Transcripts For CNBC Squawk On The Street 20140403

Ecb holds rates steady saying the risk of deflation have not decreased. The markets set to edge lower after a jump in claims. Plus, more trouble for citigroup as u. S. Authorities open a criminal inquiry into the banks mexican unit, so should you be worried about the companys stock price . A long legal battle starting up between tesla and the state of new jersey, well tell you how the hek carmaker is fighting back against the garden state. A lot for the markets to digest ahead of the jobs friday after the s p closes for a record high for a second consecutive session. The jobless claims are up to 326,000 and as we said the ecb does keep its key Interest Rate unchanged at a quarter percent despite all the concerns about deflation rinks. In a News Conference mario draghi said the drcentral bank will use all methods needed. They say if a 0. 5 cpi doesnt get your attention, what does . This guy is really on a mission to get that economy restarted. I think hes managed to be able to dodge the russian bullet. I think he has said over draghi has said over and over again, listen, by any means necessary. He reiterates that. When i look at the rates in these countries including the third biggest bond market in the world, italy, when i look at some of the statistics nascent in autos, i get a little hopeful, but this man is not going to stop until they get better economic growth. Very bernankelike. You short europe at your own peril. And jim chanos was saying that europe is some of the europe well, International Banks. I like u. S. Banks more than International Banks but draghi is making it so those banks can refinance all they want. Covered a lot of ground with chanos on squawk this morning. He did find it stunning and scary in his view that greek bonds are trading in the sixes, basically at precrisis levels after all this time. Triple c paper in this country is trading at 6 so, i mean, you just do have this search for yield anywhere. Obviously to me i think that the att field yield is better than c yield and if you look at the Great Companies offering good dividends in this country, superior to these. But the big Pension Funds that are required to own a security that is a they are just deploying money. And they deploy money with their charter and their charter says they got to buy the stuff. If you bought greek bonds after the restructuring and you didnt tender into the big buyback or, you know, youre very, very happy. And, in fact, i did, i spoke to an institution yesterday that held on, sold just recently with this move up, it is weve pointed it out before, but they have come a long way. But this is so interesting because the rigorous thing to do was what you thought was the stupid thing to do. You know, the really most difficult thing to do was to stand pat with a government that was that to me looked like it was a flake. Right. Wow, that took courage. Congratulations to these people. It doesnt mean we are necessarily out of the woods. We dont talk about greece nearly as often as we did or italy. But a lot of the basket base pmis they liked to talk about, it looked okay. They sure did. Ireland putting up good numbers, people said its small, dont worry about it. And spain put up good numbers, its small. Europe is 700 Million People and at a certain point if you get the southern rim up, i am now beginning to hear some of the ceos say, look, the southern rim is gradually improving. Unthinkable. Unthinkable two years ago. In places like spain they are still worried about deflation given the numbers weve gotten recently and hence the ecb and the pressure on them to make sure it doesnt happen. When you have governments that they may tighten the belt and you cut back, say, frijs the amazie ing subsidies for alternative energy. The governments are tightening the belt and they are no longer the source of great job growth. You were up early on twitter and said lets hope for a quiet day, a nonrotation day ahead of tomorrows jobs report. I just feel like i would love a day where yelp isnt down four and splunks not down big and people take caterpillar up. Listened to chanos was talking about relative performance, caterpillar and how it hasnt been that bad a short versus the s p. A short he has not covered yet despite 13 this year. Right. But there were also other there were other issues that he raised about the depth of the pc and i was looking in may. Ive known jim for years. His a very rigorous thinking. But in may last 84 he was talking about being short seagate, 39 gone to 57 and the death of the pc has not occurred. So, youre getting a lot of the reason i point that out is because thats the antithesis of a lot of the 30 and 40 revenue growers erers you get somethin hewlettpackard which he said very harsh things about every earnings ill hear from him and hell talk about deferred revenue a lot of Different Things he claims on the accounting front that he claims they are doing to make things look better. But its hard to revenue, they almost have it, revenue gret. Well, what happens with like with ibm which my Charitable Trust owns youre betting on Global Growth. If you get Global Growth the companies that have fired temperature numbers of people have true leverage. Chanos is looking at the pallens sheet and saying be very careful. Im looking at Worldwide Growth and saying that meg whitman may have set the company up for nice growth. Thats how i look it. And you are pointing to an rbc note coming off a meeting. And the cash flow equals 3 3 billion, Free Cash Flow theyve been very focused on, remember, when meg took over, this was a company that obviously had a not more debt than cash. That has changed completely. It is generating free cash beyond what people had anticipated that it would. Isnt it impressive . It is whap i look at every quarter. Its what i look at every quarter and it is where they have been focussed to a certain extent. And the stocks matter. The bigger question, though, is as we enter into the midpoint of this year halfway through the turnaround that she has talked about, that being meg whitman, will we start to see growth heading into 14 and into 15 . Thats the plan. They do have initiatives. The moving shot initiative. They do have 3d printing. 3d printing thats a code word, because 3d printing is such a cult that theyve got some. Theyve got some. What im really saying is you can listen to chanos and chanos is absolutely right, the pc not doing well. But then you can look at the companies that have to do with the pc and the marketplace has decided these are cheaper than splunk and fireeye. Fireeye. Fireeye. Fireeye. Not fire tv. Fireeye. Oh, man, fire tv. But you lock at the Insider Selling and wouldnt you rather be in the hewlettpackard and nice dividend and buyback and you look at the companies and the names of people selling, wow, why do i want to buy from them, they are smart people and they are unloading. You are talking about a stock up dramatically last year being hewlettpackard and its up another 19. 5 this year, its only three months old. Almost 20 . Getting kicked out of the dow is a beautiful thing. Alcoa, eight to 12, the greatest thing to happen. My problem with hewlettpackard its been 33 and 0. 45. You can sell 2 million at 3. 44 right . You dont get the extra penny. The tax. The tax. We always have to remember the new tax that we didnt really we always thought about but it was a hidden tax. Right. Another comment by chanos today that the High Frequency effects are not material. Well, theyre not material for most individuals but if youre selling and buying millions of shares a day, im reluctant to say i think it is material. Well, well see what happens today, of course, and the jobs numbers tomorrow. One day left for you to nail the number. Tweet us your predictions for nonfarm payrolls. Use our handle stalkstreet. And this months prize, the wireless speaker, and you have until one minute before the jobs number comes out at 8 30 a. M. Eastern time to submit your predictions and you have to be right early or first and that determines the winner, so buest of luck. Are friends allowed to participate . Davids friends, yes. Theyre not my friends. Yes, friends are allowed to participate. This is isnt like battle creek, michigan, and kellogg, right . Not family. Only friends. Okay. Lets move on to citigroup this morning. U. S. Authorities have opened a criminal inquiry over a 400 million fraud at citigroups mexican unit, banamex according to the New York Times. In february citi revealed the discovery of the fraudulent loans and said employees may have participated in that crime. The inquiry is said to focus on whether weak internal controls contributed to the fraud. It doesnt, of course, mean that theres going to be any action. s is i investigating is what things like the fbi are supposed to do. Citi for its part not commenting at this point. But its yet another concern from shareholders following, of course, last weeks debacle if i could use that word where they were not cleared for buyback or dividend. Banamex very separate. You brought it up a number of times last week because you felt as though it was more important perhaps than the first brush of stories about it. You look, you google this company, i mean, google obviously is not a great forensic source and you can see the company that is involved in this. Very longterm shady operations, so, i mean, you would think at a certain point if city is in control as they have often said, obviously if you go to citi and you try to do bils at banamex, they tell you, you cant do that, they have nothing to do with each other. It almost feels like banamex had nothing to do with citi. Does citi have a different board of directors from the old days . It is not time for questionable stuff. Let me take you down the road when you look at a citi or jpmorgan or frankly a bank of america and what may be continued issues on the regulatory front, investigations, problems in overseas divisions. Does pressure start to build perhaps to split these things up . To say, do you know what, these banks are simply not manageable at their current size . That was the too big to manage era and when we look at the number of compliance people that jpmorgan had to add, it does seem like what youve created is a tower of people who do not produce revenue. But i also think that, you know look, the Founding Fathers to really go back, really hated the idea of this level of concentration. Glass steagall did work. They decided to undo glass steagall. Theres a host of reasons why i think you are right and it should be. But it was Public Policy to put the banks together and you cant suddenly say that Public Policy was wrong. Im not talking about Public Policy, im talking about if you dont get the returns in the stock market who doesnt want to be in bank of america . Had a fabulous return. And jpmorgan had a stellar move. Youre right. That may be the answer. Maybe that wont be the case. Market is liking these stocks. Morgan stanley is stalled. Investors are willing to ignore to a certain extent which is just treated as noise. They care about Net Interest Margin when i heard you mentioned 2. 8 on the ten year and i get interested if you can get a pumpup on Net Interest Margin on the Companies Report they can give a better further guidance. We know right now the guidance would be, hey, we didnt have the big blowout. Look at wells fargo. What a run its had. Endorsed by Warren Buffett. Right. But wells is a very much domestically concentrated bank. I mentioned wells because thats mr. Clean. No, theyre businesses and the business is relatively easy to understand. The cio that was mentioned once or twice. Chanos was talking about some day theyll live up to the mention of delivering alpha that no bank is too big not to be indicted. And he mentioned it again just last week this idea of corporations. When we come back the founder of geek squad promised best buy he would keep his mouth shut two years after leaving the retailer. Guess what, time is up. Stick around what he thinks that best buy needs to do to stay relevant. One more look at futures. Were trying to get five in a row, havent done it all the way back for the s p and the dow since september and october respectively. A lot more squawk on the street from post nine in a moment. Moment. Thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. To manage your money. R guy around 2 percent thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Tesla will file a legal challenge against a ruling that p prohibits it from selling cars in new jersey. Interesting legal strategy a patchwork as they have to deal with states individually, they are settling with some and obviously now fighting with others. I think that teslas its an important they have a very important series of showrooms in some wealthy areas and that is you know, thats something that you dont want to go away. This is a product that if you test drive it, it sells itself and its important to be out there. You can go to new york and i am confident that at a certain point tesla will be back. They have this big state that is a natural place for people to buy teslas. Highend state. Its the most congested state other than, say, california. You dont want to lose jersey. You dont want to lose jersey. I would have thought this is one where i think they could have somehow negotiated this and not get it out of hand. But the dealers are very powerful. As you might expect they would be. Theyre a very big lobby. Would you argue that this whole legal battle with the states and the dealers is more important or less important than where or how they execute the giga factory . At this point the giga factory is responsible for the next conceivable 200 points. There was an article yesterday about why do they need the 5 billion factory and the answer is very clear. If you want this company to be more than just a car company, they have to reinvent the grid maybe bring it much more toward tesla and less towards eddisoed. Morgan stanley note of not that long ago. That guy very interesting and solid work there, so i dont want to dismiss this. I mean, the grid the grid an atavastic system, those of who find power out like eastern turkey. You wake up and my powers out today. Thats okay. I live in jersey, we dont have consistent power. Or connecticut, all the viewers in connecticut who have generators in their garage for the five or six times a year they lose power. I would like to see a new grid and that man if hes going to have rockets and willing to develop cars, whats the dont forget the hyper loop. Huh . The hyper loop. Whatever it is, hes working on it. I want the hyperloop. Washington to new york. Oh, okay. To boston. The acela train im getting on today. 80 miles an hour. He doesnt just want the living room. He wants world domination. Thats nothing wrong with that. So does jeff bezos and so does Mark Zuckerberg. So does larry ellison. Is it like that . Is it like a shootout like a john ford movie . A lot of these guys like specter from james bond. They all want world domination. Hide out in a volcano somewhere. Do you want me to talk, mr. Musk . No, no, mr. Bezos, i want you to die. When we come back well get cramers mad dash as we count down to the opening bell. A look at futures. A lot more squawk on the street from the nyse straight ahead. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. Or how ornate the halls are. Tall the building is, it doesnt matter if there are granite statues, or big mahogany desks. When working with an investment firm, whats really important is whether the people behind the desks actually stand behind what they say. Introducing the schwab accountability guarantee. If youre not happy with one of our participating Investment Advisory services, well refund your program fee from the previous quarter. Its no guarantee against loss and other fees and expenses may still apply. Chuck vo standing by your word, thats what matters the most. All right, got something for the mad dash on a others. Want to start out with yelp, you talked often about, u. S. Authorities opening a criminal inquiry excuse me, that is wrong. The ftc right. Whoa, whoa. The ftc. I apologize. The ftc is looking in to many complaints, thousands of complaints, about negative reviews that yelp that services on yelp claim were generated not from real people. Okay. Suntrust is saying the ftc has received 2,046 complaints and wondered if its different from the Better Business bureau. Im referencing them because they say its time to buy. Its a very hot button issue. Yes, full disclosure, i own a piece of an inn and restaurant, yelp is very powerful. Ive not experienced this notion that if you put an ad in the reviews get better, if you dont, the reviews get worse. Thats one of the charges. Theres basically this charge its almost as if you have to Pay Protection money. Right. And stoppleman has repeated, the ceo, said this is ridiculous. I got to tell you that i under a business can be hurt very badly by reviews, very badly. Far worse than Better Business bureau. Its instant wordofmouth and it spreads like wildfire, i always felt yelp would be vulnerable to this, but at the same time i think it will be a hiccup because its a worldwide yellow pages that sells very well our mobile and i understand theres always going to be complaints by anybody who has their store, their business flagged, but i have not experienced this as an owner. Right. And court cases about First Amendment rights versus yes. Whether or not the negative reviews are justified. Right. If theyre coming from people who dont its not bill ackman filing at yelp saying a really negative story. Its little guys, okay . And little guys are a little helpless because advertising yelp costs a great deal of money. Well talk monsanto after around the bell. This is very important. Weve got some Interesting Research notes on that stock. But the opening bell just a few minutes away. Stay with us right here on squawk on the street. Beautiful day in baltimore where most people probably know that geico could save them money on car insurance, right . You see the thing is geico, well, could help them save on boat insurance too. Hey okay. Im ready to come in now. Hello . Im trying my best. Seriously, im. Im serious. Request to come ashore. Geico. Saving people money on more than just car insurance. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbc squawk on the street live from the Financial Capital of the world. The opening bell in a couple of minutes here on a thursday. The dow and the s p going for five days up in a row. Dow is actually three points away from an alltime closing high. 15 points from an intraday high and the journal this morning points out on this day in 98 the dow passed 9,000 for the first time, 9,000. Break out the hats, those of that remember 98 know it was a pit stop on the way to 10,000. I do think that these numbers that youre talking about remind me that its been kind of a dud year and a lot of hedge funds i talk to are very frustrated. They feel like its been trendless one day listen to chanos, he doesnt like caterpillar since the beginning of the year its been a pretty great stock. Its not proud a great quarter. We have chinese stimulus mini stimulus. Mini stimulus, of course, chanos can see through buildings. But its the same debate over and over again and in the meantime the bulls keep winning and we have to recognize that but the bulls are winning in certain stocks that are very underowned. Caterpillar ended up being underowned. And then wells comes out today and say they are one of the best positioned, right, on cat . United rentals is saying over and over again that nonresidential construction is coming back in this country and thats caterpillar, okay . Thats what you need cat for. If were going to sit here and say cats all china, maybe were missing something big. Theres another economy in this world, the united states. All right. Theres well, a few seconds away from the opening bell. Well get to look at the breadth at the top of your screen. Down here at the big board, networking Equipment Company ciena hosting its investor day from the nyse and over at the nasdaq, torina International Provider of professional Education Services in china celebrating its ipo today. Nasdaq actually has a couple new issues coming online. My Charitable Trust owns ciena, juniper down 6 and it took fire out of the ciena call, the last time the stock was at 26 and people didnt like the guy and it went down to 23 and its been all over the map and a difficult stock to own. All right. Well keep our eye on monsanto. We saw the earnings earlier in the week almost out of the gate its up 2 . Down a couple of months when it opened. It was up a buck and then down two and the rest of the day it went up. Almost as if people realized perhaps this is the moment because of soy and corn seeds because of a better pricing environment for herbicide and we get the big upgrade today and a lot of good feeling that monsanto lagged t ed ged the ma. You mentioned the upgrade. Why is it big . Well, i think its up big because the stock has done nothing and its one this is a biotech stock basically for seeds and theyre talking about how the seed prices have been better. Soybean results, remember, corn, tyson yesterday down a couple of bucks. Big buyer of corn. If the commodity goes higher, deere has been a great stock here, if the commodities go higher, farmers have more money to spray and, bingo. More acres. More spray. More monsanto. Michael clayton. Great. You are seeing pc names on the winners list. Intel, piper assumes coverage with a buy. Micro micron about to report. The pieces are all when you read them about the exaggerated death of the pc and that these companies are taking advantage and harnessing big data. I heard that dell is doing well. Obviously a private company now. It is. Public debt holders, of course, in dell so you do get some sense into their business but not a great deal of transparency. Youve been hearing they are doing better. Doing better. Yes. So carl icahn will end up being right, theyve stolen the company. Wouldnt that be something . Well see. Look. Look at the numbers. I mean, have pcs stopped going down . No, they havent stopped going down. Theyre still going down. No. In the Hedge Fund World theyre not going down as fast as they were going down. All right. You can outrun them. The rate of change, second derivative. Remember that class . Yes. Of course. Talk about google at all . We will. But by the way, this is an alltime high for the dow at 16,601. Transports confirmed. And now industrials. I believe in dow theory, im sorry, im old fashioned. Are you . Thats going back a ways. That theory to a guy named charles dow. This is some people including me, like to see these things move in tandem. It makes me feel like commerce is Getting Better and its not just one gigantic short squeeze which a lot of people say to me. A lot of people say its a bubble and a lot of people say its a short squeeze. When the transports do well and the industrials follow through its a sign that you may be on more solid footing than you think. David mentions google and for the first time on your screen you might see the ticker googl as the twoforone split, 501 stocks in the s p. 500. A lot of people are saying, wait a second, shareholders, obviously being disenfranchised more of a younger stay here. Critics are saying that you are talking schmidt and page and brin have too much power. The other side is, wait a second, if they had the vision to build this Company Maybe the power is reasonable to have. Right. This is, though this is about essentially preserving the voting power of the founders sergey brin and larry. The company has been issuing a lot of shares and if you issue shares at that Voting Rights even though their shares had more Voting Rights you still are diluting overall and their voting power and they wanted to stop that. They want to make sure they have full control. Hard control as don malone would say. Youve covered media for years, david. Are the Media Companies that much different than major Media Companies . No, not at all. Right. And, in fact, the different classes i think thats something youre going to have to get accustomed to, not just in well, google is technology, but its also media of course but not in just that. I think many of the companies that are now coming public with significant founder owners youll see the dualclass structure because nobodys complaining about it. No. Zuckerbergs got it and theyve got it. If you go to media whether its Rupert Murdoch or Sumner Redstone or the roberts family, there is control. Through the votes. Even if its not necessarily with the economic ownership. How about this . Lets put it right in your face. Those are some of the best performing stocks weve ever seen, so maybe what we need is more family control of companies. How about that . Is that a wrong thing to say . As carr pointed out in his column able to think ahead without these sort of shareholders looking over your shoulders saying, hey, what about the quarter . High frequency trading mosquitos, bring the off on. You have to have faith in the dynastic abilities of some of these families. Dynastic abilities . Rough the sun king . Thats what youll be living with, but that being said Mark Zuckerberg is doing things if you were not in full control you might have to think about. Rupert murdoch is the heir to the fortune. His dad got it rolling. Its not a lucky gene thing entirely. Edsel ford here in terms of the next generation taking it to the next level . Its going to be a question mark if you actually want to have that be part of it. I want to move on to something weve just gotten in. The case of the collapse firm mf global is over in at least one legal sense. The truvt trustee says youll of the claims of former customers have now been sea atisfied. Theyve gotten a 100 payout that means customers will be fully reimbursed for all losses and distributions beginning tomorrow. Remember, how hard they were searching for the missing money there for such a longered. Of time. Remember what the trade was that anigh lanihilated them . They bought the european bonds on margin. Its a great call. Every one has to be a double or a triple. They were on leverage, right . Of course. Wow. But took on enormous risk with enormous leverage. And people think im saying something good. No, im just saying im talking about irony. Irony. Theres nothing good about doing something that a lot of people lost a lot of money on. Well, or maybe got some back. Right. But in retrospect but if theyd been able to stay alive and the trade had stayed on, it would have made them a lot of money. Isnt it funny that you often hear that you can stay alive, that that is not unusual that if we play long enough at the casino, we should win at blackjack 50. 5 versus 49. 5. But its a lot of people that dont have the cash. Right. One last point. Some of the rails are down today. I know you saw downgrade of csx, jim . Yeah, i thought that downgrade was fatuous. Michael ward came on mad money and coal is trading up. They mention the secret behind what any short wants which is the epa getting more and more aggressive on their primary cargo which is coal. Of which csx is more levered than the others to coal. Amazon, too, down more than 1 . Havent talked about that in a while. In the meantime well see if the dow theory can hold at the close. For now lets go to bob and see whats moving on the floor. I want to reiterate not just the dow at historic highs but the s p was there yesterday. The big three, dow, s p and the midcap index. People ask why do i talk about midcaps . Because thats what we talk about all day. Midcaps are Airline Stocks and home builders. A lot of the stuff that we talk about thats not the Biggest Company following the midcap group and you can own that as an etf these days. Notice whats not on the list russell 2000 not at a new high. Not quite there yet. Overseas a lot of talk about china, the chinese premier rerated 7. 5 gdp growth because a lot of people felt it would slip into 6 , he said no, well do 7. 5 . Good news but its a dilemma for the central bank. What will they do, new programs to lower Interest Rates, stimulate growth . They were already worried about credit risk, so theres a real dilemma now for the Chinese Central Bank on what to do. Over in europe you heard about mario draghi Central Banks discussing quantitative easing, qe, of course, not doing anything yet. But the hent int is there. And meantime weve got ipos today but the big ones will come tomorrow. A couple on the nasdaq. A Chinese Service educator provider, is pricing 15. 3 million shares at 9 hasnt quite opened and another one Corium International at the nasdaq waiting to open as well. The two big ones are tonight. You all know grub hub, it does the restaurant pickup orders online but the one you want to watch, thats about 165 million. The really big one that all the Ipo Community is talking about is ims health. They are looking to price here 65 million shares. Put up the full screen on this one, 18 to 21. You do the math were talking north of 1. 2 billion. Thats a big ipo thats got everybodys attention. One of the Biggest Online Health Care Data managements in the world and the clients are Drug Companies and insurance companies. They try to figure out whats happening with patient usage of their products. This is a cross. People want to know, make it simple, bob, a cross between big data and Cloud Computing and health care. Can you get more three hot topics, big data, Cloud Computing and health care, uf want it simpler, you get it on your drug use and hospital use to your companies. Thats what they do. Its a huge deal. And, david, you know this is an lbo, a lot of famous names that are involved in this company because its so big, so tpg is involved, Leonard Green is involved. Thats coming tonight. Now, look, theres been a lot of interesting talk about ipos this week and if you look at some of the ones happening recently, a lot of interesting ones, rubicon yesterday priced at the low end of the range, 15 to 17 and prices at 15 and ends up 33 and it means theyre getting more conservative in how they price. Thats a good sign. Price low and opening higher and thats exactly what you see on the day, yellsterday for rubico. A perfect ipo well see if they can continue that kind of sensible pricing. All up for grabs. Back to you. Thank you very much, bob pisani. Did want to look at shares of barnes noble and the news is impacting the stock. Were talking about a company 1. 5 billion market value, a bit less than that, but it is losing almost 10 of its value. Liberty media was a roughly 17 owner through a preferred it bought back in 2011. 16. 6 stake is what came along with that, 204 million was invested at the time. Of course, libertys ownership was ev was seen as a positive given the apparent investing insight of the likes of john malone and they also got a number of board seats along with that. But they have cut their stake dramatically. In fact, down to 10 of what it was. So, were talking more or less exiting much of the barnes noble investment is liberty and that is pressuring the stock price at this point. They will step off the board of directors as a result of that reduced stake. By the way, way back then there had been some negotiations under which liberty had offered as much as 17 a share in cash for 70 of the company. They do end up making some money on this. Liberty. Although over time im not sure its been the greatest investment, but with the stock at some recent highs, jim company saw the light on the nook which was maybe a technologically superior device to amazon but you cant really as you know cant really compete with amazon. They are back to sort of relying on the College Business and the retail stores. Theres been so many different iterations of barnes noble and nook media brought in microsoft at a high valuation and pierson at a high valuation but, of course, barnes noble still n owns 70 plus percent of nook media and it looked like for a while it was making traction only to kind of lose during the holiday not that long ago. And were back to basics. We have very sentimental attachment to barnes noble, last man standing. Kind of hard to sign an ebook. Someone asked me to do it at costco. Just do it. Why dont you just throw away the device after i do that. No, im going to frame it. Or to share an ebook. I know theres an ability to share it. Do you use an ebook . I have occasionally but im more often actually im going to be on the train today. I got Michael Lewis book. You do . Which i will read in book form. Yes or no will you finish the book . I will finish the book. Yes or no, an illusion to one of the great moments on tv. Right here. Not unlike the ackman i prefer the do you want to do this, lets do this. This is insane. Lets do this. Were going to do this, lets do this. Lets do this. Lets get to the bond pits, Rick Santelli is at the cme in chicago. Hey, rick. Good morning, carl. Lets play beach party bingo. Lets surf the curve with charts a little bit here. Were going to move quick. Look at a three year, look at a fiviee ieyear. Why . Because were coming back to september of last year on both those maturities. Lets move further down. Lets look at seven years and ten years. Were comping those back to various points to january of this year. And the lone soldier whose rates have gone up but not as fast as the rest of the curve. Thats the 30year bend. Were up at this level, 363, 364 on a closing basis. A few minutes ago was 365 just a couple of weeks ago. Now, knowing all of that, lets see what the fives to 30s looks like. Well, youre going back to april of 2009 which is about where its been. But its still remaining very flat. Thank you, janet yellen and ben bernanke, because some of the issues at the last fed meeting definitely knocked the curve and its stuck in this flatter mode. Euro, Mario Draghis big day, well, look at the intraday of the euro. We talked this morning before the press conference got rolling. 137. 40s a very significant area. Many traders using it as a pivot and if you open the chart up, you can see the last time it was clolging around the low trade zone which is still very proactive was around the latter part of february. Of course, we tell have ism nonmanufacturing to come up and were going to have one of the executives from that group with me as a guest today to go over some of the comment that the respondents have because the comment that really took my notice last month was obamacare, aca, the Affordable Care act, really showing up as an issue, lets see if it continues. Back to carl and the gang. All right, thanks, rick. Rick santelli in chicago. When we come bag, cocacola firing back against one activist investors criticism of that company. Well get cokes response in a cnbc exclusive. Take a look at the markets. Dow may be up only 20 points. First new record high for the dow of the year at 16,589. Well be right back. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. But i didnt always watch out for myself. 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Or that our Software Helps over 20 million smartphone users remotely configure email every month . Or how about processing nearly 5 billion in electronic toll payments a year . In fact, todays xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. With xerox, youre ready for real business. Got the soul of the man music makes a happy day music makes the clouds hbo premieres along with game of thrones here it is, bit soup. Its like alphabet soup but its ones and zeros instead of the letters. Because its binary, you know, binary is just ones and zeros. I know what binaries is. I memorized them when i was writing machine codes. Ask me what nine times f is. Fabulous. A screening was held last night and the show includes cameos from notable tech players including Googles Eric Schmidt and karen swisher, so far the reviews pretty good. The San Francisco chronicle not only about the best show about the culture dominating tech world but one of the best shows of the season. Variety says all the shows that merit the word comedy that are half hour, hbo has its most fully realized and potentially commercial player within that genre. Looks like a must watch. Curious to see if they have a sense of humor about themselves out there in Silicon Valley. Oh, yeah. Seems doubtful. They take themselves very seriously. They do. You shouldnt lump everybody. Mark benioff doesnt take himself as seriously. He talks on the show. Realize your full potential, come on, jim, go into business for yourself. Everybody you meet out there. Whats wrong with you . Why is that a bad thing . Its not a bad thing. The entrepreneurial spirit has created a lot of wealth and jobs. I have incredible admiration for that and for many of those people. I do, too. Especially because ive been unable to do it myself. Stop it. Thats shadenfreud. Its not, its taking being happy about it how about jealousy . That wasnt jealousy. Its joy at the misfortune of others. Thats right, they feel bad about us. Right. Stop trading with jim in just a minute. A minute. Opportunities arent always obvious. Sometimes they just drop in. A minute. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Do you have a minute to think ok, how about thirty seconds . At comcast business our internet is fast. Up to 5x faster than dsl from the phone company. And our phones better too. Switch to comcast business internet. Then add voice and tv for just 34. 90 more per month. Time to make the call. 8005016000 comcast business. Built for business. Time for cramer and a look at the statement out of Charles Schwab on High Frequency trading. This the real deal. This is Charles Schwab a man i have tremendous respect for. High frequency trading is a growing cancer that needs to be addressed. He says they are basically pickpockets against you legitimate Market Participants and hes got something that i think will be the whole case. He said 95 of High Frequency trader orders were canceled suggesting Something Else besides trades. That will be the focus of any government investigation is t n cancellation. Im telling you that will be plus he alsos to i think he says the exchanges its their favored clients. This is the best single piece that i have seen on the issue. If confidence erodes further, the fuel of our Free Enterprise system is at risk. I mean, its an absolutely statement. This is a man those of us who have been around forever respect this man, one of the great in the pantheon, this is not idle. This will move this debate further i think. Jim, you got benmosche . Its one of the cheapest stocks often talk about this one with you guys, this is hedge fund favorite, stalled at 50 for a long time. Huge book to book value, last quarter people thought it was a little murky. Price competition in many lines. Fishman has said that with travelers. I want to hear about price competition. I want to hear about buyback. I went to hear about the plans for the next level. See you tonight, jim, 6 00 eastern time. Ism services after that break. Eak. Making moves that would put an adult in the emergency room. Yet all they really want to do is grow up. Its funny, everyone i know wishes they could go back and feel younger. Sound familiar . Then test drive one of these. Current nongm owners and lessees use your 1,500 allowance to lease the 2014 cadillac ats for around 359 a month with nothing due at signing. And youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. March nonmanufacturing ism at 53. 1 close to expectation. We were looking for 53. 5. Last month at 51. 6 is unrevised. Lets dig down a little bit. That 51. 6 last time refresh your memory was the lowest level since february of 2010. 53. 1 dovetails between january which was 54. Youd have to go back to august of last year for the high heart mark 57. 9 the best since april of 06. Improvement maybe not quite as much as expected but its pretty solid and well continue to dig down. 53. 6 on the employment indicator in front of tomorrows number. A nice jump from 47. 5 and thats a positive. On new orders 53. 4 also an improvement from 51. 3 so the internals dont look bad especially on the employment index. Back to you, sara. All right, thanks, rick, for running us through the numbers. More on todays data to put it all in perspective is senior economics reporter steve liesman. This follows in whats been a string of pretty positive data. Everything is up from february, sara, maybe not as much as wed hoped. I want to read you a quick comment that comes along with the ism services report, quoting somebody from the arts and Entertainment Industry, cold weather played more havoc on revenue causing steep declines for nearly a week and then picked up well beyond expectations. Overall per capita spending increasing and thats a good sign. Rick pointed out one thing i noticed very quickly was the jumpback in the ism nonmanufacturing Services Component employment and thats a big jump from 47 up to 53. And as sara said, its part of a string of better numbers weve had. Jobless claims better than the month before. Ism manufacturing better than the month before. Adp better, nfib jobs report better and vehicle sales was way off the charts well above 16. They were looking for 16 Million Units at an annual rate and they were looking for under 16. I just want to share that with you guys. The trade deficit for february coming in below expectations. I want to share a chart with you that explains why this was. Ill put it up for a minute. You can take a look. I can tell you those spikes, guys, are july and february and they happen every four years. And what this is, this is the olympics. When we pay when i guess nbc pays the fees for broadcasting the olympics, it creates a deficit in imports and the economists didnt expect it and thats worth right around 1 billion so thats one of the reasons why that trade deficit was higher than expected. Sara . Interesting. Thanks for pointing that out. Sure, in capes you were wond earl wondering. We are seeing alltime highs set by the Dow Jones Industrial average first time weve seen that this year and the s p. Those stocks carrying a little bit of earlier gains. Theyre still in positive record territory. Lets bring in vince reinhardt, managing director u. S. Economist with Morgan Stanley and vince, the latest data release just follows a number of beats, adp, jobless claims looking healthy, vehicle sales. That bodes pretty well for tomorrows jobs report, doesnt it . Thats right. Solid, not spectacular. But also recognize underneath it is a lot more volatility associated with weather effects. So were reaching into an urn thats a little more uncertain for tomorrow than usual. Interesting to hear your note of caution. Ed, youve been very bullish on this stock market. Youve been dead on in your calls over the last few years. Do you see tomorrows jobs report as the catalyst for the next move higher . Well, ive been thinking that as spring approaches and the Economic Indicators improve, that there would be quite a bit of relief. You know, this bull markets been all about panic attack contributi corrections followed by the worldings not going to come to an end after all and we get relief rallies. With some anxiety about the weakness of the january and february numbers, that maybe it wasnt just weather. And now i think were going to have a continuation of this relief rally to new record highs on the perception that the economys doing fine. Why are we why do traders seem to be ignoring the warning signs out there especially on the gleobal front . China and the emerging markets and even here in the u. S. , said . People have anxiety fatigue and tired of being anxious and worried. The bull market, again, had lots of these anxiety provoking events. One of these days we may get one that really brings this bull market to an end, but weve been worrying about china for the past five years. And the chinese are doing everything they can to keep their economy growing. Maybe its a soft landing but its certainly not a hard landing over there. Well, lets talk about the u. S. Since thats where the action is right now, vince, you mentioned some caution on the jobs front. Now that were in qualitative mode for the Federal Reserve its not just about the Unemployment Rate, not just about payrolls growth. Looking at a number of other indicators which to me seem pretty disappointing if you stack them up compared to the precrisis highs in our labor market. What do you see . So, were expecting solid employment gains, something on the order of 200,000 net jobs created for the month. Unemployment rate ticking lower. The feds qualitative guidance just makes it hard to understand exactly how theyll translate that. I think there is a risk that if we get a strong number people will focus on that and what it means for the fed. By not having really anchored expectations, i think theres going to be a little bit more volatility on the front end of the yield curve because were not sure when the fed will actually start raising rates. If you look at the other rates, underemployment, wage growth, they have not really picked up. Theres plenty of reasons for the fed to delay policy action and the headline one is inflation. They are well below their goal. Were not getting the wage increases that are the domestic impetus to inflation, so i think what most likely will happen is janet yellen will discover that inflation is low and umse that s a reason for pushing out the tightening but it will be a bumpy road because the underlying data are volatile. How do you square the optimism of the equity markets and the economy and the jobs report with whats happening in the bond report . Yes, were seeing yields reach hife highs we havent seen in a few months, but it seems more cautious than the record highs on stocks . Youre right. It is a bit more cautious. But on the other hand, that yield just doesnt go above 3 . I mean, on the some point it might when the fed actually starts raising Interest Rates. But i think vince is absolutely right. Whats kind of keeping bond yields down and what will give janet yellen some cover for keeping Interest Rates near zero is inflation. Its hard to see it. The head of the imf called it lowflation. I kind of like that. Its a little less scary than deflation. But we definitely have lowflation and i think thats keeping the bond market in a range. Whats going to change that, vince . How do we get out of a lowflation world into more normal inflation and then looking at higher rates . Continued solid employment gains that keep sending the Unemployment Rate lower. By our forecast we get into a 2. 75 growth channel for real gdp and by the end of the year we work off resource slack. We still have some slack, so inflation isnt an issue for this year, but next year it will start to creep up. All right. Well continue to watch it. Thanks for joining us today on the data on the markets vince and ed, good to see you both. The dow is up five points here. Lets send it over to dom chu and get a market flash. Check out shares of pandora, moving higher after reporting that listener hours rose 14 in march while active listening jumped 8 . That stock is currently up to about the 4 level to the upside so, carl, a nice day for pandora shares at least in the early trade. Back over to you. Thanks a lot. Of course, the jobs number is tomorrow. Dont forget one day left for you to nail the number. Tweet your predictions for march nonfarm payrolls and use the handle squawkstreet and if you win a wireless speaker autographed by david and jim and sara and everyone on squawk on the street and you have until one minute before the friday release at 8 30 to submit your predictions. Best of luck. Consensus hasnt budged a whole lot just below the two 200 mark. Services suggest it could be good. Its been a head fake. And adp coming out at 191, but the one thing ill say it was pretty broad. In terms of gains in employment, small, medium, and large businesses. Manufacturing was a little bit weak. Longtime adviser to Vice President biden, senator ted kaufman joins us, an unbelievable statement from Charles Schwab calling High Frequency trading a cancer on our system. Well talk about the coke story when we come back. When we. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Theres a group of profitseeking people in between traders and investors and the exchanges and i think thats whats new here. But its not unknown. And from a perspective of investors, my investors i sat with my trading desk this week, you know, we know theyre there. We know that theyre extracting a slight tax. We turn our portfolio over very, very slowly about once a year, so for the half a penny or penny that we may be losing out on transactions, its not material. That was famed short seller jim chanos on squawk this morning in response to allegations from Michael Lewis who said the markets are rigged and just a few moments away Charles Schwab said High Frequency traders are game can the system and reaping billions and its a growing cancer and needs to be addressed if confidence erodes further the fuel of our Free Enterprise system Capital Formation is at risk. Lets bring in former delaware democratic senator ted kaufman who knows a thing or two about this. He joins us from wilmington. Great to see you. Good morning. Great to see you. Youve got a fund manager saying its not material to his game. Obviously schwab has a much large interest at stake. Where are you on this . I think we dont know. The biggest problem we have is Michael Lewis book is excellent. It presents a very well reasoned argument of whats gone on. But and i think that theres two different interests here. Chanos says he has very low turnover and schwab has high turnover. High turnover the pennies add up. This industry is making billions of dollars and its going somewhere. But my concern from the beginning has been what schwab said at the end. This is a problem that affects our markets. Our markets are one of the key things that made america great. Thats an overstatement. The free markets and the credibility of our markets and what ive been saying, carl, for five years is we dont know whats going on because we are not keeping track. We dont have the information of whats actually happening in these markets by the High Frequency traders. And i called on the securities and exchange commission, Mary Schapiro five years ago and said weve got to do something about it. Four years ago i called for consolidated audit trail so we can find out whats gone on. We cannot have our markets unregulated. We know what happened with derivatives but we didnt have derivatives regulated and we saw what happened and how much that played a part in the financial meltdown. Our concern is we got to get in there and find out whats actually happening or we wont have regulation. If we dont have regulation, well have a real problem. All of us have been talking about transaction costs for years. We want to keep it as low as possible. Exactly. Its one thing to say that and another to make a rather inflammatory accusation that the markets are rigged. Did you have money in the u. S. Stock market, senator . Do you invest . Oh, yeah. Ive been an investor for my whole adult life. Do you think the markets are rigged . Do you think its unsafe for an average investor to put money in the stock market . Thats what im worried about. The fact is we dont know. Our markets have always been regulated. Weve always known whats going on. With the growth of High Frequency trading they cannot they dont know what happened. When we had the flash crash on may 6th of 2010, it was six months before they could tell us what happened and even when they got to that point there are a lot of people that dont believe they even got it right there. Kind of like the malaysian airliner, nobody really knows what happened during the flash crash. My point is for the credibility of our markets which is incredibly important for all of us, investors and noninvestors, big investors and small investors, we have to have regulation of those markets. People have to know whats gone on and in the lack of that the allegations of whats gone on are truly disturbing. I dont make the comments, i dont know. The idea that weve gone five years without finding out doing really the major things we have to do to find out is a disgrace. I think everybody can agree that what we need to do now is make sure the s. E. C. Has the tools to adequately investigate any instances of abusive and manipulative behavior and thats the legal phrase thats in the s. E. C. Law. Consolidated audit trail. They are talking about maybe 2016 before they get that together. I know. Senator, is there anything we can do or get them to do to speed up that process . Absolutely. Commissioner Lewis Aguilar came up with a good proposal, he thought we ought to do a Pilot Program and in the meantime we ought to ban market maker rebates. I think thats the kind of things we have to do in the interim. But weve wasted as you know, theyve had that charge for years. And the consolidated audit trail, it was four years after Mary Schapiro said they would do it and they completely weakened it. I think the really good news on this thing is that Michael Lewis is a great author. Hes very popular. This will make it to the number one on the New York Times best seller list. And it will be great. By the way, people want to know whats really gone on and the details of it, theres a book out by sal arnack called broken markets which will go into all the details that have gone on in the High Frequency trading. He just tweeted you are a Great American watching the interview right now. Senator, you mentioned Michael Lewis who is bringing a lot of attention to this. And people think, great, finally hes creating some urgency. Exactly. But that ignores the fact that weve had flash crashes before and nothing has been done. There is nothing like publicity to get the senatsenate the congress to work. Its an extraordinarily complex business and its very hard for members of congress and very hard for the public to even understand. I felt like for the last five years ive been a voice in the wilderness with sal and joe and others. I think what Michael Lewis does once in my experience in the congress, once it reaches the point where the general public gets interested and you get comments like what Charles Schwab said, then things start to happen because then people say its really important, we got to look into it. You see a number of members of congress now jumping on this bandwagon. S. E. C. Has obviously been looking in to it for years, the new York Attorney general. How do you distinguish those sort of using it as a platform, the public is aware of it, it makes members of Congress Look pro consumer and promain street investor. Is there someone in congress that needs to get involved on it . Sherrod brown gets it, mark reid gets it, and theres loads of people that get it. The thing is you cant move it forward on a complex issue unless you have broad support out there in the public. Everybody wants to jump on the bandwagon. This bandwagons big enough for everybody. The more people that jump on it, we have to do it. Before we let you go, the problem with banning rebates is its an integral park of reg msm and the whole thing that came about in 2007 and might create unintended consequences. Dont you think we should call for an accelerated review of the old regulations that created some of this and by the end of the year perhaps come to a series of definitive conclusions, i mean, the s. E. C. Should come to it, and then we can all agree what we need to do to step forward rather than piecemeal measures . No, i agree with that. But i think in the interim what commissioner aguilar is calling for is a Pilot Program. Hes calling for a Pilot Program. I think its a good idea. I think theres no doubt in my mind that rebates are at the heart of that problem. Its all those things and your proposal is perfect. I think its right on. But i also think we can walk and chew gum at the same time. I think we can move ahead with what commissioner aguilar is trying to do. We got to do a lot of things. This is this is a this is sa real problem. Anything affects the credibility of u. S. Financial markets is a major problem for the country because we depend on the credibility of our markets. Echoing what schwab said a few moments ago. Senator, great to see you again. Thank you for your time. Always a pleasure. Coming up, a new investigation for citi group. Should citi drop amid analysts downgrades . Well take a look next. Aflac. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses whoyour boss . Rk for . Yourself . Your parents . Your family . At baird, what matters most to you. Matters most to us. As an Employee Owned firm, our Financial Advisors have the freedom and resources to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Welcome back to squawk on the street. Check out shares of amgen, the stock is moving lower after it end a Marketing Agreement with glaxosmithkline. Down a percent. As for glaxo also down a . The drugmakers on the move. Trouble for citigroup and this time the fed is opening an investigation. Michelle Caruso Cabrera is back at hq with more. This is relating to the mexican unit. Absolutely. The New York Times reporting that u. S. Federal authorities have opened an investigation in to citigroups mexico unit known as banamex specifically related to a announcement of fraud by citi back on february 28th where they acknowledged they had found 400 million worth of falsified receivables. Overall pretty small on the scale of citis revenues which last quarter were nearly 18 billion but when it comes to fraud 400 million is pretty high. We saw mike mayo who is a banking analyst made a lot of news last week when he was on the Halftime Report saying that citis cfo should really be taken to task for this, but at the same time somebody who is also going to come under increasing scrutiny as a result of this is probably the copresident overseeing Global Consumer banking. But he was in charge of banamex from 1996 to 21 and he was promoted toe kroo of latin america of 2004 and copresident back in 2010 but that entire time he also has overseen mexico. So, he will definitely be under scrutiny. His pay was docked by more than a Million Dollars last year due to issues of control according to citis annual report. This is just yet another shoe to drop for this company and there were questions raised when they didnt pass the stress test as to whether or not it had anything to do with the situation in mexico. Because that and a couple of other issues have raised questions about whether or not there are proper controls in place there and perhaps throughout the bank. One of the questions thats been raised. Guys, back to you. Yeah, and citi has the most International Exposure out of any of the banks also, michelle. They love to call themselves the emerging markets bank, number one. And remember during the crisis banamex was held up there were concerns that they would be forced to sell banamex. Thanks very much for that story. Coming up, investor David Winters agitates for change at cocacola when it comes to its pay practice. Coke responds exclusively right here on squawk on the street. You will hear from cokes head of corporate gov nantion, next. L you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Save you fifteen percent or more on car insurance. D Everybody Knows that. Well, did you know pinocchio was a bad motivational speaker . I look around this room and i see nothing but untapped potential. You have potential. You have. Oh boy. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. E financial noise financial noise financial noise financial noise these days, everything is done on the internet. And tomorrow youll do even more. Thats what comcast business was built for. Slow dsl from the phone company was built for stuff like this. Switch to comcast business internet. Then add voice and tv for just 34. 90 more per month. And youll be ready for tomorrow today. Comcast business. Built for business. Welcome back to squawk on the street. The head line in the energy hits today, its all about natural gas inventories. Traders were expecting them to decline last week according to the department of energy. The number is out. We did get a drawdown of 74 billion cubic feet in line with expectations but i will say this, its less severe than what we saw last year in terms of the draw down but much more severe than what weve seen over the fiveyear average. Only an 8 billion cubic feet draw, a very big difference there. A lot of the Market Participants are saying the market has a lot to do, a big job to do, to be able to play catchup and get these storage numbers back to normal levels. Meantime, prices were up today ahead of this report. Trading around the 440 level. Trading a couple of cents down right now, but the bottom line is if these draws continue, you are going to see prices supported. You are going to see prices potentially rise. What will indicate where were going to go from here . Its all about the weather, guys. Howst we how fast well heat up or potentially not will impact the shortterm demand and the summer sizzle will impact the longer term picture. Back to you. The summer sizzle, thank you very much. Cocacola is fighting back, coke investors David Winters has recently launched a very Public Campaign protesting cokes compensation plan. The equity plan is up for a vote at cokes annual meeting in less than three week. Joining us for cokes First Response Gloria Bowden the associate general counsel and corporate secretary for cocacola, the head of Corporate Governance, thanks for joining us. Thank you so much for having me here today. I appreciate it. David winters says that cokes plan is one of the most outrageous grabs of shareholder money in the history of commerce. Why do you say hes wrong . Well, i think theres been a lot of misconceptions out there about this plan and a lot of the numbers out there are really just plain wrong. And i think its important to real listly step back and thinkt the reasons we have this plan. Weve been granting equity awards to you our employees for years at the Cocacola Company and this plan does nothing to change the equity practices that weve had in the past. You know, a plan is just a vehicle. Its just a way to deliver equity awards. So, this new plan allows us the ability to continue to grant equity awards in exactly the same way as we have in the past. One of the argument against that and why he says this is, in fact, new and different is that youre issuing more shares at a lower base. And, therefore, the dilution is greater. Yeah. Actually, the real dilution over the last three years has been less than 1 a year and we expect it to be in that range Going Forward. This plan actually is very much in line with the plans that we have put forward to shareholders in the past and that have had shareholder approval. One of the numbers getting a lot of attention from mr. Winters, he says he calculates over the next four years you would dilute existing shareholders 14 to 16 . Were talking 26 billion to 28 billion on tom p of cokes existg shares. You debate that number . We do. When you start with dilution you can start with a number but there are many things that have to be deducted from that number. Things, for example, awards that would be forfeited, shares that are repurchased with employee proceeds from stock options, those things have to be deducted from that number, so we know it will not be that number. The real number on dilution is much more in line with past practices and historical practices which has been less than 1 per year. Another one of your arguments has been this is very much performance based. It depends on what happens with the stock. How do you define those incentives for members of management . Wow, theres a number of ways. First of all, a lot of these awards are very dependent on stock price. Our investors really like that because management doesnt get paid unless the company performs and unless our investors get an Additional Return on theirs. And in addition our performance shares are based on economic profit. And thats a great metric that we have disclosed very broadly in our proxy even the exact targets are in our proxy statement, were a leader in disclosure around that. I know it is performance based. Last year the ceo and chairman actually made 30 less than he made the previous year. I think we have the number. Made about 20 million for the year. But then if you look at it versus other industry executives, for instance, the ceo of pepsico made 12. 6 million. How do you explain that gap for those who would look at that and say hes paid way more than the industry average . Right, sara, whats important to know that a lot of the numbers in our pxy statement are what we call potential compensation. They are compensation and a person could realize if and only if our company performs. Let me give you an example. We had performance shares coming due last year but because we did not meet a very challenging internal target that we had set, those shares are paying out at zero. So, when we reported that in the proxy statement several years ago that was reported at a potential of 5. 6 million for the ceo. The actual payout is going to be zero. Have you heard yet from Warren Buffett who owns 9 is the biggest shareholder of the company who mr. Winters also sent a letter to, he has not heard from him as of yesterday. Mr. Buffett, of course, is a great share owner and a great friend of the company and i would never presume to speak for mr. Buffett or anybody else. But i think its important that we listen to all of our share owners. We really invite a dialogue on any number of topics with a share owner of the magnitude of mr. Buffett or much smaller shareholder as well. Does he support the current pay plan . I would never presume to speak to mr. Buffett. Howard buffett, his son, is the board of directors. And theres been a question raised whether its proper to have mr. Kent on the board of shareholders whether theres a conflict of issue when it comes to management compensation. Our board strongly believes a combined chair and ceo is the right structure for our company and its important to note that Compensation Committee sets the compensation for our company. So, the Compensation Committee is comprised entirely of independent directors. So, there is not a conflict of interest for having a combined chair ceo role. Have you ever looked in to the possibility . I mean, have you ever done Due Diligence on a Corporate Governance side about whether this makes the most sense . We dont think theres one size fits all for every company. For our company it is the right structure. And we think its in the boards discretion to determine what is the right thing for the company. All right. Well, thanks for going through some of the numbers. Just for those who are watching and who are outraged at general ceo compensation, ceos make millions and millions of dollars, their employees make a tiny fraction of that in general. How would you defend cocacolas position right now in light of the Public Campaign against the pay plan . Executive compensation really is an important issue in Corporate Governance today. We acknowledge that and we actually want to hear from our share owners on this topic and on other topics. As a matter of fact, we engage in dialogue with share owners all the time whether or not theres an issue. And as a matter of fact, we talk to our share owners last year and we made specific changes to some of our compensation plans this last year. Directly in response to some of those share owner discussions. So, we welcome those discussions and we hope to continue to have those in the future. All right. Good to see you, gloria, thanks so much for coming in from atlanta, from coke, representing coke stance in this issue. And a quick programming note here. David winters of wintergreen will be joining us a little bit later on closing bell today for the other side of this argument. We sure not to miss that one. Carl . All right, sara, thank you so much. When we come back the secret iphone feature that could reinvent the messaging world. Texting your friends without a wifi connection, without a cell phone plan. It is possible. The app has seen more than 100,000 downloads a day. Well talk to the founder when squawk on the street comes back. Back. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. How did i know . Well, i didnt really. See, i figured low testosterone would decrease my sex drive. But when i started losing energy and became moody. Thats when i had an honest conversation with my doctor. We discussed all the symptoms. Then he gave me some blood tests. Showed it was low t. Thats it. It was a number not just me. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. 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And id like to welcome a special guest today. The ism nonmanufacturing Service Number really was an important number for a variety of reasons. So we have tom durrey from that organization. Thanks for taking the time today, tom. My pleasure, rick, good to be with you. Thank you. Okay, lets start out with the headline event. It was close to expectations and better than last time but, you know, not that many months ago we had a whopper number. Can you put it all in context for me especially with a hint of how weather may have affected it . Yeah. Theres no question that weather continues to show up as a factor, i mean, of the 13 industries that we cover here, retail is one of them. That had an impact. The Entertainment Industry weather clearly has an impact about peoples ability to get out and spend money, so that shows up. The sixmonth period ended with march the rate of growth has decelerated compared to the prior six months so were clearly seeing a growing trend but a slowing in the rate of growth. Wow, that really does make sense, tom, because thats kind of what i think the fixed income markets are telephoning us. Now ill show a couple of things on the yeen the Affordable Care act, obamacare, its on the screen, it was much more intention, the Affordable Care act is creating significant financial uncertainty for Health Care Organizations with little warning and the negative impact has been unprecedented and today same type of thing but i thought less intense showed on the screen, Health Care Reform continues to adversely impact hospital projected actual reeve knew. Can you tell me, anything you can, being with this organization, about what the respondents are trying to tell us and how many of the traders watching should interpret these comments on the Affordable Care act . Well, i think the first thing is that the uncertaintys clearly having a hangover effect, right in terms of projecting future revenues. Weve seen a pickup in terms of registration on healthcare. Gov. I think that begins to take away a little bit of the uncertainty in terms of the insurance market, but it is also important to notice of the 13 industries covered in this report, four are reporting actual contractions and health care is one of the four contracting industries. It reported a worse performance on all four components of the Overall Index number, so its fair to say that while i cant explain whats underlying that, the data shows that health cares actually going through a period of contraction in the runup to obamacare. All right. We only have 25 seconds left, so i want you to kind of be pretty curt with this. In your opinion watching the way these respondents normally operate, would you say that this is kind of a onetime kind of pricing event or is this going to be something that slowly continues to creep in and get more attention . I know its a tough one, but try to answer it with ten seconds left. Yeah, my instinct tells me this is more of a temporary phenomenon, the data becomes clearer, business will adjust and well return to a more normal period. Excellent. Thanks for taking the time today. Carl and the gang, back to you. Thanks very much Rick Santelli. Want to note that weve turned negative for the dow, s p, and nasdaq opened higher. Now just went into the red. Coming up the final four this weekend. Want to go to the game . Well, it just got a little bit easier. Ticket prices had spiked earlier in the week. They are now plummeting. The mysteries of the secondary ticket market is next. At your ford dealer think . They think about tires. And what theyve been through lately. 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Then add voice and tv for just 34. 90 more per month. Time to make the call. 8005016000 comcast business. Built for business. Welcome back to squawk on the street. Check out shares of the Online Discount brokers all moving lower at session lows now. This after Charles Schwab said that High Frequency trading is a growing cancer to the stock market that needs to be addressed. Then former senator ted kaufman made comments to cnbc saying liquidity rebates should go away. Liquidity rebates are payments High Frequency traders receive for order flof flows, so the dt brokers very much in focus on the comments as well as the debate, carl, back over to you. The debate got second legs this morning, dom. Thanks a lot. If you are in line for tickets are for the ncaa final four, there are still a number of affordable options for fans looking to get into at t stadium. Otherwise individual tickets to the saturday or monday sessions are reselling for 600 to 650 each. Its great to have you back, jack, good morning. Most expensive since when . Since ever. Since ever . Yeah. In the five years weve been tracking final four tickets, the most spedgeive final four ever. Is that a function of the quality of the teams . The marketing by the ncaa . What would you to what would you attribute it . Its partly that. Its partly dallas is a very easytotravel to city, a lot of flights this, cheap he teoeffe its a premium seating and with high ticket prices. Since the capacity is relatively good, it could be higher if it were held in a different city. The flip side because its so big there are cheap tickets on the bottom end. If you are trying to go as cheap as possible, you can get in for face value, about 200. Now you wont have the best view on earth. You may need some binoculars. You may feel you are in outer space but its i want to ask ab sporting event in the news, the masters now that tiger has dropped out how are the prices . We havent seen as big of a decline as you would think which speaks to the brand of the masters. Weve seen a 5 to 10 drop. What i also like about your program just looking at some seats for concerts or broadway shows you score the seats based on what, the availability, the price . We look at how much a ticket should cost and how much each ticket does cost and say is this a good bang for your buck. You can think about you dont want to just look at whats the very cheapest ticket because then youre just going to look at stuff in the nosebleeds. We help someone find a courtside seat thats relatively underpriced based on what it should cost. They always give people advice on buying plane tickets. Buy 21 days out, 21 hours out if you have ultimate flexibility. In the last couple of days prices will come in a little bit. Why is that . Prices tend to drop as most major events approach. And you know one really interesting thing with the final four specifically is if you buy on sunday, if you buy the day after the semifinals game, we often see a really big nose dive. The reason is you have a lot of fans who have flown down to dallas to see their teams. Two are going to be totally out of it after the game on sunday. Theyre going to want to get their tickets and leave. In past years weve seen tickets for 20, 30, bargain prices. Are you kidding me . Because of those people who unfortunately had their team lose. Yes. Theyre bitter. What type of user growth are you saying for the site . Seatgeek has gone 10 to 15 month over month. You have seasonality, good months and bad months. Is the summer in terms of everything, music, sports, is the summer looking significantly more expensive than last summer . Yeah. One major trend in terms of summer music is festivals. Music festivals have become skort sort of a force in the music industry. Lollapalooza has sold out for months . Its a great way to see bands for not much money. What industry is seeing higher growth . Slower growth in the nhl in the last few years. Weve seen really strong growth in music and the nfl. So those are the two ends of the spectrum. You know theres been a lot of discussion about the nfl, mark cuban criticizing the Business Model saying theyre going to overdo it. Hogs are going to get slaughtered. Do you see a day so many Football Games during the week, during the season that it loses its impact . I think its possible. I think what mark cuban has done with the mavericks has been careful to keep prices on the primary market, you know, what youre selling tickets for for face value to attack value. Its not charging whatever he can get. Hes looking at what people are paying on a secondary market and use that to inform his primary market pricing. Are you dgoing to dallas . Im not. Do you have any picks . Florida number one overall. Youre talking to our producer, gator. So florida and. I would have to go with florida. Yeah. Florida wisconsin. Hes got the metrics. I know. Im also rooting for the high ticket prices, right . Is there ever any ticket to any show of any kind that you cant get . At the right price you can pretty much always get. Gets a low score, i guess. Who says there was no inflation. I know. Im going to get his number after this. Lady gaga. Joining us from seatgeek. Coming up, amazon stepping into the Home Entertainment business. A brand new streaming device to compete with roku, apple tv, chrome cast. We have one here with us at post 9. Well show it to you, how it works. Thats all coming up here on squawk on the street. Awk on t [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Thats when expertise happens. Mfs. Because there is no expertise without collaboration. Have a look at the major indices. All turning lower. The dow, s p, and nasdaq red arrows. Not a whole lot of movement though. Should note that when we opened the morning the dow was hitting a record high. First time for 2014. S p also hitting record heights. Have turned lower. The data, economic data, has been pretty solid. Jobless claims ticked up from last we last week. Everyone is watching the euro versus the dollar today. Mar mario draghi left rates unchanged. Falling during the News Conference where mr. Draghi said that he was open to qe. Didnt rule it out. Still no, major moves. Just a whole lot of talk from mario draghi. Theres euro trading your intraday lows as we speak. And dont forget tomorrows jobs day just one day left for you to nail the number. Tweet us your predictions for the march nonfarm payroll number. Use the handle and you will see a wireless speaker autographed by the hire squawk on the street gang. You will have one minute before the 8 30 release tomorrow to submit your predictions. Looks like were just around 200,000 in terms of consensus. A little less than that for the number of jobs added during the month of march. Carl, back over to you. Sarah, thank you so much. Sarah eisen bringing us up to speed. Transports have set a record high today as well. If youre just joining us, heres what you missed earlier on. Welcome to squawk on the street. Heres whats happened so far. When i look at the rates in these countries including a third biggest bond market in the world, italy. When i look at some of the statistics that i see in autos i get a little hopeful. This is not going to stop until they get better economic growth. Very bernanke like. This is an alltime high now for the dow. At 16601. Dow has never been hire in the entire history. We got to get in there and find out whats actually happening or we will not have regulation. If we dont have regulation, we have a real problem. Equity awards to our employees for years at the Cocacola Company. And this plan does nothing to change the equity practices that weve had in the past. It is 11 00 a. M. On wall street. 8 00 a. M. On the west coast. A messaging app thats adding 100,000 users a day. Is this the next whatsapp . Well talk to the ceo behind the company. And rumor has it, this is the Wearable Tech Company he has his eye on. Well have the ceo behind a brain sensing device if hes selling and how she got Ashton Kutcher to buy in. Move over box. One of the Top Companies in that sector joins us for an exclusive interview. New h brk o show Silicon Valley features kara swisher but the real question, is it any good . Well give you a preview this hour. Joining us today, Dennis Berman of the wall street. Good to have you back. It is spring. It is spring. Im feeling it. Its not going to be any more . I know. Sorry. Our own jon fortt joining us as well. More people tuning into pandora these days. Listener hours up 14 in march compared to the year ago. Pandora also gaining share, over 9 of the total radio users using the platform. Last couple of months dennis gave the bulls but this is a nice number. Apple incursion into the apple radio sent that stock down for a while. Those Growth Numbers are darn impressive. 9 of all radio listening hours. But i did a little research, carl. I looked at how much money pandora has made in the last seven years. You know the answer, right . I think i do. The answer is nothing. Its lost, i think, close to 100 million. So this is a call valued at 6 billion. The market loves the growth. But as we know about the pandora Business Model in some ways the more it sells the more it loses. 100 million. Box lost that in just a last couple of months. Badge of honor at this point. You look at the traffic numbers. Not much about pandoras product seems to change. How much can we attribute to dumb luck . I charted out the listener hours over the past three years to get a sense of how good this number was. Its very good. Especially given the trend of flattening out and declining the couple of months before this. People were feeling iffy about the fact theyre not going to report monthly numbers anymore. One more monthly report before they switch back to quarterly. Now that we see this spike of acceleration, i think it gives the biggest competitive threats are in the past . I mean, apple, im trying to think of things that were called pandora killers at the time. Pandora killers but as weve seen this market involve, i just got a new spotify upgrade on my smartphone. Its pretty darn good, too. Its probably going to ipo soon. It doesnt make any money either. Again, these are really valuable companies. People are spending a lot of money a lot of time on their products. But the core Business Model is still not perfect and certainly, you know, maybe not even that good. Theres potential here for expansion in the car. Pandora is well positioned relative to everybody else, at least. I dont know if anybody who is really making a lot of money on this yet. The question is, is anybody going to make money or is this just going to become 1078 kind of platform play and up sell for everybody else in which case pandora gets held under water. What do you think is the most sustainable model . Do you think the way pandora has gone about it you basically have to listen to as many ads as you want or spotify where you pay for premium . I have an answer for you. Terrestrial radio. What is that . The durability of these terrestrial Radio Companies are shocking. Cumulus radio, one of the biggest Radio Companies out there, theyre getting the ad dollars that pandora wants to get. Be it the obamacare rollout and pitch to young people. Theyre getting a lot of those dollars. Those are high margin dollars. So theres definitely growth and definitely pushing the traditional Radio Companies out of the way. In terms of like baseline, old fashion, reliability, its going to be a terrestrial company. It might not be in the music itself but in man dora knowing who wants to listen to what, are, and directing people to go. Would you call pandora extraterrestrial . Very well put. Theyre all merging together. Clear channel and i heart radio are out there. Theyre becoming more like pandora and spotify themselves. Its all becoming a mixed breed of terrestrial and extraterrestrial. Up next, amazons new firetv just got people at apple nervous. Competition is ramping up. Piper jaf phrase. An lais says with each month that passes without credible feedback from the supply chain reduces their confidence in the product. Jon, youve brought some fire to demo today. I did. I have brought fire to post 9. Its a good product. I spent a few minutes with it last night after the kids went to bed. And if we were starting at zero, between, say, this and apple tv, if you didnt have an investment in either eco system this is nicer than todays apple tv. The fact that, you know, if you have prime or even if you dont, its very smooth to flip through. Youve got Voice Control from the remote. The fact is most people do have some kind of an investment in itunes already and you can go into an apple store and see apple tv. Amazon is just selling this online. Am has time to come up. You were recently watching duck dynasty and downton abbey. All the time. Are they all better than apple . Its good. You just have to enter your pass word. The setup process pretty smooth. I cant compare it to all of them because i havent set all of them up lately but this was very, very easy right up the alley of the user who might just bs checking this out for the first time. I think the core customer for this is going to be somebody who already owns a kindle, somebody who already has some skin in the amazon media game. And this i think isnt just a loyalty play. Its going to get people to buy more movies and tv from amazon and monetize it. As we see the amazon and the kindle, if you own a kindle and youre a primary member youre going to spend hundreds of dollars more. I wonder about apple. They have no games on their platform right now. Amazon obviously does. But, you know, if we think that apple is somehow going to he spond to competitive threat from amazon, thats been true for four to five years. What i do think is interesting about apple is theyve not really had the big product launch. You can go back. You will probably find old squawk clips from 2012, 2013 say this is i probably said it, this is the year theyre going to launch it. They havent launched it. We saw their flirt taation withe cab cable companies. How much pressure is there on pressure to aggressively respond to a lot of things . I dont think theyre quaking just yet. Theyve obviously got a plan they want to pursue. Theyve been robust in so many different ways. What i do think, kayla, the longer they wait in some ways the better it has to be. Its like that term paper that you havent written and yet comes in later and later, its got to be a little bit better. Bjojon is going to demo fire after the break. No pressure. Also, another selfy controversy. Today this time involving the president. David ortiz from the Boston Red Sox snapped this picture with president obama while he was at the white house yesterday. Turns out ortiz had just inked an endorsement deal with samsung and the selfie was just another promotional stunt from the company. White house aides say they were unaware the selfi, was part of an advertising campaign. It sounds like the deal was, all right, ortiz, go see what you can get. If you get a selfie with the president well run with it. Im not sure the president was aware of what was going on. Probably wasnt. Other people could say he has other issues about whats going on but asamsung, carl, the interesting thing is samsung pretty much helped ellen plan out her oscars selfie. One of the biggest spenders overall in all u. S. Media for advertising. Theyre trying every gimmick they can. If you read their statement, its really oddly worded. Its so samsungian and trying to be cool but not actually. We enjoyed working with ortiz and the red sox team trying to help them figure out how to leverage the opportunity and you wonder what discussions were had. Were they basic consulting . This got 41,000 retweets, 47,000 favorites as of the point when we looked earlier today. Thats not that many. This falls under the category of trying too hard. I mean tough crowd. You want to know that people, you know, famous people, your friends, are using a piece of Technology Just because its great. Not because theyre paid to kind of attack the president and gorilla marketing style get a selfie. What does the selfie tell me about the quality of the camera . Not so much. I think that is where the consensus is about samsungs marketing right now. Theyre try a little too hard. Do you think its a samsung issue, not a broader issue of people trying to be social and moving the line of whats acceptable and whats not . Well, i do think that this is, for me, as a consumer, maybe across the line of acceptable. This doesnt make me feel any particular doesnt make me feel better and samsung or smartphones. What are they trying to communicate. At this point theyre just snapping selfies all over the place. Are we creating a culture of selfabsorbed narcissist Via Technology . The answer is yes. It didnt happen overnight, either. Thats right. We do have a news alert. Turkish government will lift the ban on twitter. Thats according to the associated press. What a story that has turned into. Been an incredible story. When you look at the meddling at the top layer of the Telecom System inside turkey or russia, the ability with which governments can try to control is pretty startling. I think basically needs to be some more reporting done about the role of western companies, u. S. Companies, and the ability of governments to do that. It would be quite interesting to see. Efforts on the street around this election to try to use twitter, to use youtube, to mobilize the vote. The fact that the vote ends and now theyre lifting the twitter ban cynically shows you what they were trying to do there. We do have breaking news from the Federal Reserve. Steve liesman has that back at hq. Steve . Carl, thanks very much. Fed governor jeremy stein who joined the board in 2012 announcing his resignation. He will leave in may 2014. May 28th will be his last day. He was a harvard economics professor. Hes going back to harvard according to a press release. No other reason given. Its a relatively short stint for mr. Stein on the board but these guys do come from academia. Generally theyre given two years leave. Sometimes thats extended by the university. And then they go back after two years. Jeremy made some waves back a year or so ago with a speech he gave about the effect of quantitative easing on Interest Rates. And hes thought of as a deep thinker on how qe affects the financial markets. Given a lot of speeches on that. Two vacancies remain. Those that are denominated by president obama filled by treasury and stan fischer, former governor of the bank of israel, have not yet been approved. Thanks for that, steve. Certainly a story we will watch. When we come back on squawk on the street, amazons long awaited set top box which weve been talking about is finally here. Jon fortt has brought the fire to post 9 and well test whether it will succeed in taking over your living room. Stay here with squawk on the street. Well have much more after the break. But first, Rick Santelli, what are you watching . I tell you what. The news about jeremy stein is a bit depressing. On this trading floor, hes about as good as it gets with regard to how traders feel about fed officials. Were going to talk a bit about the euro post the press conference. And were going to talk about that booned tenyear spread. I found a correlation that may give you one up on your trading neighbor. All at the bottom of the hour. O. Welcome back. I want to send it over to dom chu. Kayla, the selling of netflix after setting 458 buck on march 6th. The stock dropped 100 points or about 20 of its value lost. Talk about a losing streak here. Its also down in trading 19 of the last 22 sessions. The latest news to negatively impact the stock, amazon selling the new 99 firetv streaming device box yesterday. The stock is currently down a little over a percent here. Carl, back over to you. Dominic chu. Jon fortt was at the big event at amazon yesterday in new york city. He brought the firetv to post. Youre going to demo this. I want to show you the New York Post which doesnt like a lot of things. Street douses fire. Amazon tv idea fails to stir buzz. Is that how you see it . I dont. I mean, i dont know that this is going to blow the doors off right out of the gate because you can only order it online. Theres no store right now where you can go in and see it. First, to give you a sense. Heres the box. Here it is next to apple tv. Its not as tall. So its thinner. But its a little bit bigger. Ill see if i can set it on top here without knocking the whole thing over and ruining the demo. So far so good. Scroll through her. Ive been watching dust dynasty. Nothing in my watch list yet. Video, library, games. Youve got all of these games. This is an original amazon title here. Apps as well. You can add things like youtube, espn, the espn folks told me that in terms of quality of stream youre going to get this box is actually top notch. One of the features this has at 99 bucks that apple doesnt is Voice Control in the we remote. So lets give that a try. Veronica mars. Hello. Yes, i did say veronica mars. It takes you to that. You can try duck dynasty. There was also good. Quad core processor working in there. Pretty good. What else should i try . I dont know. I mean, how is the selection . Downton abbey. Its guessing. This was correct. Pawn stars it didnt get before. Thats a risky one for live television. Lets see if it gets it this time. Pawn stars. All right. Yeah. It does okay. Thats pretty good. Would you arc theres more here to watch than on netflix . Definitely not more than on netflix. The advantage here is with the interface. Easy scroll. It makes interesting suggestions as far as what you can watch. If they dont have it in prime instant video it will offer to let you buy it. In the past you maybe just went with what was free. If you buy it any idea how quickly you can get it . Are they running out . Just came out yesterday, supplies pretty good. Besos is good with the supply thing. Interesting demo. Thanks, jon. Jon was brave to try pawn stars but welldone on that one. Move over, whatsapp, this next messaging service is adding 100,000 users a day, one user a second. Could this be the next 16 billion idea . Well speak to the ceo of that company when we come back. Making moves that would put an adult in the emergency room. Yet all they really want to do is grow up. Its funny, everyone i know wishes they could go back and feel younger. Sound familiar . Then test drive one of these. Current nongm owners and lessees use your 1,500 allowance to lease the 2014 cadillac ats for around 359 a month with nothing due at signing. Customizable charts, powerful screening tools, and guaranteed onesecond trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Imagine an app that lets you send messages even if theres no internet or Cellular Connection available. Fire chat launched just last month on apples operating system and is already seeing explosive growth around the world. Top tenet work social networking app in why is it so popular and how does it work off the grid . Cofounder and ceo of open garden which makes this popular app firechat. Thanks for joining us. Good morning. Some people have talked about this as a hybrid of skype, twitter, snapchat, whatsapp. What is this . Explain how it works. Some people call it snapchat for text because when you leave your chat conversations, all the conversation disappears. But the main thing about firechat, it is that its all of the grid messaging app. It means you can keep on sending text and photos to people around you even if you dont have any Internet Access. So what network does it run off of . So its using technologies of mesh networking. So today when you want to get connectivity you normally get connectivity through your cable operator or your mobile operator. Its a very centralized network. With mesh Network Everything is centralized. Even if you dont have any Internet Access you can still get connectivity. So, instead of being the end points only, people become the hot spots, they become the points where the data gets transmitted. So the question is security, right . If my message is going through the person next to me in the subway or the person passing by me on the sidewalk, what are the chances that it actually gets retained by them or somehow your system gets hacked and messages end up in the hands of people who arent supposed to have them . So the way it works is the messages bounce from one smartphone to another, so its going to reach right person. And thats why in this case of network we need scale, we need a t lot of people. The more people are joining the network, the better the connectivity is for everyone and the easier it is the send messages to everyone. But security is my question. If my message is bouncing to a strangers phone on its way to its intended recipient, how confident can i be that its not going to be intercepted . So, its actually very secure because the information is flowing through one person or several person at the same time. And theres nothing different than just having you sending a text over a Similar Network or wifi network. Its the same level of security. But its interesting because google was sued for something similar to this. They were actually automatically accessing some random users networks when they were building google maps and they they said, okay, we cant be joining these Peer Networks without explicit access to the networks. How does the legality of this network work and do you have to get users agree when they sign up to have their network open to this platform . So its an when you install the application you accept obviously to be connected to other people and have other people to send messages through you. We have first application on mesh networking has been out for more than a year and a half now. We have millions of users. And i mean, we never got any any issue. And i think people understand. They understand that to get better connectivity you need actually to deploy mesh networks. Mesh networks are what are changing the internet. Micha, you say youre adding more than one use area second. Obviously people are signing on. They are using this. They do find value in the service. Im wondering who you count as your users and what type of person ultimately is signing up for this . So today we are even seeing reservation of two years. This network of users is growing, growing fast. And we belief that the main use case for this application is obviously for people to get connectivity in situations where normally you dont have any connectivity. That means in the subway, on the train, or during big events like at the ballpark or at the concert or festival like coachella festival. Well, mesh networking has been around for a long time. Its an exciting idea. I guess my concern isnt so much with firechat but with the trend itself, if the wrong hacker, if the wrong theyer do well spoofs and allows people to get on it they could do a whole lot of damage. Clearly mesh networking is the future, micha. I think mesh networking is the future of the internet and i think the benefits people are getting to be connected because people want to be connected always. Its greater than anything. And this app is going to help people in many different situations in countries where also there is very poor connectivity or where internet is lacking. And so its really, i think, bringing more people to connect together all around the world. And so today we are launching the android version, 15 days after we Just Launched the ios version which really had an explosion all around the world. It was a big surprise for us when we launched it. Micha, thanks so much for joining us. An congratulations on launching on android. Thank you. In about 2 30, were going to get the bells across europe on a day where mario draghi did hold rates steady and held that press conference. Talked about his biggest fear for the continent. Well talk about that in a minute. Minute. Ance. Everybody knows that. Well, did you know bad news doesnt always travel fast . clears throat hi mister tompkins. Todd . Youre fired. Well, gotta run. Geico. Fifteen minutes could save you fifteen percent or more. When my son was born, i remember, you know, picking him up and holding him against me. It wasnt just about me anymore. I had to quit. [ male announcer ] along with support, Chantix Varenicline is proven to help people quit smoking. It reduces the urge to smoke. Chantix didnt have nicotine in it, and that was important to me. [ male announcer ] some people had changes in behavior, thinking or mood, hostility, agitation, depressed mood and suicidal thoughts or actions while taking or after stopping chantix. If you notice any of these, stop chantix and call your doctor right away. Tell your doctor about any history of Mental Health problems, which could get worse while taking chantix. Dont take chantix if youve had a serious allergic or skin reaction to it. If you develop these, stop chantix and see your doctor right away, as some could be life threatening. Tell your doctor if you have a history of heart or blood vessel problems, or if you develop new or worse symptoms. Get medical help right away if you have symptoms of a heart attack or stroke. Use caution when driving or operating machinery. Common side effects include nausea, trouble sleeping and unusual dreams. I had to quit smoking to keep up with this guy. [ male announcer ] ask your doctor if chantix is right for you. Chief International Correspondent michelle carusocabrera, the mixed bag but a lot of news this morning. The dominant news in the european markets coming from the Central Banks mondayly meeting on Interest Rates. They didnt take any action today in terms of Interest Rates or conventional measures that had been speculated on. However, mario draghi, the head of the ecb in a press conference afterward was dovish saying theyre going to act swiftly if required, dont exclude further easing of Interest Rates. He was asked about quantitative easing like we do in the united states. The purchase of debt by central bank. He said there was unanimous commitment by the committee for unconventional instruments including, if necessary, quantitativesing. The risk is Economic Outlook remained on the downside for the european economy. The euro moved to session lows during the press conference. Here were showing you eurozone inflation because draghi and the ecb is under increasing pressure to fight inflation on the downside. Theyre in the midst of a protracted period inflation running below their target. Theres fears the continent could face fullon deplace like japan did for nearly 20 years. During the News Conference drag my revealed what keeps him awake at night. The on going stagnation in the european economy. My biggest fear is actually, to some extent, a reality. And that is the protracted stagnation longer than we have in our baseline scenario. And even so, right now, its pretty severe. Thats economic way to say the situation is far worse than we expected. Carl, back to you. Dramatic press Conference Today out of draghi. Thank you, michelle. We all know that 26yearold aaron levee is taking box public in what could be the hottest ipos this year. But some big names are already in that space. And in that we turn to jon forth. Emc has 57 billion market cap. It is in this space few people know it. Its a business unite called p simplicity. He is the manager of that business unit. You are the player in the same share and sync that box is in, dropbox is in. Youre the Fastest Growing in the space. What customer are you targeting . Enter prizes and mid market customers. If you think about the problem were solving, this is opening week in baseball. One of the favorite american past times. The red sox is a customer of ours. The way they use us is they gout and have scouts going out and taking videos of talent they want to go out and share with everyone. They will take the videos and share those security through simplicity throughout their organization. No different from a Pharmaceutical Company wanting to share Clinical Trial data with the fda or a Manufacturing Firm wanting to share design documents. The problem we start to solve is a simple one. People want to be able to read, edit, access documents and share and collaboration with them wherever they are securely and historically whats happened is people have reverted to consumer great tools for doing this. Emc is a storage company. Part of what impressed me here about your app is that it looks pretty good. Yeah. Let us see it. This is the app. What weve done is weve been obsessed around the User Experience and the delight the users can feel with this. This has to be a better experience in the consumer grade system while its more secure. Ill give you a simple example. When you navigate folders, we thought long and hard about this. You would typically have many folders and subfolders within a hierarchy. Lets say i would go into a folder tree. All of a sudden before ive gone down pretty far down i realize i traversed down the wrong path. Most consumer tools that you see you have to keep hitting the back button eight or nine times. With us all you do is swipe your finger and now you can just go out and take a look at it at whatever level. I want to talk to you about sales and marketing. A lot of money is being spent in this space. You can see on sales in marketing. You are able to leverage emcs, sales force, to do your sales for you. How is that working and you got one customer thats 150,000 seats . Yes. How did you get that customer on at that size . Very lucky to be part of emc. If you think about every kusz her that we go into they start small and expand because of virality and users love it. We started that customer with 50 seats. From 50 seats we went to 250 seats. Then there is a movement going on internally from 250 to 4,000 seats. To 150,000. And sales force gets an incenti incentive, extra incentive, to sell you along with Everything Else theyre selling for emc ask mr. The sales force gets twice as much for selling snycplicity than any other product. Theyre spending 3. 7 in sales and marketing. For us, thats exactly the opposite. Interesting. So the key that i got from you, its going to be an interesting battle Going Forward in this share in sync space. They have really impressive sales arsenals to leverage in this fight. The app doesnt look bad either. People love box but its going to be a tough road to hoe to continue to expand. Thank you for bringing us such a special guest today. The world of tech has never been so funny. A new comedy show Silicon Valley premiers this weekend on hbo. We already have all the tech stars lined up in the first episode. Well tell you exactly who when squawk on the street comes back. I have low testosterone. There, i said it. How did i know . Well, i didnt really. See, i figured low testosterone would decrease my sex drive. But when i started losing energy and became moody. Thats when i had an honest conversation with my doctor. We discussed all the symptoms. Then he gave me some blood tests. Showed it was low t. Thats it. It was a number not just me. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. So. What do men do when a numbers too low . Turn it up [ male announcer ] in a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . How much money do you think youll need when you retire . Then we gave each person a ribbon to show how many years that amount might last. I was trying to, like, pull it a little further. [ woman ] got me to 70 years old. Im going to have to rethink this thing. Its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. Coming up, stocks heading higher again. Is it false euphoria or are we heading for a spring snapback . Then, is eight brain drain from big banks . Were asking the experts after a slew of departures from jpmorgan. As the battle heetsz up, amazon isnt pull anything punches. Were going to look at the players in that game, plug how old tech could give them a run for their money. Its all straight ahead at the top of the hour. See you in 20 minutes. Thanks, scott. We will stay tuned for thanchts we twoonlt get to the cme group and see what Rick Santelli has on the santelli exchange. Were going to look at three areas quickly. And consider the ism data was not bad data. One thing that you have to notice is, especially when it comes to Interest Rates and stocks, that even though that data was pretty good, Interest Rates have moderated a bit. The curve flattening hasnt dissipated. The equity markets as we can see, you know, are down a bit today. So, you know, a cautionary note here, i know there are weather implications that are being alleviated due to clarity on data. But we are significantly higher, not that many months ago on ism. Lets switch gears a bit. To the Euro Currency and the draghi press conference. This is really fascinating now as im speaking lets show an intraday of the euro versus the dollar. You can clearly see weve been talking about the areas around 137 1 2 being pretty good pivot areas. The minute you traded through that you did some damage to that market. If you open it up to a year to date chart you can clearly see that there is some pressure here. Now, will they be a i believe to pull off qe . Hints they want to try to. If you look at spanish yields and the spread to very high quality sovereigns like treasuries it makes very little sense from a funding perspective. And that is the key. Funding. Because i tell you what, yesterday when we were looking at the guilt versus boons, and the treasuries versus boons, both those spreads are the widest theyve been since the end of the 1990s. But a couple of very, very good sources emailed me overnight and showed me theres another relationship on this funding issue that is of particular interest and that is look at the chart 20 years when you overlay, when you overlay the Dow Jones Industrial average to the booned tenyear spread. What you see is fairly interesting because it gives you a very good clue on which way equities are going. So why would that work . I think funding is the issue. Ic i think theres clarity and reality to that spread. When it gets wider no matter what games get played by Central Banks in both markets, the reality is as guilt yields and treasury yields, get their own life back and try to define what the Global Economy and each domestic economy is doing, better rates are going to bring Better Capital flows. Whats going on with the euro and the ecb and potential quantitative easing and potential deflation are all interesting and makes very little sense when you see some of the southern economies yield versus high quality. But i think this particular spread may give traders an edge as to the ultimate direction. And if i just had to take a passing stab at it, both those marks look a little topee. Back to you. All right. Thanks so much, Rick Santelli. Speaking of stocks that may or may not be topee, lets send it over to dominic chu. Carl, this time its vivus. Its taking a hit after Piper Jaffray downgrades the share from 3 to prior 8 torarget. That stock that you can see there is down on todays news. Carl, back over to you. A bunch of momentum names have begun to roll over earlier than we are used to seeing. Its happening on the afternoon in past sessions. Workday, pandora, netflix, tesla. Jon, amazon, close at this level will be the lowest close of the year. Yeah. Its interesting. Theyre spending money on these initiatives including firetv. It looks good. But the market tends to be vacillating back and forth between were exciting at the risky names, they spend a lot of money. I dont know. When the Broader Market hits an alltime high on the s p and dow, it makes you wonder should you be putting your money on the momentum names. Well keep an eye on those names this afternoon. Right now the dow is down about 20. When we come back, rumor has it sergei bren wanted to poach this next company. Were going to meet the founder of muse, the Wearable Tech Company backed by Ashton Kutcher in just a minute. [ male announcer ] help brazil reduce its overall reliance on foreign imports with the launch of the countrys largest petrochemical operation. When emerson takes up the challenge, its never been done before simply becomes consider it solved. Emerson. Silicon valley is coming to your tv thanks to the creator of beavis and butthead a new comedy space. It already has famous spaces lined up. Morgan brennan is live in l. A. With the details. Nerd is no longer a fourletter word on the small screen. Take a look at this. Steve jobs. I heard you. Which one jobs. Jobs is a poser. He didnt even write code. So thats a sneak peek of qu Silicon Valley. Jobs iconic turtleneck look makes an appearance as well. So thor isries is the work of mike judge who created beavis and butthead. The concept here, a programmer work for a google like tech giant creates an algorithm that everybody wants. It opens with a cameo of Googles Eric Schmidt at a party where kid rock is jamming and no one is paying attention. We caught up with the creators at the screening in the valley where judge says theres a lot of real life fodder to work from. The timing seemed good a year ago. Now it seems even better. A lot of stuff has happened in the last year that i wish we could go back. We just did eight episodes. If we do another season, theres a wealth of material that has come up just in the last year. Hbos debuting this on sunday behind the season premier of the biggest show of the network. Theres no real estate for us like the spot right after that. Its a testament of our faith in it. Okay. So how does the real Silicon Valley like this . Reviews are positive so far and craigslist founder who also attended last night called it, quote, honest and funny. Back to you. All right. Thank you, morgan. That looked like a fun premier to go to and an interesting series if one that is slightly fictional but interesting to see how that rolls out this weekend. Its interesting, carl, because she had a reality show about Silicon Valley and that didnt get great reviews. But this one is taking a different approach to it. A minus in entertainment weekly. They call it very funny. As cramer said, if kiSilicon Valley can laugh and themselves. They can. I think its whether other people can find it funny. Silicon valley is quirky but if this is freaks and geeks, ten years later, 0 yea20 years late will be hilarious. You wonder what the audience will think france situatitransi hbo has great Demographic Data because people have to pay to get their service. That is sunday night. Up next on squawk on the street, what if you could control your tv with your brain . Well, that might be more realistic than you think. More on that when we come back. Okay, listen up im reworkin the menu. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. [ bottle ] ensure®. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. Work with equity experts. Who work with regional experts. Thats when expertise happens. Mfs. Because there is no expertise without collaboration. Heres a question. Are you feeling thirsty . Maybe youre sleepy or hungry. Check this video out. Thanks to this new wearable tech you can find out what you need before you even know it. It monitors your brain waves and allows you to use your mind to perform tasks like turning this beer tap off and on. Lets bring in the cofounder and ceo which specializes in noninvasive brain computer interface. She joins us this morning from toronto toronto. Ive heard of wearables but this is more like a thinkable. How does this work . Well, this is muse, the brain sensing headband. Behind the forehead and behind the ears. Slips on like a pair of glasses. It tracks your brain activity and sends it to your smartphone or tablet so you can interact with the world directly with your mind. What are you able to control . What can you turn off and on, for instance . Were at the first stages of control. The real thing that you can effectively control now is your own mind. So you can understand what happens in your mind and learn to manage and monitor your own brain activity so you can perform more effectively. We have done fun demos of other things you can control with your mind like your thought control beer tap which is you focus on it, beer pours, tap turns, and youve got your beer. Weve got thought controlled toasters, thought controlled lighting systems. Thought control is basic now. Its something in the future. The real value and use for the tool is helping you understand and manage your own mind. So, ariel, are you saying at this point you can basically turn it op and off based on whether you have a lot of brainwave activity or in the in the demo but for the most part youre helping people relax their minds . You got it. So in a demo situation you can create a lot of brain activity or relax your mind. Those become controlled signals. In a real situation is because you can actually learn to manage your own brain activity is you can learn to focus your mind, calm your mind, and who couldnt use a calm mind . I think a lot of people would agree with that, ariel. What sort of cooperation does it require on the receiving end . On the beer tap there seems to be a nod chul on the top that is reading what is coming through the brain band. Do you have company that youre working with to develop what Technology Goes on those products or is that your technology as well . All of it is our technology from end to end. Its our own headband software algorithms, full stack. What were coming out with now to everybody is muse calm which is an app that anybody can use to understand their own mind and then learn to calm and control it. We should point out youve raised almost 8 million. Some of it from Ashton Kutcher was amentioned during the break. You were a big hit at ces where people waited as long as an hour to get a chance to try this device. Of those people who tried it, how many wanted to make an order . We had 70 try to buy conversion at ces. 75 conversion. Yes. As soon as somebody tries it, as soon as you put it on youre able to see your own mind for the first time. Youre able to interact and youre able to understand what it does for you. People are just like, get me one. I need one. People would walk out saying things like ive never melt so calm, we feel so in control. I feel like i can do anything now. Reportedly also google not only liked it but wanted to try and buy your entire company. What did you say when you got that approach . Well, we would say that that was a rumor that i cant substantiate. I can neither confirm nor deny. I got a question about the look. If youre going for the wonder woman look, it works. But is there anywhere else you can wear it other than straight across your forehead . Because im not doing that. Muse at the moment is in a headband that fits straight across your forehead. Over time were going to see different form factors. We worked incredibly hard to make something sleek, beautiful, easy to wear. There are silver sensors on the forehead. Bits of gold that help it work more effectively. We worked to get something slim and sleek that most people love to wear. That is where your brain is. I mean, sometimes with, you know what they say about men, but brain is usually up here. Maybe you can pull that off, carl. But i cant wear something straight across my head. Im not going to make a joke. Well figure out which brain you want to wear it on. Were going to watch you, as strange as this seems to some, obviously you got some credibility to work with. Ariel, thank you for your time. Thank you so much. Its been a pleasure if. Cofounder and ceo. I think you got her brain working on that one. We could see a new product coming out, a little bit unorthodox there. Market is near lows. Down 16. We want to send it over to dom chu for a market flash. Check out overall with these particular names. Check out whats happening with the markeding look at whats happening overall with these stocks and one in particular is tarena here. Up 14 on the session. Again, check out those shares. Back over to you guys. All right. Thanks. Come tomorrow morning we are going to get that big jobs number. Of course, your chance to win the nail the number prize. This month its a wireless speaker signed by the whole squawk on the street gang. And as usual you have until a minute before 8 30 eastern to make your guess. A chance to win. Dont forget use the nailthenumber and at squawk street. On the front. Very nice. Well talk about what the number may be after adp and ism services today. The internals regarding employment actually had a nice bump although thats proven to be a head fake in the past. Some people say this isnt a head fake but you cant predict it. Meantime, keep your eye on the momentum names we come back and discuss day after day after day. Workday is a great example. As is pandora. Big gap open this morning. Nice ride for the first hour of trading. Starting to give a lot back. Not entirely. Not every single name. Some of the 3d printing names, jon, are hanging in there. As we mentioned earlier, amazon would be a low for the year off 15 since the beginning of january 1st. Open table is hanging in there nicely, still up almost 3 . King, you know, not crushed by that rough open on ipo day. Its at around 19 1 2. Still up a little bit for the day. But, yeah, a lot of those opened strong, workday, viva, Palo Alto Networks not fairing so well. You got a downgrade of citi and the news that the federal authorities have opened a criminal probe as to what happened in that mexican unit. Youre seeing a weakness and rotation out of financials which had been a winning trade for a long time. Do we have a new google l, just google, the one with the l, the class a shares are doing well today. Up more than 2 . Goog l or goog. Scott wapner, busy hour. This pattern seems to be rearing its ugly head. Were watching rates, too, as you do see a little bit of money going into treasuries which may in part be for why were seeing the stock market sell off a little bit. See you soon. Have a good one. Welcome to the halftime show. Heres whats in our playbook. Brain drain, why is so much top talent leaving jpmorgan and what does it mean for the firms and the stocks future . Throwback thursday with many old techs suddenly new again. Is there a best move to stay in the names or take the money and run . Spring snapback. Is the economy about to bloom . Steve liesman on what the data says about the markets next move. Lets meet the starreder starting