Care Reform. And later the future of uber. Whats ahead for the 60 billion raid hailing service in light of some of the pr problems the companys experienced recently and in light of the numbers they just put out this weekend. Squawk box will be right back. You always pay your insance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 509 on auto insurance. Call for a free qte today. Liberty stands with you™ Liberty Mutual insurance. A used car, welcome back to squawk box. Lets take a look at some stocks to watch this morning. Mcdonalds upgraded to outperform from market perform at wells fargo. Bank saying mcdonalds will see market share gains from its move into mobile ordering and that Profit Margins are improving. Also take a look at money gram international. It got an improved takeover offer over the weekend from alibaba affiliate ant financial. The latest bid worth 1. 2 billion. The Money Transfer service originally agreed to a deal but another Money Transfer company came in with a higher bid. The takeover deal also involving a share of fidelity and guaranty has reportedly fallen apart reuters reporting that the firms proposed acquisition by Anbang Insurance Company wont happen because of a failure to obtain regulatory approval. Theres a fascinating story, i wonder where fidelity guarantee got this. Now in a new insurance product that companies are buying, to effectively hedge against deals that fall apart because of regulatory issues, especially when a Chinese Company is trying to buy a u. S. Company, you effectively can buy insurance so that the fee, the breakup fee gets paid by the insurance company. Like merger default . Like a merger default insurance, right. Interesting. So. Interesting. We were going to talk about united and delta but they took the stories away. We can still talk about it. So im going to talk about that right now with our guest host. Richard bernstein. Richard, the united story continues. The company saying that they are addressing this by saying, any time theyre going to kick you out of your seats on the flight they have to do it at least 60 minutes before you board the flight by putting their employees there. Delta came out and looks like a good response with the way theyre coming to this saying theyre upping the amount they can pay passengers so that they will volunteer to get off the plane. Right. I know airlines are not your area of expertise but i think this drags a huge spotlight on the entire industry of airlines. Right. Just by the bad behavior of united and by not responding appropriately. Let me tell you, when i was at Merrill Lynch i travelled an amazing amount all over the world. And i saw a lot of these things in action. Not somebody getting beaten up on the plane and getting dragged off. But you know, people are ultimately economic animals. And ive seen cases where they overbook planes and they just keep raising and raising and raising the fee. Eventually and eventually somebody steps forward. Somebody eventually does. So, you know, you think about the publicity and everything involved. And the potential for regulators getting involved. And the lawsuits and Everything Else, you know, why not pay an extra 500 to get somebody off the plane. I think delta took the right tack by saying yeah were going to authorize people to pay up to almost 10,000. Just keep going. Youll eventually get somebody. And this is a normal auction process and they should just do it i think. Would you buy united though . The one thing thats been fascinating about this, the stocks only fallen about 2 . That has shocked me. We talked about it being an oligopoly. Theres part of me that thinks this is a great buying opportunity. It would be a great buying opportunity if the stock was down. It didnt go down. But now the question is whether its sort of artificially marginally by the way it did lose a couple hundred million dollars. It would have been a lot people to pay people 10,000 to get off the plane. Im not a industry analyst. We dont buy individual stocks but i will say if united is smart theyll start discounting their tick eds. So when you get on your travel website and you look and you want to go from new york to miami or something, wherever you want to go, youre going to find that united is cheaper. Again, people are economic animals. Theyll be it would have been cheaper to pay somebody 10,000 to get off the flight. It would have been. But weve been discussing this, last week the argument was if youre sitting on kayak or expedia or whatever your service is. And you need to go at 8 00 in the morning from newark, guess what . Youre going on united whether you like it or not. Right. You are. Thats just the the reality of the moment. But i think the reality is you have potentially tempted regulators to come in and place more strict rules on you because there is so much passenger outrage at this. If you fly, you know, its a pain. And its not all the carriers fault. A lot of this is because of security lines you have to deal with before you even get to the gate. I understand all of that. But having flown a couple of times last week you understand why people get so upset and you understand why you feel like you are not being treated as a customer. Youre being treated as cattle. I think one of the great ironies, and im not even sure i was told this by somebody else, so this is kind of hearsay. I was told the ceo of united about two or three weeks before this incident occurred actually won communicator of the year. He did. He did. No pr. Pr . He was on the cover of a pr magazine. Thats just too ironic. Just too good for words, right . Richard we loved having you here. Thank you. Oh, wait. Yeah, this is it. Byebye. This is it. Youre done. Got Better Things to do. Hes moving on. Still to come here on squawk box, congressman joe crowley talks health care and tax reform and as we go to break check out futures in the green. The dow expected to open up by over 50 points now following about a percent of declines last week. The nasdaq was down 1. 5 . Were back in a couple minutes. Dear predictable, theres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia its your tv, take it with you. With directv now and at t, get the ultimate in Entertainment Plus unlimited data. Get directv now for 10 a month when you have the new at t unlimited plus plan. The north korea threat. The Vice President visits the Demilitarized Zone after a failed Missile Launch. Now while issues like that remain, the president and i have great confidence that china will properly deal with north korea. What it means for the markets. Plus a live report from the border straight ahead. Filling the fed. The Trump Administration set to name a former treasury official to a key post. Plus a race to the top. The fate of the furious zooms past box office records. Take the wheel. What . Well tell you why the film might have china to thank as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from the nasdaq marketsite in times square. Im becky quick along with Andrew Ross Sorkin and wilford frost. Joe is out today. Were fired up about a lot of stuff and were going to talk about it in just a moment. In the meantime check out the futures. They continue to build this morning. Dow futures now indicated up by about 58 points. S p futures indicated to open up by almost 6 points and the nasdaq up by about 15 points. If you check out whats been happening in the bond market, treasury yields continuing to be under some pressure with the yield in the ten year note today sitting at 2. 223 . Among the top stories that were looking at, shares of eli lilly under a lot of pressure. The fda declined to approve lilys new Rheumatoid Arthritis drug saying it needed new information. Apple now has secured a permit to test Autonomous Vehicles in california. The permit authorizes test vehicles for three types of vehicles all 2015 lexus crossover suvs. Her mission to test selfdriving cars doesnt necessarily mean apple is building a car. The test could be for software or hardware. And then on the economic agenda were going to get the latest readings of home Builder Sentiment. That comes at 10 00 a. M. Eastern time, from the National Association of Home Builders fell slightly this month from market year. Walmart is reportedly in advanced talks to by bonoos. They are, as andrew just side an online mens apparel retailer a. The two sides have agreed on a price and transaction is in the Due Diligence stage. Walmart down a little bit in the premarket today. Abbott labs will go ahead with its deal to buy alere but a lower price than previously offered. The deal is worth 5. 3 billion compared to original deal at 5. 8 billion. Abbott had tried to back out of the deal because of concerns about the accuracy of aleres Financial Data. Alere did say this morning that Financial Data over the past few years had been inaccurate and they will be restated as soon as possible. Abbott down a little bit in the premarket, alere bouncing nicely 16 . Vice president mike pence visiting the Demilitarized Zone between north and south korea. This comes after a failed Missile Launch over the weekend. Sherry kaine joins us live from the south korean border and this is something weve been watching very closely. Im sure that the launch was not anything that wasnt related to this visit by the Vice President. Well, exactly. The timing was very interesting. As Vice President mike pence was en route to south korea, becky, north Korean Leader kim jongun decided to push the button for the missile test. Yet another one, just eleven days after since the last missile test. Yes, it failed, exploding just some seconds after. And weve seen some failures in recent weeks, but youve got to keep chesting in order to advance its technology. And also there was a military parade, and it was sort of like a showcase of the Missile Technology collection. It was two hours long. Revealing some three new types of intercontinental ballistic missiles. Yes, there are some experts who say that maybe theyre empty inside and maybe theyre not something to work with. But, assuming that they are good to go or theyre something that theyre working on, certainly the target audience is very clear. Its not about japan. Its not about south korea. If were trying to show off long range missiles, its its the Trump Administration, its the washington, and i think some of the north korea watchers that i spoke to out of seoul today seem to agree that yes, they are trying to get that message out. Yes, we are capable of reaching the u. S. Territory, and attacking it. But i think for now, theyre going to likely stick to short range or midrange missiles, sort of stick to mini provocations, shall we say, in order to see, buy time, and in order to see how far washington, as well as beijing, are willing to go in terms of putting pyongyang in check. Guys . Chery thank you for that. In the meantime were going to talk more about President Trumps response to north korea threat. In this weeks other political headlines joining us right now, new york congressman joe crowley, chairman of the Democratic Caucus. Good morning to you. Good morning. What do you make of the news about everything that took place on friday, and then everything that took place on saturday in north korea . Well, i think its further evidence as to why we need our friends to do more now than ever. We have an opportunity to shake the hand of Prime Minister of germany we should do that. These are our friends, our allies. Its more than them. This is an issue that affects not only europe, and asia and us, its the world. The entire world together. And obviously the chinese, the president s apparently done a fairly good job in terms of talking to the chinese at this point. No commitment that theyll help beyond, you know, expressing simpatico with us but we need to see some real steps taken to demilitarize and really, i think, to address the issue of Nuclear Weapons with what do you know about the failed launch that north korea took place on saturday . Theres been some speculation that it failed on its own, and theres been some other speculation that maybe we had a hand in it. I know weve had that hand in it before when it came to iran. Right. For instance, and work with our israeli allies. I dont know, quite frankly. I know no more than you do in terms of watching the news, and being a little bit surprised by the failure. Given the hype and everything around the celebration of a father and grandfather of the present leader of north korea. So its, you know, it the concern i think now about the testing of a sixth nuclear test has people a bit unsettled, as well. Congressman, obviously things are always uncertain in the world. But it feels a little more like it these days with whats happened not only with north korea, but also with syria. That theyre poisoning assads poisoning of some of his citizens and our turning around and bombing it. The markets are watching this, too, trying to figure out what to make of all of it. Were you in favor of the president s move to drop bombs on syria . I think like most americans from my reaction point of view it felt that it was an appropriate response for a human catastrophe. But at the same time, it lacks an overall policy, or dogma, or doctrine, about what lies ahead for us in terms of involvement in syria. Not the oneoff and just kind of walk away after that. It kind of increases our level of involvement. And its not like the president Syrian Government walks away and says that didnt happen or the russians or anyone else, quite frankly. So i do think its really called upon the president , and his administration, to really come out with a real plan as to how to move forward with syria. Markets are watching including refugees. The markets are watching two things. Theyre watching all of these geopolitical issues that are happening. And then also trying to figure out whats happening on the policy front here in the United States. You sit on the house ways and means committee. The two major bills that weve been waiting to see what happens, one would have to be what happens with health care, the other would be tax reform. Do you think that well get tax reform by the end of the year . That weve kind of pushed back the august weve already dealt with the issue of health care for the most part. Although you think its gone . Well, you know, the only thing that will change it right now is whether this administration supports the present law. And if they dont, if they willfully underfund it or block the funding of Fair Distribution portion of it, that would have a incredibly negative effect on Health Care Delivery in the United States. Hospitals will suffer. Patients will suffer. The American People will suffer. Democrats, republicans alike. And if thats the avenue the president wants to move down is that the avenue you think hes going to go down . Its apparently seems to be. Hes threatening to withhold 7 billion of funding. The Freedom Caucus has come back and said maybe theyd put another bill on the table. Is there any likelihood that a bill that could appease the Freedom Caucus and the more moderates not likely. Not likely. Certainly would not appease democrats. So theres no help from the democrats . Well, democrats have consistently said our response to this is, let the law thats in place work. Right. Help it. Lets amend it, lets improve the act. Lets not try to rip it away from the American People. Take your own politics out of it just for a second and given the fault lines that you understand about washington, within the republican party, within the democratic party, what do you think the true chances are that we get some form of tax reform, take the health care piece away, by the end of the year. You know, i will try to do that as best i can, because as difficult as people think Health Care Reform is, and was, or is, tax reform is just as, if not, more difficult. And somehow that this is an easier issue and move to something easier, thats really not the case here. Very complicated. And i think there are issues that democrats and republicans agree on. And its very similar to the language you heard back in 86. These are generational bills. The system rate today is overly complicated. Its unfair. It actually promotes growth overseas as opposed to the United States. And those are issues that need to be addressed. Does that sort of skepticism of getting something done by the year end apply to a simple tax cut as opposed to broader tax reform . Theres been talk about that, a candy bill so to speak, do something thats very easy. I think in terms of bringing down the overall rates which theyre talking about, theyre talking about doing in a revenue neutral way but not necessarily in a distributional way. If the rich are going to pay less and whos going to make up for that in the revenue neutral bill. If its the poor and middleclass were going to have some issues. Something we touched on in the top in terms of President Trumps policy actions. Has he got a mandate for that in your eyes . In terms of the Foreign Policy . In terms of stepping up his action, whether missile strikes or sending fleets. I dont know necessarily the president s mandate as much as it is the mandate of the United States as the world superpower. That we have some responsibilities, and as i said before, this is why coalitions matter. It matters now with these types of situations more than anything else. So it is as much the president s mandate, as much as the mandate of the United States. The president s rejected that type of involvement in the past and said we should not go in to syria, and yet, he went into syria. Hes kind of turned and look some of the stuff again, this is i may be happy about. Some of these things have been because circumstances have changed. You may have said not going into syria until you see assad use chemical, sarin gas. Im not necessarily, as i said, i didnt necessarily disagree with the first step. Its the overall lack of an overall policy that im not aware of, unless someone else was aware of one, im not. Congressman before we let you go, weve been talking about united all morning. Yeah. Weigh in on this. Is anybody in washington meaningfully talking about legislation or new rules about how passengers are bumped or not . You know, its interesting. The last time we really dealt in a big way with airlines was in post9 11 where we actually gave them a pass for the most part. The american taxpayer took on responsibility for the victims of 9 11. I do think that the way people are being treated more and more by airlines, theyre monopolies almost. They have just too much power. Smaller seats. Look at me. I mean i can barely fit in the Economy Class to begin with. Its getting worse and worse. You know, lack of attention. Lack of service on the airplane. I mean it does wil and i were talking about that. You feel like youre not a customer, youre cattle. Yeah, you do. And in a way up there it is an oligopoly. If you look Chris Christie just sent a letter last week to washington asking for help at Newark Airport because united has 70 of the slots there. So, if thats not some sort of an oligopoly im not sure what is. Becky, what i think, its about you know, freedom of the skies. Democratization of the skies. Its cheaper to fly now than probably, you know, arguably depending, but more people have opportunity to fly than they certainly did when we were growing up as kids. Our grandparents went to ireland, we were all at the airport to see them off and welcome them home. Do you think theres going to be bipartisan Government Action on an issue that relates to all of this . Its certainly possible. Democrats, republicans both agree that something needs to change about the flying public. Wait a minute, thats the only thing that both sides of the aisle may agree with. I dont know about that. Havent seen the details yet, becky. Well find out. Yes, thank you. Thank you. Appreciate it. Thank you. When we come back, pricing in global risk factors. We will talk to the head of one of europes oldest funds about black swans on the horizon. Squawk box will be right back. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Welcome back to squawk box, everyone. In our headlines this morning, the leader of turkey claiming victory in a narrow vote that expands his president ial powers. Speaking to a crowd of supporters in istanbul overnight president erdogan said that the outcome will help turkeys economy as well as give him the tools to better fight terrorism. Critics on the other side are complaining that the results were skewed. They say that the outcome deals a blow to turkeys democratic system. Lets talk more about geopolitical risk and how it plays into market strategy. Joining us now philippe jordan, president of capital fund management. Capital fund is one of europes oldest and largest quad funds philippe, good morning to you. Thank you very much for joining us. Good morning. Thank you for having me. We want to definitely move on and talk specifically about strategies in a moment but if we may can we start on the french election, and your view of that, and whether its something that the market needs to be more concerned about than it is currently. Im not sure if the market needs to be more concerned. Certainly not in the second round. If we make it past the first round maybe ill give you a quick primer on the system in france. We have a system where you can have multiple candidates in the first round. Which plays out with the voters as a form of possible protest vote. Mmhmm. So you could have marginal folks on the first ballot that actually get air time. So right now weve got four candidates that are roughly splitting the vote from 17 to 23 depending on which candidate. Which means that statistically, unfortunately, theres no clear frontrunner right now in the polls. We have two candidates that have kind of like from the historical middle of the road parties. So macron which is a breakoff id say from the right of the left in france. And fillon which is a traditional candidate from the right. And at the two extremes we have merechon who is a romantic oldfashioned communist, and then a far right party thats very concerned about immigrations, kind of issues. If at the end of the first ballot we end up with merechon and marie le pen that would be very concerning. So the chances of le pen winning are significant but not probable based on the current odds in the polls. If she did win, youre not too concerned that she could meaningfully deliver a french exit from the eurozone, is that right . Well the next step, even if an extremist candidate did win, they have to deal fortunately with the french constitution, the french parliament, which will act as institutional breaks to any president that wants to enact a series of pieces of legislation that may be anticonstitutional or certainly not pass the parliament. If we move back to your hedge fund capital fund management, one of the largest funds as we know in europe would you say that the wind is behind your sails in terms of quant strategies, traditional versus more automatic debate . I think technology played a role for everybody. Were sitting in a building, the nasdaq, where you dont have human beings making markets anymore but algorithms and i think technology, khup indication, engineering, has improved the investment appropriation at large for everyone. And i think quant investing is a manifestation of that. Theres a very, very successful quant strategy that we all forget is quant is investing in index fund. Index funds were invested over 50 years ago using systematic algorithms. And have proven to be tremendously successful in their implementation over the course of five decades. I think were entering the second, Third Generation of technology but doesnt a human being at some point have to actually make the decision that therefore all the computers are trying to figure out what the people are thinking in a weird sort of psychological way . Youre right. If you take the people out of it, then what . Theres people behind people have this vision of cyborgs building these algorithms, we actually have a little under 200 people that are building these algorithms, engineers, scientists, business people. Also have their role to play. So its really just people using technology as opposed to some sort of Science Technology thats implementing itself. And just quickly in terms of actual market levels at the moment, the sort of statistics you look at daily, do you think that the market is accurately pricing in the level of concern and risks that is out there . Oh, thats always a very difficult question. I prefer it to take the position that i cant answer that question accurately, and therefore we take positions that have a risk budget embedded into them, that will survive, realize future risk. Right . So instead of say i can guess if its appropriately priced or not, im going to shape my portfolio in a manner thats as regardless of the outcome, this is survivable and functional. Philippe, thank you very much for joining us this morning. Okay coming up when we return, Delta Airlines reacting to uniteds pr crisis, jacking up the amount you could get paid for getting bumped. Weve got details on that next. Its sort of front running united in this. And then tomorrow on squawk box, an interview you dont want to miss, former microsoft ceo Steve Ballmer is going to be our guest host. Stay tuned youre watching squawk box right here on cnbc. Back in a moment. Ck in a moment. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Back to squawk box this morning. United making a policy change. Its aimed at preventing an instance like the one from last week when a passenger was forcibly removed from the plane to make room for a crew member. Now, commuting staff and crew members will have to check in to flights 60 minutes prior to departure. United says that will ensure such incidents dont happen again. But, its not nearly as far as delta has gone this morning. Right. With its own announcement. We should mention united has its Earnings Announcement at the end of today so we may be hearing more about all of these policies. Everyone will be focused on the call, not the numbers. Correct. The question, look at united, i understand their issue was taking somebody off the plane that was already seated to put an employee on. You take a paying customer off and you put an employee on the plane. Thats bad enough. Now the fix is theyre saying theyll do that to you, theyll bump you before you can get on the plane which is hardly much of a fix. In the meantime delta is learning from uniteds mistake and is really changing its policy in a significant way. Now it says that when it comes to bumping passengers off flights, the companys Customer Service agents are authorized to offer up to 2,000 for voluntary boarding removals. So you say okay i wont get on the plane, you can pay them up to 10,000. The previous normal limit was 800. In some cases, delta has actually authorized agents to offer up to nearly 10,000 for being bumped although the airline does have a number of rules for high dollar amounts including authorization from superiors until the policy change on friday though the maximum payoff had been capped at 1350 that they would allow people to pay. I still think this is the way to fix it. The other big defense of oscar was i think i could have said im horrified by what the police have done here. That we im completely disgusted no, their level of because united told them to remove the customer. United said nobody said drag him off the plane. Im just saying doesnt matter. This is a fix no, there are two things. You dont respect your customers. Okay. And then as a response even when this happens and its brought to your attention you go back and say it was a belligerent passenger. Id be belligerent, too more importantly they should just stop bumping. Exactly. Dont overbook the flights. Huge amount of money belligerence continues here on squawk box this morning. I mean that guy squawk box will be right back. Back. Customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back to squawk box. Good morning, were here on cnbc live at the nasdaq marketsite in times square. A couple stories to tell you about this morning among the stories front and center. Apple may be interested in bidding for toshibas chip unit, or not. Japanese broadcaster nhk reporting that apple may bid for the semiconductor but the Financial Times saying theres no evidence that apple intends to take that step. Also volkswagen says it is fixed or bought back more than half the diesel vehicles that fall under its u. S. Government settlement agreement. Those vehicles contain software that let them emit excess pollution. Vw must fix or buy back the vehicles by late 2018. And then theres chinas economy which grew by 6. 9 in the First Quarter compared to a year earlier thats slightly better than economists had anticipated, and the fastest since the Third Quarter of 2015. And i also want to tell you, guys, real quick, about a news story out of newsweek this morning, going through the united contract that actually, since weve been talking about united the whole time. I saw this. That says that actually once you boarded they cant kick you off. They cant kick you off unless you are behaving ee ratley or disorderly or they think its a safety violation. That they can deny you boarding. Wow. Involuntarily but once youre on the plane, its on you. You have to have done something nefarious or otherwise. So this gets more complicated. Thats huge. The ceo munoz said that this was a belligerent passenger. He was belligerent because they were dragging him off the plane. He was not belligerent forehand. He went into the civil disobedience go limp mode. Thats nicer than i would have been. Thats a big detail. I agree. Anyway we must move on. Up data on friday pointed to even weaker First Quarter growth than had prior than expected. Steve liesman joins us. Where were you at 8 30 on friday. Were you watching the data come right off . I put on a i went to my desk and acted like it was a real workday is what i did. Shaved and everything. It was a not so good friday when it came to Economic Data. Heres what you mist. Cpi down 0. 3 . It was forecast to rise. Down 0. 1. So the year over year fell to 2 . Retail down 0. 2. And they revised down february by a big amount down 0. 3 . So, weak consumption in the First Quarter. All of that combined to reduce the outlook yet again for First Quarter growth. Were now below the 1 mark and raising questions about the sentiment data off the charts. Off the soft data what we call it. But the hard data is weak. Heres the rapid update folks. Just a warning here this is only six forecasts. We usually have nine, ten, eleven, twelve but because we didnt get a response from everybody. Were tracking 0. 8 . The range is 0. 5 to 1. 3 . Fourth quarter actual 2. 1 . Who is where. Action economics, barclays and moodys at 0. 8 . Hfe at 0. 7 . Atlanta fed followed by many at 0. 5 . The weakest on the street. The history of sentiment. Let me tell you what Steven Stanley said. He said fundamentals remain exceedingly healthy and theres a very good reason to expect a bounceback in q2 just as was the case last year and folks the year before that. I will tell you the history of this sentiment data which is now 1. 25 on the consumer confidence, theres a spotty job of forecasting real economic activity. Does this change what the fed is likely to do . It changes the i think the fed it takes in all data but its going to give more weight i think to the real Economic Data. Aand less weight to the sentiment because of this spotty relationship between sense imand confidence. I see the probability for that june hike teetering near 50 now. Theres a story in the Milwaukee Journal Sentinel picked up today by ben white in his morningny money that talks about your political leanings in terms of how your own sentiment around the economy faurs. Yep. Which is to say that if you were republican, under obama you had a terrible view of the economy. Today you have a brilliant view of the economy. If you were a democrat under obama you thought the economy was better, than the republicans thought and today you think the whole economy is going to hell in a hand basket. Im about as mad that you asked me that question that becky is about united. Weve been doing this story andrew for five or six years now. Our allamerica survey has chronicled this notion that no single factor derms your view about the economy more than your political party. As well as your optimism. And what you found is that during the obama years, democrats were much more optimistic about the economy than republicans. And then right off the election, republicans flipped. The reason why you have stronger overall sentiment is because democrats were not all that optimistic under obama. And republicans were very, very pessimistic. You had this huge switch. And by the way, independents are along with republicans in terms of their majority optimism. Not necessarily in terms of being as optimistic as the republicans. But this notion of filtering or screening or the prism of politics, and abuse of the economy is something that we chronicle really have you measured the realty of the economy against those two prevailing views and which side is i feel like there are numbers that every side can use to back them up. The numbers but the issue is that, it goes back to what i started saying earl remember. The issue of sentiment doesnt necessarily follow at best sentiment is coincident with good Economic Data. But even numbers it doesnt do a good job of forecasting. Even hard data we say oh, the Unemployment Rate is down. You fight over hard data, too. Oh, absolutely. Absolutely. At least we can, well, many of us can agree on what the actual numbers are. Rather than this notion of sentiment, which is so whats fascinated me among other things is watching over the years. And i mean 20 years, watching how much weight the market puts on sentiment. Uhhuh. Versus the economists who put much less weight on it. Because it is a leading indicator. Its all youve got. Its all about leading can indicators. The consumer is 70 of the economy. Youll take whatever you can get in terms of knowing where its going. The greatest example of this is sentiment plunged in the wake of 9 11. Car sales and retail sales for several months after that were very, very strong. And so that was a huge disennance. Lets bring in another voice. Chris is joining us right now Evercore Isis vice chairman. And why dont you weigh in on this conversation that were having right now, just in terms of where the economy is, where things are headed, and how we should feel about things right now. Well, you know, as steve pointed out, yet again, another disappointingly sluggish First Quarter. It does seem that theres something in the seasonals here. It cant be a coincidence that every First Quarter without fail looks a lot worse than the second half that preceded it. This has got to give some caution to the fed as it looks at its plans for rate hikes and Balance Sheet rolloff perhaps at the end of the year. But i will say, i think somethings a little different this year. I think first of all, we can have confidence in the underlying fundamentals here in the u. S. , but also theres less risk theyll be disturbed by shocks from overseas. Secondly, i think the fed is indicating that right now, the burden of proof is on the data to prevent them from moving forward with a very gradual sequence of hikes. Rather than the burden of proof on the data to make them hike. I think that was the message from march and its still relevant. What do you think about the wall street journals interview with President Trump last week where he said a lot of Different Things, including that he may actually reappoint janet yellen . I thought it was a fascinating interview. My hunch was always that in the end, trump would be a low rates guy. Right. He said that himself. Hes obviously said Different Things on this over time. But he certainly reiterated that point, you know, in the interview. It makes sense. First of all, heres a guy whos worried about the strength of the dollar. If hes just jaw boning, sooner or later markets are going to start ignoring him. But if hes linking this, if hes joining the dots to fed Monetary Policy and he has multiple appointments coming up, he can influence the markets on the dollar. Secondly, if you have ambitious plans, tax cuts and infrastructure spending, youre likely going to lean in favor of wanting a fed that is not going to respond by jacking up rates brutally aggressively. So i think were learning that for all the campaign rhetoric, trump is someone who is not going to favor a very hawkish fed. Hes probably going to seek a pragmatic fed. Maybe a fed with more business people. More finance people, on the committee krishna, is it yellen . Maybe. But more broadly not a hardline hawk. Sorry, steve . Yes, first of all i want to tell everybody, your friends joel, theyll be done calculating a fudge factor for how much q1 is weaker by what it ought to be. The residual seasonality. They think its three quarters of a point up. I want to ask krishna back to the fed her. Story about Randy Quarles out there and him possibly being appointed by the president to fill that vice chair of supervision job. Two things about that. One is he seems to be a pragmat pragmatic, more moderate, maybe less ideological person on the first one. The second one is i think maybe people need to understand, even appointing this guy, if he was the most rabid antidoddfrank person he could not change the feds doddfrank rules and regulations overnight or even single handedly. So, both those points, steve, are completely right. Now, certainly Randy Quarles i think is an adult. Hes somebody who we can have confidence is going to take you know hes going to take a hard look at those regs. Hes going to look for ways to get rid of some of the regulatory burden, to maybe ease the credit flow. But hes not an ideologue whos going to try and burn down the whole post crisis regulatory infrastructure. Secondly, in terms of doddfrank youre right a lot of this stuff is hard wired in the law. The stuff that isnt hard wired in the law takes time to review these supervisory judgments, supervisory frameworks, rules for implementing the law. But i will say that not all the important stuff is hard wired in the law. Ccar does not exist in dad frank. Let me matters whos there. Let me push back a little bit. Which is that if he could propose as vice chair of supervision but its the board of governors that has to approve all of this. So, in the absence of donald trump having the majority on the board that he will be able to appoint eventually, at least initially, hes not going to be able to get through stuff that people like janet yellen, richard story, stan fischer and others disagree with. So again i think thats absolutely right, steve. But cumulatively over the next, you know, three, four years, quite a lot can be done as the composition of the board of governors changes. As you know well, steve, trump gets three fed appointments this year, quite possibly two next year. The shape of the fed board is going to change. And over time, the guy whos in the seat, if it is quarles, is going to have significant ability to steer the way, to shape the way, the fed implements the law of the land. And if youre not asleep by this discussion of banking regulations just yet, i should point out that its even more complicated can i wake up . Wake up now. A bunch of these things require four or five different agencies to agree with them. So its not just getting the fed on board. Now, the other thing you may want to heres the point. Were already so deep the question makes a big difference. Let me make one point. Too early in the morning for nap time. How optimistic should investors be about relief coming to the banks from regulation . Thats the question that you want to know and it gets very complicated and the other for what its worth steve my own view is that couple laively if were patient, its not a one year job. Cumulatively over three or four years you will see material really it really matters whos in there. Thats right. Over time, to shape how tough secar is, the liquidity rules, things like volcker rule interpretation, whats market making. Over time it matters whos in that job. Krishna, thank you for your time today. Steve great to see you. All the best sflp coming up when we return the road ahead for uber. The ride sharing giant opening up its books for the first time after a streak of controversies. Ill call it worse than that. Ed lee is going to join us next to talk about it. Of intelligence. K about e its a supercomputer. With this grade of protection. Its a fortress. And with this standard of luxury. Its an oasis. The 2017 eclass. Its everything you need it to be. And more. Lease the e300 for 549 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Its your tv, take it with you. With directv now and at t, get the ultimate in Entertainment Plus unlimited data. Get directv now for 10 a month when you have the new at t unlimited plus plan. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. That was ann winblad talking about uber earlier on the show. Joining us is ed lee managing editor and cnbc contributor. I said to ann on the air i said is uber a criminal enterprise. Criminal enterprise. No no and its Strong Language in part because there has been so many stories that have come out over the past month and a half that have dealt with software either through hacking or other means that might be that a prosecutor might decide is either fraudulent to the customers or to regulators. Or that theyre breaking some kind of law ultimately. If they are breaking laws, i wouldnt necessarily call them criminal enterprise. I think theres a lot of poor management. I think theres a lot of is it cowboy ethic of lets just try culture of this institution . I think its a cultural issue more than it is a systemic one in terms of set up in a sort of a criminal way. I think the bigger issue again is, the ceo controls the votes. He controls the company. So whatever kind of pr feints that you might be hearing from the company or the board is looking at a coo role to be the adult in the room kind of a thing were going to solve the problem with Sexual Harassment that employees have alleged. Right. He still controls the company, right . Its going to come down to him performing himself. Straight up or down, if the board decided they did not have confidence in travis anymore, that they decided this was not going to work. Right. Could they push him out . So is there a way . Is there a mechanism in which that can happen . The bylaws, its unclear because we dont at least from reporting we havent seen exactly how that mechanism works in terms are what are ways that you could push him out or sort of lower his power. Thats, again i dont think thats going to be the case. I think he is still so much in charge and in control, whatever the board ultimately represents, hes going to decide whether to follow that or not. It is a remarkable company and it has changed the way we all behave in terms of what its done. And largely because of his vision, too. And their quick expansion. And their aggressive expansion. They spent a lot of money. Theyre losing a lot of money, of course. But there was a report out past week where we saw some of the financials. 20 billion in bookings. Which netted them 6. 5 billion net sales. So, thats pretty thats a lot of money. Thats a big, big business. And for that to become profit you think they need to focus more on uber pool than anything else . The way for them to really increase or to get to real profitability is to really focus on the uber pool business. Where you know, you a bunch of people share a ride. Its better for the driver. They make more money. Its better for uber and its cheaper for the consumer. Its less convenient, of course. Its not like just hailing a cab because it might take you longer to get to your destination. You have to share the ride. You might not like that personally either. But that is the future. If theyre going to find real profitability thats where its going to come from. Real briefly though when you look at the numbers and the burn rate, do you think that they have to take out their other competitors . Meaning, is this a business that can survive continued losses or will the will there be continued losses if a lyft exists or a get exists in at of the cities. For a lot of the cities, yes. Thats why theyre spending so much on subsidies to try to bring riders back to using uber. Because a lot of the riders drivers they use both. They sort of toggle back and forth. See who has the most fares and they select that. In big markets if uber dominates in the big markets, they win. Smaller markets, mid sized markets they either lose or theyre they and their competitor are losing at the same rate. A quick side question. The data released that instagram is overtaking snap in terms of the users of the story function. Right. They copied the snapchat function and they have way more users. How big of a threat is it to snap . Now its real, right . We have a real ball game because right now theyre driven by the business is driven by advertising. If youre an advertiser you always want scale. Right . If its essentially the same thing and i can hit the same number of people but at a much higher scale, thats the ball game. I think thats a real threat to snap. Ed lee, our resident tech guru. Thank you. Any time. When we return, the fate of the furious is on track to leave record breaking blockbusters Like Star Wars and Jurassic Park in the dust. In the dustm happening in the first place. At cognizant, were turning the industry known for processing claims, into one focused on prevention with predictive analytics. Helping them proactively protect the things that matter most. Get ready. Because were helping leading Companies Lead with digital. Will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. The s p fell below the moving average last month and then a month later the negative trend continues with the s p down nea welcome back, everybody. The late installment of the fast and furious franchise breaking records. Julia boorstin has more. Hey, becky. The fate of the furious had a record worldwide Opening Weekend bringing in a record 532. 5 million worldwide. The biggest take was in japan where it grossed 190 million. Thats the largest three day opening of all time in the country. In the u. S. Though, the film fell short of expectations, grossing about 100 million. But thats down more than 30 from the last film of the franchise which was bolstered by interest following star paul walkers death. Now, this does show the ongoing success of universals most valuable franchise which is seen increasingly as a global play and justifies the massive cost of the film which is report as much as 350 million to make and market worldwide. Perhaps most importantly it maintains momentum for the next two films which are due out in 2019 and 2021. Bolstered by furious and record breaking beauty and the beast the box office is up 6 this year. The number of big franchise films in the works such as the guardians of the galaxies sequel which is out in may. I didnt realize there were that many in the works. Yeah, they have to plan ahead for these. These are massive big budget films. They want on the schedule way ahead of time. Well, if it sells, make it. Still ahead, the top stories. She cant become a guitar legend just by playing air guitar. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Welcome back to squawk box. Facebook shareholders have put out two proposals for the upcoming annual meeting. One calling for a report on the spread of fake news. The other on pay equality. The board has recommended votes against both proposals. Lets get a final check of the markets on a monday morning after the threeday weekend. You will see the futures are in positive territory. They have been building all morning long. They were in negative territory when we started at 5 00 a. M. Only just though. But now looks like the dow futures are up by 76 points and the s p is up by 7 and the nasdaq up by 20. The ten year note the yield is still hovering around 2. 2 . And oil prices if you want to check that out, wti was a little bit up. Its down. Turned down by about six cents to 53. 13. Thank you for being here. So you think this is a risk a situation after the mother of all bombs and all this stuff happens over the weekend, everyone says okay. Last week on low volumes, you know, a percent or so declines. Europes closed today as is hong kong, asia for easter monday. Low volumes outside of the u. S. Today. Thanks for hanging out. Join us tomorrow. Squawk on the street begins right now. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with sara eisen and david faber here. Coming off a two month lows, as earnings season kicks into the higher gear this week, most of europe is closed for the easter week. The econ data is soft. And the Vice President delivering a fresh warning to north korea. Not to test their res