Transcripts For CNBC Squawk On The Street 20140606

How are we doing in europe is always a question, of course. Largely in the green. Lets get to our road map this morning. And it does start as you might expect with the may jobs report as we mentioned. 217,000 jobs added. The Unemployment Rate Holding Steady at 6. 3 . David, ups announcing ceo david abeny will be elevated to ceo succeeding scott day retiring after leaving the Company Since 2008. We will talk to both of them live later on. The news maker interviews dont stop there. We will speak with the soontobe stepping down ford Ceo Alan Mulally about how he is handing off the iconic automaker. Bank of america is reportedly set to pay more than 12 billion to settle mortgage probes brought by the Justice Department and several states. All right. Not only did the may jobs report beat forecasts of what were about 210,000 nonfarm payroll gains, the private sector added 216,000 jobs. Todays number means the economy has recruouped 8. 7 million jobs lost since the recession. The Unemployment Rate steady at 6. 3 . Forecasts called for a slight increase in that Unemployment Rate. Now this later this hour we will be speaking with jason furman, chairman of president obamas council of economic advisers. All right, all good, nice. I can stay complacent about the market as so many people seem to be . I dont think that this number should worry you, no. I mean i think that complacency about the market is measured by the vix, measured by people not having one step david tepper not being as nervous. I dont call complacency as much as opportunity. This gives you a chance to go for some stocks, not going to blindside you, not going to send you down. A lot of this is europe. Its big bond market, all one big bond market. Im not going to start paying up for get a not going to get a big yield with italy. Follow through from the ecb yesterday and the attempt to combat potential deflation, obviously saying to the banks were going to penialize you, youre starting to pay us if you dont lend. I know everyone might know that my nef few, cliff mason the head writer for my show and we were going back and forth for mad money and saying draghi he is just living, he is saying the republic must be predserveprese. Must not go to the third reich. This is what hes thinking about the far right Parliament Members. This is what i believe. Hes thinking the far right Parliament Members are getting too strong, this is what happened in the 1920s in germany no joke, and has to blunt the far right parliament and i think thats right. People arent talking about it. What do you make of the tepper comments yesterday, jim . The market didnt do much off of draghi and the ecb. Sure shot up when kate kelly did that. Thats right. I think tepper did what you should do. He if you go back, i did line by line parse what he said at salt which he did a magnificent job at and he was saying unless the European Central bank got much more engaged and started doing more he would be nervous but said the market would still grind up in the interim. It was up 3 since he said that. Thats a grind up. What happened . Ecb, im sure tepper was like, my, this is so much better than i thought because it was so much better, and he changed his view. The facts changed what he used to top change yours view. And so i thought everything tepper did was perfect. Perfect. I know people were saying he flip flopped. No. No because he wasnt told you what would make him positive. Nervous time what he said at salt wasnt bearish time. He get off a margin. Said he had the flexibility to get positive or negative. You know, i was out positive right at the top of mad money saying tepper, exactly what you should do. If he says listen if this occurs ill get more bullish and it occurs, what you dont want him to do is say no. I still dont like it. I mean draghi, im sure draghi knew tepper, maybe they do, draghi was at goldman, was somewhere tepper probably rolls in big circles. Regular guy. I dont know whether they speak to each other. Central bankers dont typically talk to hedge fund managers. One of the most charitable guys. Tepper is a good man. Oh, you say got to throw that in there. Why not. Youre right. Applaud it. He should give more to charity. Call people out who dont give any money away. I think its important. Lee cooperman, he at salt was positive on where the market could be. Thats right. I think tepper to go back over one more time is not a flip flopper. He waited to see what the ecb would do and the ecb was im telling you this is about the far right. I am not kidding. This is about the far right. He had a checklist. It was the ukraine elections. Im concerned about that. Those are in the past. Right. Some of the concerns worked out okay. Checked that off. Ecb, draghi walks the walk. Right. At least for now. Check that off. U. S. Economy seems to be picking up. Yes. Auto sales. Manufacturing. Jobs numbers decent. Check that off. Sets up for pretty good. Within this report today a couple positives. Average duration of unemployment fell to the lowest since december of 2010. Matters. Which is good. And you did have manufacturing 10,000 jobs versus 4,000 in each of the previous two months. Very important. Thanks to peter for his quick summation. Thats what im taking this from. Those are some positive things you might want to seize on. Its the federal government that doesnt hire. Right. The federal government lays off people. Our country is probably doing the least to get at the economy going of any major country in the world. Yeah. Participation rate was basically the same as last time, right . I mean no still remains the underlying concern. Didnt budge. 62. 8 . Still as low as its been since 78. Or Something Like that. If the Unemployment Rate ticked up this time, we would probably be saying thats good. You have more people out there looking for jobs. More looking for jobs. I also am now coming around to this idea that every week, baby boomers, its dday, thank you for serving to all. You see the age of people in this country and the next of people, postkorea and now vietnam war you will see many people at retirement age. Yes. Whatever that may be. 80, 85, 90, in the case of people who served in world war ii. My dad retired about five minutes ago. Going on 91. Hes just now winding things down. Shout out to pops. Absolutely. Now that the jobs number is out did you nail the number . We asked you to tweet us your predictions for the may nonfarm payrolls. The winner will receive a cnbc 25 pillow. It was autographed by the squawk on the street gang. Our staff combing through entrants and announce the winner later in the show and often times we have a number of people who got the number right. Its the first entry then that wins. Is that what we we cant get like three pillows . I know. What do you do with the pillow if you win . You cant really lay on it. Sharpie. I hope its sharpie by the wayp. And doesnt come off on your head. You display it somewhere. Like a decorative pillow. Display. It ticks down every time. Next time its going to be like a dirty tshirt. I mean we vary. Mugs, backpacks, photos. Yeah. Pillow is yeah. Lets move on to other news. Thin on the ideas, guys. Ups announces that coo david abeny will become the ceo of the Package Delivery company. That will be effective september 1. He will succeed scott davis who is retiring after serving as chairman and ceo since 2008. Davis will assume the role of nonexecutive chairman. In his 40 years at ups, abeny who i believe is 58, has held various operational positions including president of the companys international business. A live interview with david abeny and scott davis later on squawk on the street. Its funny, davis only 62. I was surprised. But when you look back at the tenure whether kelly or the guy who preceded davis, six years, they seem to be stuck on six years at ups as being an optimal amount of time for a ceo. Well, i think davis did a great job. I know that he is often on the Conference Call talked about the economy and washington has been a problem. I always like davis Conference Calls. He tells it real straight. I think thats a tough tenure, a little window they give you there versus fedex. Your ceo for life at fedex. Fred going on a lot of years there. It helps when you own at lot of the company. Yes, it does. Hes i look theres some ceo turnover. I had doug touf on recently, the ceo of iff recently. He stepped down. The turnover is a little more rapid than i like to see from the guys who are good guys, how about that. Right. Es cue, thats who i was trying to think of who davis took over from and again the tenure more or less the same. Great american story. Starts at ups like 18. Thats right. And now he works his way up to ceo. They have a number of people there in the executive ranks many of whom were were loading trucks and doing things like that. Thats a Great American company. They all watch the show. Dont know if you ever talk about talk to a ups guy, like they watch a lot of cnbc and because theyre all in stock. The employees there have a huge seems like theyre very vested. They deliver a lot of stock when they went public in 99 i guess it was. Its not that long ago that ups one of the largest, of course, public offerings. We had certainly to that point. I know visa trumped that. Another one coming up in late july, early august that may trumpp all of them. Ali. 40 thieves sounds like. Right. But ups Great Success story and wish scott well. Nonexecutive chairman. Yes. That is right. Coming up also well have a live interview with fords Ceo Alan Mulally who didnt need a bailout to turn around that automaker. Always worth reminding people. He will be here at the big board. Find out what mulally has to say about his eightyear stint as the ceo of ford. Saw an interesting meeting took place with eddie lampert. I love that story. Maybe the entire section. Have to ask about that. Another look at futures here. Of course it is an employment number friday. We got the number. Not bad. Not too hot, not too cold perhaps. You can see the market reacting. Goldilocks thing. I know. He was so on his game this morning. Does feel that way. By the way, earlier, it did send the tenyear yield down a little bit, i think. Well see how long that lasts. A lot more squawk on the street. Were going to last for quite a while here at post nine at the nyse. Were back after this. Oh my god look. 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. Welcome back to post nine. Bank of america is reportedly in talks to settle mortgage probes. Multiple reports say the banking giant could pay more than 12 billion to settle with the Justice Department and several states. The probes involve the handling of mortgages before the financial crisis. 5 billion of that amount is expected to go towards helping homeowners and reducing principle amounts and monthly payments. Bank of america and the doj are not commenting on this story, but jim, im sure you are. What a win that would be. My travel trust owns it. Been very unhappy with bank of america. Most people feel who are close to the situation, that they had to pay more than jpmorgan which wrote the big check. But they had already paid a very big check. People forget this is like the second whammy. Pay like 6 or Something Like that already. People can be forgiven if theyve completely lost track of just how much has been paid for various offenses and various areas. You need a big scorecard. You do. Not to mention the putback litigation which is private litigation and or fannie and freddie which say the reps and warranties you told us you said about the mortgages you gave us to securityize were not right and were putting them back to you or penalizing you. Thats a separate area. I dont know where we are. Its like 50 billion. Gary smith, former sec of the general councsel, everyone has been overwhelmed. This would be a huge thing to keep this below 13 billion and i say they have no problem with reserves on this. Thats my view. Reserves are very difficult, dont want to say what they really are because then everyone feels oh, i see, its a honey pot. But i think that theyre well reserved for that figure is what i would say. Probably a good time to sort of talk about investing or buying the banks. Theyve been great. Right . Theyve been great. You get this these kind of overhangs off of your back. If you get rates finally starting to rise, do you get into an environment, anywhere soon, where you should be buying these things. Were seeing really great nonresidential construction numbers coming up. Those are big projects. Never mortgages. Everyone says the mortgage they dont make money on mortgages. If they can get what i would regard as being the nonrevenue producers throughout, these giant legal bills, all the people that are just setup to pay bills, to actually fight the government. All multi multijurisdictions. The government sues you here, there. This would be major. Take a look at wells which has put almost everything behind them. It had wells is up almost 14 this year. The rest of the group its bank. Is down. Still banking. Mr. Stump is doing some banking. Not trading. We know goldman is fixed income, volumes have. Quite low, difficult. Right. Layoffs coming in that area. M a has certainly picked up for some of the banks. Yes. And mr. Stump i happen to like the guy. I know covassvich theres a shot in Tim Geithners book stress tests because he said they didnt need the bailout, they were like the biggest second biggest. But the main thing is when you put this stuff behind you, it changes everything. How much is michael want to put behind . Theyve had its issues as well. Oh, yeah. So i mean the idea of selling it because you see 12 billion you should be buying it. 12 billion. I dont know if i can keep it under that. That would be huge for them. 12 billion. I said that and now the government i know holder watches the show. Mr. Holder. Now hes going back to his numbers like wait a minute. Cramer said they got a deal here. I also told him not to let the airlines merge. A lot of good that did. Instead they went after it snooshs blew me off that one. Went after the book publishers. Up next mr. Cramers mad dash. Well count down to the opening bell. Fords Ceo Alan Mulally retiring after steering the automaker to a recovery, and navigating through a recession, i dont know well have a lot more driving pun ps for you. Take a look at futures. More squawk on the street coming back after this. [ 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. Its a friday and we got a mad dash here about eight minutes before the opening bell for this last day of trading in the week. Where are we headed . First of all youre styling so this may steal the thunder from my mad dash because that is a look that ive got to get to know better so to speak. Excellent. A little baggy. All right. Yeah. Are they baggy . What clothing makes you good, look thin . Tell me. Fashion forward. Yes. Vince. Vnce. This stock is so on fire and it proves that if you have the right merchandise it doesnt matter whether retail, the cold weather, promotional environment, vince has the right merchandise. Great ceo. They opened a new store you and i will have to go to this weekend in the meat packing district in new york. That store, judging from what im hearing you cant get into these places. Scott wapner and i like to wear vince on the weekends. That doesnt show you its last night. Right. This but i want you to keep this in mind. I have to bring up pvh. Pvh missed the mark and talked about you were very unhappy. I was very unhappy. You were almost walking the plank on that one. I think i walked the plank. Alligator with the clock and swallowed i respect that. Manny treeco comes on look. I dont know. I think manny can get it back. I think it was a tough acquisition. Vince has the look and when you have the look, and you have the right fashion, it will trump things. Like the other day when i had skechers on, they have the look. They have women who go to yoga class like to wear different shoes every day. They regard shoes as an accessory. Skechers has the right look in foot wear and vince has the right look in womens and mens apparel. Im not kidding. I will be wearing a vince shirt to see my dad this weekend. And youll actually be able to tell me when they no longer have the right look . Oh. You see early on in the ramp, thats very important you say that. Early on. Because at a certain point, when you saturate, then its, you know not yet. Its early on. I like the stock still even up here. Its not expensive. Coming up white house reaction to this mornings jobs report and talk to jason furman chairman of the president s economic advisors and hertz this morning, that stock down sharply. Were going to tell you why in the faber report. Get ready. We have the opening bell just five, six, lets call it six minutes away. Friday night, buddy. You are gonna need a wingman. And with my cash back, you are money. Forget him. My Airline Miles will take your game worldwide. What im really looking for is i got two words for you rewards. Theres got to be better cards than this. [ male announcer ] theres a better way with creditcards. Com. Compare hundreds of cards from all the major banks to find the one thats right for you. Its simple. Search, compare, and apply at creditcards. Com. First rounds on me. 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 cnbc squawk on the street live from the Financial Capital of the world where the opening bell is set to ring in about three minutes. Going to get a reaction to the jobs report. Seen it in the futures. Doesnt seem to change much in terms of the debate about an economy that does seem to be picking up speed a bit. Not enough that makes it so youre really worried about inflation. Not a lot of inflation. When you look at the jobs at the actual numbers for labor, the Participation Rate, 30year low. Thats what i know you were talking about this morning. This is not one where youre like were out of the woods. Also, you are in a situation where the revenues are going up a little bit, not a lot of hiring. You know what that means . Bottom line profits, dividend is better. Get the inversions going. Suddenly you get much better tax rate on those profits. How about this stat from our peter shack now, back on our news desk, yesterdays s p close compared to the same date five years ago . Exactly a thousand points. S p up a thousand points. How does shack get thats a brilliant i like that. Thousand points. Like a thousand point whatever. A thousand points. Thats like knowing whos on second and third in the fourth game of the world series in 1928. The equivalent of that. Pretty amazing. As were talking you have the rodgy dangerfield market. I dont know what that would sound like. Theres no respect. The stock market keeps going up. I got no idea. Its good. Its good. I know that came out of nowhere. Carl icahn i have to admit. It is. Thats dead on. Queens carl icahn little conversation at some point. Rodney was i got to tell you, carl, i dont know. Ill get there with you. You give all these companies no respect. Wapner man, unbelievable. Hard to focus. Who knew he was going to pull that out. Are we going to have halftime . Rodney could be a special i know, stopping trading and going to rodney this afternoon. Shack now telling us, thank you for the shoutout, right back. People watching the show, lot of good mojo. The whole enterprise, right, david . Yeah. Meanwhile ending the week here, of course, im trying to think about some of the high flyers. Apple had a decent week. The Developers Conference earlier in the week. The stock is up over 15 for the year now. As we sort of end this week. We didnt get that much news conceivably. We got the beats deal over a week ago. Got some new products coming. I think that you got that opportunistic buyback. Look at that move the stock has had. The stock is not that expensive and got that split. Leem like to buy ahead of the split. You pointed out the split could result in some selling. Theres no evidence that a split necessarily improves the stock. Its 50 50. None. I remember in the 90s during the real bubble splits were a reason for stocks to go up 40 in a day. Remember that . Well, we had a we had a real bubble hey suddenly i notice theres a lot of people here. All right. You are watching and listening to the opening bell. The s p 500 back at the cnbc realtime exchange, getting itself sorted out on jobs friday. A cisco competitor. I think cisco is doing great. Risk network. Provide of data center equipment. Cisco is great, celebrating its ipo making my head spin on cisco. Another positive note on cisco. I think cisco is doing very well. How about Dunkin Brands group celebrating National Doughnut day. No, i had nijle long on last night. You get a free doughnut. Its blueberry. If you dont like the blueberry filling dont go. They get smiley toe nuts if you buy at doughnuts if you buy at dunkin. I think its a good story and also life. One of these franchiselike. Julia stuart for i hop, dine equity. Like patty doyle at dominos, big winners. Panera i see not along those lines but a 600 million buyback. Panera, aig aig, another 2 billion. Keeps returning capital and the dollars keep getting of course the swan song, ben mowshay. What a job hes done. Talk about a successor. I think miller was on the other day. Yeah. Whos still still nonexec chairman steve miller and the board is focused on. Thats been a win. The insurers have been big wins. We talk about protective came and went. 6 billion, big deal. You pointed out that could have lifted valuation ace cross the board for the life sector. Whole group doing well. Lincoln financials doing quite well. Travelers, not necessarily competitive in that but has been a leader in the dow, quietly going up. No one talks about it. Intel, leader in the dow, quietly going up. Caterpillar, no one talks about it. Caterpillar had a breakout yesterday because united said positive things. These underneath, these are the things that are percolating. Underneath. Thats why this market is so difficult to keep down. It is difficult to keep down. Are you worried at all about the complacency . About the sense that, you know, the data is okay, employment number fine, but you dont know, people not taking account of storm clouds . Look, i think that the valuations are still not that bad. I think that the most excessive area of the market, software as a service, software as a disservice, hitting up a stock called rally today. Raly. Okay. Now thats rally software is one of these that came public during this moment of good the year of good feelings. Look at that, that stock down 2. 77. When you have these johnny come lately Software Development companies, there are no place to be. The short bases moved up in the work days. So be careful short sellers. Think you had a free ride and you did. Fireeye, short base way too high. Be aware that excess was rung out of this market. Because those stocks got killed. Now they may not be killed enough for you. Thats the key question. Youre bringing up an area for debate. Is it not necessarily time to buy them, i dont hear you saying that. To cover. But its perhaps time to cover and or at least no longer sell. There is no joy in shorts with joy. Joy is coming back because they had a Canadian Oil Sands order and things arent so bad. The short position there is 22 . Thats a little lludicrous. Come on. The stock has been beaten up. Alcoa was a per ma short for a long time. Well speak to alan mulally. Theyre lightweighting there. Some of the Industrial Companies have things going for them and we can pretty much presume if draghi get his way the 20 of the sales that are in so many of the International Companies is going to come back. The autos are good. Remember the autos . Yeah. There was a little bit of coverage at gm the other day i vaguely remember. Yeah. Auto sales gm does it make it harder, jim, in this market, even when a guy like tepper comes out and says that, you know, some of the concerns have been a alleviated to some respect, its still harder to find stocks in this market, isnt it . And what people say is a fairly valued market. Stocks arent necessarily cheap. Theyre not necessarily expensive. What do you find . In the 80s and 90s you had this problem which was that we kept breaking out. You would have these stocks that people would say you know what, 3m, its at 117, i remember it when it was at 90 im not touching it. Mean time they put up unbelievable numbers and the next thing you know the stock is at 142. 143. 52week high. And then a new group of people say you know what, if that stock goes to 151. 60 im going to sell it. It goes there. What im saying, its hard to keep stocks on the sheets so to speak. Weve had these bump ups. In the end, youre dealing with a company thats getting a higher multiple. You typically dont want to play multiple expansion. Thats called the greater fool theory when growing up. At the same time, 3m, business turns up a little bit in europe, the stock will be very cheap. You have to have international growth, china come back on line, draghi is doing something, construction getting better. You have to believe in a lot of these things. You do. I didnt put tooth fairy in. My daughter Still Believes in the tooth fairy. She does . Dont ruin it for her. What is now 5. 5 sometimes. Depends what you got in your wallet. Its unfortunate when you cant find anything like but a ten and youre out of luck. Theres inflation from the tooth fairy. Tooth fairy. Really . Yeah. We got to move on. Knock my teeth out and what i come up i would never do that but there are a number of people who might want to. I will protect you. People on twitter who despise me on twitter. Why follow me and despise me . I agree. Move to the jobs report. For may, of course, it did come in above expectations. 217,000 nonfarm jobs added. Lets get the first reaction from the white house. First on cnbc, jason furman, chairman of president obamas council of economic advisors. Always nice to have you, jason. And a good number by many accounts. I will start on, of course, what youre bound to get a lot of questions on, which is, that Participation Rate staying stubbornly high. In fact, didnt budge at all or i should say low, lowest level at 62. 8 since 1978. We talked about it last month. Is it ever going to budge . You know, were going to continue to have the same demographic trend which has been the biggest challenge for our Participation Rate. Its the biggest cause of the decline in the Participation Rate. What were really focused on, is that steady job growth. We now have 51 straight months of job growth. 9. 4 million jobs added by the private sector. We saw wages rise this past month. A lot more we need to do. This is the type of progress we would like to be seeing in the economy . Within the report itself, i believe manufacturing having a better month than it had the previous two months. Construction jobs, though, just up i think 6,000, lowest since december. When you look inside and see various industries, give me a sense as to what youre seeing that looks positive and what perhaps is lacking . I think one thing notable in manufacturing by the way, was that we tied the record for the highest average hours in manufacturing. And what that means is that as manufacturing is picking up, youre seeing that, you know, partly in hiring, but partly in extra hours, thats going to give you more scope for extra hiring and more job gains Going Forward in manufacturing. Beyond that, the pattern of job growth was pretty typical. Health was going back towards a more normal growth and some of the lower we had seen. Construction even was towards the middle of the range. Manufacturing again, pretty typical month for this recovery where we have been steadily adding jobs there. Jason, jim cramer here. Good to see you again. Hey, jim. Is there like a debate in washington, in your administration, for instance, i know i had the ceo of American Power on the other day and he said the epa, a lot could hurt jobs, is there someone in there in your government saying, listen, epa, were concerned about job growth and please take that into account when you put through your rules . Jim, i would say two things. First of all, lets look at the president s entire all of the above energy strategy. The council of economic advisors put out a report on that last week. And it documents how natural gas, renewables, everything were doing in energy, is adding to jobs, adding to our economic growth. Now if you look at the carbon rule in particular, the epa did the analysis on jobs and found that all the jobs in areas like energy efficiency, renewables, will add total jobs. But the most important thing, is how youre doing that regulation. They made it as flexible as possible for states. They can use market mechanisms. They have flexibility on the timing and they can use it to help some of the natural gas and renewable transformations were seeing in our economy. Jason, auto sales coming off very strong month. Manufacturing picking up. Not to knock 200 plus thousand. I think were all happy its over 2. Why arent we adding more jobs, do you think . Adding over 200,000 jobs a month is a pace consistent with a declining Unemployment Rate, pace consistent with the economy recovering. I think people have to be careful. People have job numbers from 20 years ago in their head. Our population isnt growing as fast as it was 20 years ago. Baby boomers are beginning to retire. Relative to where we are in demography the type of jobs we need to get our Unemployment Rate down, this is a good month. This has been a good couple months. Jason, as always, appreciate your time and insights. Thanks for joining us. Thanks for having me. Jason furman. To bob pisani on the floor, gives us a look at whats moving this morning. Bob . Good morning. And the important thing were having a good week overall. Another good day. Stocks up. New record territory essentially. S p up 2 this week. Want to bring up today on the ipo situation because the risk looks like a firecracker down here. Aristo. Look over here, indications 52 to 55, 43 pricing and now indicated at 52 to 55. This is Cloud Computing but specifically they allow companies to optimize the data centers in the cloud and theyre profitable. Compare this to another company that is over on the nasdaq, ra, dshgs iant do treatments to restore bone density. 8 in line with the guidance. They had postponed their ipo from may. They were doing a deal, 5 million shares at 14 to 16. Lower numbers here for radiant. Wanted to do a 75 million deal in may, now doe doing a 50, 52 million deal. One is profitable, the other not. The other one is in a not so hot space. Biotech not as hot as it used to be. Cloud computing doing well off of its highs. Third ipo, will bur rosss company, Wl Ross Holding corp pricing over the nasdaq this morning, 43 million shares, 10. This is a blank check company. Its literally a blank check. They will invest . What wilbur ross wants to invest in. I would point out, remember march 12th there was a 210 million ipo, will bur ross had for diamond shipping, a tanker operator postponed. He specifically said he didnt like the price at that time. Looks like this deal, though, is getting done. Theres some life in the ipo markets, signs of life. Look at the ipo spaez etf out there. There is an etf renaissance etf, symbol ipo well off its lows of a short while ago. May 9th, they were at their lows. Theyre up almost 6 since then. Thats twice the gain of the s p 500. So a little bit signs of life were seeing here. As far as the markets goes down here everyone talking about the nonfarm payrolls, steady as she goes. Number ins werent that different than the consensus. S p futures rose on that news, bond yields sort of declined. The biggest complaint down here, even 217,000, a lot of people think were going to do 4 gdp growth this quarter. I dont know how you get there at 217,000. Most of the people ive seen, think you need closer to 300,000. 275,000. Certainly here. Hourly earnings no inflation pressure there at all. Take a look at the sectors, though. More of a risk on today. Tech, Consumer Discretionary doing better than expected right now. If you look at the tenyear yield and most of the people down here, thats the thing they watch most carefully, obviously theyre not terribly impressed with the rate of growth for the overall economy. Still, david, you to admit, bonds up, stock is up on the data were getting. If youre an overall investor in both of these still a goldilocks investment environment. Despite all the anxiety that exists. David, back to you. Yep. That certainly does feel that way. That anxiety hangs around and we keep going higher. One stock that is not going higher today hertz. I did mention it before we ended the mad dash. Lets get to it now. The stock down almost 11 this morning. The company in a filing this morning indicated well basically that its committee has determined at least one Material Weakness hertzs internal controls over Financial Reporting and that disclosure controls and procedures were ineffective as of december 31st, 2013. This is not insignificant for hertz. In fact, the Auto Committee of the board has consulted with management and analyzed adjustments and has concluded Financial Statements for 2011 should no longer be relied upon. Hertz must restate them. Hertz needs to correct 2012 and 2013 Financial Statements to reflect certain errors. And this has to do with conclusions regarding the capitalization and timing of depreciation for certain nonfleet assets, allowances for doubtful accounts in brazil. Wondering weight going on there. Oh, man. As well as other items. Theyre continuing to review and have recently identified additional errors related to allowances for uncollectible amounts with respect to renter obligations for damaged vehicles. And restoration obligations at the end of the facility leases all of which is to say, its kind of a mess. Wow. Thats bad. Right now at hertz. In terms of their internal controls. Lets not forget, hertz under pressure from activists a while back. Carl icahn in there, then put in the pill, out of there, core vex in there, theyve been selling out of core vex democrat. York was in there. Still have lobe, i think in there and janna. I dont know theyre large positions but i mention this because given whats been going on in this latest, one has to wonder whether theyre not going to be looking for the ceos head. Oh, man. A hedge fund herd trade in there for sure, right . And even though it may not be carl, you have lobe, meister, kind of moving out of corevex. This is an activist name. They moved to naples not that long ago. One of the Largest Companies in florida. The ceo wanted to move down to naples. Take a look at avis, just avis is good. Doing quite well. Contrast here. Many would say listen, the business is fine. But overall. Business is fine. Business is fine. Go buy avis. This is worrisome to me. I didnt like that litany of things and when i hear accounting irregularities i say sell. Stock would have been down on the fact that they didnt do the quarter. That is some list you just read. By the way, thank you. I didnt actually get to that. The company, of course, said its operating results will be likely below consensus, did cite costs associated with the accounting review. Other unusual items. It also said certain anticipating operating results. Are also contributing to below consensus number for first quarter. Thats the quarter that ended with march 31st. So there you can see what theyre talking about. Ceo. In terms of Material Weakness and again the operating results are also perhaps contributing to whats going to be a lower than expected by the analyst that follow the company number. Thats hertz for today. I kind of feel like we got more to come on the story. The ceo kind of on the hot seat there. You know. He ought to try harder. Thats the winning one, avis. Oh. Rick santelli up in chicago at the cme. Good morning. Well i know everybody talks about the Rodney Dangerfield stock market, but i dont know. I would peg that more walter mitty and say the Walter Dangerfield is the bond market. Look an intraday chart of tenyear note yields we had about seven basis points of volatility and if you look at a twoday chart we can clearly see what was heading up is heading down here. Here we sit. Whats fascinating whether you look at the fives at 1. 62, tens at 2. 57, 30s at 3. 42, were back where we started before the data was released. Open the chart up and see how significant things area is for the end of january i will continue to point out the 2. 57 low closing yield for february 3rd is an important pivot point. Keeps you out of trouble. The market seems to be trading as though most likely well close at a lower yield, so say traders based on how it was doing. A lot of work above this. Were beyond the ecb, beyond what happened with adp and the jobs report. Its sequentially lower. Attain number as expected. Tame as expected isnt bad except five years everything weve thrown at it, many may have expected more like the bond market. If we want to look at some other issues, and we started talking about this heavy in january, look at the spread between bunds and tens. The numbers are okay side of keeping rates down and then the european side. Everybody likes that side and certainly at 121 fresh highs, open it foup for ten years, fresh highs for 9 1 2 years. We could go through the other relationships with the italian, the frenchrs and see the same dynam dynamics. No same person will look at those as a deal and us as expensive. If we want to look at whats going on in the Foreign Exchange market, all the volatility on Interest Rates is nowhere to be found in Foreign Exchange. Interesting when you think of what mario draghi is trying do. Look at a twoweek chart of the dollar index. Its basically been look at the scale. Automatic scaling, look at the scale. For the last two weeks weve been closing in range between like 80. 35 and 80. 65. Look at the euro, the mere image. For the last two weeks, maybe the most important two weeks in Central Banks my currency is too high history, the currency closing between 135. 90 and 1. 3660. Unreal. Not sure if were going to david, not sure if were going to judge, but in either case were in good hands in either of your scenarios. Take it, boys. All right. Rick, thank you so much. Still to come, the man called a hall of fame ceo, alan mulally, with weeks to go before he retires from the top job at ford. Changes at the top of ups. Were going to talk with incoming ceo david abney and outgoing ceo scott davis. Squawk on the street will be right back. Okay, listen up im reworkin the menu. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. [ bottle ] ensure®. 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. 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™. Its that time, time for cramer and a little stop trading. Yeah. Okay. This gw pharma ive been saying over and over one of my favorite specs, a british company, always subject to an inversion. Got fast track yesterday fda for cannibis for what they make, for rare treatment form of epilepsy for chirp. This is the beginning of what i think is the fda saying we have a lot of reasons to start thinking that mare wijuana is important for a lot of illnesses. You cant make marijuana nis country. Its a class 1 felony. Only one company that is really behind all this which is a british company. In other words, i believe many of the u. S. Drug companies would be loving to experiment with cannibis. Marijuana. And i know doctors who have been saying look, were going after all the no hope situations with marijuana but we cant make it here. Only legal repository of the pure marijuana at the university of mississippi. Gw pharmaceuticals has been the play, gwph and a remarkable company. I typically dont comment on Companies Like this but they are the company that people have been using that the fda is blessing to be able to get marijuana in these tragic situations like this incredibly resistant to treatment epilepsy. Right. Theyre so worried about. Come on. You know, geez, this is just compassionate use man. So watch gwph. What do we have on mad money . We have you know what, things that are hot are so strange, entergy. The new orleans power company. 52week high. Its been on fire and analyst meeting, big move yesterday. Utilities have been fabulous. So were going to speak to them. Its been a great stock. Are they largely coal, natural gas . Whats the they have some nuke. Thats right. They were the super bowl power company. Right. You remember, gave you that little extra 18 minutes of commercials. Bathroom break, run to the fridge. They made a super bowl great super bowl in large part because the niners had a chance to recover, they were a little worn out, i say entergy made that a game. You know what, lets mention this arista networks. Not the record company. But singing a good song right now. Up 32 . Price it night priced at 43, opened it at 55. 25, at 56 and change right now, 31 gain. Weve had a big glut and then a big dry up. This is a network, security company, one trast that contrast that with rally software. A connecter. You get these Internet Companies that compete with cisco and the markets big. You know, the internet of things is a very big thing. David is skeptical when i use terms like internet of things. I understand what it is. Im not necessarily skeptical. Youre not . I get it. I dont know that were all going to be using our phone. Do i need my phone. I guess so. Feed your phone to go to dunkin donuts. You are. Yeah. You need your phone to go to starbucks. Starbucks in korea rolled out the ultimate cell phone, order through your cell phone and pick it up. I like that. Important that the evaluations on ipos like this and or the companies publicly trading are not just important to the groups that are public but for companies that are private. So many. Lot of rounds being done. Off and on squawk alley can take those valuations down as well. Get your thought real quick we will lose you in a second for the weekend. Dow 17,000 is not that far away, jim. Its breakout level. Theres a lot of chart work that says were going to hit it. All right. Coming up a live interview with soontobe departing ford Ceo Alan Mulally at the big board. Squawk on the street is coming right back. Rapid prototype a lo. Being able to pay as we go is crucial for a start up. Having to fork out a lot of money up front was risky. 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See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business. Built for business. Alan mulally final weeks as ceo of ford. All right. Troubled automaker ceo in september of 2006, since then the stock is up 100 . The deferred we love that piece of paper too. He was the unu. S. Automaker to avoid bankruptcy and turn ford around slashing costs and completely overhauling its product lineup. Amazing changes to the whole lineup. To say he is leaving the automaker in a better shape than he found it would be an understatement. Joining us for one of his final interviews, alan mulally, one of the last interviews as fords ceo. We have phil here. You have said you didnt want to retire until you felt europe was in great shape, south america, its been tough, are you leaving it with every area of the globe better than it was two, three years ago . Absolutely, jim. You have covered it so well that we, of course, eight years ago when we decided we were going to serve all the markets around the world were solid in the united states, Fastest Growing brand in asia pacific, going to be profitable now in europe and south america is sorting itself out. This win ford now plan will serve everybody around the world and deliver that profitable growth. Can you explain to people you are doing something i think a lot of americans are buzzing about. Youve been lightweighting cars the whole time an youre getting more gas mileage, at a lower price than we have expected from ford. Absolutely. Its been a key part of our brand promise. We promised the consumers that every one of our vehicle, best in quality, fuel efficiency, lowest co2 and smart in safe design with the lightweighting allows us to downsize the power trains so now whether its petrol, eco boost engine, turbo charging, everything is increasing fuel efficiency today. You are announcing sales today in china of 3 for the month of may 32 . Can you say that again, phil. Im not your Pr Department although accused often of being in that. What do you see for growth not only in china but the western part of china where the growth is really taking off . Well, its incredible. Of course we are investing as you know, three new plants that support that growth but the thing about china, the chinese customers are so discerning and they love the full product line. They like the sedans, like the suvs, and we are now the Fastest Growing brand in china. Is pollution a problem over there . Of course into terms of people who will have to cut back on people buying vehicles . In fords case were part of that solution. Everything the government trying to do to manage that we are part of the solution in the cities and rural areas as they migrate into the city. I was surprised to read today uaw starting to say listen, the concessions are done. Youve always spoken of profitable growth for all. Exactly. Do you think that Labor Relations could get rocky again after all youve been through. I am really, really optimistic about the continuing negotiations with all of our state stakeholders. Because everybody now its been a lifechanging experience. They are doing so well. We just distributed Profit Sharing checks of 8,000 per person. Based on all this fantastic work by everybody. I believe Everybody Knows now that competitiveness and if you deliver, profitable growth, then everybody will benefit. Youve got a lot of years left. We know that we know that today my old friend eddie lamb pert from goldman sachs, reuters says youve been talking with him, not going to work for sears, just say it. Come on. Its okay to shop there but not working there. In fords case i have been honored to have people ask about the ford transformation and im glad to share the ford story. A lot of Lessons Learned there. Im honored to represent ford. Let me go at it from this standpoint, in the future would you ever run a company again or looking at this saying ive done the ceo gig, had a great run, cant repeat it anywhere else im happy to help out but not going to be a ceo again . There are you two know better than anybody else i have absolutely love served two American Global icons with boeing and ford. I am focussed on the new leader mark fields that jim and phil know wells, great team, strategy will stay in place, Management System and culture. When i graduate on july 1st im going to really think about where im going to serve next. Now, mary barra on the hot seat, all right, youve always been a collegial competitor to gm. When you watch what goes through your mind . Thank heavens i didnt have that or say shes making a statement, shes trying to get rid of the bad sghis. Well, i think shes clearly trying to move the company in the right direction. I cant speak for gm but if fords case we are absolutely focused on the customer and every piece of knowledge that we get, we move decisively on to deal with it. Elon musk, this week, holds the annual meeting and he says, you know what, i dont think the other automakers are getting serious about building electric vehicles. He basically said tesla is the only one getting serious about it. Are you not doing enough when it comes to electric vehicles . I think he knows that ford has been a leader for ever in electric vehicles and our ford fusion, focus, electric, is a fantastic vehicle. I also admire the fact that he went to the high end with a larger battery that costs 60 or 70,000 but that is a specific market. But we are henry ford, open up the highways to all mankind. Were going to focus on the smaller vehicles and Affordable Electric vehicles. Does the price come down . It those come down at some point . We have to make a break through in the batteries and the lithium ion is a great chemistry. Henry ford and Thomas Edison were best of friends at the turn of the century and at that time all the vehicles were electric. We are going to continue to find the solution to affordable batteries and will change the world. How about the stock . The stock has been stuck in the 16 range. You know that a higher dividend take this stock back to the high that you had in 2011. Can i know you cant speak for the family, cant speak for the board but would you think that the dividend could be higher say six months to a year from now . Well, clearly when we reinstated the dvsds we made a commitment were going to continue the dividend even through a downturn like before and increase the shareholder value. Clearly thats an opportunity for us to enhance shareholder Going Forward. Make it so ford, growth for all, once again is it not time to reward the shareholders . Were up to 3. 35 with the dividend with the stock appreciation. Shareholder value. Everybody gaining is a really important part of the ford plan. Obviously if you called ford and mark riff week when you retire, they would give you a new vehicle every week if you wanted it. People are curious, when you leave, what ford vehicle will you drive, day in and day out . This is breaking news, phil. Oh, yeah. This is breaking news. Right now, im going to announce that three days ago i just purchased my new car for my retirement its a brand new 2015 red taurus. Thats it . With sears tires . Im not going to give up on this. Hes taking it to sears auto every month. Alan mulally. You know, remember when i first arrived and they were asking what i was driving, what do you think about ford . I joined ford to help design and produce the best cars in the world and create a fantastic profit growing business and were doing it today. Well, i know i got the ford super duty, the 350 used, but you know what, thinking couple hundred thousand miles what you expect from the 50 f series. And live in it and pull your house behind it simultaneously. Its a fantastic vehicle. Youve heard the questions about whether or not an i aluminum vehicle with as much content as the f150 will have on the f series will have, that these will be able to hold up day in and day out. Absolutely from what youve seen so far do you have any concerns about that . Not at all, phil. You know this is material that we love to work with. These are the same alloys in commercial airplanes that i know very well. And your buddy klaus from the boeing days. You guys work together. They dont corrode. Resistance to dents. Easier to repair. But 700 pounds of weight savings to jims original point that turns into towing, hauling and smaller power trains, v 8s going to v 6s, v 4s. This is a tremendous improvement in the automobile. How about you were spending a lot of time with steve ballmer, dad worked for ford. Yep. Surprised that he just left and did you really consider actively taking that job . You know, jim, one of the neatest things is getting a chance to share the ford story when other ceos have asked me. I was pleased to share the story with microsoft and steve. Hes a good friend. And theres a lot of Lessons Learned there. Im proud to be able to share our experience. Final question from me. After you retire, a lot of speculation Public Service might be something youre interested in doing. Would you go to washington, in some capacity whether for the current or future administration some. I am really looking forward to the future but right now im 100 focused on this orderly transition of not only Leadership Team but our strategy and our Management System and the culture change and when july 1st, july 2nd i cant see what the future your phone rings on july 2nd youre willing to talk to somebody . Im looking forward to figuring out the future. How did you get a jersey guy running ford morter . He is a good leader. You know him well. Mark has served all around the world and one of the neatest things he is along with me, he was there to create this new ford. The product strategy, protein duck strategy, culture change and man, does he ever believe. He is going to take ford flying. He will. It will be interesting to watch this next transition here. Im really looking forward to it. Me too. Hear that. Take ford flying. You cant get away from the boeing days, can you . Ill always love boeing and ford. I remember it was in the mid90s when we first met when you were at boeing and you took me down and said look were going to get the Assembly Line moving here and a lot of people are like planes on a moving Assembly Line. Remember that. 7777 has 4 million parts, we learned so much that now the 777 is on a mving Assembly Moving Assembly Line. Every year the quality and productivity continue to move. Thank you so much, alan, for spending time with us. Thank you so much. Thank you. Thanks a lot, phil. Back to you guys. Fantastic stuff, jim, phil, our thanks to alan mulally. Looking for that red taurus on the road fairly soon and get you a quick check on the markets on the jobs friday. The dow and s p treading well into record territory. The dow less than 100 points from 17,000 if you can believe that. That on the back of the u. S. Economy having added 217,000 jobs to the nonfarm payrolls in may. David . Now to another shakeup and, in fact, retirement. Ups has chosen its next leader this morning. The Company Announcing its coo david abney will take over as ceo beginning september 1st. Scott davis who served as chairman and ceo of ups twins 20 since 2008 is retiring. Here is incoming ceo of ups david abney and outgoing ceo scott davis. Thanks for joining us. Mr. Davis, let me start with you. Youre a relatively young man. But it does seem thank you. Youre welcome. And your board of directors, seem to like you guys to serve about five or six years, at least for the last three ceos. And then move you out despite the fact that you, as i said r not, what are you 62 years old. Why is that the approach, at least of at ups and at this board of directors . Well, our board, david, spent a lot of time focused on Succession Planning. They started a Succession Plan for me the day i took the job. Weve started a Succession Plan for david already. He doesnt take the job until september is 1st. I spent seven years as cfo, and seven years as ceo. The company is positioned well. We have a talented Leadership Team and david with the great background is ready to take the job on. Well, let me ask why was he the choice . Its funny, this morning obviously hearing the news i look back at the reports and people anticipated there might be a change in leadership but i did not see mr. Abneys name. I saw others. Why did the board make this choice . Well, we had a talented group of people who could be ceo. Davids got a tremendous background. Hes been involved in all businesses at ups. The forwarding business, u. S. Domestic packaging, ran international package. Hes been chief operating officer pore the last eight years. Hes done a phenomenal job in all those areas. Hes the right person at the right time to lead ups. And finally, mr. Davis, not finally, before we get to mr. Abney, when you look back at your last six years since 2008 running the company, what do you view as your proudest achievement, your legacy . Well, starts with i think we performed outperformed the s p and stock returns. We did a nice job there. Weve distributed a lot of cash to our share owners but most important, most important, is the company is positioned very well for the future. Weve developed our international network. Weve developed our forwarding business, logistics business. So i think we are in a position to compete in a fast changing world. So i feel like were leaving the company in great shape for the next generation. David, congratulations on being named ceo. Thank you. Jim and david and i were speaking earlier and talking about how such a great many story, a guy whos worked at that company for 40 years, i think since you were the age of 18 and now becoming the ceo. Can you put into context for us what this day means to you after such a long time at ups from where you started to where you are today . You know, obviously im very excited and honored that the board chose me to lead this great company. I think its just an example of our promotion from within policy and the fact that we give ups people lots of opportunities and experiences to learn from so theyre ready for additional responsibility as they go. Im wondering what you think your biggest challenge is . The heat gets turned up now, right . Well, you know, as far as challenges, i got to say that scott did an excellent job in the last seven years, but the biggest challenge i think is that were going to continue to grow our international business. Emerging markets are growing rapidly. We have responded and were going to continue to respond accordingly. David, i would be interested to hear a little more about the strategy in the international space, especially emerging markets. I know you guys built a Logistics Center in china and beijing were seeing these companies, jd. Com and alibaba, they have their own Delivery Network and fulfillment system. I was wondering what you think a market is like there for a company like snups. Emerging markets is a great opportunity for us and what we have in addition to local coverage that some of these other Companies May have, is we have this Global Network so we can connect the emerging markets, the chinas, the vietnams and other countries, to our entire network and do it with our technology wrapped around that. Let me come back to you, mr. Davis. Since you are still the ceo, get to answer these questions for a little bit longer. Capital allocation. Thats good. You know, we talked about china, for example, just now. The tnt deal did not occur. There are certainly going to be some shareholders who while they may applaud your Capital Allocation decisions in the past, want even more back. Are you in a position to do that . Or are your International Plans really the focus in terms of where youre going to be spending your money . Well, weve got a great track record of distributing cash. Over the last seven or eight years 100 of net income via dividends and distributions. We continue to expect to distribute 100 Going Forward. But number one priority is to reinvest in the business and we do see opportunities in the health care arena, emerging markets arena and ecommerce arena to make investments Going Forward. Distribution will stay strong at ups Going Forward. Let me come back to one other question you guys have been getting, came up in the first quarter. Deferred products seem to enjoy a good deal of growth which comes at the detriment of the company, especially internationally, the margins are higher on twoday shipping, has that stabilized . Ru continuing to see that trend move in the right direction . Yeah. I think it has stabilized. That last quarter we saw the express, the fastmoving goods grow at a 4 levelrs not as fast as a deferred which grew at 13 , but we see that the downturn or downtrading has slowed down dramatically. It probably will not grow as fast as deferred in the future but still expect it to grow moving forward. I would like to ask you, scott, one more question as well. I think the market assumes that it would find out within this month i believe and forgive me if youve already announced this, i dont think you have, whether you will match fedex price increases. Where are we on that . Fedex did announce a dimensional weight increase. We have had a dimensional charge for three cubic feet and above ground packages and all air packages. It means obviously you pay for weight, pay for zone or distance, you also need to pay for space. And this kind of equalizes that. Were evaluating right now what fedex did, which is lower than our charge weight on cubic feet. Probably come out with our announcement on that decision. And finally, mr. Abney, seems like you got about six years from now. Im not sure, but that seems to be the way its going. Is that the way you view it . You know, since the decision was made this morning, i cant say that im thinking about the number of years. Im just looking forward to the opportunity to lead this company and im going to enjoy it and im going to make sure that all 400,000 upsers do just as good as we can taking care of our customers. Leave it there. Gentlemen, thanks to you both, scott davis, and david abney joining us. Big day and leadership change coming at ups. The other big story today, jobs. Nonfarm payrolls at 217,000. Cnbcs senior economics reporter Steve Liesman has more details on the numbers. How would you characterize what we got today . Pretty good. Economists are beginning to say nice things about the jobs market. Theres less commentary about the failure to produce a blowout number than about the slow steady and relatively high job growth weve been getting the past several months. The numbers from today, nonfarm payrolls 217, right around the forecast that was out there. Touch higher. The Unemployment Rate 6. 3 unchanged. Average hourly wages again in line at 0. 2 . Modest growth there. Participation rate unchanged at 62. 8 . The big story is that we have now done four months in a row of 200,000 job growth. The first time weve done that in 14 years and we have now made back all the jobs lost since the peak at the beginning of the recession. At the same time, wages growing slowly 2 a year and the Unemployment Rate unchanged. The number of longterm unemployed is declined by half a million. We dont know if theyre finding work or dropping out of the work force. What it means for the fed no reason to change policy. Heres some of the commentary were getting this morning. Quote, bmo, sufficient slack in the economy to keep Interest Rate hikes at bay for another year. Over at barclays saying the committee is likely to view wages growing only modestly, the report likely to keep the tapering process on track. Unlikely to alter the feds time line to rate policy hikes. Pantheon, the fed unemployment forecast which calls for lower which the current rate is really beating right now, the forecasts look ever more absurd. Where the jobs are, manufacturing, up 10, retail up 13, temporary help, leisure and hospitality, doing very well, up 39,000, and Transportation Warehousing up 16,000. A bit of a puzzle why strong job growth is not attracting more people back into the work force or soaking up more slack quickly but for now, the fed keep policy pretty much on auto pilot. Back to you. All right. Thanks so much for that, steve. Well continue watching that all morning. We also want to look at walmart where shareholders are gathering today in arkansas for the companys annual shareholders Shareholder Meeting. Many hoping to get a deeper insight into the new ceos plans for the retail giant. Our own sara eisen is in faye E Fayetteville at the meeting with a look at what we can expect. Always a very star hp studded affair. Oh, yes. Celeb celebrities, executives associates and investors. The meeting is well under way inside the arena behind me. Executives taking turns with the celebrity acts. On the stage, sharing their plans for walmart. What weve seen so far, harry conic jr. The mystery celebrity host of the event. Pharrell opened with a performance, robin thicke, got out of a Sara Mclaughlin concert. This is what walmart does, holds a pep rally for investors for the walmart faithful, for the associates as when well. When it comes to the board elections, that just came in, walton remains chairman of the board despite some opposition from proxy firm iss. They named greg penner to be the vice chairman of the board which is his soninlaw and former walmart executive. Perhaps paving the way for him one day to be chairman of the board as well. So theres the news. Not surprising given that the waltons still control more than 50 of voting shares. There are overarching questions. If youre a shareholder of walmart despite the xwralgs, that is underperformance, you missed half the rally of the s p 500 if you were in walmart. Im going to tell you what walmart executives are doing about it, sneak peek into their new concepts. Guys . All right. Thanks so much. David, nobody knows this Company Better than you. For a while yeah, i mean listen whats interesting the Walton Family holdings, enormous. The dividends alone thats a huge number. They are competing firstly but having a difficult time domestically as we know. International has not grown perhaps as fast as some had hoped with new ceo doug mcmillon. Well e. Placing a bet on ecommerce, prig to invest heavily there. 100 days on the job as of right around today anyway. Up next an exclusive with the Vice President of the ecb. Well get his take on the state of the Global Economy and liquidity measures. Goldman sachs chief economist jan hatzuis joins us live at post nine weigh in on the jobs number. 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Mattress discounters clearly they are concerned about the strength of the at this point and after those package of measures were announced yesterday including Interest Rate cuts we saw the euro fall against the dollar and then rebound very sharply. So i asked the Vice President of the European Central bank whether they are done here on Interest Rate cuts or whether they could, in fact, go lower. And his message seemed to be there is still room for further cutting. Lets listen to what he said. With some of the rates, for instance, we could tweak with the [ inaudible ] and not necessarily with the main refinancing rate. Just an example of things. Im not saying its going to happen. But it didnt exclude that. It says for political reasons. Well, you know, the lower bond. S which is a slightly different message than the markets took away yesterday they had the impression from mr. Draghi that was the end of further rate cutting. The further movement in this area, the other area which was interesting in this conversation the potential fine levied by u. S. Authorities on the french bank. Weve learned potentially it could have been 16 billion. I asked him as these banks are trying to build reserves, is there the potential for these fines to damage lending in the eurozone and cause the kind of event, the kind of liquidity event that could mean they move to qe. Lets hear what he said. Talking about an important bank, of course, with a fine that is by itself high but not going to necessarily kill the bank. So i wouldnt say that these would be such type that could create a situation where the sort of negative feedback could lead to an unanchoring of deflation. Thats the important thing. And that was the bottom line from the interview. They continue to be kurnds at the council about the low level of inflation in the eurozone and they are still keeping their powder dry on qe once they see whether these cuts in Interest Rates and also the new ltro program, the targeted lending programs, actually make any difference to lending growth in the eurozone. Ill send it back to you on that. Thanks, jeff. We know for now at least its fueling risk appetite. Well see where it goes from there. Jeff cutmore in london. A look at the industrial sector. One of todays best performing sectors on the s p. Bertha comes back at hq with whats moving there. Hey. Good day for the industrials edging out energy among the best performers. Among the leaders, joy global after reporting better than expected earnings results, b of a, Merrill Lynch upping the stock from a buy to neutral. Airlines are especially strong too. Delta hitting a new 52week high. Masco fluor and Robert Half International round out the top five. Straight ahead, jan hatzuis joins us live here at post nine with his take on todays jobs number. What it means for the economy and you. We are back after a quick break. Oh my god look. 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. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. 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. Back to the news of the day. The may jobs report, 217,000 jobs added around where goldmans chief economist jan hatzuis was predicting they would be. He joins us on post nine. Good morning. Good morning. 217,000 slightly above where you had been estimating they would come in. Right. Did you make anything interesting out of this or is this what you expected . I think on the Establishment Survey it was pretty close to exactly right on the number, right on consensus expectations. The Household Survey i think was more interesting and generally stronger. The drop in the Unemployment Rate in april was confirmed in this report. The drop in the labor force Participation Rate was confirmed as well, back at the same level in april and may as in december of last year. But there were some positive areas like the slight decline in the u 6 under employment rate and a pretty good gain in household jobs. When you look at where the jobs are added, professional and business services, leisure and hospitality some of the strong sectors does ha have the making of a high quality jobs report to you or do you think were still seeing jobs added in more part time, more sort of underemployed sectors . Youre right that composition of the payroll gains was a little more towards less cyclical sectors, so leisure and hospitality is one, education and health care, showed a big increase. Thats maybe a little less cyclical strength than one would hope since construction and manufacturing were a little more muted. When i look at things broadly, you know, overall, not just the jobs numbers but the manufacturing surveys an business surveys, it does seem to me that the economy is in pretty good shape cyclically. Do you feel now this winterfree story is now over . We are turning the corner, spring and this thaw, took a little time to materialize it felt like. Are we there yet . I think so. I dont think this report got a particular boost from the weather that happened in the last report, so you know, last report was clearly above the underlying trend. I think now were sort of settling into a pace of expansion that maybe isnt super fast by the by the standards of past u. S. Business cycle recoveries but its good enough to gradually bring the economy back to full employment, although i think a long way to go there. Are you expecting a much more powerful snapback of the pent up demand if you will from what happened in the winter . I think most of that weve seen at this point. I mean, you look at the auto Sales Numbers thats not all that much to cheer about. I mean we would be expecting a little bit more, wouldnt we . If you look at gdp, yes. Gdp the Second Quarter report should be quite a bit stronger, but when i look at broader measures of activity, the payroll numbers, the various business surveys, i dont think the economy really slowed that much in the winter. It slowed a little bit in december, january, february. Weve gotten that back. I dont think it was so violent. The may report is important from a historical standpoint. The first month we broke even from the jobs lost during the recession. We lost 8. 7 million. Weve now made up 8. 8 million. How important is that psychologically to the everyday american . Does it matter . Does it matter only in so far as we can be creating net new jobs . Im not sure how much it matters. I think that its going to get some play, less than the decline in the Unemployment Rate weve seen in general over the last few years. I think, you know, whats also important to remember is ha we are back in absolute terms but, of course, the population has grown in the meantime so the share of the population that has jobs is still far below where it was in 2007. Thats an important thing to focus on also from a policy perspective, there is still a long ways to go. Stubbornly low Participation Rate. You expected the Unemployment Rate to tick up a bit because you expected the Participation Rate to tick up. It didnt. Right. Is that something we should be focused on and concerned about . I mean i think at the margin that is, you know, more negative news. The month to month moves are, you know, pretty noisy, but it is it would have been better to see a higher Participation Rate and preferably a higher Participation Rate but at the same time not a higher Unemployment Rate. So i think it is an important issue in participation in terms of what happened in 2014 as a whole, our expectation would be participation goes sideways. Maybe a touch higher but so far hasnt done anything. And what about the second half of the year in terms of your gdp expectation, no change from todays report given what you were expecting . No major implications. We think 3. 25 for the gdp numbers and i think as we go into 2015, i would expect a similar pace, maybe a hair slower, but that would be half a percentage point to one percentage point above the economys underlying trend. So, you know, it does make it does mean were making progress. Average Hourly Earnings rising. 2 . So it was the same month on month. How should we be thinking about rising wages, inflation and how the fed would be viewing both of those . The way to think about wages is that were still growing only at a very slow pace. So the year on year rate, the underlying trend of wage growth, is still basically 2 if you look at the different indicators. And that is extremely low for Business Cycle recovery in a normally growing economy, you know, with the 2 inflation starting for the fed, you would expect 3 to 4 . That slow growth rate of wages is increasingly driver of fed policy. Thats a reason why i think the fed is still nowhere close to wanting to hike the funds rate. This is a stay the course number. Absolutely. I think. And theyre going to continue to taper qe, you know, almost for sure, but, you know, hikes in the funds rate are still a very, very long ways off in my view. As always these reports, spectators will try to read the tea leaves and see whether they hold any clues for what the fed will do. Jan, you always add so much value here. Thanks for joining us today. Jan hatzuis from goldman sachs. Okay. Up next, the coowner of California Chrome joins us live. Just the day before his horse goes for the triple crown out at belmont. Cant wait for that. Well be right back. Theres this couple in sydney. Worked hard. Raised two kids. Theyve never been to moscow. But they sent money there. Rented an apartment. All because, they have this 19yearold daughter who loves to dance. In over 700 cities worldwide, products and services that make a citi client anywhere a citi client everywhere. So what im saying is, people like options. 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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. Welcome back to squawk on the street. Biotech kind of flat but Gw Pharmaceuticals bucking the trend the stock moving higher on news the fda has granted Fast Track Designation for a drug to treat a severe form of epilepsy in children that currently has no cure. The stock up today well over 8 . Stock. Bertha, thanks so much. This saturday, kicks off the 146th running of the belmont stakes. California chrome the early favorite. Hes going to attempt to make history by winning the triple crown, something that hasnt been done in 36 years. Joining us now is the coowner of California Chrome steve coburn. Welcome to squawk on the street. Its great to welcome you. Thank you very much. Thanks for having me. How is the horse this morning . Thats what everybody wants to know. How are doing . Just left the barn. He got his cookies and hes pretty happy right now. This is a happy horse we got going into this race. Happy horse is a good horse to have at this moment. I bet hes got a couple happy owners as well. You talk about the ride youve been on, that may culminate with the triple crown. Well, its been an exciting ride for us and everything. Our game plan was just to go to the Kentucky Derby and when we accomplished that, it kind of stopped, so we decided were here we might as well see what weve got in this horse and hes proven to the world that hes not a joke. He is the real deal. Hes turned back everything theyve thrown at him. I believe he will do the same thing tomorrow. Very far from a joke. As lowkey as you and your Business Partner may be, im sure you guys have a very well laid out race ritual. Walk us through between now and 4 30 p. M. Tomorrow. What will you be doing . What will you be talking about . How will California Chrome be warming up . Well, california, chrome galloped this morning. Hes going to jog tomorrow morning. And tonight my partner and i will probably just enjoy the evening together. If i get time ive been talking to so many people, we havent had much time to talk. As far as plans for the horse, you know, we havent even thought about that. Were just going to see what happens tomorrow and then take it one day at a time. Thats all we can do. You know, all we want is a happy, healthy horse coming out of the race. He galloped this morning with his nasal strip, that is right . No, he did not. He doesnt gallup with a nasal strip. Only runs with it. Interesting. So is there any kind of adjustment that you would expect from the horse during the race if hes not quote unquote practicing how hell actually run in terms of breathing . No. Hes fine. Hes fine. Those nasal strips all they actually do is help the horse cool down after the race. They keep the nostrils open wider. During the race the nostrils are open 100 and they get all the air they can. But after the race, it helps keep the nostrils open wider so they can get more air to the lung and blood system and cool down a lot quicker and they dont cramp up in their muscles because they have oxygen filled blood going to the legs and everything. Thats interesting. Is he Walking Around with his skechers horseshoes this morning . Pardon me . Walking around with his skechers horseshoes this morning. You know where im going with that . Yeah, yeah. Well i didnt see him this morning. I was i was at another interview this morning so i wasnt able to come out and watch him gallup, but i guess he took them off before i got to the barn. Im sure theyre i dont know what else to say other than yeah, he hes going to have a pair named after him im sure. They do that sometimes, steve. Im wondering, being sponsored by skechers, youve attracted the attention of glaxosmithkline which makes the breathe right nasal strips. Im wondering if youve been contacted by other companies with chrome to be the first potential triple crown in 36 years, getting any other calls from other Big Companies . Yeah. Weve had some people contact my partner perry martin. We had to hire an attorney. And perry told me, steve, i did not give him your number because you talk too much. His hourly rate is pretty good. Yeah, weve had to hire an attorney to look over all these contracts and everything. Well make a decision. Its you know, well just have to wait and see what tomorrow brings. Yeah. When this horse wins the triple crown, i can just imagine the promotions that people are going to want to use this horse to do and were just going to have to wait and see what happens tomorrow. Right now were pretty comfortable with what we have. Not to mention the stud fees. You must be thinking about the big payoffs down the road that could come from stud fees if this horse wins tomorrow. Well, when he wins tomorrow, yeah, you know, thats something to take into consideration. But were going to hes going to fly home the day after the race. Going back to california. Weve got a place, a very exclusive place were going to send him and give him down time. Let him be a horse for a while. What are you going to do the day after . I have to go to work tuesday. The day after i got to pack because im leaving monday because i have to be back to work tuesday. Ive got a real job. Busy weekend. This is my dream. But ive got a job that ive got to use to pay for this dream. I got i got bills i got to pay. Dont we all. Steve, were going to be thinking about you and were certainly going to be watching your horse. You can have a whole country rooting for him im sure trying to win the triple crown since 78, make history, best of luck. Thank you very much. Thanks for having me. When we examine back, walmarts new ceo has been on the job for 100 days and the challenges are piling up. Now hes facing shareholders at the companys annual meeting. Will he be able to win them over . Were live at walmarts Shareholder Meeting when we come back. But at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Hows that for an encore . Fame, makes a man howtake things over ore . 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 for that moment, where right place meets right time. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. Want to come back to shares of hertz this morning among the worst performers of the day after the company said it will restate the 2011, 2011 Financial Statements. Those should no longer be relied upon after citing a Material Weakness in hertz internal controls over Financial Reporting and disclosure procedures and policies ineffective. This having to do with capitalization, depreciation for certain nonfleet assets and other issues, as well. Earlier we may have indicated they said theyd restate 2012 and 2013. That is not yet the case. It may become the case. Those years are being reviewed. All of it, though, adding up to nothing good for hertz and the company also saying that it will come in expects to come in below consensus for its operating results due to charges having to do with or costs having to do with the accounting review and anticipating operating results, as well. Well see what happens there particularly theres changes in the executive suite given this weakness which its competitors are not saying. As a shareholder you never want to see that. No. Thank you for that update there. We want to bring you back to walmart where the companys new ceo Doug Mcmillan on the job 100 days and got a long todo list and now facing shareholders. We have more live in arkansas. Reporter Doug Mcmillan just took the stage to speak to walmart shareholders and associates. As you mentioned, 100 days on the job, this is his first Shareholder Meeting. I think he took a selfie on the stage there. Everybody wants to hear from him because he has to talk about strategy. The cold reality here for walmart is its struggling. A lot of people point to samestore sales growth to show you how difficult its been. Five straight quarters of declines in u. S. Samestore sales growth, problems with u. S. Traffic, problems with the lowend consumer and the cfo earlier talking about head winds, the government shutdown, walmart needs to be creative and why the executives here today talking about a number of new and exciting initiatives to put in place to turn it around. Im going to tell you about a few of them here. Walmart neighborhood stores, this is the new concept store. 180 to 200 stores this year. Smaller, grocery and pharmaceutical stoerls. Completely different than the supercenter concept and expect to see more of those this year and walmarts getting into Convenience Stores. Its basically going on one here in benville and compete with the likes of 7lech and the Value Proposition is to have the what it calls every day low prices, super cheap prices are everything to get in Convenience Stores and the third thing beside the neighborhood and Convenience Stores to watch, ecommerce. The only part of the business growing double digits, 30 growth. The trick for walmart is can they transform the business to get the businesses moving . Because so far, for walmart shareholders, they have underperformed the s p 500. Guys . Yeah. Sarah, great reporting out there today. I know you will be out there for the rest of the day, as well. Enjoy. Reporter yes. Ill be back. Thanks. Up next, the moment weve all been waiting for. The jobs report is out. May nonfarm payrolls increased by 217,000 jobs. Were you able to nail the number . If so, you will be taking home the c nbc pillow. Signed by the entire squawk on the street gang. Find out if youre the lucky winner next on squawk on the street. In his head in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device. Up to the cloud it goes. Back down it comes sounding better. We break down the walls of creation, and we give music creation for the masses. With a guess of 217,000, our nail the number winner this month guessed it right on the money. Joshua is the nail the number winner this month. Joshua, are you there . Yeah. Im here. How did you come up with the number . Well planned, long thought out educational guess. Yeah, right 217s pretty good. What do you do for a living . I work for a Wealth Management firm here in san antonio, texas. Legacy Wealth Management. I do operations here, paper work, that type of thing. I graduated in december. Just trying to get my feet under and hit the ground running. Now you are the proud owner of a squawk on the street pillow. Congratulations. Thank you. Well talk to you again soon. Our nail the number winner. Guys . Good morning. It is 8 00 a. M. Do you know its 8 00 a. M. At netflix headquarters in california . Squawk alley is live. Good morning. Im andrew ross sorkin. Im not one of those faces. Orange is the new black markets in the green after the u. S. Economy added 217,000 jobs in the month after may and its been a busy morning. We caught up with outgoing ford ceo and the brand new ceo of u. P. S. David abney. Joining us is cara swisher, coexecutive editor and all hour john and kayla. I watch the first ten minutes of the new orange is the new black. You are an overachiever. I made sure it was there and