A billion. I did not say that, jim. Youre my hero. You know that. Mark haynes introducing cramer for the first time here. The first time on cnbc. Oh, i loved them. This the networks 25th anniversary. Well bring you highlights later in the morning. Welcome to squawk on the street. Im Carl Quintanilla with jim. Faber is up town at the nasdaq today. Hell bring us key interviews including Morgan Stanleys james goreman later on. Massive day for earnings. Big cap banks, industrials, tech, s p on track for the best week since july. Dragged down, though, in part by ibm today. The tenyear yield crept up to 2. 66. Claims up just a touch. Europe hanging on to some gains before the long weekend the road map will go like this. Earnings, lots of earnings. The blue chips, goldman sachs, Morgan Stanley, am mex and ge beating expectations. Google and ibm reporting quarters that were disappointing. Pepsi profit and revenue ahead of expectations. Chipotle, mixed quarter, missing estimates but revenue beating. Another big day for ipos. David will kick things off from the nasdaq with the first on cnbc interview with the chairman of weibo. First off well kick it off with the barrage of blue chip earnings. Goldman sachs, Morgan Stanley, both beating estimates. Tackle the banks first here. Everyone wants to talk about Morgan Stanley being best in class. Morgan stanley did theres lines. No one thought the fixed income trading anyone was going to do well. Gorman did incredibly well. This was the quarter everyone was hoping from each one of these firms and then they all kind of no one could make that much money in that end. Gorman did. Shot the lights out. People will like that because thats the kind of business we remember as where theres big margins, but lets not goldman, Investment Banking good, equity offerings, someone is making money, they are. M and a, goldman had a good line. Everybody had something good to say. Its funny, i know im picking on these guys and theyre not happy and emailing me already, anticipating, al go rhythmic mind, jpmorgan is now went from being the Gold Standard to being the copper standard, brass standard, aluminum standard. It made everybody look good. The gift that made every firm look good. Everybody beat them on a line. Everyone points to trading, down 21 at jpmorgan, up double digit at Morgan Stanley. Yeah. That will be interesting to talk to mr. Gorman. He has been looking for consistency in earnings, for some time. Still talks about it being in a process at this point they are far from done with, of course, trying to get return on equity in all their businesses including Global Wealth management as well which has become such an important platform for them. It is interesting, isnt it, how fixed income currency and commodities can be so different for different firms and we go back to jpmorgan as jim just did and we have at least some questions, jim, in terms of execution, terms of management focus, that we did not see raised with the likes of goldman and certainly with Morgan Stanley. No. Frankly, just mystified. Having worked on these desks, typically someone midquarter said were just doing awful here. We have to change up. We have to do something different. It was rudderless and i know that this bank had tremendous pressure. When you take a look at bank of america, they havent even really dealt yet with the Justice Department problem. Jamie dimon, what i now feel, i feel jamie dimon was more hands on than i realized. Im sure they will disagree with that. They disagree with anything youre negative on. In the end this is an empirical business. They got the l, Morgan Stanley got the w. You want to cover industrials. Tackle ge, back to form by beating by a penny after a couple of inline quarters. Revenue a bit slight. Industrial revenue up 8, industrial profit up 12. Ge, you used the word industrial three times. You know what, when was the last time we thought of ge as an industrial. Better start thinking of it now. Aerospace, oil and gas, power, these were extraordinary and this is the breakout quarter ive been waiting for. Jeff immelt is not going anywhere after he puts this kind of quarter. This what is were thinking one day they raise the Gross Margins, they raise it big on industri industrial. Listen half a basis, half an Interest Rate point to use the language people at home know. I have to tell you, carl, we all felt at a certain point it would get out from under the shadow of finance. They did it this quarter. This was the only line that i didnt like was health care and no longer that big transportation a bit weak. Those are noisy from quarter to quarter. Exactly. Lumpy. And theres lumpy orders for aerospa aerospace. The growth areas of the economy are aerospace and oil and gas. Unless boeing were to buy schlumberger right now you have the two parts of the economy that are on fire and ge will dominate. David, ge capital earnings flat. Some people still argue that that separation and divorce cant happen fast enough. Yeah. Although it still could be a difficult one to accomplish in terms of at least the multiple that would get were it to be spratsds fully would probably be far lower than the multiple it receives as a part of ge. Thats always been a question mark. Certainly we know carl, over the last couple years without a doubt, they have reduced the size of that unit significantly and that seems to be part of the strategy. Not that it isnt a contributor and important one and not that by the way it cant add a great deal to the bottom line when things are good, but certainly we know the volatility is most likely not something they want to see in the future and hey, it was only five years ago the stock was below 6 a share. I know. Due almost solely to concerns about ge capital. Of course at one point ge almost couldnt roll its commercial paper in october of 2008. That was pretty concerning to. One of those highlights well be looking at later on in the day. Maybe get emmerson mobile. I used to talk to jeff immelt one times you will get 18 times multiple if you get rid of the finance. You have a bank multiple. Goldman sachs is trading like just slightly above book. Goldman when it was private was considered to be just on fire. The multiple at goldman is so low, the multiple at ge will go higher, david. Right. Whats worth paying for at goldman. You know, given what weve been through and it still were talking 25 years today, go back five, whats it worth paying for a financial because we dont really know its there. One two times book. I know. Lets get to some of the tech stories. Googles First Quarter revenue did fall short of targets. Stock will trade lower in the premarket. Ibm reporting its lowest quarterly revenue in five years as hardware sales fall on google, costs, r and d 31 year over year as they move into areas not part of the core google business. Im going to give you a wrap on google. First the stock was down 35 points at one point. The dilemma people face, portfolio managers, in the trenches every day. They look at this number and realize google doesnt help your model. The analysts werent able to model correctly. Really good people like jordan rohan, bob peck at suntrust, guys i trust. However suntrust keeps a buy on it. The growth in google is 19 . The multiple is roughly 19. 17 on next years numbers. Bristol myers 14 growth, 27 p e. Chipotle, later, 22 growth, 44 p e. Pane panera. This is an algebra question. If you guess 19 growth, how can you not pay well at least 30 times earnings . Cocacola here cocacola has 6. 7, pepsi claiming 7, and cocacola sales at the same p e as google. How is that possible . Google is going higher. I said it. Multiple of google is going much higher. In the next two weeks. My travel trust tried to buy some last night. Its going much higher. Extraordinary quarter. The analysts dont know how to analyze it. This will be the quarter, by the way, they are going to get you, mark my words, they are going to get you more dollars per ad on a mobile phone than they are desk top. This was the quarter. He basically said listen, guys, Everyone Wants it on their cell phone. Get the 5. 1, 5. 6 inch factor, Everyone Wants their cell phone and if they want it, google will control it. I would just buy it. Just buy it. On ibm, guys, 2. 54 was in line lower than expected tax rate, obviously lower share count, thats going to take 50 points off the dow this morning. Thats going to be down as we see perhaps as much as 5 . Its interesting ive been trying to get to understand this company over the last few weeks. Carl talking to a number of hedge fund managers. The conversation always ends up being, i was short it, i might get short it, ive been short it, staying short it, ive covered. Nobody ever talks about buying this thing. The concern, of course, has been with the transformation that it is taking place under current ceo jen my ra metty and whether or not that is something that is going to be successful. Important year for the company. Read the annual report. All they are talking about is big data and an lytics, cloud computing, security, social, mobile, all those things we hear about from so Many Companies but ibm is doing it. Its just how quickly can they get away from the old hardware business. Dont forget all the divestitures that have taken place including the lowend server business that will soon close. The sale to lenovo. So much going on, but talking 450,000 employees. Buy that one too. This is one enormous company. Buy ibm. Buy ge, buy ibm. Warren buffet loves it. Buyback for real. Second half going to be stronger. This is the transition quarter. Read the canopies. You sound like cantor today. I dont like it either. But you have to buy it. What did you eat something this morning . Whats going on with you . I had on the right side of the bed. No. I had i didnt even have my granola, julie didnt send me the granola you promised me. More about those companies. Also chipotle and pepsi later today. When we come back dubbed the twitter of china, weibo begins trading at the nasdaq today. Well talk to the companys chairman after the break. Also ahead, an exclusive with the chairman an ceo of Morgan Stanley, james gorman. You did not want to miss that. Nice hat trick for the Investment Banking business. Futures trying to get out of the red with the anchor of ibm. More squawk on the street live from post nine in just a minute. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. The chinese micro blogging site weibo is going public today. Priced at 17 a share. That was at the low end of its range and also reduced the size of the overall offering. Joining us first on cnbc, charles chao, the chairman of weibo. Nice to have you here. Thank you. You brought i dont know if we can show it, you brought quite a crowd, a lot of people coming from china. Exciting day im sure. Yeah. Charles, speaking to some of the people who may have seen you on the road show or know the company, their main concern they expressed was one of user engagement. Right. The growth rates for which have been slowing and there is concern there. Address that concern for me when some would say, i just cant get a sense of future growth because im concerned that user growth is slowing and engagement is slowing. Right. I think its a general concern on the road and we understand the concern and if you look at our history, i mean we only have been in this market for more than 4 1 2 years. And we have grown very, very rapidly in the first two, three years. Partly because we were the first sort of the social media kind of product in china on the mobile and they make us very, very powerful, popular in china, but on the other hand, there was no competition from the beginning. But and as competition becomes more intensified, naturally there will be some kind of dilution in the market in the usage. Were not talking only about social products from other than mobile app, but also as a product on mobile app, gaming and video, so inevitable that our kind of market share. So we did see some slowing down in terms of growth rate last year. But as we begin to refocus our purpose, our effort, on the user growth, actually we see tremendous coming back in terms of the growth rate. I mean if you look at a number in the First Quarter, it was a big jump. Right. And we see the momentum going as long as we can execute our strategy right. If you look at entire market in china we are big, but only account for probably 25 mau on the mobile internet. Monthly average use spheres right. But if you look at mobile mau in china for the internet, right now, but entire Addressable Market is 1 billion. There is a lot of room to grow basically. And there is competition now. We always in the states like to compare whatever company it is to a company here. Sure. Weibo is the twitter of china. Right. Is that a fair comparison . Well, to some degree. I mean theres a lot of similarities between these two products in terms of functionality and a lot of things. But also a lot of differences. For example, from the very beginning, we support multimedia. From the beginning we actually i mean incorporate long form content actually into our platform and also i mean, our features are different. Were not only allowing people to post, reposting, but also allow people to make a comment liking something and also make a comment when they repost. So make our product much more engaged, much more conversation. It is in some ways a much more product, and allow content because its more international multimedia, and i think this is i will say that its similar but i think we are probably more so in terms of, you know, the diversification of the usage basically. In your filing you describe weibo as combining public expression and powerful platform for social expression. Public social expression and china and the government and censorship, some told me wee po was a robust platform, the tragic train accident of a few years ago. Sure. And the government may have curbed that selfexpression and that may have hurt weibo. Is that true and is that something that investors should be concerned about in the future when it comes to china and the prc and regulatory authorities . Sure. I think theres a general perception here that theres a lot of control of content out of censorship here. I mean granted, i mean i think theres a degree of content control in china but this is true for any other countries except i mean maybe you probably will apply different kind of law, the regulation might be different, and there is no exception in china. If you look at weibo at history or Chinese Media history, in general i think it has been growing very fast and also, in general, it is a very free platform. I mean especially the first platform for Chinese People not only to express themselves, they can anythi they can publish ag they want and dispute anything they want. Our platform is to understand the market and how to comply with the local law so we can actually move this platform more effectively within the market and so i dont think i mean theres major things people should be worried about. Final question. Alibaba is going on 30 of this company. Likely at some point alibaba would want to own all of weibo . Thats probably not question for me and currently, after this ipo, still controlling Share Holding position and have power, control its entity and we believe that a lot of synergies between these two platforms, weibo and alibaba, essentially it is a huge ecommerce ecosystem in china and social and mobile platform and together we can do a lot of things in the mobile internet stage and we try to create a mobile social ecommerce kind of ecosystem together in china and i think theres a lot of potential behind it. Chao, got to leave it there. Thank you. Good luck today. Well be watching closely as weibo opens for trading. Another chinese internet company, if you will. Charles chao joining us, chairman of weibo. Back to you. Thank you. When we come back cramers mad dash, count down to the opening bell on the final trading day of the week. Futures as the market absorbs earnings from goldman, Morgan Stanley, pepsi, ge, american express, dupont, you name it. Were back in a minute. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Little Janet Jackson songs from 89 the year cnbc debuted. 25th anniversary today. You know how much the s p is up since we went on the air . No. 517 says Brian Sullivan today. Because of the fed. You know, just the fed wayward action and i resent it and i would like to reveal that. The fed, its all unfair. Beginning to sound like our twitter followers now. I mean its unfair now. People made a lot of money but its not right. Jim, we got so many earnings weve not gotten to, pepsi, 83 cents, beat 75. Revenue up. Their volume on beverage couldnt match cokes which was our question earlier in the week. Right. But the volume wasnt that bad. The snack business is really on fire. They got 3 growth worldwide in volume. Volume is not off a cliff. I think pepco decided were not just going to put out a lot of soda and lose money. Theyre far more oriented toward the Gross Margins were good. China is a different picture because theres problems with a partner. This was a quarter that give you enough to say i know nelson peltz isnt happy but im happy with a stock that went from 80 to 86. I like the quarter. I like the fact that the company has a real grip on their Capital Allocation which cocacola had unbelievable capital aloegation. Organic revenue up 4 in the quarter. I have nothing to complain about. I have some things i like. North american frito lay, up. Its tough. Look at these Companies LikeGeneral Mills and kelloggs. Yes. Look at clorox. I mean when you get a 3 handle, theyre all pretty happy. Im not going to say that pepco is doing badly. I wish, you know, do i want the company to split up . I want the company to do whats right. This number seemed good from me. Im sure well hear from nelson peltz saying it could be better. A 13 handle on chipotle. I have to tell you. A 13 handle. Certain things happen. I have been saying, can they do 9 which was the last quarter. The average guy is lucky to do 3, 4. Its fast food quick service. 3, 4 . 5 is unbelievably good. I mean 5 is amazing. 13 , its just not possible. I shot them an email. Must be a typo. Has to be a typo. Its not possible. The earnings per share not as good because the costs are going up. Doesnt matter. Anyone who looks at anything other than revenue here and samestore sales is ought to just go look at a tool and dye company. This is a Great AmericanRevenue Growth story and food costs are up 150 basis points. Higher beef, higher avocado and did it matter . No. Cheese as well. Cheese. And then operating margin at the restaurant level, 25. 9. But given Everything Else thats pretty good. Yeah. Very hard heres one, they are making it up in volume. Look 13 . I dont have any company in any Retail Business of any way that had plus 13. I dont even have any double duj it. No. Im sure mcdonalds looked and said why did we sell this . The company upping their guidance on comps for the year, looking for high single digits. Perfect. Dont set the bar so high you miss it. Stock is off 100 points. In the last few days we see this reversion out of growth into value. Mcdonalds slicing through 100. Chipotle down 100. Chipotle is i dont know how you do it, guys. I dont know how they do it. Mostly on traffic as Herb Greenberg pointed out this morning. Not so much on price. I feel that bar san miguel, not delivering. Im cutting numbers. Brings us to the larger question of the markets. Did we need a bigger toilet flush earlier in the week or is that tradeable bottom in do you think for now . These companies, look, the strongest Tech Companies, thats a great question. The strongest Tech Companies today will be the ones most heavily shorted. Sandisk, western digital, micron coming back. Its seagate and why . Because old tech is still doing better than new tech. Thats something to watch. I mean, one of the reasons why i said ibm is going to be fine because people want earnings per share, cash, you know, returning cash. Ibm is going to do that. Do i like ibm no but recognize the offering. Its the old tech standing out still. Hewlettpackard will probably go up. You need to see salesforce. Com and concur and work day really put in a bottom and you need to see the Insider Selling an the deals. The Companies Going up have no Insider Selling, not trying to get venture capitalists out of the stock, buying back stock and the multiples are low. Does bring us to weibo and davids interview in the last block. All eight ipos this week have priced either at the low end in weibos case or below the range. Thats what has to happen. Think about moelis the deal that came yesterday. That guy is a banker. What does a banker want to do . He wants a good banker wants everyone to win. You buy it. Thats what moelis said with us. Thats the oldfashioned way. We got away from that and the last pricing for ally and the pricing for king, these were awful. I mean made no sense at all. Shame on you guys. Im saying listen, if you see them at the supermarket throw tomatoes at them. I said that. Im not saying that. Not this time. Do a better job. But im more of a diplomat. That was the old days. Sounds like theyve gotten religion slowly over the past couple weeks. Dont be agnostic. The final bell of the week ahead of the Easter Holiday. And a look at the s p at thep top of your screen. Down here at the big board, leju, a holdings celebrating their ipo and at the nasdaq as we said, chinese social media platform Weibo Corporation celebrating its ipo. We talked to the chairman. Ticker is wb. And as we said earlier there, 16. 8 million shares priced. We were looking for 20 million. The range was 17 to 19. My favorite tidbit in their prospectus, criminal sanctions may come upon users who tweet things that disrupt National Unity. Thats the way business is done over there. If google were to embrace National Unity the stock would be at 1,000. Google is against google has this free speech thing. Yes. These other guys not seem to be as oriented that way. You said the words sandisk, micr micron, all those names will lead the s p at the top. They sell it like a gazillion zero times earnings and not a lot of new capacity coming on and the companies are all heavily shorted by smart guy hedge funds saying listen, the pc is going away, the tablet is going away. All that matters is the cell phone and its actually quite the opposite right now. People really, really want old tech. I still believe in google today. Youre going to be its going to be under pressure. Im thinking three weeks from now google comes back because its not that high a multiple. Ibm looking at the dow and thinking the markets weak bear in mind a lot is going to be driven by ibm. Aircraft carrier. Think of Aircraft Carrier, turning an Aircraft Carrier around its not a speed boat, its a gigantic company. Im saying next year at this time the company will look different and some are saying warren buffet is not liking the stock. I listen to warren buffet. Hes a big believer in returning cash flow. The cash flow perfect, no. Many flaws in the story. And thats why i buy them because the ones that were flawless go into this quarter are the ones that crushed. Yeah. Signings weak, book to bill was weak. Pointed out cantor says the profit cycle will turn in the second half. Thats what you buy it for. Dont buy it for now. Why did this stock go up all the way from 179 to 190 and change . Well the reason was because Everyone Wants to get anticipate on the big cycle. This is cater pilar, cater pilar at 85. All the commentary since caterpillar was at 85 is all bad. People see a cycle coming up. Caterpillar at 103. Nothing good is happening from 85 to 103 except the stock went up. I care about stocks. You know what, cliff lee pitched a better game than whoever was on the mound for atlanta. He lost. I dont want to invest in lee. I want the team that won. I dont want tuna with good taste. I want tuna what else is not going to work our insurers, unh, the second worst performing dow component. I mean, lacking of growth there. Those stocks have been real places to hide no ones hiding in them today. And i dont know. I mean ive got to do more sometimes you have to say, carl, that was the conundrum for me. As soon as this show is over i have to break that down. That group had been a leader. Et nat had not been leading but unh had been a star. Humana had been a star. Lets do more work before we opine on those. Dupont did meet and affirm for 2014. Seven cents because of weather on their ad business mostly. They do. Ag does react to that. What Herb Greenberg said, the weather was must have been nice at chipotle. Just like they must have had kind of like a ray of sunshine. Where the weather was terrible. And some are located across the street from chipotle which means you can just see the sun shining on the north an i mean really chipotle just said, hey, guys, weather, not really a factor. Couple analyst calls, netflix does get upped at pacific crest. Yeah. Target is 500, their bull case 760. You know look im down on the high ever since the qualcomm thousand dollar price target. I have a problem with that piece. That piece is basically saying look international will be great. Thats been the case for a long time. The world series over there . Yeah. Leju at post 11 is exceptionally loud maybe because its close to the set. Good for them. I like a little spirit. Wait for the opening trade. Finally some news on yahoo more talk about them wanting to be the default platform for items like the iphone. Of course Marissa Mayers pay getting some buzz yesterday. I still think theres room for everybody. If you really think google is not good just go short yahoo . I dont want you to do that by the way. Google is the quintessential good growth low multiple stock. Something clearly happened. Thats very valuable, isnt it . Take a look at leju at at post 11. Quick 8 pop in the name. 10. There it goes. And opens at 10. 52. That will put a cap on what has obviously been a busy week for ipos nehere and the nasdaq. The ipos are the problem of the market. I reiterate that. All the pressure in biotech. Youre talking about stocks that are way, way below the multiple now of old pharma. Thats because when you walk across the street you get hit bay prospectus thats a biotech. One of the fears going into the quarter for all companies was that guidance would be weak. You havent seen a lot of downward revisions to the year. No. Thats what even ibm, everyone says its downward but sticking by the number. One of the reasons i have faith in the company. There havent been. That was supposed to be the hallmark. A lot of revisions down. We do see some Companies LikeUnion Pacific did not report great revs and that is getting hit today. Csx felt revs werent that great. How many times do we come in, alcoa slashing numbers, intel slashing numbers. J j, pepsico. No all those were good. Schlumberger did beat by a pepeny and dont think weve done ammention. I felt sum ber jay was mixed. Schlumberger. You have these businesses year over year you have to look at. Schlumberger ran more than any company i follow into the quarter. I like schlumberger. Everyone liked it going in. That makes it a tougher call. Ultimately the stock will be fine. Yeah. That company is well run. We mentioned goldman at the top and the 11 drop in revenue. John carney wrote its the fifth Consecutive Year over year decline in q1 fick which is interesting, right. And prop trading too. The lowest since lehman. We dont want that. I dont know. I get a little frustrated with goldman because what was great at goldman when i worked there but that was many years ago where the departments that arent doing well now. But i think that you bet against goldman with your own peril given the fact that the book value is low. People want Morgan Stanley. They want that just consistent good gorman trend. These guys didnt give it to you. And, of course, james gorman will be with david facebooker e in faber in an hours time. Dominic chu is at the floor. Picked a busy day to come down. Right next to you at post 11 over here where leju opened up trading at 10. 80. Quick 8 pop for stock. Down now to about well call it 10. 33. 3. 3 gain. These guys priced 10 million shares at 10 bucks apiece. The low end of that range. Lejust the zillow of china. Weibo the twitter of china. Does real estate listings for chinese properties. For the ipo picture overall this week we had 12 ipos expected to come out and price. Only ten did. Two pulled. Among those ten all ten of them priced below the expected initial midpoint where they thought they were going to raise money at. Out of those 10, 8 priced below the range expected. With the ipo system the way it works right now, we were expecting big pops all over the place. Weve seen that tail off now and what were seeing for demand here is yes, you price below the range, sometimes you get a modest pop but the last real one we saw a massive pop was zoes the first day. Overall this ipo landscape is slightly different than it was a month or two ago which maybe tells you something about how investors are viewing. Thanks so much dominic chu at the floor. Lets get over to the bond pits. Rick santelli in chicago. Some of the treasury complex had a wild ride. We will get to it. Two day chart of tens. I like two days. Old floor trader, yesterdays range especially the extremes are very important so yesterdays high yield 2. 65 up there a few times. Theoretically popped through a bit. The pattern is in place. We seem to come off that level. Year to date chart reveals the significant area to the marketplace right now is the lower bonds of the range. 2. 58 to 2. 60. If we want to see what happened on the excitement i was talking about look at a two day chart of the spread, 5s minus 30s. This thing has flattened almost ten basis pointses. The catalyst well keep Interest Rates low by janet yellen yesterday, the market pushing back a little bit. If you open this chart up that has caused a fresh new flat that comps that was roughly october, move back a couple weeks towards september of 09. September of 09. This is something we need to continue to Pay Attention to. It has implications and especially has implications on simple things like difference between choosing a fixed Rate Mortgage versus a floating Rate Mortgage, flattening curve, probably put you more into the fixed rate mort again. Foreign exchange. You know when we talk about the dollar yen you have to be cognizant theres consumption issues after their tax increase, lots of stories about that today and well be hitting that hard on the santelli exchange. Pair it up, if you pair it up year to date with tenyear rates the dollar yen you can see its tracking extremely well. That is kind of how the trait fits into the leverage which fits into the risk trade. Talk about going nowhere fast. The dollar has had volatility against things like the yen and lesser extent the euro, the dollar index hovers unchanged on the year. Carl, back to you. All right. Rick talk to you in a while. Rick santelli in chicago. When we come back, Morgan Stanleys chairman and Ceo James Gorman will join us live for an exclusive interview after the banks results earlier this morning. Thats coming up a little bit later. Were back after a break. After. 1k3w we learned that Technology Allows us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. Today were celebrating 25 years here at cnbc. Mark haynes was, of course, a major presence at the network. Heres a look back at some of marks best moments. Good morning, everyone. Im mark haynes. Youre watching squawk box. Were back, things are looking grim. Over here. Theyre over there. Youre pointing to that one but this is the one its on. Any idea how hard it is to get pin stripes to match this. Were not going to fall for it. Just listening to this going on next to me is making me ill. Tell the producer to stick it. Ill tell you what, there are viewers who have been watching us for decades, david, who will remember that ketchup with the fry, the day heinz brought in the colored ketchup, classic moments only the way mark could deliver it. I remember so much, yeah. You just saw, makes me smile of course. We miss him a lot to remember those days. Starting squawk box, which was at the time anew. There werent a lot of people sitting around a desk going over the news of the day trying to provide analysis in real time. I can remember it so well. I remember one story, at t breaking up into five pieces. Me and joe sitting there going what . And reacting to it and sort of at that moment, but that was a new that was a new paradigm to use a word from back then as well. God. Some great memories. David, you remember, i mean it was ridiculous to watch tv at an office. And then suddenly it was ridiculous not to watch cnbc at the office. Thats a good point. David, of course, you celebrated 20 years at cnbc. And our producers have assembled a look back at your time as well take a look. Hasbro was delivering all the blows. Boom boom. They were scorched earth basically and mattel was just taking them and they didnt come back. Everyone was waiting for them to come in do a little here, there, maybe a body blow, nothing. Oh, my god. Sorry. I know. How do you do it, david . You havent aged. Youve gone back in time. Carl, are you kidding me . Come on. Did you see that boy there. By the way, that tie, thank god weve gotten some help on our ties. That was frightening. But, you know, i still got the hair. At least i have that going for me. Yeah. I dont know where they pick these clips i dont know where they find these things. That wasnt necessarily any sort of a highlight but there had been plenty through the years for me as you well know. Whether it was starting squawk box or breaking mci and British Telecom the first story broke on our news on our air or starting documentaries, being with you guys, going through the crisis, i mean i can go through so many incredible times that ive been able to be a part of here for the last 20 of those 25 years that cnbc has been on the air. Yes, there is. Yeah. Always know and knew when david had a big one coming to air because the tension in the newsroom elevates by about 2x. Congratulations david. David changed also you mentioned the word paradigm. News used to be broken by newspapers. Ive seen where a newspaper did beat him you dont want to be with david when that happens. David breaks the stories. Newspapers write the stories after. Well said. Well the world has changed a great deal. Now i break stories on twitter, right . It is a very, very different world than when we started, when i started 27 years ago as a journalist but 20 years ago on cnbc as well. Now you give it for free. News was still in the newspaper the fex day. Remember when you used to get paid to write. Now you give it for free. You give away your talent for free. Yeah. Yeah who knows whats to come, jim. We have to pace. The change continues. Well get stop trading with jim in a moment. Dow down 3 1 largely on the ibm weakness. Back in a minute. Back in a minu. Ive always kept my eye on her. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still gonna give me a heart attack. Thats health in numbers. Unitedhealthcare. Bulldog [yawn] bulldog i just had a dream i was at mattress discounters with tempurpedic and the Largest Selection of memory Foam Mattresses under one roof icomfort, by serta. Optimum, by posturepedic. Ahh comforpedic, by beautyrest. Ooh 48 months interestfree financing, free delivery, and queensize memory Foam Mattress sets as low as 697 thats more mattresses than you can shake a bone at. Mattress discounters trwith secure wifie for your business. It also comes with public wifi for your customers. Not so with internet from the phone company. I would email the phone company to inquire as to why they have shortchanged these customers. But that would require wifi. Switch to comcast Business Internet and get two Wifi Networks included. Comcast business built for business. Time for cramer and stop trading. Watching these oils all week. Holy cow. Schlumberger the one i usually focus on, i always look at big news at the end of the day. You cant. You have to look right now. They are on fire. What is going on . Its north American Energy renaissance. The Texas Petroleum numbers came out yesterday, highest since 1980. 2. 75 Million Barrels a day. I think well get back to when texas was king of oil maybe in the world other than saudi arabia and United Arab Emirates and venezuela. If its the per me yan, it is pie fear, it means its core labs, you need core labs to measure the reservoirs. Again coming back to this but i have to, eog. Texas is going to be up there with saudi arabia. Thats amazing. Whos under exposed to texas. Who would you not want to follow into that. Chesapeake, some of the nat Gas Companies arent there, the ultras, theyre doing fine, but, you know, if you want texas, you want pioneer. Thats a good one to watch. Preaching that gospel for a long time. Pioneer came on and said look, were on the second biggest second largest in the world weve got it a lot said to me, what are you smoking . Core labs would be saying you know what, theres oil in them there hills. I have to do my shows from the per me yan. I told my executive producer were going to marfa where they filmed the movie giant. Really . James dean. Of course. Up if the car. I always use the kid david faber, he looked like John Garfield and it was, John Garfield. Youre not going to the per me yan tonight. No. What is on mad tonight . Snappon, another company that keeps shooting the lights out. Best moonie reported a terrific number and then maybe the key to the market, when will con ed start going down . If con ed goes down the rest of the market can rally. Con ed is a good company well talk to the ceo. In general you like the fact that we did not open up big today. Yeah. We cant. We were up for three Straight Days you need a pause. Bad markses go up four or five Straight Days and the short comes out and win. Good markets take a couple days off. Were taking a couple days off. Take off today, maybe monday. I dont want to see the market straight up. Google im reiterating not today but next couple weeks you will find google back. Not today. People are saying hey, maybe its not as good as i thought. Say we get back to a 200 day on key names. Do you wow. Easier exit are you out . Well, i think on some sectors we kind of learned our lesson on these high multiple stocks. Really. In the end the bankers will come back and flood us with stock and the insiders want out. But this is a very daunting rally in sandisk and in micron. Meaning that people really want the low multiple stuff. That hasnt changed yet. By the way, a lot of the financials that were seeing doing well are low multiple stocks, low multiple priced earnings stocks. Keep that in mind. Thats what people still want. Okay. Fulcrum name is facebook. My travel trust owns facebook. After google, what people are going to say is wait a second, it doesnt really matter, that the numbers arent being crushed. The guys crunching the numbers are old companies, not new ones. Get rest. We will need it next week. My 25 years. Jim, well see you tonight, mad money, 6 00 p. M. When we come back exclusive interview with Morgan Stanley. James gorman will give us his first reaction to the banks quarterly results. And the ceo of Fifth Third Bank will join us. Us. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. 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Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Make a my financial priorities appointment today. I hate when my computer gets grouchy. Its probably due to lack of sleep. Set your computers to hibernate after 30 minutes. The rest will do it some good, and save energy. The more you know. Welcome back. Earnings this morning and the dow dragged down by big ones like ibm. We are down about 47. Sara is back, thank goodness, from vacation, looking at consumer names including pepsi which had numbers today too. This is interesting. A strong report out of pepsi and an eagerly awaited Earnings Report as well. See the stock Market Reaction up slightly off the highs of the session. Eagerly awaited i say for two major reasons. Number one, the secular decline in the soda business and numbers have shown it is getting worse. Also pepsi under pressure that has only intensified from nelson peltz the activist investor from try yon to break up businesses in two. What pepsi delivered was proof they say that the power of one exists. Keeping the beverages and the snacks under one roof. Earlier hugh johnson on squawk box and says every shareholder should be happy with this report. Wouldnt address nelson peltz by name, he owns 1 billion worth of stock, about 1 , bring you through some of the highlights of the pepsi Earnings Report. It was a beat on the bottom line, top line. Organic revenue rising 5 for snacks globally, 3 for beverage. That was certainly better than cokes earnings a few days ago. Emerging markets in europe also came in better than analysts were expecting. To break it down the one weak point carbonated drinks, weve seen this across the industry, declining 1 in north america that could be something that nelson would point to if he ramps it up back again. He has intensified the pressure. The stock by the way has outperformed the s p 500 so far this year. Yes. That was cramers point that peltz may be unhappy but he kind of likes whats happened. The stock has been up since nelson peltz started agitating as well. See increased volatility around that. Rick santelli with breaking news. Rick . April, philadelphia. Fed business read is 16. 6. 16. 6. This is a strong number. And it does auger there is in certain areas, especially some of the manufacturing data, a weather bounceback. This is the best level since july of 13 when we had a number of 18, but maybe even more important if you look at some of the internals on the employment index, 6. 9. Thats multiples of the 1. 7 from our last look. And new orders we always want to see whats in the hopper, 14. 8 versus a whisker under 6. In our last look, so this is a good number. It really in many ways augers the notion we need to see a lot of Inventory Data eventually. The big inventory bills are is the consumer demand going to be there. These numbers are very important. They also give us some insights potentially into the next jobs report. Back to you, carl. All right. Rick, thank you so much. Of course it is a big day for cnbc. Were celebrating our 25th anniversary on the air looking at some of the big moments in the last quarter century. We have great ones from you, rick. Ill tell you its been a heck of a run, buddy. A few rants coming up. Cant wait for the coverage. But now what we do best here, the markets. The dow, s p and nasdaq down for the first day in four. The stocks lower across the board. Lets bring in david with deutsch bank and anders, Jpmorgan FundsVice President and Global Market strategist. David to you, this is a strange market. I think i need to go way move often. Coming off the best three days in two months. Big moves, little catalyst, whats driving it . Been a wildly volatile month in april. The s p swing 5 in less than two weeks, many investors are confused about the macro outlook. Will things accelerate strongly or muddle along and what does that mean for Interest Rates . I think 10year yields thats the real debate going on with investors and earnings season, usually earnings season is supported for the market. Companies earned not missing tremendously but actually i would tell you if you look into the lower layers of whats going on, its a real soft earnings season. The average weighted is less than 1 and the average way to be for financials is less than 2 . Weak year on year Earnings Growth. Comes back to the sub 3 growth outlook. Anders, do you think the Earnings Growth or lack of it as david mentioned is good enough to keep the market moving higher . In the short term hard to tell. We think for this year we do expect Earnings Growth to be around 6 to 7 , mostly led by Revenue Growth. Which we might not see until the economy finally starts to ramp up in the Second Quarter, Third Quarter of this year. What about tech stocks, david . Theyve been beaten up lately. Youre starting to see knock on effects on startups, ipos. Can you go into the smaller cap stocks and search for growth . The small cap rotation or the rotation from the high p e to lower p e stocks has been part of what the volatility is about this month. I actually think theres more of this to go. The reason why is, i mean obviously the small Cap University is a large universe. Pick your stocks well you can do well. The Overall Group of stocks say the russell is that valuations that i think are overly dependent on a combination of strong growth and Interest Rates staying low for a long time. I think thats wishing for a little bit too much. You heard janet yellen, doesnt sound like Interest Rates are going higher. Growth will be relatively moderate. Is that a good scenario for the stock . For the mega caps in the s p if growth is moderate and Interest Rates stay low we can argue for higher p es. So investors need to position for their view. We should bring the International Picture into the market. Andres, you like european equities. People here down here on the floor are talking about russia, talking about the ukraine, situations not getting better, involves u. S. Relations with russia. How do you price that geopolitical risk . Hard to see where its showing up . Very true. Unless youre a ukrainian general its hard to know where this is going. I think there is going to be higher volatility in the next couple months, but if you think about it, long term there are three drivers for the market, right . There is Earnings Growth, multiple expansion or contraction or dividend yield. Look at the u. S. You have multiples, valuation a little more attractive, Earnings Growth probably double digit in the next couple years, and by the way dividend yields are higher there than here. We have High Conviction in european equities and although the ukrainian situation increases risk, the side for a longterm investor is still there. David, you talk about the enthusiasm out of these names given the relatively stayed economy. Net net is that going to be a positive we brought stocks in to match what the economy is trul i doing . My best take on this the s p belongs under 1850 right at this moment. As we watch how this combination of acceleration whether it happens or not affects the Interest Rate view, and i would tell you i feel like everybodys doing their best to justify a scenario, how we can get maybe a 5 further gain from here, get to about 2,000, maybe 12 months. Lot of targets still. European strategists, he believes that europe is lower. Probably gains three times as much. Thats what i would tell investors. The u. S. Has done really well and theres other opportunities beyond u. S. Stocks. Do you trust the foreign guidance out of the fed right now . I trust as much as they trust. They remind us every day its data dependent. Went to the lunch and felt i got a good reminder. I think we know the future, 2011, 2012, expected acceleration an we were relatively disappointed and we had the fed doing everything they could and adding more accommodation. I just its no time for complacency. Time to watch the data and i think the s p she did say the danger still that inflation under shoots than overshoots. The mind is coming from the bottom of that picture. By the way, even if the actually are behind the curve when it comes to inflation, lists, remember that inflation is still below 2 . Even if it starts to rise historically has not been bad for valuation, not been bad for stocks the reason that inflation is rising because the economy is actually improving. So too early to price in normalization in fed policy. Over time we will see normalizati normalization. The question Second Quarter of next year or Third Quarter for longterm investors we think equities still have upside from the levels even though we probably will see more volatility along the way. You like india too, finally, a bright spot in the emerging world. Within emerging markets there is still opportunities. For the asset class i think china will hold it back with headline risk. India is one of the gems, they have an election year, seems that the party might win this thing and theyre more investor friendly could unleash Economic Growth in a country that should be growing at 7 or 8 . David, final word . Best idea, i think the part of the market at least at risk to a moderation of growth expectations or more rapid prime in yields is a big cap banks, big cap tech stocks and tech has been under pressure but mostly the smaller names and i think thats where the opportunity is. Big stocks in the s p. Sort of that rotation theme. Plays that a little more. Good to see you both. Thanks for the tips and market commentary. It has been an interesting one, david and andres, good to see you both. Sabre opening for trading at the nasdaq. Lets see the opening trade. Well go over to Bertha Coombs with an update. All right. Thanks very much. Lets see what are we looking at here . Taking a look. Were looking at walmart at the moment. The retail giant says its going to launch a Domestic Money Transfer Service called walmart to walmart let its customers transfer money to and from more than 4,000 walmart locations. This will be in direct competition with Western Union in another Money TransferCompanies Moving down on the news. See walmart fractionally some of the others are getting hurt on that. Carl, certainly will be very interesting if that goes on as a remittance situation in terms of being able to go from a walmart in the u. S. To a wallmax in mexico. That could be a big deal. Thanks very much for pointing out that walmart news. Sorry for the confusion. A lot going on, lot moving. We want to point out sabre it has opened for trading at the nasdaq. Lets see the opening trades and as you can see, up 6. 25 , almost a dollar here on the open. Sabre by the way were going to be talking to the ceo, big day for ipos, big day for technology here. Another big issue, weibo debuting at the nasdaq. The company cutting the size of its ipo, pricing at the low end of the range. Were still waiting for the first trade. The chairman of chinas take on twitter. Well hear from him next. Morgan stanley earnings out. Faber on his way to the banks headquarters to sit down with miss man, james gorman chairman and ceo. Nice quarter from about every facet. Well talk to him about that and expectations for the future when squawk on the street continues. Continues. In todays market, a lot can happen in a second. 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. Without standard leather. You are feeling exhilarated with frontwheel drive. You are feeling powerful with a 4cylinder engine. [ male announcer ] open your eyes. To the 6cylinder, 8speed lexus gs. With more standard horsepower than any of its german competitors. This is a wakeup call. Show of unity at the nasdaq markets. This city is the capital of anniversary. Weibo the chinese micro blogging site opens for trading at the nasdaq today comes amid recent troubles for social media stocks. Seema moody breaks down chinas take on twitter for investors. Pop quiz investors. Whats micro blog in chinese . The answer, weibo. Similar to twitter and facebook, weibo allows users to communicate with one another, upload pictures and videos, and share with friends. A huge user base, roughly 144 million monthly active users as of march, and 70 of its users access weibo using their smartphone and just like other social media firms, weibo makes most of its money through advertising. But the timing of wee abouts ipo could be a factor as the market has cooled on social media stocks. The Global Social media etf down 14 this year. And as we wait for wee aboib open, we talked to the chairman. So we did see some slowing down in terms of growth rate last year, for example, but as we begin to refocus our purpose, our effort, on the user growth, actually we see tremendous coming back in terms of the growth rate. I mean if you look at a number, i pemean in the First Quarter, was a big jump. We see the momentum going as long as we can execute our strategy right. Lot of controversy over the growth there. Theyre claiming 144 million users. But various studies show 5 of the users contribute 95 of the tweets so to speak. Thats stuff that has to be sorted out. The transparency not as clean as you might expect from some u. S. Social media platforms. They talked about that and censorship an issue. 144 user growth puts it way below twitter going public at 240 million user growth. Obviously twitter valued much higher when it comes to a per sales basis. But the ceo in talking or the chairman in talking to david really played up the fact that theres room for growth potentially a billion monthly active users on china mobile and only they only have 25 of the market. If you want to bet on that growth that goes cleanly perhaps than you would be a buyer. They did post profit for q4, something twitter had not done prior to its ipo. Yeah. Not that they couldnt have if they wanted to but that clearly is not the strategy so far. Looking at the twitter price per ipo. Weve seen a huge drop off, almost 20 in the last few weeks from the high. Up 75 since the ipo. That also bodes well. I know the ceo was talking about the similarities and differences. He was stressing the fact theres more engagement on this platform versus twitter you can have more of a conversation, he was saying n terms of reposting and posting. But they do look very similar for an american audience its a good comparison. Investor as well. Watching for that, of course, well keep you posted as soon as it starts trading. Also coming up on the show weve got all the earnings covered for you, break down numbers from some of the big names in your portfolio. Were talking ge, goldman sachs, Morgan Stanley, and more. Plus, after they reported a big, the stock is up this morning. Youll be hearing from Ceo James Gorman on squawk on the street. Street. 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Because there is no expertise without collaboration. 1989 get down if youre wondering whats driving the market today its going to be earnings all over the place. Dominic chu is on the floor with a look at what you need to know. If you talk about the picture for earnings right now we have a mixed picture but the stocks that are missing on earnings are going down and the ones that are beating are going up. A good sign people are at least playing the trade fundamentally speaking. On the Dow Jones Industrial average you have drags, right . Overall today you have some you have ibm which is a high priced stock, taking about 45, 50 points off the dow. Big names like United Health care dragging by about 2025 points on the dow and then another big one, american express, dragging ten points on the dow. Those are the big weights if you want to look at it that way. Look at goldman sachs, another high priced stock that did well on earnings, thats adding about 10 or 15 points to the current dow move. Now if you look at the other picture that were talking about here, of course, the ipo side of things thats going to be big as well. The semiconductors, one interesting note here, as you look at the semiconductors, they are having a bit of a bid today, all of a sudden you see sandisk doing good earnings numbers and then micron, national or Taiwan Semiconductor all moving to the upside. I want to check the ipo, leju trading today here on the nyse and we did manage to get back to maybe unchanged slightly positive but we did pop, 8, 9 to the upside off the open only to go to 3 from the downside in the first 15, 20 minutes of trading. This will be an interesting trade to watch today just to gauge what the market thinks about the ipo environment given the updraft in stocks recently for the past few days, carl. Back over to you. All right. Ill pick it up. Thanks very much, dominic chu for runnings through the earnings and ipo. Sab sabre is up about 4 . You can see some of the strengths there. Coming up Morgan Stanley also out with results today. Profit rising, beating estimate ps their bet on the Wealth Management business paying off. The ceo and chairman of Morgan Stanley, james gorman with squawk on the street after this break. Back in two minutes. Ck in two m. Ive always kept my eye on her. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still gonna give me a heart attack. Thats health in numbers. Unitedhealthcare. Youve reached the age where you know how things work. This is the age of knowing what needs to be done. So why let erectile dysfunction get in your way . Talk to your doctor about viagra. 20 million men already have. Ask your doctor if your heart is healthy enough for sex. 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Live from Morgan Stanleys headquarters in midtown manhattan, a short skip an a throw from the nasdaq where i was not that long ago. We are joined now by Morgan Stanleys chairman and Ceo James Gorman after the Company Reported a very stellar quarterly performance. Nice to see you. Thank you for having us. Thanks for being here. Happy 25th. Thank you. Yes, we are celebrating today. Ive been there for most of it. Great photos. 20 years youve been doing it. 20 years. Good for you. You havent been doing it quite as long here although you have been in the industry and seen the ups and downs. I want to talk specifically, james, or start about this quarter in particular. Many are looking at the performance of fixed income, commodities, saying particularly strong and perhaps something of a surprise given mixed results from some of your competitors. But a key question remains, and you used this word a lot, reliability. Because weve seen it. How confident are you this is something that can be replicated . First, see, what i liked a lot about this quarter was it sort of rotated. Weve talked about Wealth Management in the last couple of years and its been a very important part of the firms story and of the turnaround in Morgan Stanley. Here we really saw some of the institutional businesses really do extremely well. Equities did extremely well, m and a number one globally, equity ipos number two globally and as you said, david, commodities and fixed income broadly clearly a major lift from where we were last year and last quarter. Yeah. Okay. But back to reliability. Yeah. To the extent that an Investor Base can say okay theyve gotten it togetherly finally after many years of ups and downs and downs, what kind of assurances can you give investors . I think youll have more variability in commodities and fixed income broadly than any of the other business lines we have. Whats interesting about the business mix here, over 80 of Morgan Stanley now is institutional equities, Investment Banking, Wealth Management and asset management. The most volatile part of the firm is now a relatively small part of the firm. The good news as i said it recovered, showed the build out on the distribution side is working. We had strong and always have had Strong Performance in credit and that continued. Right. Although again, while it may be a smaller portion overall, it does deliver a lot of the alpha so to speak to use more of a hedge fund term when it comes to your earnings. What changes have you made . We talk so often about fixed income, currency and commodities as this block box if you will, but get downs to people making trades and decisions. When you look at the unit now what changes have you made that make you think okay im more confident in their ability to continue to deliver better result . First of all how much Balance Sheet are you using to support the business. If we go back i think its 2 1 2 years, Third Quarter of 2011, we had 392 billion of assets supporting our income business. As of this quarter slightly under 200 billion. Thats a 10 capital ratio, youre running the business with about 19 billion less capital than what you needed just 2 1 2 years ago. Thats extraordinary. So you start with what is the capital you need to support the business through the Balance Sheet thats driving it and what kind of returns can you get . Weve really reshaped it. Its a focus on always had strong credit, securitized credit, mortgage related businesses and been building out the more macro side, the fx, and the rate side, and weve been building it out judiciously. Our quarter you saw was really relatively low still. Its a balance of not too much capital to support it, diversified client flow based business but having a presence in rates and foreign exchange, larger than we had historically. You mentioned, of course, capital. Something you and i have talked about in the past is earning your cost of capital which is about 10 . You seem to be getting there. Were getting there. When are you going to be there . Well weve said we will be there and its a function obviously, a function of the equity in the firm, and your returns, talk about the equity in the firm we just came through, we did our first formal buyback, less formal 500 million last year, our first formal of 1 billion this year. For the First Time Since 2007, we doubled our dividend. So these were very important markers as to the inflection of where Morgan Stanley is relative to where weve been over the last eight or nine years. Interestingly our cds is trading this morning 78, 79, recall back in the crisis we were over 1,000. The firm is in much better shape in terms of our credit standing, in terms of our capital standing, and now were driving the returns 8. 3 First Quarter. Solid. Not where we want it but on the right track. You talk a good deal and you have in previous appearances on cnbc about reliability and consistency. And also continued expense production. So again, getting to those goals, and, you know, how far along are you in terms of achieving these things that you have talked about for quite some time . Yeah. I think this is clearly now within our site. Im not going to put a specific quarter on it, but and its partly, again, a function of what we do with buybacks and or other capital actions next year. We were very clear in our call today that we think were going to be increasing significantly over the next several years the capital were giving back to share holders. Why are you doing that. Some would say why not use it to invest in the business more effectively or keep it around just in case. Sure. Even though the fed may say youre okay, go ahead, there are some questioning returns of capital whether thats the best use . Well, thats an expensive just in case and shareholders have been very patient. Weve delivered suboptimal returns since the crisis and its now our turn to reward our shareholders. We deserve to bring capital back and right size it with what we need to run the business and not keep the optionalty of what we could be doing in different circumstances. So i think youll see continued buyback capital actions over the next several years. We think particularly across both institutional and Wealth Management continued Earnings Growth, and as a result, you get a twofer. Increased r and reduced e, which obviously is going to drive and were confident well be sitting close to capital. When it comes to Global Wealth management, 19 margin this quarter if im not mistaken. You have goals to get that between 22 and 25 . Yeah. What gives you the confidence that is something thats achievab achievable . Firstly, scale driven business, great business, managing the expenses well. We did a restructuring in the Field Management structure led by the new head of the field side of the business. But importantly, the bank. Were sitting on, david, in that business a bank which when all the deposits have moved across interest citi will be from citi will be 130 billion in deposits. Inside our Wealth Management business sits the tenth largest bank in the United States. Measured by deposits. Not by assets. Not by loans. Were growing the loan bulk because we have client who is clearly have mortgage and other lending needs theyre getting from other banks they would rather do with us because of the simplicity of having all their relationship at one firm. So were very excited about the potential for Earnings Growth just coming from the bank side. So using those deposits to fund the feeds of current clients on the asset side an clearly thats going to help the margin i would assume . Thats right. And when i came to Morgan Stanley in 2006, our total deposits were 2 billion. Before we did the transaction with smith barney and citibanks deposits were 50 to 60 billion. Well be at 130 billion by the end of next year. You mentioned 2006. It seems that we are still dealing with the legacy issues of the crisis whether basel 3, continued litigation costs and dodd frank and figuring out what that does or doesnt mean. When will we be clear of the legacy issues . I think were close. The last big global move is on the supplemental leverage ratio which the fed is now getting in the final stages of rule making. I think well be compliant with what basel 3 has indicated. Then theres some talk around shortterm funding and wholesale funding and Additional Capital relating to that. I think we know most of what dodd frank has to offer. I think most firms have adjusted their Business Models to reflect the fol ker rule, for example. We are at the sort of 80 to 90 through the regulatory change. Now firms have to figure out what kind of returns can they get and to the extent theyre under performing how do you reshape your business mod toll reflect the reality . Youre not going to change the regulations in a hurry. You Better Change your business in a hurry. In terms of your business and keeping attracted talented people who will help you earn those returns, i wonder, yesterday moelis and company went public, focused on the advisory business. He will make a great pitch to many of your bankers why theyre better off there than they would be here. You would see that same competition in certain areas from others who will make similar kinds of claims. How do you keep people, particularly in this still this incredibly regulateden virmts, where you have to pay them, still wall street, and get the best out of them . Well firstly, its very exciting the story where the firm is heading right now. Weve had very low attrition. We just had our employee surveys come out which we do every two years and we had 95 of our employees say they were proud to work at Morgan Stanley. Very favorable, positive working at Morgan Stanley. These are phenomenal numbers. Are those important . Do you pay close attention to those . I keep about how the employees feel. Theyre the ones getting up dealing with their clients working on our infrastructure, supporting what were doing to drive the business. If you havent got the Employee Support you havent got a business. If youre working at Morgan Stanley we work on the largest most complex transactions around the globe. Were having no problem in attracting talent right now. When i look at your competitors, we continue to hear the ideas that some of the businesses are not able to be managed. Im not talking about Morgan Stanley which is smaller than jpmorgan or citi. Im curious, you see the far flung issues that theyre dealing with that may crop up, do you think at some point that they are too big to manage and perhaps youll be competing against Smaller Companies that are resulting from a breakup of some of those big names . Well, im sure the folks who are managing Morgan Stanley in the 70s and 80s looking at it now, now with very 55,000 employees, then we probably had 1,000, i would say how do you possibly manage it . You can manage large complex institutions. You need very Good Management breadth, management training. You need great processes and systems and metrics. You cant just manage it by anecdotal relationship. Theyre too complicated, too global. Im on the road all through the year, youre on call 24 hours a day, you cant be on top of everything. I give you an example we put in place tens of thousands of limit ps in our Risk Management precrisis we had less than 100 different limits across counter parties, sovereigns and so on. We have tens of thousands. So you manage in part complexity by very talented people managing against very clear metrics. Thousands of metrics. Does that mitigate against taking necessary risk . No, it helps you understand risk in the video instance and correlation risks across different situations. But most importantly, causes you to stay on top of the things that really can do damage to your equity basis and institution. Right. Of course we never seem to know where the next crisis is coming from. Probably not something you and i are going to be discussing. I wont you can skip that one if you want. Sure. Give me a sense as to the landscape right now . Lets start off on the corporate side. Ceo confidence plays such an Important Role whether mergers and acquisition activity, Capital Spending which can result in Capital Markets activity what are you seeing there some. More confidence building. Starting with the u. S. Economy. Listen, you need three things for ceos to act. They need to have a Strategic Plan in place, and a lot of the ceos ive talked to in the last six months in particular have been sitting on their Strategic Plans waiting for the environment more broadly defined to get better. The environment is improving in the u. S. , although were getting, you know, if you look at the litany of numbers that come out every week its not every metric is moving at the same pace but clearly improving. You believe that it is clearly improving. Every spring it seems we start to question all of the Different Things weve been thinking. My personal view is the upside risk to the Global Economy people will do better than people think. Ive held that view some period of time. Im not surprised the markets are where they are. The markets are reflecting the growing confidence. Look at corporate Balance Sheets, individual Balance Sheets, real estate pricing, you look at where rates are at the moment, the ability to finance transactions confidence is building. But were not there yet. Were not over the hump. I dont know what that trigger point is, but its coming. I know, but you and i could have had this conversation a year ago you could have cited those metrics and ifrld have said, of course, and the year prior and were still saying its coming. We dont know whats coming that might be bad. Whats going to get them there . There are differences from a year ago. The fed had not begun tapering a year ago. True. The markets werent where they are now a year ago. Look at some of the currency trades youre seeing with, for example, facebook and whatsap. You couldnt have done these transactions a year ago. Thirdly corporate confidence wasnt where it was a year ago because unemployment was half a point to a point higher than where it is now. Youre seeing there are a number of things that have materially moved. Theyve all been gradually moving forward. Im trying to look at the aggregate picture. My view is the u. S. Economy is going to outperform what most people believe it to be in the next several years and were bullish on it. I love ending on an up note. Thank you for that. Youre welcome. Happy anniversary. Thank you very much. James gorman, chairman and ceo of Morgan Stanley right here from Morgan Stanley headquarters. Carl, back to you. Got a lot of ears listening to the latter half of that conversation. David faber. Earnings beat continues. Coming up an interview with the ceo of fifth third, profit falling at the Regional Bank. Later ceo of sandisk, the best performer on the s p today as earnings jump on higher sales. Dont want to miss those. Dow is trying to recover losses, now down five. Ive. Predicting the future is a pretty difficult thing to do. Ive. But, manufacturing in the United States means advanced technology. We learned that Technology Allows us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. Make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. You can probably guess from the music were playing songs from 25 years ago. Our anniversary today, 25 years on the air. Our own Brian Sullivan at hq looking at how things have changed since then. Hey, brian. Thank god the music has changed. At least, carl, you came into the break, with a little tribe called quest, right . Can i kick it . That was good. Milli vanilli not so much. Hang around, i have stats and a tease question for you here. Dont go anywhere. Pay attention. Lets talk about what has changed. Obviously the numbers have changed in a huge way. Back on april 16th, 1989, the dow was at a heady 2337. The s p 500 at 301. See the big gains obviously and what has remained the same to your point, carl, is technology. Outperforming. We know that the nasdaq has done better over the last year. Guess what in the past 25 years, the nasdaq up 873 . Topping both the dow and the s p by a wide margin. All right. So heres my question to you. And im not talking about pennies and micro caps. Im talking about Major Companies here. Since cnbc launched, the single best performing stock out there is up 51,000 . Can you guess you have a lot of choices obviously. Can you guess what it is . Im going to give you a hint. It is not only not a technology company, with all due respect to this company, it may be the least Technological Company out there. I have no idea. Is it a Health Care Company . Nope. Were going back to 89 . Going back to 89. Single best. Is it an s p name . Give us a hint, brian. Guadalajara. Yes. That was my first guess. No. Thats the hint. Oh, blew my cover there. Royals. Guadalajara . Kansas city southern railroad, believe it and the reason, they built a huge push into mexico, right. Thats why i tried to give you the royals with the name. 51,000 gain since cnbc went public. Emc tech company, United Health, sara, you were right on the top five. Ballpark. Take what you can get from it. This was a shocker. Monster energy, up 23,000 . And when we ran the data i went to the data team, i said no, guys, Monster Energy was not around when cnbc went public. I was wrong. This was called hanson beverage. Its been around since the 1930s. Of course. So monster beverage hanson the fifth best performing stock since cnbc went public up 23,000 . Put that in your energy drink and chug it. And if only we had invested our money in those. I liked your stat this morning, the s p performance since 89, what, 517 . Yeah. Now its down a little bit because of today, probably 516. That did not include dividends as well. Listen, carl, it goes back to the serious point. Stocks have taken their lumps. Youve been doing this a long time as have i. Stocks have been beaten up. People say the stock market is dead, a waste of money. Heres what we have to remember. Its been a tough decade for many people. The last couple years good. But were back to where we were. Over the long haul there is no better performing asset class than stocks, not gold, not housing. Maybe some markets, right, but not overall, not bonds. It is still the stock market. I think its a good reminder that stocks have made a lot of people rich for a long time. It just you got to stick with them over the long haul. Get rich slowly somebody said i heard. Its a good perspective. Top song of 1989 . The top well going by the week or the total some. By the bill boods board. Look back by chicago . Look away. Look away. Terrible song by the way. I will on that note im out. Do you like any music at all, brian . Milli vanilla, peter se tara . Back in 89, 13 songs by fugazin 87 or 88. Maybe ill show a picture. I had a hair thing going with long and this. Youre showing a picture. The minute men replacements, tsol. Brian, we have to leave it there. Well look forward to more of your coverage of 1989 then and now. Markets not the only thing that has changed in the last 25 years here at cnbc. Mr. Carl, youve certainly been here for a while, a few years. Heres a quick look at carl over the years. Good morning, everyone. Welcome to the second hour of wakeup call. Im Carl Quintanilla. Im carl from cnbc. I got a dancing dance. You want to learn it . Out of control. Youre only allowed 140 characters which is more than enough to write joe is a tool. You got to do the correspo correspondence walk. Charlie. Charlie, i think the real question is thats it. Thats enough. We want to brink in Dick Costello the ceo of twitter having done a brief vine with me while we were waiting. Today its about the sign over my Left Shoulder the beijing olympic games. Caffeine. Take away. For here. About 80 proof. Thats good. For cnbc business news, im Carl Quintanilla. I love it. I always i always feel for the producers who have to wade through all that footage. Thats a lot of work. I enjoyed that very much. Were you like 16 when you started . I started when i was 5. Different time. Who was that last guy . Who was that. Bring up the last shot . Milli vili and quintanilla . Who was the third . I love you had like the morrissy thing going on. Yeah. Youre right. Before the Makeup Department had their way with me. Look at that guy. Hes a cutie. And his ties have only gotten better. Look at that. Hey, hey, hey. Sara, the gap made nice ties then and still do now. Yeah. Take it easy. How i dont think hes shopping there. Anyway, enjoyed that. Love the dancing, carl. Coming up on the show you heard Morgan Stanleys chief executive officer james gorman with us. Dont miss our interview next with the ceo of Fifth Third Bank. A view from the super regional right after this break. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. 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. That corporate trial by fire when every slacker gets his due. And yet, theres someone around the office who hasnt had a Performance Review in a while. Someone whose poor performance is slowing down the entire organization. Im looking at you phone company dsl. Go to comcastbusiness. Com checkyourspeed. If we cant offer faster speeds or save you money well give you 150. Comcast business built for business. We want to take a closer look at one of the big Regional Banks there. There it is, fifth third trading lower as you can see after reporting earnings that missed estimates this morning. This is fifth thirds shareholders, fighting management to raise its dividend. Here for a cnbc exclusive interview, fresh off the companys conference call, is kevin kabat, ceo, joining us from cincinnati, ohio. Good to have you on. Good morning, sarah. How are you . Very good. Kevin, investors are punishing the stocks. Its one of the worst performers in the s p, down almost 4 on the earnings miss. There were a lot of special items. Talk about what you saw in the quarter. Were you disappointed . No, overall, sarah, if you look beyond kind of the reported number, our core operating results were fairly solid. From that standpoint. We do own, as you know, or as youre aware, we do own a significant portion of our ipod Processing Company and the warrants on that stock that we own influenced the printed number. As i think folks get to see the core underlying performance of the company, theyll realize that it was a fairly Strong Quarter for us from that perspective. Another weight, kevin, looks like the 51 million litigation reserve. What kind of Regulatory Environment are you dealing with right now . I dont think thats news at all, sarah. Its a challenging Regulatory Environment. And so, litigation reserve in this environment is something you dont plan for. But certainly we had a Strong Enough earnings performance to be able to cover those types of issues that come up, and unfortunately, they did in this quarter. Kevin, a lot of investors wish some of the shackles would come off from regulators, but even this week, yellen said again, more stringent standards might be might be worth it for the big banks in the longer term. Do you see that going the right direction or the wrong one . Hey, carl, a lot of the management teams wish that some of that would come off, as well. Yeah. Look, for the most part, you know, while were a large regional institution, were a fairly, what i would call main street bank. We fundamentally do the business youd expect a bank a Regional Bank of our nature to do. We make loans. We gather deposits. From our standpoint, there are a lot of lessons learned. So some of the things that regulators and even the litigation or the regulation that was proposed are common sense, and weve adapted to those. Were adjusting to that. And weve incorporated that into our Business Model. But as we go forward, again, our key is serving our Customer Base. And its a key cog in helping continue to move the economy forward from that perspective. And i think thats where we would like to play. Kevin, i want to ask you about the breadandbutter banking business that youve got. Commercial loans were sharply higher. Thats a good sign. Businesses borrowing more. But consumers not so much. Whats your outlook for consumer loans this year . Yeah, its a really good point, sarah. We did see, and do see, continued good demand relati relative particularly to the commercial side and commercial businesses in loan demand. I think its fairly obvious through earnings season reported earnings season so far, january and february were tough, particularly in the severe weather, and so consumers did stay home. Yeah. We are, as we indicated even in our calling in our call that march began to get back to more normal trends, and thats continued into april. We hope that that continues. We are still waiting for the consumer, though. Right. All right, good to have you on, kevin. Thank you for joining us on the news line. Fresh off the call, kevin kabat, the ceo of fifth third. Still ahead, travelocity parent company, sabre, trading today. The ceo will join us live. The dow is down about 8 points. Were back in a minute. [ 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. [ 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. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Dows gone positive after a morning in the red. If youre just joining us, heres what you missed. Announcer welcome to squawk on the street. Heres whats happened so far youve got the two parts of the economy that are on fire and ge is going to dominate. The answer is google is going much higher. There, i said it. Just buy it. Just buy it. Buy that one, too. Buy that one, too. Buy ibm, too . Yeah. Youre saying buy ge, ibm . Warren buffett loves it. We see the momentum going theres a lot of room to grow. There is. And there is detigs now. Theres the bell. What changes have you made that make you think, okay, im more confident in their ability to continue to deliver better results . You start with what is the capital you need to support the business and through the Balance Sheet driving it, and what kind of returns can you get . It is thursday morning, 11 00 a. M. On the east coast, 8 00 a. M. Out west. Heres what were watching. Bigtech names struggling. Both ibm and google slipping to the downside after earnings come in below expectations. Well tell you what to expect from both companies for the rest of the year. And weibo going public. Should you still think about buying . Is apple about to give google the boot . And shares of san disk are rallying after strong earnings, and for a reason you might not expect. The ceo of sandisk will explain later. Its a big day for cnbc, celebrating the 25th anniversary of network. So much of the last quarter century has been centered around technology, new products, new companies, bubbles weve seen, and, of course, the ones were looking out for. What has not changed is the volatility and the momentum in the tech sector. With all that in mind, we bring in on the squawk feed john steinberg, buzzfeeds president , coo, cnbc contributor, and jon fortt back from out west, interviewing the intel ceo yesterday. Good to have you both back on set. First up today, as we mentioned, were still waiting for shares of weibo to open. Unusually late. Were trying to figure out whats causing the delay. Chinas version of twitter, priced at 17 a share. We did talk to the chairman earlier, and he talked to us about the companys plans for growth Going Forward. Take a listen. So we did see some slowing down in the growth rate last year, but as we begin to refocus our purpose, our effort on the user growth, engagement growth, we actually see tremendous coming back in terms of the growth rate. If you look at the number in the First Quarter, it was a big jump. Right. And we see the momentum going as long as we get our strategy right. Jon, what do you think . A lot of discussion about what their true user base is, and certainly what rules those twitter those users have to abide by in china. Whats fascinating to me about this is the amount of the company that it has and the amount alibaba has. The company says in its filing that 380 million of advertising and marketing revenues are coming from alibaba, between 2013 and 2015. The majority of that, at least 85 , will accrue to weibo, verse sena. Theres some risk that after that period of time, alibaba could create a competitor, Something Like that. Its been known to do that in the messaging space. Its interesting that these two Big Chinese Companies control such a huge chunk of this kind of chinese twitter. David also asked the question, would you see a scenario where alibaba would eventually buy out the 30 where they own . He said thats a question for somewhere else. But there are synergies, but he didnt buy it out. And they could buy it on the dip. The company is weak. Its a microcosm of all twitters problems exacerbated on a smaller kale. Fewer users creating content on the platform. Small engagement, and it lost more money in q1 than in q4, and less revenue in q1 than q4. And off a smaller base. It has a lot of issues. Do you believe them when they say 134 million users . With these platforms, its hard to evaluate. In a chinese stock, its harder to really know. Theyre saying 5 of the people create the content. When you look at the stern report from yesterday, its only about 12 12 people . Justin bieber, lebron james, yeah. There will always be more consumers of content, than creators. But on these platforms, its extreme. What makes me nervous about that, you also dont know how much is alibaba deciding to turn up the fire hose at certain times, because it benefits them to make them look good. And then if theres an intrashift, you could see the numbers deteriorate. And they have over 300 million monthly active users on that platform. Its a messaging thing, but one to many as well. You dont like to see pricing happen in the 9 00, 10 00 hour at night. They already know what the book is. They already know exactly what the demand is and where the market will actually absorb that price. When you have to wait five hours and then some change after that for both sabre and weibo we should know, you might know there might be problems at the open. So i talked to some underwriters this morning who said, listen, the markets tough, investors need a break, you want to bring down the size of the offering so they dont feel like youre trying to stuff them with too much supply, but ultimately, you see it at 17, it still hasnt opened, unchanged, and so reckoning and maybe it will get to a good price level. Next years revenue, 300 million, it would be trading at 11 times. If it came out at 17. Twitter trades 21 times forward revenue, so maybe it will be so discounted that the issues will make it a good buy. Well see. When the first trade happen, well bring it to you as soon as we can. A rough day for a couple of tech names. Google slipping. Paid clicks on google sites up 26 in the quarter, but that 9 drop in payments per ad, a little worrying for investors. Meantime, shares of ibm falling today. The Company Reported its lowest quarterly Revenue Total in five years, and failed to post a revenue increase for the eighth quarter in a row. We should mention buzzfeed has a Business Partnership with both google and ibm. Signings were weak, booktobuild was weak. Lets start with google. If you want to find the negative thing, you have a seasonal decline in revenue, which is typical in the advertising world. Q4, a lot more ads bought than q1. Google has never had the modest stepdown. With that said, all the comments on the call about how they are making movement in mobile, and how the gap between the click price people pay in mobile versus desk top will close, is very compelling. I think you have to be crazy to think google wont figure it out. Expensive to move into those areas, jon. Yeah, im still feeling queasy about this earnings season. I was talking about that a lot last week, talking about how we had seen money seemed to move out of momentum names into big techs, hoping for a mac macro upturn, and to me, if youre piling into big tech, you have to look at ibm having trouble making top and bottom line. Questions about, you know, Financial Engineering there. Google has had a hard time making Topline Revenue for several quarters, and theres another question about their growth rate here. Intel, you know, nice multiple on that stock, but its very clear from this latest report that theyre still spending a lot of money, trying to get into mobile. And they dont have prospects to really break into that anytime soon. Weve got microsoft coming next week. Obviously, apple and others. You know, im not sure that the narrative is clear yet, that even if we have a general upturn, these big techs are going to benefit that much. We also sort of see the repercussions of the nest acquisition. A lot of the cap ex, real estate expenses, and the head count went up more than 2,000. When they were asked what the purpose of that was, they all said, well, we had effects of the reposition. So you are seeing effects from their buying sprees. But do you think that well ultimately see results from that . The thread that ties together ibm and google, is google spends for the areas that will protect it for the future. Ibm didnt, right . And now the only area of growth is the 50 growth theyre going to have in the cloud services. Theyll do a couple billion dollars in that this year. So you either spend to protect yourself in the future, or you dont and get penalized for that. But ibm has been spending. The acquisitions theyve been doing in software, analytics, people have been criticizing them for just acquiring growth. I dont know. I think the question is, at this point, do these Companies Start cutting massively, even more massively to hit these earnings targets . Youre saying cutting back on cap ex and r d . Weve seen intel say theyre cutting back on what theyre spending on engineers. Cisco is already doing that, as well. Ibm is retooling some things, and looking at spinning off, you know, potentially chip operations. So does the pressure increase as the year goes on for them to manage the bottom line, because the top line isnt doing what well, i think faulting them for m a costs and an earnings hit, where they still largely managed to maintain growth, quarter after quarter, talking about google now. But then looking at other companies, why did microsoft end up where it is . They didnt take the big bets into the future when things changed so rapidly. The problem the New York Times raises, google is protecting itself about the distant future, not the nearterm future. I think you could say glass is a three to fiveyear bet. The robots are a tenyear bet. But cnbc, in 25, a decade comes quickly. I want to make one last comment about ibm, john. Theres one word that keeps popping up thats worrisome, and thats the word legacy. I see that with the banks, you have citigroup, bank of america. Legacy assets are things that you want to get rid of as quickly as possible, and they come at a huge cost to you. Now, people are talking about ibms legacy businesses. Thats not a good word that you want to associate with an entire company that you are trying to steer forward. A big part of this is drag is hardware. Theyre selling the wrong kind of hardware. Something im interesting in talki ining to sandisks ceo, ig data and analytics. Theyre getting benefit. Ibms business seems to be slowing down. Im wondering what the difference is. Well await that interview, thats coming later this hour. Well see you back for that. Jon steinberg, thank you for being here, as always. Coming up next, sabre opening for trading today, and the stock is in the green so far this morning. So should you think about buying this company . The ceo is here to make his case in a moment. First, Rick Santelli, what have you got your eye on today . Well, first of all, happy birthday, cnbc were going to keep our eye on Interest Rates, the yield curve, and a couple of trivia questions going back these wonderful 25 years. Ill give you a little taste. 25 years ago today, whether we first started broadcasting, yield on a 10year note was 9. 17 . Youzer show up at the bottom of the hour, and well talk about that and Everything Else you want to see changed in the last 25 years. Announcer post 9 is sponsored by fidelity investments. ] make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Drivers, tgo our marks. Its chaos out there. But the mclass sees in your blind spot. Pulls you back into your lane. Even brakes all by itself. Its almost like it couldnt crash. Even if it tried. The 2014 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Welcome back to squawk on the street. Check out pharmaceuticals. They say theyve settled with pfizer that will allow them to launch a generic version of celebrex. That could happen in december. The news comes more than a month after a u. S. Court invalidated the Patent Covering the drug. Its currently trading up over 1 . Pfizer had been a little negative earlier. Right now, it is fractionally positive. Carl . All right, thanks so much, bertha. Were more than 90 minutes into trading, awaiting the first trade of weibo over at nasdaq. The ticker will be w. B. 16. 8 million shares priced at 17. We were originally looking for 20 million, between 17 and 19. And as kayla mentioned, it took them a while to get to that point last night. When the first trade happens, well bring it to you. But a firm well known in china and increasingly well known here, one that did post a profit in q4, unlike some other big social media names that went public. And it was only one of two ipos this week out of 11 actually priced within the range. So even that is a hallmark in the market with such volatility as weve seen. Its also been a rough ride for zynga. The stock for that Gaming Company down 60 since its ipo back in 2011. Zynga has a plan to turn it around, and it stars with a sequel to its hit game farmville. Morgan brennan is getting an exclusive look at hq. Shes live in San Francisco with more. Hey, morgan. Hi, good morning. Yes, so just how big a deal is zyngas longawaited firsttimeever mobile farmville game . You might say lifesized. As you can see behind me, the company has decked out its San Francisco headquarters in honor of the launch of farmville 2 country escape. We even have a dog back here. This is the first time that zynga and there goes the dog its the first time theyve offered a fully mobile version of its flagship franchise. This is really marking a shift away from desktop and facebook. The mobile ecosystem is different, and were figuring out how to distribute the game. I would say between kind of growth and monetization, its different. But obviously we think a much bigger opportunity in the long run, and, you know, were seeing that with early results. So 75 of the companys Game Development people line is now mobile first, and zynga, which reports its earnings next week, expects mobile to surpass desktop revenue for the First Time Ever this year. But analysts are saying in order for that to happen, this game launching today, needs to be a success. Its not going to be good enough for farmville on mobile to be the number20 game or number10 game. Really, they need this to be in the Upper Echelon of games. Okay, so zynga is leveraging the farmville name in large part because it is still by far the companys most successful franchise. Its got 400 million players globally, and more than 1 billion in bookings since its inception five years ago. Now, like other gamemakers, the companys had some trouble has some challenges, recreating that level of success for newer franchises. But analysts are cautiously optimistic that the ceo, don matrick, who is new to the company, came from microsoft about ten months ago, could be the person to move the company forward. One other thing to keep in mind, the mobile gaming space very competitive. Weve got supercells heyday, a top ten grossing app for the better part of two years, and king digital whose candy crush brings in 93 players a day. We really need to see the farm bring the flair. Back to you. Thank you, morgan. Analysts say if anyone can turn around zynga now, don might be the person. Well have to see how farmville actually goes. Thank you, morgan. Were awaiting weibo, but look at travelocitys parent sabre. Its up about 1. 5 , fairly in the green. The ceo is at the nasdaq with david faber for an exclusive interview. Tdd 18886486021 there are Trading Opportunities tdd 18886486021 just waiting to be found. Tdd 18886486021 at schwab, were here to help tdd 18886486021 bring what inspires you tdd 18886486021 out there. 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This is the age of taking action. Viagra. Talk to you doctor. Welcome back. As weve been mentioning, two ipos today, and were awaiting the unusually late first trade of one of them, chinese twitter rival weibo. Were trying to determine whats causing the delay. Nasdaq Officials Say they expect it to start trading around 11 140, so 20 minutes from now. Already making the debut, sabre opened for trading, up 2. 5 right now. Of course, that was one of the biggest leveraged buyouts of the past decade. Taken private about seven years ago. We want to send it to david favor, joined by the ceo of sabre, tom klein. David . Thats right. We are joined by tom klein. Welcome. Thank you. Congrats on being a Public Company again. You were not ceo the last time. Having taken the job six, seven months ago. Yeah, its a great day for sabre. Were happy to be out on the public market. We were talking about the during the break, the guys from weibo, you were visiting similar investors. When you were talking to those investors, making your case, you know, i guess youre emphasizing Software Business, big data, mobile. By the way, Everybody Loves the the sabos thing . Yeah, those are real things. We provide software to the travel industry. Airlines, hotels. And things like mobile are changing the industry. Its changing the way suppliers talk to interact with their customers. Its changing the way travelers interact with their suppliers. And we have products like tripcase out there managing this year will manage 20 million trips on a mobile device for travelers. So those trends are real, and were taking advantage of them on behalf of the customers. To the extent, people may get confused about the different responsibilities of various providers, whether its an expedia, or whether its within google and the various things they have. What are your competitive advantages then versus some other somewhat competitors, particularly then when it comes to those who are buying corporate travel, for example . Right. So expedia is a big customer of ours. And we provide the services behind the scenes for the most part. So our software does things like, a pilot will get a flight plan thats generated by sabre software, or a Flight Attendant will get a crew schedule thats generated by our software. Hotels will price based on data and analytics that we provide to them. And travel agents find the best trips for their customers, and we have a Consumer Service, travelocity, a great brand, and provide great vacations for our custom customers. And people may know the name through the Consumer Service rather than important parts of the company. Although travelocity uses expedia, doesnt it . Its a big customer of expedia. Again, the brand is one of the best brands in travel and our customers love the nome and love to buy their vacations there. But our other business is much bhiger. The Software Business is growing faster. And airlines and hotels have really complex problems to solve every day, and this giant industry, the travel industry, 6. 5 trillion and grows all the time and gets more complex. Technology like ours helps solve the tech helps to solve the complexity. Youve been a private company for seven years now. Your private equity owners will still control roughly 79 of the shares. They are not they were not sellers today. I would think being a private company is not such a bad thing. Are you ready for the Public Markets . Are you ready for having a deal well, you had a bad quarter, watch the stock go down, and perhaps focusing more on the short term than the longer term . And sabres absolutely ready to be a Public Company. Well look forward to the quarterly calls and, you know, a company like ours thats were 3 billion in revenues, a profitable company, we generate a lot of cash flow, and we think that kind of those type of characteristics are great in any market, and we think it will be attractive to public investors just like it was to its private investors. They are attractive, of course, for those that want to do an lbo, thats generating a lot of cash. Todays proceeds will go to delevering, paying down the debt. But what about your owners . They have to get an exit. I would assume at some point they are sellers . Well, today today, they werent sellers today. And i think it shows great confidence in the future of the company. And, yes, well use 100 of the proceeds to delever a little bit. And then well take it from there. You know, eventually, im sure our owners will look to exit at some point. Again, theyre confident today. Even seven years in, theyre not trying to get an exit here. Thats right. Theyre taking the long view from the start. Theyve let us invest in the company, and doubled the size of the Software Business with the size of the investments, and theyve been great partners and have a long view of whats successes. You have made acquisitions. What about the larger consolidation play . Is there one still to come . We like the acquisitions in the Software Business. New innovations for airlines or hotels, we want to put those into our portfolio and use our big Customer Base to push that innovation out. You know, thats what we really look for. Thats our sweet spot. We acquired Ten Companies while we were private. But they were all in that small size where we can really leverage the global platform. Well, tom klein, thank you very much. Thank you very much. Great to be here. Sabre, of course, now a publicly traded company yet again. Tom klein. The ceo. Back to you guys. David, thank you very much. Pretty good day for the banks. Morgan stanley and goldman both in the green after reporting earnings before the bell this morning. Can these Companies Keep growing for the rest of the year . Well talk about that after the break. Plus, the bells are about to sound across europe, about three and a half minutes left. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. 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. 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As we have been mentioning, were still awaiting the unusually late first trade of weibo over at the nasdaq, trying to determine the cause of the delay. Although some argue it was always expected to happen around 11 40. Thats in about ten minutes from now. When the first trade happens, well bring it to you as soon as we can. The other big news of the morning is the finale of Bank Earnings season. Goldman sachs and Morgan Stanley both reporting this morning. The two big banks beating earnings estimates, though by different margins. Morgan stanley the big winner with the firstquarter profit jumping 50 . With us now, financials analyst brandon hawkin. Good to have you this morning. Good morning. So taking a look at the two companies, they often get lurchlurch lumped together. But you see two different tones. Goldman says the economy is sluggish but steady. Morgan stanley saying theres a lot of confidence coming back into the market. Somehow do you read both of the two reports this morning . Right. So actually, they both were pretty good. I thought generally comparable. I personally believe that the story of Morgan Stanley is stronger longer term. And i think thats why were seeing the reaction were seeing. So as far as the business goes and the Capital Markets side, we saw a really strong recovery at Morgan Stanley. They had been struggling in the fic businesses, and that came back in a big way, and i think thats driving relief. Equities business for them remains really, really a power house. One of the best results weve seen amongst the u. S. Bulge bracket firms as earnings season wraps up here. So very, very good results in Capital Markets. On the Wealth Management side of Morgan Stanley, which is the differentiated side of that story, not quite as strong. Seasonally a bit weaker. But nothing that happened in the quarter that makes you believe the recovery is not fully in place. Right. So really, the trading side showed that there was some reasonable strength here in 1 q. On the goldman side, theyre really more heavily reliant on trading, and trading was okay in a difficult environment. Not taking anything away from goldman here. I think they did an excellent job executing given the realities. But the realities arent great. We havent seen april show any signs of improvement here as we move into 2q. So thats the big question here, because, you know, you look at goldman with the fifth Consecutive Year of falling revenue, and you think about it as the only bank that doesnt really have its Business Model with a hedge. You know, it doesnt have a big brokerage unit. It doesnt have a consumer bank. Do you feel that Going Forward given the volatility of the market and how hard it is to predict the revenues in some of the units, that its essentially naked . Well, i think theres no question theyre going to make it. But the worry that i have is are returns going to be maybe a little mediocre, or somewhat middling . Goldman has shown a remarkability to control the expense base, and that allows it to hit doubledigit on return of equity, so about 10 bucks below what were trading today, its an absolute floor on the stock. However, wheres the upside . Theyre very reliant on fic within their trading operations, which is a capitalintensive business, not very well treated under the new regulatory regime. So im worried about where whats going to drive the incremental return on equity there, and where were going to get the upside from here. I think the businesses are quite strong, the franchise is excellent. But enhanced returns from here seem difficult given theyre not changing the Business Model, as you said. Finally, brennan, do you think one of the important stories of the quarter so far has been jpmorgans trip from some Gold Standard, as cramer put it today, to more like a copper standard, as he put it . Yeah, we can we can be a little bit bipolar here in the markets yeah. You like clean narratives. Yeah, but we certainly j. P. Certainly took a ding this quarter. And i think the worry was is the Revenue Sources throughout the bank, the core bank, the commercial bank, not even the Investment Bank. The Investment Bank was moderately weaker than many of the peers. But the fee revenue, the noninterest revenue, was really pretty soft. I think thats what had people really, really worried about jpmorgan from here. Brennan, a long and busy week with the earnings. I hope you get a long weekend. Yeah, im ready, ill tell you that. All right. Enjoy. Brennan hawken. And over to Rick Santelli with the santelli exchange. Hi, rick. Hi, carl. Yesterday, much of the fedspeak and the talk and the q a kind of fell flat on the market. I dont mean that in a negative way. I mean that in a flattening yield curve way. Real quick, lets go to my board. Right around the text was relieved, the 5s to 30 spreads, was hovering quietly in a 1. 86 area range. And what happened, the minute that text hit, we went from 1. 85, basically to 1. 80. Im telling you, people can dismiss this, fivebasis point move in that period of time, so identifiable with janet yellen, chairwoman Janet Yellens text, is really quite large. On the screen, youll see a twoday chart. Its continued to move lower. Its now around 1. 77, 1. 78. Open the chart up. These are fresh flats, 5s to 30s, going back to september of 2009. And i think its significant, because this augers that maybe short rates are being kept too low by the Federal Reserve and the markets giving us its opinion. We know 25 years at cnbc, and id like to thank a personal thanks to mark hoffman, our fearless leader, a great leader to the channel. I thank you. But 25 years ago, some interesting numbers. You saw the s p was up a little over 500 . I have a 500 number, too. My numbers 516 . Any ideas . Anybody . Anybody . Anybody . You know what that is . Thats how much the natural debts up since our birthday in april 1989. Its currently about 17. 6 trillion. 516 . Heres something neat. Lower rates. First of all, this will blow you away. Fed funds, the target, not the effective trade on our birthday 25 years ago, was 9. 75 and the curve was inverted. Ten years trading 9 paint 20, and 30 years trading around 9 . So, you know, whatever anybody thinks, and it would take me a while to find total return, but the debts moved up a lot, the nasdaq and the stock markets definitely have moved up a lot. Let me tell you. When youre in a 9. 25 on a 10year and youre now down to roughly 2. 70, thats a pretty large total return, as well. So that wasnt a bad investment either. Carl . Kayla . Back to you. Rick, thats why we have you here is to bring us numbers like that. You mentioned, rick, that today is, of course, the 25th anniversary of cnbc. Youve had stellar moments yourself. Take a look at some of these. Smash some deficits smash some deficits this is america how many you people want to pay for your neighbors mortgage that has an extra bathroom and cant pay their bills . Raise your hand [ boos ] president obama, are you listening . Were thinking of having a Chicago Tea Party in july. We have the take in. The take is where the natural gas goes. Put the valve on the tank, put lines underneath that run the natural gas up through the front. Purrs like a kitten. If you want a lipstick big enough for this pig, i think that this might do the trick. You know, when you need a 22 trillion bandaid, maybe we can find one. And we have our chance today to fire the bazooka. You need to be careful, because when the barrier entry is low, the stock might go down carl, back to you. I tell you what, rick, no one uses props as well as you do. And ill tell you, i dont think weve had any single prop that had a budget more than about 4. So its always fun for us in chicago. And i also have to thank one other group, carl. Thank the viewers and listeners on the radio. Its been a fun ride. Im going to be here another 25, trust me. Im going to keep all the politicians in line. And give you everything you ever wanted to know about the yield curve and more. Rick, i think we should make a museum or shrine for the lipstick, the brick wall, the sledgehammer, the bubble gun. You have a lot of good ones. What happens to them when you are done with them . Do you keep them . We put them from the prop recycle bin. We try to deconstruct them and reconstruct them and reconfigure them, because we want to stay on budget, you know . Well done. Yeah, gallagher can be the curator of whatever museum you put together, rick. Well talk to you later. Rick santelli in chicago, helping us celebrate 25 years here. The dow is down about 15. Check out shares of sandisk, theyre rallying after the earnings beat estimates. The numbers could show where sandisk and other chipmakers are headed in the future. The ceo will have more with jon fortt in a minute. 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. [ 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. Coming up at the top of the hour, is the correction already over . Were going to find out what the traders think and how theyre playing it, and well help you process the barrage of Earnings Reports and decide which ones matter most to the market. Meantime, shares of netflix down nearly 30 from their highs, but one analyst just slapped a buy rating on the stock. Were going to talk to the man who made that big call, all straight ahead at the top of the hour. Lets go now to seema at the nasdaq where we continue to wait for weibo. Seema . Thats right, scott. Were waiting for them to list here on the nasdaq. The nasdaq said that at first it was expected to list at around 11 40 a. M. Eastern standard time. We now understand that weibo will now list closer to 12 00 noon eastern standard time. On why weibos listing so late, we dont have a reason, but sources of mine telling me that we understand this was a decision of the underwriters. Goldman sacks is an underwriter for sabre and weibo, two ipos here on the nasdaq. And at goldman sachs, among other underwriters, they wanted to pace out both ipos. That according to sources. So we still await weibos listing on the nasdaq. We are hearing it will be closer to 12 00 p. M. Eastern standard time. Thats noon here on the east coast. Carl and kayla in. All right, seema, thank you very much for that. Seema mody. Shares of sandisk popping 6 , actually closer to 9 on these betterthanexpected earnings, the best performer on the s p. Jon fortt joins us with an exclusive. Jon . Thanks, carl. Were joined by sanjay mehrotra, the stock up about 10 , right now at 52week highs. If we were to close near here. Sanjay, thank you for joining us on first on cnbc. I want to dig into the performance, particularly the bottom line, driven by flash drives in the enterprise. On the one hand, we have hardware unpopular at ibm, the commodity sort. On the other hand, we have you outperforming in a highperformance hardware. What is driving that segment of your business . Is it big data and analytics . Thank you, jon, for having me on the show. You know, certainly flash is really becoming indispensable to the data centers, to the i. T. Infrastructure portion of 1,000 companies, and flash really is making access to data faster and is helping enterprises and data centers run the applications faster. And as you know, the Growth Trends today are all about data, data analytics, data storage, and flash is very much at the heart of these trends. And sandisk has the strategy of continuing to strengthen the mix of its Portfolio Solutions through highvalue add solutions. We are executing very well to our strategy across the board, and its not only about flash and enterprise. Its also flash and mobile devices, smartphones, tablets, all of these really contributing to growth of our business. And i want to understand that, too, because we hear a lot about saturation in the Smartphone Market. Growth isnt what it used to be. But at the same time, you seem to be making some incremental gains there. What is driving that portion of your business even as a lot of your profitability seems to be shifting toward commercial . I think whats important to understand is that while the growth of the premium smartphones may be somewhat slowing down, particularly in the developed countries, in the emerging markets, the growth of the budget smartphones and midrange phones continues to grow rapidly, markets like china, india, and latin america, these markets. And sandisk has solutions that Flash Solutions that are used for your music, your videos, for storage inside these smartphones, and sandisk also has solutions that removable cards, as a brand globally, were able to sell worldwide. So the trend of mobility and continuing growth of smartphone worldwide is really helping, and our strong position with our customers is continuing to help grow the business. So twopart question how long is the runway for growth in each of those areas, when youve got highperformance computing, how long before that market is pretty much served and weve got a replacement cycle . And same thing for the Smartphone Market you were just talking about. So i think lets look at computers. This is early stage, really enabling the experience of fast bootup access time, Notebook Computers, as well as high performance, and, you know, over the course of the next few years, the penetration of drives in Notebook Computers will continue to increase. Smartphones, early stages still, you know, the smartphones growing from about 900 million smartphones last year to over close to 1. 5 billion smartphones in the matter of a few years, and that means theyre continuing to increase in the features that are requiring more flash storage. Of course, the hyperscale data centers, this is very early innings. This market has just started. Were gaining substantial momentum in this market. Certainly a nice day for sandisk investors, who were counting on seeing some good numbers out of you. Thank you for joining us, sanjay mehrotra, looking forward to talking to you next time. Thank you. All right. Up next, google is currently set as the default Search Engine on all apple devices, but that may be about to change. Well tell you which company is trying to convince apple to dump google. That story in a moment. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Thats when expertise happens. Mfs. 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So right now, youre taking a look at the indicative price, 16. 50, so thats below where it priced last night. 16. 50, the first indicative price for a trade of weibo. It says that 1. 7 million shares have paired at that price so far. Of course, that is the famous crossware, we always look, carl, to see where that will open, though that could still move. Yeah, as we await the first trade in the next ten minutes or so. We will soon find out. As we wait, despite the seeming tech malaise, vc investors are using Online Marketing tools to create brands for a new generation of consumers. This week, chubbys, a site that designs and sells mens shorts, developed some funding from some of the biggest names in fashion and retail investing. Kyle and mark are two of the investors, and they join us from San Francisco. Guys, good morning. Great to have you with us. Good morning. Good morning. We have samples here on the set. Our crew was just commenting how much they like them. I didnt realize all right. The market for casual shorts, 3 billion and highly fragment, right, kyle . Yeah, absolutely. So the market, as you said, is about a 3 billion market. And whats exciting about that for us is that that no retailers really wholly owned that specific market. And so, if you look at our site, we have over 100 different types of shorts across four categories. And really wholly owning being the goto place if youre looking for shorts. Tom, you tripled sales last year. I think youve also said no plans to expand beyond shorts, no plans to expand to womens clothes. How do you why maintain that kind of discipline in terms of your skus . So the biggest reason is for our customers, just to have a very intimate understanding of what exactly we do. We want to really associate the term shorts with chubbys, and the way were doing that now is a laser focus on that product category. We also want to make sure were making the very best quality of anything we ever put out. And longer term, it defines the brand for the guy, but right now, its shorts and the best ones on the market. Im personally allergic to shortshorts. I remember back in college, there were some of the fraternity guys who wore shorts in winter. Who exactly is your target market . These arent cheap, and some guys just wont wear booty shorts. Yeah, so the target market is probably an 18 to 25yearold guy. But more than that, its about an ethos. Our guys are awesomely fun guys, and are focused on having a good time on the weekend. You know, the age range is 18 to 25, but more than that, its how the guys kind of view their weekends and focus on having a good time. Well, definitely doing some squats this weekend, if im going to wear these. Kyle, tom, congratulations on the round of funding. I have a feeling well have you guys back. Excellent, yeah. Thank you. Thanks. Take care. Up next, yahoo Ceo Marissa Mayer has a plan in the works to boost revenue. What is it . More details on that after this break. Thats why i got a new windows 2 in 1. It has exactly what i need for half of what i thought id pay. And i dont need to be online for it to work. It runs office, so i can do schedules and budgets and even menu changes. But its fun, too with touch, and tons of great apps for stuff like music, cause a good playlist is good for business. I need the bosss signature for this. Im the boss. Honestly i wanna see you be brave afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Youre looking at a potential open in the next few minutes for weibo. Right now, 1. 82 million shares paired at an indicative price of 16. 49. Thats gone up by a few cents, down by a few cents, but settling just shy of the 17pershare price, where it priced very late last night. Well get you that trade as soon as it happens. Marissa mayer has an aggressive plan in the works to boost revenue. According to recod, the secret plan . Get apple to dump google, replacing it with yahoo mobile search. Joining us this morning on the phone, kara swisher, who broke the news. Good to talk to you. You say shes trying to get in front of apple executives. Whats important about this . I think theyve been working on the idea of returning to search. Weve been writing about this a lot. Several projects with exotic names, sports names, and theyve been trying to get back into the search. Its a lucrative area, something yahoo gave up several years ago, and something she knows well from being at google. Shes thinking the way to do it is try to replace google on the iphone. Now, this is not a new idea. unintelligible has wanted to do that, also, with the iphone. And so, its an interesting area to think about. Kara, theyve previously given consumers a choice on the iphone, between bing, google, and yahoo by default, but they pulled a stealth to me, and when i updated to the ios, they switched it for me. John and i were talking about this during the break. Well, you are they slowly deciding on this . No, no, no, no, no, they dont give you a choice. The default is google, and you have to go into settings, several clicks in, to change it to yahoo or bing. The default is google. On siri, the default is bing. Many people dont go into settings. As for change, theres probably a box that came up when you were in weather or some other app, and you said, yes, and it changed it. So sneaky. They dont force change you. They absolutely dont force change you. Kara, denny solomon over at search land did a piece, saying theres no way this happens, because google doesnt own the search technology. Really microsoft has the can pull the levers in figuring out how to do search better. Yeah. It takes a lot of engineers to do it. Is it possible apple would still go with yahoo because of how they tailor the experience, or does bing really have the inside lane on this . Well, i dont know if anybody has the inside lane. Google may. Eddie cue, its been written around several times by different people, is particularly head of foreign services. If you can use it a month and not make a difference, you dont feel a difference between google and bing, he was for it. I think apple really got smacked around about the maps debacle, where they switched over to their own maps. That was very painful. The customers like google, they wont be that quick to switch from google, unless theres a great alternative. Now, bing is obviously way further down and has many more has the indexes much larger. Im just saying shes going for search, and this is the way shes going for search. She may not get the apple thing, but shes trying to be heavy in mobile search, because thats the loophole in her agreement with microsoft. Kara, thank you for that. Kara swisher. A reminder, nbc group is a minority investor in recode. Were showing you the first trades of weibo as we hit noon here on the east coast. Scott wapner, youll have fun watching that in the next hour . Announcer the trader with the golden mane, pete najarian, his brother just as large and even louder, john najarian, and the most connected mover and shaker on wall street, or so he says, stephen weiss. And now, your host, the man, the myth