Transcripts For CNBC Squawk On The Street 20140602

As low as 2. 44 or 2. 43 last week. Lets take a look at europe. You can see the marks overseas not too bad, a little more red on the screen. The china pmi released saturday night, people seemed to think that was positive. The nikkei in japan is up 2 . Sent the bonds down a little bit. Hence the yield back a little bit above 2. 50. Let as get to our road map the dow s p finishing may at record closing highs. The nasdaq outperforming both last month and stocks continue the upward momentum through june. After striking a deal to buy beatz the watch is on to see what apple will do for itsen core. Carl is live from San Francisco, hell have the lowdown. Carl icahn, Phil Mickleson and Billy Walters are reportedly subjects of an Insider Trading investigation and icahn is speaking out. Well have the latest on that coming up. We enter june with the dow and s p at record closing highs and four months winning streak. The nasdaq has a 3 gain that it posts in may this week, in fact the markets will be bracing for fridays may jobs report and the ecbs Interest Rate decision on thursday and as i mentioned of course jim, you briefly remarked on, we did get a more positive pmi out of china, that was released i think saturday night that tends to have some impact. So here we are beginning in june, where we find ourselves as i said not too bad. You just talked about the nasdaq. If you recall, lets go back four weeks ago. What the trend was is to say the nasdaq is overvalued and thats going to bleed into the s p, like it did in 2000, we were in april 2000 moment and that story was obliterated. There were some stocks taken out and shot, and it was cordonned off to that group. The ipo stopped, so there was not a glut anymore, that could change of course in september, but everything that was supposed to go wrong didnt. In the interim, we saw some good jobs numbers. We saw Interest Rates go down to the point where people stopped talking about oh, boy, is it frightening at the federal reserve. Remember tapering, we were supposed to sell stocks and tapering . Yes. I dont believe in the china numbers because the baltic freight and copper is not adding up. You get a good china number, people say wait a second they were all bad before this and the takeover chatter is endless and the takeover chatter is what makes shorts really afraid. And activism, too, as we continue to see it rear its head, whether its this morning with starboard and veco or moves on, well get to it on valiant or Endurance Holdings or another deal, ventas buying yet another ventas is nick shoorish again, hes involved with a host of deals, including darden and with Aubrey Mcclendon on a Brand New Company youll hear about that hasnt come public that will be gigantic. This gentleman is who . Nick shoorish, he runs american realty. Thomas piketty talking about ceo pay, hes widely regarded as overpaying himself. Hes created a lot of money for people. Suki pays his people too much but that was a package put in a couple years ago so theres income inequality going on all over the place, companies shrinking the growth, broadcom, a heavily shorted stock in the nasdaq and theres too much activity in a normally slow time to be short and think that you can make money. Okay, that being said, a year ago this time, we started to suffer in the markets, tapering talk, of course, and the emerging markets, wow. They just really kind of recovered. Im still not getting a good read in emerging markets other than people who have an axe to grind in emerging markets. Mexico hasnt come back, brazil is terrible. India, perhaps private and foreign investment. China seems to be going down. They want me to invest in malaysia and indonesia and the philippines. Shame me once, twice, three times, four times, you get your fees to take that money in, fool people with the idea of reaching for yield and we deal with the consequence of your reach for yield. Im tired with those guys getting away with a free ride. Im talking about the managers who always come on and says thats the great growth area. Then we deal with people who didnt know what they were doing and went into that, take big losses and the next thing i know, wow, that was a shame. I know, geez, we didnt understand cheap money, the idea of it going away might hurt the markets more than our own at home. Reaching for yield is the dumbest thing you can do. Dumb in the 80s, dumb in the 90s, dumb now. The people who tell you to reach for yield are shameless charlatans. I cannot play for dinner and tell the truth about these people. You havent been up until this point . I felt last year i let people down by not saying that this could happen if rates rise. It was a bad thing i did. I knew it could happen but sensed those people always say hey listen, i dont want people to lose. Professionals you can be there. Individual Retail Investors its not for you, theres not a lot of suitability there. People will come on air and tell you it is suitable. Lets get to carl quintanilla, second time in less than a week headed out to the west coast, there in San Francisco this time for apples Worldwide Developers conference. Take it away, carl. It is a very big month for tech conferences. We had the code conference last week. Googles io conference later in the month but of course today, they call it the single biggest newsmaking event in technology, centered around one company, and that is apples Worldwide Developers conference here at the Mosconi Center in San Francisco. 1,000 apple developers, 5,000 app developers. Theres a lottery to get tickets to get inside. Banners outside the conference saying write the code, change the world. Developers show up, they get the updates, they get the beta version of the code to write apps for devices debuting in the fall and that helps drive the demand. Well see if theres any indication on hardware today. In the past jobs historically did unveil a refresh of an iphone here. We talked to mike gurman outside the Mosconi Center this morning and said what could happen in the way of surprises . Heres what he said. Apple theres always surprises, qt is the really nice pipeline for the second half of this year so its possible theyll talk about that today when they have developers and media watching closely. Will there be a new iphone or ipad . I dont think so. They like to save those for the fall. Its possible to throw a curveball here or there perhaps, a new watch product or tv related product. Would i count on it . No, but its always possible. Guys like mark who watch the company closely are not dismissing out of hand the debut of some wearable, maybe a watch, or updated set top box for apple tv. More confident in looking for a health book that would be an app that manages and aggravates all of your health and fitness data, itunes radio perhaps broken out into its own app to better compete with pandora and the smartphone news from the ft guys last week, who knows if it will be a true platform in the sense of the word or maybe a Certification Program where apple gives their blessing to manufacturers of other products saying you are now blessed with the halo of producing a product that works with the iphone. Tim cooks keynote is at 1 00 p. M. Eastern time and headlines outside all day long. Carl, i think this is again im hearing a change in the way apple likes to deal things, deal with things. Is it possible tim cook comes out basically and says weve created a huge number of jobs. The real story is you, the audience, youve created more jobs than the federal governments created during this period. In other words once again the inclusion of people who are not apple, in order to make people realize that apple is more than just the company itself. Thats a good point. Obviously domestic mac production for them is a big political card. Theyve beenle to play it lately. There is a sense the conventional wisdom is theyre behind the eight ball. The beatz news from last week lets them come in with a bit of a head of steam. We might see jimmy iovine and dre on stage and some speculate a musical performance to get the buzz going. I think you agree, jim, the stock not withstanding they could probably use. Maybe theyll have shakira, i dont know if you were in Silicon Valley but i love that show. No but im going to watch it right now. Because the sales force has done, your dream force and suddenly dream force has become this event that its a tough ticket. This notion of the tough ticket, kind of exciting again, isnt it . I wish we had a camera across the street because the line outside is always fun to watch, guys, who even at this late hour, a few hours before tim cook takes the staplige, there a competition to get inside even though its streamed and headlines, people want to see this in person. That says a lot about the buzz that apple continues to have years after jobs death, of course, and years after one year after the stock was hitting those 52week lows. Carl, well be checking in with you of course throughout the next three hours. Carl quintanilla of course in San Francisco. Weve got new developments regarding valiants push to require allergan. Well have that after the break and hilton introduces a new brand. Simon hobbs will have a live and exclusive interview with the ceo. Another look at futures, a lot more squawk on the street coming to you live when we come back after this. Questions this morning about an Insider Trading inquiry involving Phil Mickelson, William Walters and activist investor carl icahn. Scott wapner has a closer look at mickelson, icahn and the whole situation. Already reports that the investigation were talking about, which has shocked wall street and the sports world, has potentially hit a snag. The wall street journal saying the investigation going public may have hurt the governmentserts to build their case. For his part, carl icahn has denied any wrongdoing, telling me exclusively over the weekend he knows of no fbi investigation, hasnt received a subpoena and has never given inside information to anyone. He also said that, while hes heard of Phil Mickelson, the two have never met or spoken. Icahn telling me hes proud of his 50year career and unblemished record and thats why this news is so stunning. People have certainly criticized icahns style and takeover strategies over the years but hes never had a big dustup with federal authorities. Blockbuster creditor sued him four years ago alleging he used inside information as he converted his equity stake to debt but that case was dismis d dismissed. Mickelson is mostly mum releasing a short statement over the weekend from the memorial Golf Tournament saying ive done absolutely nothing wrong. I have cooperated with the government in this investigation and will continue to do so. I wish i could fully discuss this matter but under the current circumstances its just not possible. Mickelsons sponsors, amgen, kpmg and barclays, and callaway says the reported investigation does not involve callaway and thus we have no comment on that matter. We would like to note we have a Longstanding Partnership with phil and value our relationship with him. Hes always acted with the utmost professionalism and integrity in our dealings. Important to note neither mr. Icahn or mickelson are accused of any wrongdoing at this point but guys, this was a shocker, friday night, 8 00 p. M. When we first heard about it. Yes, in dealing with icahn as i know you have, scott, and i have for so many years, it seems odd to me. Yes. You can tell the press whatever you want and he obviously wont do that. I dont understand what benefit could possibly these things, i dont know, i mean the trade was in 2011, right . I remember following this fight obviously for clorox, where he failed by the way, icahn, one of his big defeats. Thats the irony in the whole thing. Scott, i read this, and first thing i thought was how outrageous is this . Obviously unless theres some weird guy who is between the government and icahn, how the heck did this get out . The next thing you know, i start thinking maybe mickelson is not a great guy. This is how you wreck people. This is how you wreck peoples reputation. You dont have an indictment. You put something out. You dont arrest, and you wreck them. Who would ever allow this to happen . Now youre obviously, jim, they forced carl icahn and Phil Mickelson and this other gentleman people dont know a whole lot about, Billy Walters, to come out and have to defend themselves. At the top we noted how the case could be hitting a snag, because the investigators apparently had been doing electronic surveillance, human surveillance or whatnot, then when this was made public by two fbi guys showing up at the memorial Golf Tournament in ohio, after Phil Mickelson finished his round, then it becomes public. Now you wonder what the case is. On the other hand, as you know, jim, from your many conversations with pete barrara, the u. S. Attorney in manhattan, theres been a crackdown on insider trader. His record is 800 . You know, but look, you want to go make clear that theres an investigation, you have the fbi show up at a tournament. You want to do it a way where you dont want to ruin this guy, you have his lawyer come in and say listen, this is the way you ruin someones reputation. Its not the american way. Its what happened to giuliani when he wrecked some reputations way back. Early arrest. Yes, its not the way we do it. I looked at the trading in d foods in 2011, you lost anything if you did anything in d foods. I thought you had to make money to have an Insider Trading investigation. Youll be following throughout the day of course. Well check in with you. Final thought for me on this activism is something that we know the federal authorities are looking more closely at in terms of the circles of information, and what does and doesnt actually constitute Material Information in an activist situation where there is occasionally conversation, people are bringing ideas to an icahn for example and things of that nature. Well see how it goes from here. Up next, the mad dash with this man right here to my right. Well count down to the opening bell. Heres one more look at futures. Were back in just a couple of minutes. What can your fidelity greenline do for you . Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. 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. Do not take viagra if you take nitrates for chest pain; it may cause an unsafe drop in blood pressure. Side effects include headache, flushing, upset stomach, and abnormal vision. To avoid long term injury, seek immediate medical help for an erection lasting more than four hours. Stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. This is the age of taking action. Viagra. Talk to you doctor. Over your shoulder, yes. Sorry, sometimes got to finish those songs. We have a mad dash on monday, 7 1 2 minutes until the opening bell. In terms of federal probes and people looking at what goes on. Its alive and well, well, well. Starboard getting active in a new name. It is a remarkable company, a dominant packaging company. You see the assets they have, a lot of real estate assets and different businesses especially chemical business, we know those are red hot. Starboard comes in and write a thoughtful letter that says maybe theres a lot of fat here. This is that new thing we saw. 5. 6 ownership, they want to unlike value. Well see. Right away they do hit with you things like corporate overhead expense 4. 2 of sales. We havent heard from them in management. Three times higher than the 1. 2 average. Its a Great Company and done well. No, the stock hasnt done well. The companys done well but maybe with the changes it would go better. I dont think its a bad idea. Its a combination of mead office supply. They have a lot of real estate. It makes tons of sense to me. And of course a fight to replace all of dardens board of directors. Each time we report on these things we incense, enable some of the activist, we give them a platform, their name becomes bigger and powerful. Broadcom. Weve seen them flailing, try to stay in qualcomms orb so to speak. Theyre offloading the cellular base band systems, 700 million in savings. It has been a black hole. David, it is about time that broadcom focused on profitability. If they do, the stock is indeed worth a lot. It has missed quarter after quarter, be very careful. Be very careful. Do we have any idea what this thing is worth, the cellular based band business, jpmorgan is helping them try to sell it. Frankly it may be worth very little. Whats important is that its been a black hole for r d and broadcom has historically had a great reputation but if you were to look at the longterm of broadcom, are you kidding me . Have you developed absolutely no value . Getting rid of a division that doesnt have a lot of value is saying the rest of the company may be worth more than we thought. We got so many other things to cover including bill ackman and valiant getting a lot more, what would you call it, almost constructive in the sense of theyre coming hard at the hostile offer for agn. Thats one of the stories well be following when we come back. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. 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. Youre watching squawk on the street live from the Financial Capital of the world where the opening bell is set to ring in two minutes. Jim, weve been talking about coal. Youve said many times coals done. Right. This morning we get the press release announcing it, not really, the release from the epa of course discussing what weve known was coming this morning, farreaching, new rules that will be put into place over the next well many years. Right. Involving combating Climate Change and by that, trying to cut Carbon Emissions in this country, particularly those from coalfired plants and the like. They are now out. Just having been released. By 2030, the steady and responsible steps the epa says its taking will cut Carbon Emissions from the power sector by 30 nationwide, below 2005 levels. Thats the level theyre choosing, 2005, saying 30 below what we were doing back in 2005. I dont mean to shock people here, but this is very proindustry, much more than i thought. Because theyre going to give governors a lot of latitude. When you deal with aep, and ive dealt with nick aikens, he was on last week. The governors are pressing them to use coal. They dont care coal, natural gas, they had to build these 40year plants under jimmy carter. Theyve receipt ftrofitted and retrofitted. Gchb might be more sympathetic that be the epa. This is not as bad as i thought for the industry and i think that leaked out a couple weeks ago when you saw a spur in all the coalbased utilities. Dont freak out on this. Its not freak outable. Flexible time line for states to follow for submitting plans to the agency, the epa with plans due in june 2016 with the option to use a twostep process for submitting final plans. [ bell ringing ] it more time is sneneeded. Youre not building another coal plant but the existing coal plants are not going to be shut like they made in canada. Canada they called the utilities and said guys youre done. Not here. You heard the opening bell for this monday, taking a look back at hq there on our real time, cnbc real time exchange, showing a bit more green than red. Here at the big board nice video of oil stakes. Very smart. Accommodations in the Natural Resource industry. This is what exactly by the way weve seen other Companies Get into like clean harbors, might be interesting to unload their businesses, just an idea. This is where people can stay. Man camps. Man camps. Over at the nasdaq Alliance Fiber optic products doing the honors. Were starting off this morning, we have a lot Different Things to look at. We mentioned of course in your mad dash broadcom, we havent gotten to Endurance Specialty holdings. We havent gotten to, where theyve increased the pressure. And ventas, i wanted to come back to as well. Deb cafaro is one of my bank of 21, shes created a tremendous amount of wealth building an incredible business in assisted living. Senior assisted living, and she sells one of their, you know, ventas to buy this business, that is being offered by american realty. Arcp has become the most controversial Real Estate Investment trust in the country because nick shoorish has big triple net lease, isnt that them . Yes, they did red lobster. Theyre the ones that agreed with darden to buy the actually buy the restaurants themselves and doing a sale lease back. Exactly. Arcp, well get nick shoorish is a likeable guy, got a loss of things going on. Ventas because of the way theyre doing the acquisition the stock is hammered. They were yielding 5. 5 and theyve been bond market equivalent. I would not run away from deb cafaro. Theres arbitrage presh ubsure this is a good deal for both. Were talking about valiant being a rollup, this is rolling them up, too. Right and at the same time no ones ever said anything other than good things about deb cafaro because she created tremendous wealth and these are companies that do quite better under one roof. Shes been a great rationalizer. Deb cafardo, you talk about her, everyone has the same comment about her. She is the best operator in the industry and doesnt get enough credit. Why . One of the least promotional people ive ever met. I begged her to come on for years. Finally i used every Real Estate Investment trust contact i had to have her come on. She comes on, selfefacing, but she is not a promoter. Shes an operator and a good one. I want to look at shares of ihg, Intercontinental Hotels group. Later on this morning, as our viewers may know, simon hobbs will be at a hospitality conference not far from here interviewing the ceos of hilton and of starwood as well, fritz van passchen. There are a number of rumors that impacted the stock for the better and potential buyers for the worst. I can imagine Van Paasschen is not going to talk when asked about the takeover but people close to the company is that starwoods not interested. Starwood is not interested. The pressure on starwood is to buy back stock. Its got a great yield. Simons done remarkable work on the idea that no new hotels, very few hotels have been bought, have been built, so there is an idea that you can buy them cheaper than you can build them. Some of the lower end brands youll see, we also get inversion with this thing. Tax rate is not that great but i come back to it on the tax inversions, as much about being able to deploy cash held overseas back in the u. S. Without having to pay taxes on it that the inversions are also being pursued or why the inversions are also being pursued so aggressively. Thats not stopping. I know i say that all the time. We will see more. I wanted to point that out on ihg again, im sure well get a lot more insight into the overall industry from simon when he sits down with the ceos. From what i am hearing from sources no interest on the part of starwood in intercontinental. We have a lot of 80s things happening. In the 1980s that was the great food consolidation year, pillsbury, general foods. We had another thing happen at the begin of the 80s. Oil companies would put out releases that they had found oil, dome we opatrol yum goes to 400. Were back. Good rich petroleum talks about fines in the Louisiana Mississippi border. You see the stock take off here. This is incredible to me that we are now back in the era where theres so much oil in this country that when you hit pay dirt, you issue a release, your stock goes up. David, this is early 80s, and then it was canada, now its usually eagleford, east texas or south texas. Permiant, still. Rbm does the best research, new pipeline this time coming from the delaware basin. You get that pipeline to the east its remarkable. That will be eog, you know thats my favorite. I keep recommending it because they keep finding oil. Enron, oil and gas. Well, you know, yes. Thats what it was. Yes. I keep mentioning Endurance Specialty holdings. Why . Because they have increased their proposal to acquire Aspen Insurance holdings to 49. 50 a share in cash and stock. They also are coming after the board of directors trying to increase the size of aspens board from 12 to 19 direct, which shares of endurance are doing now. Another one of the contested situations out there, and weve got quite a few of them as our viewers well know, hillshire or this deal people are not that focused on or valiant, which ill speak about in a few moments, going after allergan. There are quite a few of them out there, whether its pfizer and its inability to want to go fully hostile and not be able to complete astrazeneca. Is there an insurance wave of consolidation . Apparently, i hate these stories, im going to Say Something and youre going to shoot me down. Daichi life is supposed to be talking to protective life. It is an expensive company. When we report on supposed to be talking, where is the value added . The only reason im doing it and i would not do it otherwise is protective is up 7, so i feel like going back to last week, we talked about smith and nephew, maybe it has a bid, maybe not. Thats another 1980s thing, you would hear things from the late great aran greiner at drexel saying wait a second, maybe general foods is in talks and youd say buying general foods. I dont want to go back to that era but we are in an era where everything is rumored and people should be sure they have the facts before they get in. There is now a good deal of robust m a activity. All the reasons that have been there for years but this time there seems to be a psychological change in the willingness of the decisionmakers to actually say okay, were going to go for it. Perhaps having seen a competitor do it. It tends to force their hand more than they might otherwise, perhaps also some decisions in terms of deploying capital, not just for stock buybacks any longer but in what might be more productive realms, if that is considered to be m a. Weve seen lots of destructive m a in the past but shareholders of companies doing the acquiring, not in the case of hillshire but often the case believe they are going to be good stewards of their capital and applaud when they see a deal. Francois nader has a big drug in the pipeline, done unbelievable drug work and theres rumors that he again only commenting on it, because the stock is up 5. Yep. Story on friday, thats right, ft alphaville i think. Your caution is well thought out, because its painful. Yes, because you can get caught in these things and i certainly dont have time to track down the different rumors and see whats true and not. You were surprised at that. He has a great thing going. He has a big approval hes hoping for and in the fall and why would he sell now . Why would he sell . Hes a terrific operator. Im going back over a lot of things that hes told me in the past, hes got a july 24th nat parra hearing in hyperthyroidism. Why would he sell now . It sounds wrong to me. Thats important to share. Bob pi ssani is back on the flo. Mixed market, happy monday. S p is at a new high. Transports every day, theyre a leadership group, energy and materials, better on the cyclical side. Golds down again, we dropped almost 50 in the last week or so on gold here. Look, everybody over the weekend was again trying to figure out whats going on with the global low Interest Rate environment. I told you last week and its still happening, the biggest beneficiary of low Interest Rates have been emerging Market Countries and frontier countries, theyre doing fantastic. Double digit gains. Nobody is paying attention to countries like turkey or egypt or the fill peeps or vietnam. Ive listed the etfs here. There are a little bit of currency effects going on, because these particular etfs dont x out the currency effects but you get the point and the oldfashioned emerging market ones that have been around for a while are doing better. Indonesia is up 18 . Thailand is up rather dramatically. The one sick man out there is china. Thats the problem with these emerging market etfs. This is the one everybody owns because its so top heavy in china, its really been underperforming. Its basically up 1 to 2 so far this year, thats far below what most of the other emerging markets forring. Put the fxi up, thats down about 4 . This has been the sick man of emerging markets for years and years now. Maybe it will get a little better at this point. The chinese pmi numbers for may were better than expected but still dramatically underperforming. Why the outperformance . Number one clearly is low global Interest Rates. Thats really what matters in these countries. Thats powering them but other people over the weekend argued there are some other things going on, the valuations are compelling, when you have developed markets at international or historic highs, the valuations are more compelling and while theres been a few crises in ukraine, thailand, none have really ripped into the Global Markets in any substantial way so theres your points on whats going on with the frontier and the emerging markets. Lets talk about some gapers right now. Broadcom was up dramatically in the preopen, up again here now, exploring Strategic Alternatives for their cellular base band business. That would be a positive for qualcomm, either going to sell or shudder that business here. Cons excellent numbers overall, samestore sales up 16 , that was a bit of a surprise, tripor up, allergan increasing their offer on friday talking almost 53 billion now and pershing verb behind the whole deal trying to replace the majority of the Board Members on allergans board here. Finally, i just want to point out some of the early comments on the Second Quarter that im hearing. Im rather surprised, thisser not very good right now. So far, there have been 117 companies have issued guidance for the Second Quarter. 103 are negative. Thats a shocker. I hadnt done these numbers until this morning. Almost 8 1 negative to positive numbers, that is very, very high, and unusually high. As of right now the early indications is much more negative than positive commentary for the Second Quarter. By the way, david, we are getting 3. 5 Earnings Growth for all the commentary you started out with negative Earnings Growth for the First Quarter, 3. 5 is the number that we get right now and the bottom line is, we usually end up beating by 3 or 4 percentage points, thats whats happening now. Still meager but still enough for a nice little gain. Back to you. Thanks very much, bob pisani. Wanted to come back to something bob mentioned the fight for allergan. 2 30 on friday, strange timing it would seem when we learned after allergans stock halted that valiant was increasing yet again its offer for the company, only two days after having increased it originally. The 58 30 cash portion of the offer goes to 72 a share, roughly 23, little more than that above where valiant started its bidding for allergan, bidding against themselves of course. Right. Strange timing on that. They follow this up morning with what i would argue is perhaps even more important which is outlining a path here that is much more realistic and typical of what we see in a hostile fight. Remember this reverend dam bill referendum bill ackman was talking about, none of it was bind,s that he aout the door. Pershing is trying to replace the board of directors at allerg allergan enough of them so they can say why he to this deal and theres the possibility of valeant moving to an exchange offer. Its on firmer and hostile footing with a 23 increase from the original bid from valeant. Timing wise as i pointed out many times, this has a ways to play out. It gives flexibility to allergan to try to consider its options, but as ive also said many times its unclear that allergan is going to say no, no, no, and five months later, lets call it november at some point, when the meeting is actually held, theyre going to be able to win, and retain control of their own board of directors. So we shall see what it is that allergan can actually do. This is no longer a delevering transaction for valeant. The idea that allergan to colever up its Balance Sheet more could be a deterrent though not completely a deterrent. Jim, valeant needs to get its stock price in the right direction, which is up. Typically the stock price would move higher but allergan itself has attacked them wholeheartedly now fullthroatedly so sotospeak and its hard to imagine, though we have seen it in the past them turning around and saying okay, when 44 of the consideration that youre getting as an allergan holder is going to be in valeant stock, where you own 44 of the combination, excuse know. Ive seen behind the scenes and we all have our sources, its not like theyre coming out and saying please go on tv and say this, im getting pushback from real top ceos saying this is an outrage, that david pyatt built a Great Company and imvented new drugs and done great things. I have never seen a pushback before from prominent ceos saying when are you going to stand up and Say Somethings wrong . They dont mean a thing here. The only thing that matters is his Shareholder Base and his base has not been making a great deal of noise. You havent seen the big shareholder come out and say youve got to go to the table. That could change. Pershing square saying it attended two inperson meetings last week, six in the top ten nonindex investors representing 29 . Theyre starting to get real support from them who believe a proposed merger is highly strategic and create enormous value. I would argue forget your ceo friends. Its only when his Shareholder Base starts to speak publicly which they havent at this point. I only mention it because this level of activism, there will be a backlash at a certain point. Youre right, the ceos who came forward to me, there are trees falling in the woods. A big spread if you do 0. 83 plus 72 bucks a share and the possible cvr for darpin as well. Were going to get one quarter of earnings if not two between now and the special meeting to replace the board and the question becomes still what can allergan if anything do . A lot of firepower used here early, early in the battle by valeant i would argue. They come with the big guns and maybe havent saved a lot for the end. Rick santelli at the cme group in chicago. Thanks, david. Pyramid shift on the yield curve. Most are up several basis points from their settlement on friday and if you look at a oneday chart of tens you could see it shot up a bit but maybe if the twoday chart gives you a better technical glimpse of the notion that the minute we traded above the high yield low price of 2. 49 from friday, you see it accelerated a bit, a technical feature in important of the ism number coming out. Oneyear chart reveals were hovering in a zone of low yields that dates back to june of last year. Lets look at relationships with other sovereigns. Weve talked about this a lot, keeps you out of trouble. Tenyear chart of boones versus tens, we hover in a zone set up in april, basically at 9. 5year wids even though theres been a readjustment of some of the southern securities against the boone, this relationship against tens is not altered much. If you think this is wide, look at the 17, yes, 17, 17year wids of boones versus the gilt. The uk tenyear dates back to 1997, since weve been this wide. Currencies in lieu of the meeting thursdays ecb and overnight germans inflation rate in a variety of their areas of the country and definitely less than expected, but tomorrow, we get the eurozone aggregate cpi, we should Pay Attention to. You see the euro there, looks like 136 is what we see the currency defending in front of the ecb decision to ease or not to ease more, and the last chart is the dollar yep and it certainly is sideways, even with abes 60page reform, yes, 60page, footnotes on any legislation and ideas here is usually five times as big. David, back to you. Thank you very much, rick santelli. Bristolmyers making news in the battle against cancer. Well have a live interview with the drugmaker answer head of oncology coming up. Lots of buzz around apple as it gets ready to kick off its Worldwide Developers conference today. Carl has more in San Francisco. Squawk on the street still here at the nyse and were back after this. Drivers want to go further with their electrical vehicles. But you cant take a trip from lisbon to stockholm if you cant plan and recharge along the way. The European Commission is using cloud to make this possible. Creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go and when they want to go. I got lots of advice, but i needed information i could trust. Unitedhealthcares innovative, Simple Program helps moms stay on track with their doctors to get the right care and guidance. anncr vo thats health in numbers. Unitedhealthcare. Peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Announcer from your first move in the morning to your late day market in nufr, strategy and insight, join Brian Sullivan for talking numbers powered by cnbc and exclusively on yahoofinance. Com, sponsored by charles schwab. It may be statistically warped price weighted index that we continue to follow for some bizarre reason but there it is, the dow 30. We follow it because our parents followed it and our grandparents followed it. So long for tradition at least. We have stock trading coming up next. All right, all right. Making new york state number two in the nation in new private sector job creation. With 10 Regional Development strategies to fit your business needs. And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. Could mean less waiting for things like security backups become the next business to discover the new new york. And file downloads youd take that test, right . Well, what are you waiting for . You could literally be done with the test by now. Now you could have done it twice. This is awkward. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business built for business. Its time, time for kramer and stock trading. A stock bullet proof in the softwares of service, software, internet, ecommerce segment. Its been bulletproof and the stocks name is zillion row, letter z, you roar as woolworth and use the anachronism of a dow stock. This morning, both Pacific Crest and rbc downgraded saying theres little upside, that it sells at 12 times ev, which is the highest of any of the companies other than fire eye. David, my prediction is this. The ceo, spencer, is probably behind me saying how can you mention this . Spencer is one of the most activist ceos and someone i have to tell you a great spokesman, the zillow ads are everywhere. He told you hed carpet bomb in order to wipe out true leo, although maybe theres enough room but zillow is the most expensive and i would be careful speculating right now that you have a bottom when two firms downgrade. What happens is then the salesmen will get on and say listen its not too late to sell zillow but they should also add one other thing, until spencer comes on and says its cheap. And he will. Are you kidding me . I think hes booking himself right now. There he is. What do we have on that . Alliance data systems is a stock that isnt talked about enough. It is one of the best barometers of retail sales. Ed heffernan, i love him, he gives you the known. Gary evan has teamed up with relational. Is he another one of the wildcaters that is changing the face of america. Hes got West Virginia properties. There is oil in a lot of places we didnt think there was oil, david, and that is really boosting employment in this country. Im telling that story. You cant stop me. All right, i wont. 6 00 tonight mad money. Breaking news on ism data enaConstruction Spending, top of the hour. Moving across the world . To join a start up. So he sent money and rented an apartment in a new land. Thats crazy, his boss said. What fun is life if youre not,he said. In over 700 cities worldwide, products and services that make a citi client anywhere a citi client everywhere. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. Welcome back to squawk box. Breaking news. April Construction Spending rising 0. 2, onethird of expectations, but last month, the 0. 2 was revised up to 0. 6, so kind of call it a wash to some extent. May ism, 53. 2. This is indeed a miss. Were looking for a number closer to 55. 53. 2 equals what we saw in february. We have to go to januarys 51. 3 to find a lower number, and prices paid, buckle up, move from 56. 5 to 60. 0. Anybody looking for signs of inflation . Sarah, back to you. Thanks very much, rick santelli. Want to dig deeper into the Market Reaction and the data. Weve got our seepor economics reporter Steve Liesman joining us from hq. This was a miss on manufacturing but indicated expansion following a few months what have weve been seeing. This number has not done a good job over the years since the recession, forecasting the level of growth. Anything above 50 is definitely growth. And this is a miss as you say, i cant look in the internals and find anything good. The only thing i know is that come into this report, six of the seven Regional Manufacturing surveys had indicated pretty strong growth in manufacturing, which is why you had some buoyant numbers out there in the 55 range. The construction rebound is going to flatter probably the First Quarter of gdp but not the second, so 0. 2 a somewhat higher even. Well check on that as the morning goes by here. The Employment Index in the ism is the only troubling one here. 51. 9 and i want to underscore what rick said about prices paid being up to the 60 range from 56, something to watch right there, the Employment Index falling to around 52, 54. 7, sarah, so definitely a miss, something to watch, big week of data, well be following all the data including culminating on friday with the jobs report. David . Thanks very much, Steve Liesman. A golfer, a gambler and one of the worlds greatest investors caught up in a federal Insider Trading inquirinquiry. Scott cohn is at hq is has the latest. David, the fact that were even talking about it at this point does present a problem for federal investigators if it they were hoping to do any undercover work in the case which makes it more curious that federal agents conspicuously approached Phil Mickelson last week at the memorial tournament in ohio. Over the weekend mickelson said hes cooperating. I have done absolutely nothing wrong. Thats why ive been fully cooperating with the fbi agents, and im happy to do so in the future, too, until this gets resolved, but for right now, hopefully it will be soon. Right now i cant talk much about it. An attorney for mickelson says the golfer has been told he is not a target, but what about the others . Gambler Billy Walters isnt talking at least not to the media. He supposedly is the middleman for tips from carl icahn, who insisted to our scott wapner friday night he has never given out Insider Information and hasnt heard from the feds. The wall street journal reports the publicity scuttled plans to wiretap icahn, but thats not the only way to make an Insider Trading case. The government at least the sec part of the government can do this by circumstantial evidence, if they show telephone calls immediately before trades or meetings that occurred and then trading that took place. The stock at the center of it all is clorox, a chart from 2011, the big jump in july is when carl icahn announced a 76. 50 a share takeover bid. Days before it was heavy trading in color ox options. Did someone like mickelson and walters know the bid was coming and would icahn have violated anything if he was the source . The law is murky, david, and sarah, and so are the facts here. Absolutely, which is why we want to dig into it further. Thanks for the setup, scott cohn. Where does this case go from here . Richard holwell, former Federal District judge in new york, certainly a high profile cases. What do you make of the case the fact that its in the press and that may keep them from going further like wiretaps . Its curious how it got into the press. Certainly the suspects, targets or subjects or simply people of interest, have no reason to be leaking this to the press, so some can say that maybe the government has leaked it to attempt to stir the pot, get information flowing. Would that work . It can work. They arent just smearing the high profile people were talking about . This may not be a matter of mr. Icahn himself doing something wrong or alleged to do something wrong. Lot of people who work for his organization, maybe an intern said something he or she shouldnt have. I come back to icahn and what would he have to gain from sharing that information, and would the government, if they were to try to bring a case, which we know is far from conclusive at this point, would they have to prove that there was some benefit to him in giving the information to somebody else . Well, there are a lot of problems with any kind of suit against mr. Icahn at this point. Not the least of which is the fact he probably didnt have any inside information about clorox. So the fact remains, though, is that there is a gap in the area of tender offers and theres nothing particularly legal from people who are acquiring stock in making that public. And you know, there is a lot more talk about the authorities looking at activism and the chains of conversation and information that take place but this is an admittedly murky area right now, knowing that youre going to acquire stock in a particular company and potentially try to replace the board or get them to do something isnt necessarily material, is it . Well, it is material not inside information, and possibly inside information in comparison to mr. Icahns company but certainly not with respect to clorox. What is your take overall . Is this a big nothing and thats why they did leak it to the press . There is certainly smoke here. These investigations start either with the financial regulatory agents or the sec that monitored trading before these types of announcements, and they saw something not unusual. Its going to be difficult to prove as david said the fact that it was material, nonpublic information that was being leaked. Absolutely correct. What about the timing here . You cite those things. Usually we see action within weeks sometimes when we see unusual option trading or something along those lines, and somebodys brotherinlaw is taken away. This has been four years. This is normal to see this type of movement before an announcement. Its not always a sign of trading, a sign of information, sometimes you know mr. Icahn has filed a 13day saying hes got 5 of the stock of the company, people are going to anticipate he might make a run on it, if only to drive up the price. My point is four years passed since this trading took place. What does that say about where theyve been . Timing it self is not necessarily a negative here. The government has its statute of limitations. Yes, its starting to feel a little steal but if they thought they could get the goods, it wouldnt stop them. What is the next move from the prosecutors. Do they have enough to send out grand jury subpoenas . I think they do. They surely do and now that its public they have no reason to scurry around, if you will, quietly. They will issue document request, the sec probably will, the grand jury could be impan impaneled. There might be one impaneled right now, we dont know because thats secret. What is your guess here what happens . I know my guess, smoke not fire. Smoke not fire. Judge, as always appreciate it, thank you. My pleasure. Judge holwell joining us here at post nine. Top ceos in the Hotel Industry are gathering in manhattan for the 36th annual nyu Hospitality Investment conference. Simon hobbs is here and joins us with a special guest. Good morning to you and hilton kicked us off at the nyu Investment Conference by announcing a new brand for four and fivestar hotels in urban locations that they can kind of mop up those that are not already customers, joining us now for cnbc exclusive is the ceo of hilton worldwide, chris nassetta. Good morning, simon. Great to be here with you. Why when you are doing as well as you are with the ten brands that you have, youve got 18 of the hotel rooms under construction around the world, do you need yet another brand . We do have 18, actually 18. 5 of the rooms under construction in the world and number one in every single region in the world but the reason we launched curio this morning is simple, responding to the demands of our customers and owners. Both of our customers and owners have said increasingly they see an opportunity for urban and to some degree resort assets that are very unique in their characteristics in a particular market but dont necessarily fit within the confines of any of our existing brands. Sure. And our owners want to serve customers and obviously we want to serve customers. Another brand coming up, accessible lifestyle brand youll launch before the end of the year. You said you think its a mistake to target the up and coming generation of travelers, the millenials, as your rivals are doing. Why do you think theyre making a mistake . I dont think its a mistake. I think what ive said is that i think all of our brands 10, now 11 with curio, need to appeal to a broad base of customers including the millenials, not that any one brand would be solely focused on any one age cohort. In our lifestyle brand which were not talking about today but briefly, well talk to you again in the fall when we launch it, it will appeal to a broad array of customers including millenials and may disproportionately weight heavier to millenials. All of our brands, there will be a segment of millenial customers we are trying to appeal to. Chris, you are a Big Personality backed by blackstone, which is a huge owner of assets now and people wonder what your big thing will be. At the moment youre very focused on paying down debt, up to 9 hub million this year. Thats right. To return to Investment Grade by the end of next year probably. Thats about right, yes. Why dont you accelerate that . You own an entire block of manhattan on park avenue. We do. Why dont you sell the waldorfs aer waldorf astoria . We are looking at all of the options and particularly the waldorf astoria. Weve talked publicly on one of my visits with cnbc about the options were exploring. Are you waiting for people to say yes ill buy it . The waldorf is a complex asset in terms of what we could do with it from a use point of view and structurally what wha makes sense. Were just not there yet. Clearly what were looking to do with the real estate is maximize the value, but we think were in a very nice part of the cycle for growth and operations. We have a bunch of value enhancement opportunities including the waldorf that we think are going to drive significant value. I have to cut you off, so many questions i want to ask you and we run out of time. Keep going. Youre accelerating that pipeline and no impact on the Balance Sheet and no acquisit n acquisitio acquisitions. The hotel owners are paying, were not paying, the Balance Sheet remains as it is. That is correct. Which makes me think youre preparing people to do something with the Balance Sheets. Let me ask you directly, are you the guy behind this report of a 10 billion takeover for intercontinental in the uk . We were not. Would you like to take over someone like intercontinental . That is not in our plan. What we have with our 11 brands, soon to be 12 brands with the Growth Profile that we have, with the 40 million plus honors members we have hitting broad geograph geographic, geographies around the world with very broad geographic distribution and significant chain scale distribution, honestly, simon, we think we have everything we need in the company, to be very successful, which is i think supported by the fact that as you described when we started that were the Fastest Growing in the world. But at the same time the way that the tax system works means you are at a disadvantage, some would say, from being in this country, tax domiciled here, why dont you do the tax inversion like the pharmaceutical companies are trying into the uk, and actually save maybe 20 of your tax bill . We feel quite comfortable with our tax structure and if you look at what our cash taxes are, theyre at a reasonable level in the high teens, and so a lot of people have looked at those types of transactions. Were quite pleased with the structure of what we have, and whats in place. Have you looked at it as a possibility . No. No. Not in any serious way. Would you look at it as a possibility . No. And the reason you and i pointed out, were being successful executing against our plan with our current structure. Its good to see you, chris. Good to see you. Chris nassetta ceo of hilton worldwide. Still to come the ceo of starwood who may have been bidding 10 billion for intercontinental. David, you dont think theyre interested anymore . I can tell you im looking forward to what fritz Van Paasschen has to say. Sources close to the company say they are not interested in ihg. That was an interesting interchange you just had with mr. Nassetta about the same subject as well. Im surprised that stock is holding up as well as it is. Ihg shares down about 1. 6 . Well get back to you later. We have an exclusive interview with ihg on street signs later. Mentioning that on the program. See you a little bit later in the hour. Lets send it over to dominic chu for a which can market flash. Mastec took a hit after it expected Second Quarter results to be negatively impacted by new and unexpected delays in wireless prong spending as well as weaker than expected oil and gas segment results. Down to session lows about 11 off. Mastec is one of the companies thats taken it a little bit harder than the overall market today. Back to you. Thanks for pointing that out. Coming up, if you use an ipho iphone, ipad or a mac, today could mean big changes for you. Apples Worldwide Developers aconference kicking off in San Francisco. Well take you there live to get a look at what we can expect when squawk on the street returns. E financial noise financial noise financial noise financial noise in just a few hours, apples ceo tim cook is expected to take the stage of the companys highly anticipated Worldwide Developers conference in San Francisco. Carl quintanilla is live outside the event with a look at what we can expect. Carl . David, three hours and counting until tim cooks keynote as you said at 1 00 p. M. Eastern time. The doors just opened a few moments ago at the Mosconi Center in San Francisco. Some of the folks have been in line since 2 00 or 3 00 this morning. Lot of them wearing this black jacket that apple gave away to attendees, has the number 14 on the back for wwdc14. Will it be an iphone . Pretty much no. Anybody you talk to is skeptical on that, but the software we see could give some indications as to what a phone might look like this fall especially if the software tends to work better on a bigger screen. We will see. Look for some possible improvements on the ipad, some clarity on the beatz acquisit n acquisition. This show is becoming more and more important as apple becomes less of a hardware play and more of asoftware play. The iphone is half of revenue. Growth has to come from somewhere else. That was a big part of goldmans call last week where they moved their target to 720. Were going to cover it all, beginning at 11 00 a. M. Eastern time on squawk alley and that leads to us tim cooks speech which begins at 1 00 p. M. Eastern time, 10 00 a. M. Local. Should be an exciting morning and in true apple fashion, guys, the stock is down, well see that changes after the keynote. Carl, btig pointed out it usually declines more than 1 on the day of the wwdc and 1. 5 on the day after. Lot to look forward to from you. Good to see you, carl. See you a lot more in the next hour. Up next here on squawk on the street, the head of oncology at bristolmyers gives us the latest on its fight against cancer. Well be right back. Moving our y to new york state. The numbers are impressive. Over 400,000 new private sector jobs. Making new york state number two in the nation in new private sector job creation. With 10 Regional Development strategies to fit your business needs. And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. 800,000 hours of supercomputing time, 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. Whether its building the worlds most advanced satellite, the space station, or the next leap in unmanned systems. At boeing, one thing never changes. Our passion to make it real. To prove to you that aleve is the better choice for him, hes agreed to give it up. Thats today . [ male announcer ] well be with him all day as he goes back to taking tylenol. I was okay, but after lunch my knee started to hurt again. And now ive got to take more pills. Yup. Another pill stop. Can i get my aleve back yet . For my pain, i want my aleve. [ male announcer ] look for the easyopen red arthritis cap. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. All on thinkorswim theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. The American Society of clinical oncology is the worlds biggest cabber is Research Meeting and its under way in chicago. Our biotech and pharma reporter meg terrell joins us live with a special guest. Meg . Hey, sarah, thats right. Im here at asco with brist bristolmye bristolmyers head of oncology, dr. Michael giordano. Thanks for joining us. Its nice to be here. Youre presenting important day in in melanoma and the first drug showed a survival benefit for patients with melanoma. Tell us how the landscape is shaping up for people with this kind of skin cancer and how its changed over the years. Thanks. This has been a really exciting for broistolmyers squibb. Our strategy is to focus on the durability of response and the potential for longterm survival is being realized at this congress. For example this morning we announced very important data on the combination of urevoi, first drug approved for advanced melanoma in combination with your oekd checkpoint inhibitor and that study in advanced melanoma, 88 of patients were alive at two years. This is a phase one study but those survival rates are unprecedented. Huge advances there. These drugs arent without side effects. Tell us about the safety profile of them. Is that concerning . As pioneers in the treatment of cancer with immunoon kohl, e oncology, the first drug we approved, we instituted treatment algorithms which help cancer doctors identify and treat the side effects so we can optimize the benefits for patients. We put the same treatment algorithms into our programs for nevolamab and im cop fortable the oncologists will be able to use that. Can the success be translated into other kinds of cancers . What are you seeing there in terms of lung cancer and solid tumors . Im very excited about the conference. Renal cell and lung cell khan sar, the strategy into durable response, potential for survival, are playing out. Were presenting today some exciting data on renal cell cancer which has given us a path forward to combine those two agents to be able to improve upon the standards of care. Similarly in lung cancer, Bristolmyers Squibb has a broad program across the histologies, the lines of therapies and were confident well have the right Program Designed for the right Patient Population to deliver the potential for longterm survival. And a lot of people, youre talking about combining drugs and to have really good outcomes with you of course you have two drugs and they could be expensive, the average cost of a branded cancer drug up to 10,000 a month. How are you think being price with the combinations of drugs . We take a thoughtful approach and at Bristolmyers Squibb were committed to make sure patients have access to innovative medicines. The treatment for advanced melanoma we have a robust treatment, Patient Assistance Program in the u. S. Which ensures these patients can have access to this innovation. Dr. Michael giordano, thank you for joining us. Thank you. Sarah, back to you guys. Thanks very much for that conversation, meg terrell. Look forward to more interviews from you throughout the day at the cancer conference. Straight ahead what carl icahn had to say about the sec investigation involving him and Phil Mickelson. Plus the epa wants to cut Carbon Emissions by 30 by 2030. Theyre set to make that announcement any minute now. Well have it for you live after this quick break. Shes still the one for you. And cialis for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid long term injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Check for more well, i guess i can double check. My watch [ male announcer ] it pays to double check, with state farm. That corporate trial by fire when every slacker gets his due. My watch 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. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business built for business. A lot of questions today about an Insider Trading inquiry involving golfer Phil Mickelson, the las vegas gambler named William Walters and activist investor carl icahn. Scott wapner has a closer look at mickelson and icahn. There are still more questions than answers but it appears that the governments investigation could have already hit a snag. The wall street journal saying the investigation going public may have hurt the governments efforts to build their case, a case that has focused on Phil Mickelson, carl icahn and gambler Billy Walters. Mr. Icahn denied any wrongdoing. He says he knows of no fbi investigation, hasnt received a subpoena, never gave inside information to anyone and also said while hes heard of Phil Mickelson the two have never met or spoken. Icahn telling me hes proud of his 50year record and unblemished record at that. As for mr. Mickelson, hes been mostly mum on the subject, releasing a short statement over the weekend from ohio where he was prlaying in a tournament saying ive done absolutely nothing wrong. Ive cooperated with the government in this investigation. Ill continue to do so. I wish i could fully discuss this matter but under the current circumstances its just not possible. As for mickelsons sponsors, which include amagain, Kpmg Barclays and exxon, most arent commenting at all. Calloway which provides mickelson with clubs and apparel says theyre standing by their man. The reported investigation does not involve calloway, they say, and thus we have no comment on that matter. However, we would like to note that weve had a Longstanding Partnership with phil and value our relationship with him. Hes always acted with the utmost professionalism and integrity in our dealings with him. We continue to support him during this challenging time for him and his family. David, as i said at the top, many more questions than answers. Where does this investigation go from here . And important to note, as you know, neither mr. Icahn, mr. Mickelson or this other gentleman at this point are accused of any wrongdoing at least at this point. We had judge holwell here most famously sat in judgment on the roger ratnam trial. More smoke than fire is what he said. Thats exactly what he said, more smoke than fire. We have that question, scott, why now, many years after the trades of course took place. Three years. Yes. I wonder, what do we know about William Walters . He seems to be sort of the key in the middle of this thing. Any comment out of him yet . I believe, in fact, that he is maybe in the process of making a statement. Jane wells of course covering that angle of the story. Im sure shell have much more coming up from him. We know hes a very wellknown gambler apparentfully las vegas with a successful record betting on sports. We will see. As you said, scott, a lot more questions than answers at this point. Thanks for filling us in on the latest. Apple engineers and thousands of developers are all gathering today in San Francisco for apples Worldwide Developers conference. So whats going to be announced . Carl is outside, along with josh lipton with a look at what we can expect. Carl . Sarah, i dont know whats more fun the actual conference or the guessing game that happens in the hours and days leading up to the conference. Josh lipton is here with me outside the Mosconi Center and talking to us before he goes into the we wibelly of the beas. Good to he so you. Wwdc says what would dre code. Beatz gives these guys momentum going in. Some of the excitement could see new faces, cook comes out, gives a formal introduction and do we say dre and jimmy eye iovine. Is that the story,ing mat, ios 10 . The expectation is the conference is all about the new software updates, kind of laying the foundation for products that could be on the way, and we just heard apple eddie cue saying its the best pipeline in years. Maybe improvements to siri, maps, maybe a fitness app, does that suggest a wearable is on the way and you think about carl how does ios stack up against the competition, and the most basic metric is, just market share, and if you look at googles android, clearly dominates, 81 . Ios is a way distant second at 15 a cording to idc but all these thousands of Developers Behind us, theyre less concerned about market share than they are about you, and ios makes up 50 of all mobile use, phones and tablets, its incredible. If you are a developer you make more money writing for ios than android. The app story is the battleground between google and apple. Google has the lead in terms of downloads but apple is still on revenue. Lets talk about you mentioned mobile payments, right, the smartphone, the health part. Apple is clearly trying to start, they want to dominate some of these platform refreshes. Theyre almost becoming a bigger story than all right, when am i going to get the next one of these . Right. Listen, in terms of the products, phone, wearable, i think youll look for that in the back half of the year. Today a fitness app would be huge, also the reports that theyre going to create this new Software Platform for the smarthome. Thats the wild card to watch, the idea you control your smart thermostat, lights, security with your ios device. Well see if apple does that today. Youll be tweeting cnbcjosh. I already follow you but everybody should in the next couple of hours. Josh lipton outside the Mosconi Center. Guysing baaing to you. Try to snag one of the 2014 jackets for me, carl, would you . Okay. Thats you wear a small, im sure. Its a small. Ill take any size you can get your hands on. The epa Administrator Gina Mccarthy unveiling the First National limits on carbon dioxide, part of president obamas plan to reduce pollution linked to global warming. John harwood joins us with details, which could have big itch indication fos are a loft industries. Very big itch indications for the entire u. S. Economy as well as the environment. This is something the president s been talking about ever since he was a candidate. He try toyed get limits through a cap and trade system legislatively past the house, couldnt pass the senate. That prospect for legislation died. Now the president s using authority that the epa has as affirmed by the Supreme Court to regulate emissions. What Gina Mccarthy is announcing today is a proposed regulation that would cut car bop emissions by 30 below 2005 levels by the year 2030. Now theres a year Comment Period so youre going to hear pushback politically as well as from business, after that, states would have another year to propose their own plans, this is a state by state proposal each state depending on its own energy mix can choose its own path toward reducing emissions that much. Its significant and also going to cost them money and thats where a lot of the political pushback is going to come. The chamber of commerce was out last week with a study attacking these proposed regulations saying they could cost 50 billion for a year for the u. S. Economy. Proponents say thats not all that much, given the size of our economy and the environmental benefits, so the game is on, the fight is on politically over these regulations, but this is president obama fulfilling a pleng he made during the campaign, and if he can make these regulations stick, because theyre going to be challenged legally, that will be a major transformation of the energy basis of the american economy. John, acting by executive action would be the one area coconceivably still make an impact. Given that legislation wont for the rest of his term theres not going to be legislation on this, Everybody Knows that. Thats why the president is using this authority, he kind of slow walked it up to using the authority because he was trying to work with congress, but it was clear that wasnt going to happen, but this could be a major impact without legislation because what its likely to do by effectively setting a price on carbon, you set Market Forces in play that enhance the renewables which have already grown significantly solar and other methods and you also have cheap natural gas which is lower carbon than coal. Lot of the coal plants are going offline already. Big changes for the u. S. Economy. John harwood from washington. Lets send it over to dom any chu with a quick market flash. All right mr. Faber. Protective live corp. Is moving toward a deal with daichi life. The deal would be a biggest deal in the string of overseas acquisitions by japans insurance companies. Back over to you guys. Quite the jump on that speculation. Thanks, dom. Up next a first on cnbc interview with the ceo of Starwood Hotels and resorts. Well be back with the interview after a quick break. [ female announcer ] theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Lets close the gap between people and care. You need to see this. Show em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. man speaking chinese welcome back to the nyu investment hospitality conference here at the marriott marquee off times square. Joining me is frits Van Paasschen, ceo of Starwood Hotels and resorts. Its great to be back. We have many things to discuss but i do want to start off with the technology that youre introducing, the idea, and youre proving this in hotels that you can have mobile keyless checkin. We launched this in two hotels, Lofton Harlem and Lofton Cupertino in california. You can take your mobile device, checkin before you get to the hotel and then use your mobile device as your room key and go straight to your room. Its a really simple idea, but it changes an ageold pain point for many guests as theyve been traveling in a way that we think is going to be exciting, if not revolutionary. Rollout in 2015 . Rollout to elements in lofton and ws in 2015. What about the google glass, what are you going to do with that . Were working on beta testing using voice activation. It used to be people engage with travel through web search on pcs. Now everybodys gone to mobile. Half of our interaction with people today is on their mobile device which is much more of a dialogue. Clearly wearable is where things are going next. It makes connect i feel that much more ubiquitous and we think it gives us great opportunities to give people individually what they want by having a dialogue. I want to talk about, and i think you need to clarify to shareholders what youre doing on returning cash to shareholders. Five weeks ago you had an Earnings Call you said was the most challenging youve ever faced even through the financial crisis, where the analysts pushed back and said frits your stock is underperforming because youre not buying back stock. One week later your competent cfo left to join our Parent Company Nbc Universal and the day after that the board announced it would buy backs 0 million of stock to year end. Why did that uturn happen . Over the last ten years weve returned cash to shareholders through dividends and Share Repurchases to the tune of 1 billion each of the last ten years. This year between our difficult aends at 750 million and continuing the authorization which was already in place and our intent to complete that by the end of the year, thats 1. 35 billion. So what shareholders are saying is you have a great business model. Business is good. Youre selling hotels, your Balance Sheet is less levelage than its been before. Lets see what you can do to return cash to shareholders. We completely agree. On the other hand you didnt, ive read the call and the First Quarter you didnt agree and it makes sense. It makes sense if the reports are right, and you were talking to intercontinental about spending 10 billion to take them over and you needed to keep your powder dry, and then maybe those talks broke off, and youre not interested anymore, as david faber is reporting, and so you can afford to turn the cash to shareholders of course as a matter of policy, we dont concept on a mermger a e merger and acquisition rumors. We were active in buying back stock last year. This year were continuing that very same program. When we announced we were going to continue buying back on the authorization through the end of the year, we were assuring markets that in spite of many questions that investors had on the call, in spite of the fact that our cfo left, by the way, on very good terms, with no issues. Sure. And nobodys doubting that. Look, frits, let me ask you a direct question. Have you been in negotiations with ihg to take them over in londons aa tax aversion. We make a policy not on commenting on m a rumors, true or false. David faber is reporting youre not interested anymore. Who on your team do you think is telling david that or do you think its not your team . We have 180,000 people in our company. The real sit people are going to speculate one way or another. If you bought ihg it would give you holiday inn, exposure to the mid scale so you could compete with hiltons hatchton and marriotts fairfield. Would you like to gain exposure in some form to that area of the market which you dont have at the moment . So far weve been able to succeed very well by focusing on the high end of the market. People who stay in fivestar hotels, who stay in luxury properties, theyre very unlikely to trade that far down. The second is the middle market of the Hotel Business is not a very globally branded business today. So weve stayed focused on global highend hospitality brands, the acquisition that we did at la meridian eight years ago has been april Great Success for us. Well continue to focus on the high end of the market. It is said if you do a deal with ihg or with david saying youre not doing a deal, but it would be a tax inversion. Youd take the business and domicile it in the uk to say says wells fargo about 20 of your tax bill, Value Creation 500 million. With 60 of your money or profit coming from overseas, is it inevitable in that growing over time that you guys will seek tax inversion . Is that not the correct way to minimize what you guys would call tax leakage . That depends on your definition of correct. Well continue to grow our business in the 102 countries where we operate today. 80 of our pipeline is outside of the u. S. , over 60 of our management and Franchise Fees are outside of the u. S. , and of course, we have to manage our tax planning, but that by itself wouldnt be a reason to do an acquisition and of course i wouldnt speculate as to whether a tax inversion through any transaction would get us there since im not commenting on transactions in general. It would be a helpful addon if you were to do a deal is what i think im hearing from you. It wouldnt be the driver in the hypothetical. In the hypothetical if it improved your tax situation it would be a consideration. If youre the u. S. Government you dont want u. S. Domiciled companies to find a way out the back door. Great to talk to you, frits. Were out of time. Frits Van Paasschen, ceo of starwood. See up the network. I look forward to it. Back to you guys. The relentless simon hobbs with a lot of great reporting on hotelses. Coming up, the big question on everyones mind at the apples developer conference, what is up apples sleeve . We asked the Senior Editor of 9 00 to 5 00 mac earlier today, coming up on squawk alley plus a lot more on the event in San Francisco. Well be right back. Relax into childs pose. Sfx bing. Whos got two hooves and just got a claim status update from geico . This guy, thats who. Sfx bing. And i just got a. Oh no, thats mom. Sorry. Claim status updates. Just a tap away on the geico app. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. 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. Wells. In los angeles, weve now heard from Billy Walters the famous sports gambler part of this investigation of carl icahn, Phil Mickelson. He told the golf channel, i am innocent of doing anything wrong, its that simple. Those that know me best know it is preposterous to think i would be involved in insider training. No one says anything when i lose money for not successful and how it has happened to many of us. The bottom line here is as i stated before, i am not involved in any Insider Trading and never been involved in any Insider Trading. Billy walters telling that to the golf channel. I will be back with more on that and his connection to golf. Thanks. Rick santelli joins us with the santelli exchange. Thanks. Id like to welcome our guest, jeff schneider. Thanks for joining us this monday morning. Thanks. How are you . Very well. In some of your pieces youve written to a great extent how the average consumer may have gotten to the point where hes delevered or hes delevered and you can see this in autos or potentially gscs making extra Student Loans. Are these good forms of credit . Why are they necessary at this point . Whats the problem with the economy creating its own credit . Theres nothing wrong with Student Loans or mortgages or any kinds of credit as long as its done for organic means and organic creation. The simple fact of the matter is were trying to create artificial boosts of credit to get the economy towards an aggregate demand level theres no way for the economy to tell which is artificial and how it will shake out. You end up with a bunch of bubbles and certain areas that dont do much toward the real economy. Back in the early days of the credit crisis, the midst to late 08, many talking you needed priming of the pump. I dont necessarily disagree with that. This is many years after priming. If you have to prime the pump on an annual basis, doesnt that defeat the whole point of what the keynesians believe in . Isnt it a sustainability issue at this point . Of course its sustainability. Were what 5 1 2, six years past the crisis and still talking about emergency monitors to do exactly what you said, emergency measures to prime the pump. It wouldnt need pump priming and move on its own. The difference between organic economy and artificial economy. Whether its ben bernanke or janet yellin, weve heard many times the reason theyre embarking on extraordinary measures is because Congress Wont act. We heard it from the epa, because Congress Wont act. If people are allowed to vote for people they send to congress but not necessarily allowed to vote for mel watts or epa officials, it seems to me this is a go around of the checks and promises and constitution, of the checks and balances of government. Am i right . I think youre right. It goes to this idea of aggregate demand. Some way somehow we have to create aggregate demand and each of the individual pieces of the credit apparatus are taking their own signals from the fed and deciding, well, we will do housing, we will do Student Loans, whatever it is each individual piece wants to do. Theyre all moving towards the same goal, which is the feds idea of pump priming or monitorism to create artificial demand from nothing. I dont know, after listening to all of this, i think mr. Piketty ought to be in charge of the federal reserve. I dont think that will work out. Thanks for bringing that to us. Thanks. Rick santelli. Carl is live at the Developers Conference in San Francisco and talking to everyone about what they want to see. The event of the day. We are back after a quick break. Fame, lets him loose, hard to swallow fame, puts you there where things are hollow the evolution of luxury continues. The next generation 2015 escalade. Fame peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Its the glow of opportunities of countless people, every one of us, striving to succeed. Thats what lights cities up for more than 200 years, citis job has been to help empower people and business. Wherever ideas come alive. Wherever you are. The worlds citi. Good morning. It is 8 00 a. M. Right here at the masconi center in San Francisco and 11 00 a. M. On the east coast. And squawk alley is live. We are live in front of the masconi center in San Francisco where in just two hours the Worldwide Developers conference will kick off with a keynote from the ceo of apple, tim cook. Joining us this morning i cant think of a panel id rather talk apple with. Steven levy of wired and our own jon fortt and the others. Good morning to all of you. Steven, do you think this will be better than most wwdcs . I was there at the code conference when eddy said that. That was an amazing session. This culture merger between the Music Industry and apple, where he came out with that really raised eyebrows, whoa. He said it twice. 92 think of what theyve done in the last 25 years. A real game changer theyve had. Are we going to fin