Transcripts For CNBC Squawk On The Street 20150309

Friday. It went above 2. 2. Can you imagine that . There we stay above 2. 2. Lets get to our road map this morning and it starts with those markets, six years into the bull market. The dow coming off one of the worst trading days its had in over a month. Will the weakness continue . And watch out for apple, as we spring forward, apple expected to unveil the latest details of its watch in San Francisco. Plus, gm says its time for a buyback. Shares are up in the premarket as the auto maker announces a 5 billion Share Buyback, which does avert that proxy fight that might have been in the offing with harry wilson. But first some other news. A hostile bid, or at least a bear hug. Lets call it a hostile bid from Simon Propertyies group for macerich announced by Simon Property group which has tried to get macerich another large Shopping Mall operator in the country, with primary parts of its property. It has tried to engage it in a potential deal discussion for some time. Makes the decision this morning to come with a letter that it has made public and an offer. 91 a share, 50 cash 50 stock. They also have a plan to sell selected assets of general growth propertyies. As for Simon Property group, its the largest in the country, an enormous 60 billion market value company. This deal, by the way, worth over 22. 6 billion when you include debt. The 91 a share price though well, it is a 30 premium to where macerichs stock was trading. But some will tell you, at least i believe, that its still not quite enough for them to want to part with their shares in a sale to Simon Property group. Consolidation is coming. We dont see many in this part of the world. They are by their nature extremely difficult to do. I could add, by the way, that macerich is incorporated in maryland. Traditionally a very very tough state in which to get a takeover through if you want to do it on an unfriendly basis. They have strong antitakeover provisions there. I would also add, though the window for nominating directors at macerich is currently open. There is no staggered board, although they can change that very quickly back to maryland law, but it is open until the end of the month, so it is certainly possible and no doubt the timing of this is not coincidence that simon could try to nominate directors for the board with a full blown hostile bid. Two things. Got the best Shopping Mall merging with the secondbest Shopping Mall. In simon stocks you go up after the smoke clears. I know theres going to be arbitrage pressure. But secondly 22 billion. I thought the fed was going to raise and it was the end of deals and the end of life and the end, it looks like maybe things go on, david, particularly with this group, which has just been hammered because of the fed. Hammered. Yeah. In fact, on friday of course Simon Property stock down like so many other Real Estate Investment trusts or utilities, anything with a yield, thats a yield play starting to get hurt. As it relates to this simon operates at about 70 operating margins. Macerich is less. Lets call it the high 50s. There is a belief that you could get those higher operating margins. There may also be the opportunity for revenue. Dont always see that. Do they have any malls that are next to each other . I dont know that they have any that are next to each other, but the properties do line gee grandfatherically quite well. They like the geographic fit. Theres been no doubt that sigh mop has been trying to think about or make this play for some time. They actually bought their stake before november they just revealed it in november, but then macerich did this deal where it sold stock about 11 of the company to ontario teachers at 71 a share to consolidate some joint ventures. They basically bought in the 49 of malls that ontario teachers owned in conjunction with them. I dont think you can point to the 71 as a great arbiter of value, but what simon will tell you is were talking about a company with a Net Asset Value of 76. Were offering 91. Again, because i reported on this last week. Right, you gave us a heads up. Many were saying well 95 at the very least. Some optimistic shareholders were hoping it might get to above 100 given they think that theres beyond this number. Those who watch the market on friday really felt that it was a sea change. A deal this size on top of another deal were going to talk about and a major auto company in there buying stock, says look, those who think that its all over, forget it. The companies themselves dont think its over. The cost of capital continues to be the driving force behind this. By the way simons cost to capital is incredibly low. This amounts to about a 4. 35 cap rate. In other words the given yield on those properties from mace rich right now. Macerich right now. Real Estate Investment trust, ten years ago, this meant nothing. The size of this cohort is gigantic. And people have to recognize that this is a very big deal compared to almost every other deal, other than drug deals. Well be watching that one. Of course macerich shares do look to be up as high as 92 a share. As for those markets, they are coming off that rough session on friday. The dow had its worst day since january 27th. The s p had its worst day since january 5th. Stock futures, lets call it more or less flat this morning. Whats your take . Europe starts its qe program, and im looking at these tenyears. Spain, italy, 1. 27. France below. Im thinking yes, everyones decided that our rates are going to skyrocket, except for the people who are rich in europe, who know they buy the dollar, and theyve got a fantastic trade. I think that those who expect the rates to shoot up the fiveyear is not broken out yet. I think are poorly advised. I think its entirely possible that the banks can do much better. I think the fed could raise i know people are saying june. The fed could raise in a couple weeks. I mean they should. That up 295 number. A big number on friday. Although we did not see the kind of wage growth that many people are hoping for and keep waiting for and we saw at least a glimmer of the last report but no sign of this report. No but at the same time were creating jobs at a pace that we havent seen in a long time in america. I think its unnatural to keep rates where they are. So what do i want to do in my approach to the stock market given the jobs number and the expectation. Whether its june or september, its coming. Theres always somebody out there who thinks theyre not going to do anything. You saw the money coming into the banks. It was really amazing. You see people reconfiguring, getting out of the Consumer Product stocks, which have been bond market equivalents. Those do not make sense. You saw the utilities get hammered. Everything is happening textbook. Remember, the market goes up after the first couple of rate hikes. No one wants to believe that. Its just made up of different players. Normally we would expect international, the big cyclicals to go up. But until you see some sign that im right on europe, i think that youre going to find the money still gravitates to domestic retail. Im seeing some signs that youre right on europe. I absolutely couldnt believe it when you started about six weeks ago or two months ago. Theres real numbers are still going to be cut. And remember, theyre debating the currency. I could make a case that mcdonalds was not as horrible. Were going to talk mcdonalds in just a home. The euro has just killed them. Everybody is talking parity, which makes you think we wont actually get there. The world is convinced that the euro is just going to keep going down. At a certain point, did they not anticipate exactly what draghi is doing but hes going to buy bonds with negative yields. Below. 2. Germany is like what are you talking about . I realize i kept asking why would anybody buy negative yield. They think its going to get more negative and thats whats happened. The chinese came in and just bought trillions of european bonds. They are sitting on gigantic amounts. They are having a hard time stimulating the consumer there. You saw those numbers over the weekend. Theyre importing very very little. Its time for the chinese to make a move. But they seem almost paralyzed with these bond positions all over the world. But boy do they have a huge profit in europe. Its like this untold thing. The chinese have a gigantic gain. If they ring the register and started the kinds of things like rebuilding the infrastructure where theyre no longer killing a Million People with pollution, theyve got a lot to do there. But china has been paralyzed. Interesting stories about that documentary making the rounds. Its the sixyear anniversary of the market lows in the financial crisis. March 9th 2009 the dow 6,547. The s p, thats what i remember. 676. Here at cnbc, we do call it the haynes bottom as the late mark haynes went on air the next morning, march 10th on squawk on the street and called what was the bottom of the market. Take a listen. However im going to step out on a limb here. Were waiting for this. I think were at the bottom. Mark didnt make those calls idly. He had not said im warming up. He was always in the 9to1. He was always into the amount of downside. So when he made that call i almost said when he makes that call, he made that call what you had to do is say holy cow. He has not said a single positive thing, and it was overdone. And he knew it was overdone, because thats what if you remember in the late 90s, he knew the nasdaq was too high. Made a couple bold calls. That was his boldest. It was quite something. We miss him every day. Want to move on to some other news. It has been a busy morning. Gm announces the 5 billion stock buyback program. Promises more clarity as well on its Capital Allocation plans. All part of a settlement with investor harry wilson who promised to potentially wager a proxy fight on behalf of four hedge funds who earned roughly 2 of the stock. Wilson is going to withdraw his nomination to gms board. Hell drop his proposal, which called for an 8 billion repurpose, saying we have arrived at a win win outcome. I guess thats what they can say. For gm you avoid what we talked so often about the nasty distraction of a proxy fight. Even if its over one word. See if these things still take a toll on management. Are not worth it. A lot of management will tell you better to settle. At the same time i brought up many times the interesting Compensation Scheme that mr. Wilson agreed to at the hedge funds, which i believe, and it varied. Talked to hedge fund guys, they werent bothered by it but institutional managers were. It would have cleaved him from the rest of the board in terms of his compensation. Even if not, he was going to get 2 of the upside on the 30 million shares, but 4 if he was on the board on any upside. Im shocked at this. You know that mary barra said we can get it. They reached this number 20 billion. Anything above that is going to return to shareholders. My Charitable Trust owns this. It has been unfortunate so far. Not anymore. Were now up on it. But i do think that what that means is theres 10 billion total. Phil lebeau is in europe. Great stuff on this. But the fact is they convinced they rolled barra. They rolled her. She must be a little more optimistic than we thought. Or alternatively, they really didnt have any use of the capital. This is on the conference said. She said driving strong returns with medium risk given their Balance Sheets in good shape. The risk reward does not favor deploying cash toward the Balance Sheet at this time. 20 billion is where they will be. They had been above that and mr. Wilson asked the question do you really need to have that much cash in your Balance Sheet . You know even if you break even, you tell us in a downturn these are conversations id have with mr. Wilson previously. Conversations with mr. Wilson. Yes, some time ago. Got it. Right. That was a little bit before my time. Its okay. Its been terrific. Mr. Bass got me excited about it. Hes going to end up doing well. I dont know about that. Frank brosen is going to end up doing well. He was the main engine behind this. People who dont know frank brosen should know he is not one of these boisterous look at me guys. Hes the opposite. Mr. Wilson was the public face of their approaches to gm about Capital Allocation. Its big that they convinced them to do this. It does show a degree of confidence. I keep thinking theres really only going to be one left. Right. Coming up mcdonalds delivers another weak month of sales. The stock is down this morning. Also ahead, the ceo of alcoa. I get to say it. Klaus kleinfeld, hes going to be a guest of ours. More squawk on the street with just a few hours to go to apples event in San Francisco. Were back after this. [upbeat music] defiance is in our bones. Defiance never grows old. Citracal maximum. Easily absorbed calcium plus d. Now in a new look. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable professional. Im actually a dj. [ dance music plays ] woman [laughs] no way that really is you . If theyre not a cfp pro you just dont know. Cfp work with the highest standard. Mcdonalds out with disappointing sales for the month of february. Asia was also weak. And global sales fell 1. 7 . Europe the only region to come in better than expected. This coming as the new ceo took the helm on the first of the month. Held big franchise meeting last week, and announced an effort to curtail the use of human antibiotics in chicken. That will take a few years but one of the biggest buyers of chicken out there, will have a potential impact for the positive on the general wellbeing, i would expect of our population here in the u. S. Bigtime story this weekend. New york times story about the challenges he faces. Need to simplify. What ive heard from some investors, youve got to bring sgna down. Comparisons with burger king and mcdonalds its impossible. Hes on mad money. 10th anniversary. Heres the most important thing in this release. Consumer needs and preferences have changed. Reset strategic priorities. David, i dont know what that means. Thats not idle language. We know how horrible we are, and thats why the stocks not going to go down a lot. You dont think so . No. Because this is the kind of thing you put out when you say listen, all hands on deck we know we screwed up, we are not going to let this happen anymore. We are going to go back to the 12. I think they go back to 12 15 items. Maybe they will. When i talked to investors who met recently they asked the question, do they really understand how bloated their sgna is . Thats incredible. I want to say those numbers, im sure there are reasons why. It may be closer but it gives you some sense as to what were talking about here. They dont have a lot of the huge franchisees. Your average owns five, six. So you cant amortize those costs. You talked to pop eyes theyre going to tell you listen, the franchisees want to deal with another company. And thats really killed them. Thats what got thompson fired. Wasnt the board. The board liked them. Jim skinner told you in a very hostile interview, he wasnt our guy. You must win the franchisees over. Mcdonalds shares for their part look to be down but as jim said not that much. Change is going to come. Its a sam cook situation. After selma 50 years on saturday. Up next, cramers mad dash. Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. 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 longterm 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 symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Its more than a network and the cloud. Its reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions, including an industry leading Broadband Network, and cloud and hosting services all with dedicated responsive support. With centurylink as your trusted Technology Partner youre free to focus on growing your business. Centurylink. Your link to whats next. Consolidation in the energy sector, something weve talked about but we havent yet seen will we . Right. Im always conscious of the fact that youve taught me that when you see press reports, discount them. Because the press just runs with anything. It doesnt matter anymore. Its like well issue a correction five years from now. They have tremendous assets. The logical buyer here because of the bachen would be stat oil. Which says they need to diversify away from the north sea and come here. They have made some acquisitions at the top of the market. This is a lower price. Now noble is the outfit which did an Equity Offering is the outfit that has a good borrower. I do very much believe that this is worth a great deal more if you think oil stays at 50 because of the cost of drilling are down so much. The idea is to sell off of this. Right. This is when everyone thought it was going to go. There are many rumors that whiting was on the block to go. But can it hang in there . Yes. It could . If it chose not to sell pete did an Equity Offering. Goodrich did a deal. We dont have to worry about the capital struck schur. They seem to want to go. They do . They want to sell off 30 instead of off 90 . Just the way you draw it up at home right . You know, what can i say . Chevron was buying stock high and then the stock goes down its low. That would be cruel. So im not saying it. But we have a lot more to say coming up. First impressions are important. Youve got to make every second count. Banking designed for the way you live your life. So you can welcome your family home. For the first time. Chase. So you can. Youre watching cnbcs squawk on the street. The opening bell is beginning to ring in about a minute and a half or so jim. What are you watching whats the key i love to ask you, whats the key to this market . Do you have one . I think the key is whether oil holds. I think the exxon up grid of goldman is important. Exxon is the one that basically does well. The fact that they start chevron and conoco with the neutral say be careful. Hey, its not going to go down a lot, but dont get excited. The glut right now is the largest it has ever been in the united states. The largest, and dont forget these trains that are breaking down, boy, Warren Buffett must be furious. Whoa. Still not able to withstand crashes. No. The government made them they made a misjudgment about what kind of cars. Remember, that oil is like lighter fluid. Its the lightest. It just goes up like that. Its like gasoline. Its not heavy crude. Keep in mind the glut. Not just pushing. Although thats really interesting. Yeah. All right. Hear the applause. And there it is. The opening bell for monday march 9th. By the way heres the big board. Women and etfs celebrating International Womens day over at the nasdaq. Also celebrating womens day. The u. N. Global compact. And Sustainable Stock Exchange initiative. More deals. Yeah. And one that you wrote this morning. Pinnacle is a complicated one, jim. Because youre talking again about the sector. If you recall a number of these well actually, not a number. Pen gaming split itself into the gaming operations, managing the casinos and the actual real estate. It became gaming and leisure proper, glpi. There is another gaming company, pinnacle, not that large, but fourplus, somewhere in there that has also been investigating and potentially planning a split. The real estate becomes a wreath and then they manage the casinos and that becomes operating company, profit company. Gaming and leisure this morning makes a hostile basically, a bear hug, to try and save pinnacle. When you split, we want to combine with your reit. The second reit a second hostile. These are signs optimism not negatism. 36 a share, would close by the end of this year. Thats including the opco part as well. Could have alluded to the fact the that there could be some hidden value. I dont think he expected it to be this way. But, you know mgm has been another name that has been considering the same kind of approach. Namely could you split. Apparently theres two guys at the irs that make all these private letter rulings on reits. Its two guys. Two guys that have really just become you want your afteradvertising company to become a reit, right . Okay. Iron mountain these two guys . Two guys. They get backed up. Ive got whole law firms trying to get at those two guys. So yeah you could do that. Theyre the most powerful two people at the irs. They may be. Isnt that incredible . A profile on those two guys. But it wouldnt be very exciting. For all we know these guys are like skiers olympians. They could be spelling bee champs. They could be all sorts of things. But apparently they are also experts on what is a reit and what isnt. Glpis proposal is structured as a taxable transaction. Its not reliant on a favorable irs tax ruling. There you go. All right. What else we want to talk about. Im looking around here. Apple shares. The watch. That is so negligent of us. People have more predictions about the watch without looking at the watch than ive ever seen. Its unbelievable how irresponsible it is to write this thing off from the very beginning and to say its going to be the biggest ever. I say we see it. We see what apps are being written for it. We see the different gradations of it. Did you know that you have to charge it every night . Yes. I did. I read that. I thought that was interesting. I have to charge this every night, too. You charge them at the same time. See what you did just pulling it out . Theyre betting that you dont want to pull it out. Like whos that calling . Without being rude, you can look at your watch. I was in a Cocktail Party with the president of a major university. It kept going off. If it took it out, i was a jerk. Had i looked at my jerk, i would say hey, ive got to take this call. Was that a mass market, the guys who want to do this instead of just pull it out of your pocket . Probably not. I dont know. Its a good question. I dont know. Its a health issue. They keep coming back to these apps. Look they all want to live to 100. I can look on this and see how many steps i took. You live to 100 for the watch. Im looking at my health. I can do it right here. Natural organic and watch together equals 100. Ive already taken 900 steps today. I walked half a mile. Got a fitbit . No, ive got the app that comes with the phone. You ever look at it . Im busy. Yeah, youre busy. Amazon shares are down. This morning. This is very unpeckish. This is not a peckish report. He has some influence. Hes basically saying the stock has moved up a little bit too much. Hes not as enamored of this breakup. I just keep thinking back to your documentary. I watched it with my father. What kind of company is that . You want to ask faber about that. More on how things oh man. You ask faber. Are you getting along with faber . I love faber. Getting along well. Were good. Amazon down quite a bit. Hes hurting amazon. Who knows . What else do we have this morning . You mentioned alcoa. Were going to go back. They do a deal. Were going to be talking about it. What do i need to be thinking about . Paid a lot of money. Another transaction as he completely transforms the company. Hes trying to get away from just being an aluminum company, which is how the street views it. This is another engineered products company. This is all about taking over mine share and an actual plane. If you go to rtis website, youll see how integrated they are. Alcoa already makes the fasteners. This is about a multiyear cycle as both air bus and boeing would tell you. Every time he does a deal it takes away from the notion that i can look at the lne and decide how alcoa is doing. I think its smart. Hes got to get that company away from being just plain vanilla and hes doing it. Yes, hes done it. Hes done it. Were going to get to bob in a second. Want to come back the a number of the names we focused on at the top. Mcdonalds is up. The sense of urgency down 4 . Thats thompsons problem. Thompsons legacy. This is still thompsons problem. Wendys wasnt any good and wendys got good. Burger king wasnt good burger king got good. Thats true. They are not entertaining this, but a lot of investors will talk about it about why not beef up debt as opposed to equity. Thats the world were in. Theyve got a Balance Sheet. They can do everything. I dont want to have to hire a lot of people because i dont want my menu to be so difficult. I want the line short. I want to clean the bathrooms up. These are the traditional things as what happened when Howard Schultz went back to starbucks. Reinvented the company. Macerich is up. Fixed ratio by the way. Obviously theres an expectation on the part of macerich shareholders that there will be a higher price from simon or perhaps another buyer, although that doesnt seem as likely. Westfields one name maybe. Theyre big enough. Maybe theres a french they can use that free money. Theyre not coming here. Well see what happens here. Finally, gm shares jim. Congratulations, thank you on the Charitable Trust being in the black. Should be up more. Theres so much activity today. Shows me that friday might be well, im not saying they put it behind us but the whole idea that a strong economic number is poison for the equity market that has to be working through the system today. Its not necessarily poison. And the banks do better. Yeah the banks do. Lets get to bob pisani. Hes got more on whats moving this morning. Good morning, everybody. Just back after a week off, and Better Weather where i was, but this is going to be in the 40s this week, so a lot of people were optimistic whether its turning for the better here. Consumer discretionary, technical tech stocks on the upside. Energy also modestly on the upside. I want to show you the s p 500. Its true the 50day moving average for the s p, here in 2,061 or so. Earnings estimates have been coming down. But not so dramatically that people are pushing the panic button. I saw sam stovall over the weekend. At 1. 1 increase kind of anemic, but he said well likely see a gradual up tick in those estimates. Why . Because the gdp number is likely to be 3 in 2015 not 2 because the economy is improving. Thats certainly a very good reason to be optimistic earnings overall. Energy stocks on the mix side with positive comments. You heard that earlier from Goldman Sachs on exxon mobil. Chevron and conoco were introduced for a neutral with them. What i found interesting was that nobody can agree on whether supply is going up or down. They think it could be going down into the 40 level, the bottom end of the level again, but the opec secretarygeneral was out over the weekend quoting the wall street journal, noting that the pullback in shale production could create a shortage that will push prices up even more. He went on to say if we dont get more supplies soon there will be a shortage and the price will rise again. So not everybody necessarily on the same page on the status of what the supply issue is. The u. S. Sales down 4 . I saw numbers generally down around 1 . But i think everybody still feels theyve got to give steve some time. I already saw some notes out from activist boards saying there should be new membership and leadership on the board. I think its a little bit early for that overall. He came in at the end of january. That stock went from 89 to about 97. I think it was january 28th. They still do have a 3. 5 yield here. If you look at european bond yields germany, france bond yields dropping dramatically again today. Those are dramatic drops in those yields. Back to you. Lets head to the bond pits and Rick Santelli in chicago. We definitely saw a different range traded in treasuries. We jumped a bit. Basically last week, the tents closed up about 21 basis points. And if we look at a yeartodate chart, you can clearly see that we are now at the highest yields since early december. And if you actually opened up all the way to 2013 a couple of things should jump out at you. First of all last october and november, huge amount of consolidation, right in the mid 230s, so there is a lot of resistance above the market. If you look at most of 2014 it was what we call a slice line. 260. We did a lot of consolidation above and below. So 260 is the optimum for many technician technicians. Yield, ascension level that theyre paying attention to to break out of that 230ish consolidation. The year to date of boons, bob referenced rates. Theyre not lower because theyve had humongous moves. Theyve been chipping away at the ice block for a while now. As you look at bund yields theyre at 32. Definitely seven basis points lower than friday as we get ready for qe but the low yield was under 30 and that was a day after christmas. If you look at some of the other reference tenyear notes, spain hovering just below 130, obviously these are historic lows, and they are gaining a little bit of momentum kind of the junky stuff wants to get purchased by the ecb, and the program that gets under way today. We broke under the range. Were basically making fresh lows although it is holding just a bit with fridays lows. Currently, the dollar now holding that 120 handle in a significant way, hovering at the best closing level since early december of last year. Back to you, david. All right, thank you very much, Rick Santelli. Up next the ceo of alcoa, klaus kleinfeld, announcing an acquisition this morning as that companys continued transformation is ongoing. And later, live from apples event in San Francisco, walt and kara are going to join us. Were back in two. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Alcoa acquiring rpi metals this morning. Klaus, two birds with one stone. Second, making it less of a commodity play. Thats exactly right. Why is this a good deal . I mean, on the one hand, we are expanding our value at business. Secondly, we are expanding it in an area of aerospace that is high growth. Going to grow 15 . Overall, we see in the next year 5 to 6 annual growth rate. Nine years of auto backlog. We are closing the value, and we now have a complete downstream titanium off rink plus machining in there. And then it also has to get access to some very foundational additional technology. 3d manufacturing. Very, very good. At the same time increase the profitability from 14. 5 to 25. Thats in essence what it is. Klaus, you mentioned you brought it up i didnt. 3d printing. Because this is a very hot area. I know maybe the best at industrial 3d printing. Titanium filings, if you can make them into something, it could be fabulous. Supposed to be the preeminent 3d present 3d Printing Company starting in 2016. Synergies here . Well we already apply free printing on making prototypes but this obviously is a very very nice addition and we will apply not just in what is today inside of rti, but also apply it to some of our other businesses like in the investment casting side. It allows us to do prototyping faster. As well as for small batches make them just as readymade as rti does. And its not just aerospace, by the way. A lot of components that rti does today in the 3d manufacturing go into medical applications also. So this is an area of foundation technology. Tialuminides are a great answer to some of the material changes in there. Overall, titanium in total is the Fastest Growing metal in aerospace. With an average growth rate in the next year of 5 . So this is a very very nice addition to our portfolio. We have a process that we already have designed. So this is a good day for our customers as well as for shareholders. This summer, there was a lot of talk that both boeing and air bus would be in major trouble bufz sanction because of sanctions. This company that you acquired does not use Russian Technology and what i can tell is that maybe this is the way if russian sanctions are ratcheted up that boeing and air bus are going to be just fine, thank you. Well indeed. It gives more optionalty and also adds some capacities capabilities that rti so far could not offer to the whole value. This is a very complete value. From the responses that ive seen from our customers already earlier this morning, i think theres a lot of positive response there and they are looking at this very favorably, for probably some of the reasons that you mentioned also just beyond the excitement about having a very competent player like alcoa here. When you look at our aerospace offering, which now through this transaction grossed by another 13 , makes up 5. 6 billion. We cover the leading position in structures and with different materials, the leading position in engine and doubled for an acquisition, we doubled the content in the engines. And with this now, we add to the titanium capacity. On top of it we have other capabilities. Eng that this is a good day, another player another player also in the west who understands the how to create value in this industry. Thank you, klaus kleinfeld, chairman and ceo of alcoa. Trading coming up with jim right after this. These days, the most important person in your business could be a software developer. So, hows the app coming . Weve got to make something great. Hows the app coming . Weve got to do it fast. Lets do this on bluemix. You can build apps with analytics, big data, even ibm watson. That could give us the edge. Lets do this on bluemix. It can provide code for you. We could be first to market. Because being best is priority one. Being first is priority one. Theres a new way to work and its made with ibm. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. You hate him . I said i do not hate him. Reiterating a price target of 67. Most importantly, the video was an important step for twitter. I think twitter is being monetized. I do not hate dickc its changed. I change, too, sir. What do you do . Finally learned that one. I think that this is the beginning of when cost low says i have this hidden giant within the company and im going to monetize it. Whenever i said you know what, i dont take it back. Im sorry. I believe in charity. But i just am not going to blast twitter here because this jp morgan report tells all. What have we got on mad tonight . This is the beginning of our 10th anniversary. Ive got leonard schleifer. Indra nooyi, unbelievable products. And Howard Schultz may be our greatest ambassador to the world. Be prepared to be shocked at this best list. Because our staff is just our staff is unbelievable okay . This is it. They are booking people. Ill be watching every minute. Tenth anniversary. We have a team. Hes just beginning to keep talking. But we have to go to break. Were counting down, by the way, to San Francisco. So he can measure every bodily function that he has. 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. I have a cold with terrible chest congestion. I better take something. Theraflu severe cold doesnt treat chest congestion. Really . New alkaseltzer plus day powder rushes relief to your worst cold symptoms plus chest congestion. [breath of relief] oh, what a relief it is. Its more than the cloud. Its security and flexibility. Its where great ideas and vital data are stored. With centurylink you get advanced Technology Solutions from a trusted it partner. Including cloud and hosting services all backed by an industry leading Broadband Network and people committed to helping you grow your business. You get a company thats more than just the sum of its parts. Centurylink. Your link to whats next. Good morning. Im david faber along with sarah eisen and simon hobbs. We are live from post nine at the new york stock exchange. Happy to be back with you guys. Carl quintanilla is on assignment today. Lets give everybody a look at the markets. Shall we do that . Thank you, david. Youre welcome. Im here for you. Up about a quarter of 1 . How about oil . There it is. Still below 50 a barrel. The Company Expected to unveil the latest details of its watch. Well take you there live. Mcdonalds posting a big decline, just as the new ceo takes over. The stocks not doing too badly, but what should you do with it now . And the incoming ceo of deloitte joins us live. Shell tell us how american businesses are handling a challenging global environment. Apples former ad consultant will join us here live at post nine. But first, we begin with stocks. Slightly higher this morning after ending last week with a brutal day. Joining us live on set, jeffrey solomon. Good to see you. Good to see you, too. Its your rally beard. Sixyear anniversary of the bull market. What does that tell you in term of how much longer we have left . Does the longevity matter . I think the key thing to look at is where funds flow is going. People are looking for bays to take more risk. As long as that continues for a while, well continue to see money flowing into equities even though i do expect there to be rate increases. Do you include that in your low rate environment, an Interest Rate hike in june or possibly september . We actually think it will be in june. So yes, i do think thats factored in. The new normal is probably a lot lower than any other time in our lifetimes. So i still think Global Growth is a big way on the overall economy. The u. S. Seems to be doing okay. So if we have this extraordinary sixyear bull market six years the anniversary today, what is the next leg look like . Thats what people are trying to predict. I dont know that its going to be so easy. An easy fed environment makes it easy just to own stocks. I actually think youre likely to find more stock picking going on. To me thats a really critical thing. Youve had this tremendous wave in passive product where people access the market through etfs, but the dynamics are now likely to tip in favor of stock pickers. Does that mean you dont think the market will continue to rise . It wont be the same trajectory. I think youre going to have to be a little bit more adept at it. I think stock picking actually returns to favor. Weve seen that. I know its a contrarian call. I believe at the end of the day that stock picking actually does matter. In an environment where you dont have conducive fed. Although active managers typically seem to lag the broader indexes. And hedge funds the most even when it comes to those who are at least making decisions about stocks. I think its risk reward. Youve got to look at adjusted risk returns. I always hear that any time i say anything bad about hedge funds. You know, save it. Just save it. I think that again, its a precious few number of active managers that outperformed. The ones that do you want to own. I think that you know thats where were focused for most of our efforts. We believe theres a lot of people that come to work every day trying to figure out how to outperform. I do think that stock picking does matter. I know you spoke at your companys 35th annual health care conference. That has been a hot sector of the economy and of the stock market. I know youve been a big underwriter for lot of these deals. Do you expect that pace to continue . Its been one of the biggest defining factors of this bull market. I think that its hard to see that well take 71 Companies Public this year in biotech like we did last year. But i will tell you that we raised more money in the first two months of this year than in any other time. Raised 6 billion in the industry. Most of that is with companies that are already public. I actually think were in the midst of a really interesting early stage cycle where youre seeing the confluence of an accommodative fba, actually good science maturing, Good Management teams. And most importantly, Strong Capital flows in the sector. I actually think were at the front end of that even though i think its hard to say that we wont have volatility, we always do. But i do think were at the front end of that. There are a lot of people who think theres a bubble in biotech. Theres a lot of professional biotech investors who are nervous given the levels in the runup that weve had at the moment. You mentioned about this being accommodating. Didnt they approve a generic drug that is intended under obamacare to save a lot of money moving forward . Isnt that potentially an undoing for parts of the sector . Well i do think were going to see a lot of Successful Companies off the become on successful economic models. Thats great for the industry because it means the pressure to innovate, the pressure to bring to bear cost savings into the system is right at the forefront on the mind of the fda and of this administration. Orphan drugs, for example, we expect that to make up almost 20 of prescription drugs by 2020. Thats a whole new area that isnt even being addressed by generics. Some things to worry about with your bigger pharmaceuticals, but for the biotech industry we have a lot to do here. Thanks jeffrey. Good to see you. Its planning a 5 billion Share Buyback very quickly. Harry wilson will withdraw his candidacy for the board of directors. Want to bring in phil lebeau to fill us in on the details. They didnt go to the 8 billion that he originally was pushing for. Would have been a great deal of distraction. Right. I talked to perry wilson about this earlier today, david. From this perspective, he gets what the hedge funds that he represents are looking for. They expect to be down to a tax position of roughly 20 billion by the end of this year. That is the key area. Because General Motors in addition to announcing this has said look that is the minimum tax position we need for this company. Anything above 20 billion in the future in terms of free cash flow, we commit to returning that to investors, whether its through a dividend or stock buyback, they dont make that clear in this commitment today, but they have put some mile posts, if you will out there in terms of what the commitment is in the future for returning cash to investors. In a Conference Call with reporters earlier this morning, Ceo Mary Barra talked about why she believes General Motors after going through this situation with harry wilson and the hedge fund is positioned financially in terms of its Balance Sheet for the next couple of years. We believe were in a position to move forward because were executing operationally. Weve made a lot of progress on delivering our customer focused strategy and were building on that momentum from the progress we made in 2014. What was interesting listening to mary barra this morning was a specific question from one analyst who said mary everybody agrees that General Motors shares are by any measure undervalued relative to what we believe they should be. Why is that the case . She did not answer that question. Shes not going to get caught in this game of why exactly is your stock not reaching the levels that people believe it should reach . That said she has committed and the gm board has committed that they can make this company operate with a 20 billion cash threshold. Above that, they said that they are beginning to be bringing that back to the investors, whether its through dividend or a stock buyback. David, guys, back to you. All right phil thanks very much. The culmination of not that longrunning dispute between some shareholders and gms. The big event today, Apple Holding that special event in San Francisco today. Widely expected to come through with more details on the apple watch. Our team is in place. Kayla is live outside the theater where tim cook will present. Over to you. Good morning, simon. From the other coast, just about three hours, apple is pulling back the curtain on that highly anticipated apple watch, which was first previewed in september during the release of the iphone 6. Heres how apples ceo tim cook described it then. Apple watch is the most personal device weve ever created. That first glimpse of the apple watch, underscoring that the device will work extensively with the iphone, but also as an extension of the iphone. And it will also have a wide range of health and fitness benefits and work with some existing technology of fitness bands. Weve also learned the starting price point will be around 350 for the simplest model. It will step up from there based on the design. If you want that 18 karat gold rose gold watch, youre going to be shelling out quite a bit more. A few of those designs unveiled in this months vogue magazine in a 12page ad spread that looked pretty stunning from a design perspective. But its a sure signal that apple is moving headstrong into the luxury goods market. As if hiring the former ceos werent enough of a signal in that direction already. Telling the new yorker the watch face itself only took about six weeks for the team to settle on but it took a year to decide on those six interchangeable bands. So fashion is very important in this product launch. But fashion is not the only thing thats going to be focused on today. Function will be the main question. What apps are available. Thats how youre going to be able to maneuver back and forth. Tim cook in anticipation of todays event is already up and at them. He tweeted very early, got some extra rest for this event, slept in until 4 30. Of course, hes famous for being an early riser. Applelive is already trending and well have more for you. Up next on squawk alley. For now, back to you. I see theyre actually going to redesign the apple stores so theres going to be a designated area which by appointment, you can actually look at some of the watches and try them on in a special training for the sales people. A lot of people said its not going to move because if you look at the culture of what theyre trying to do here its very different. And its different from an ethos perspective, simon, than what apple has tried to do with its products in the past. When johnny ives spoke to the Financial Times last week he described it as different from what they were trying to do with the iphone because everybody on the design team hated their cell phone and thats why they wanted to create a new product. Whereas everyone now has a high regard for their watch and for the luxury product. So the trick was introducing new functionality and additional fashion to actually create a new product that could fit in alongside that. You mentioned that shipments might not be as big as the iphone. The iphone was not a blowout success overnight either. Wall street estimates, between 8 million and 50 million for the apple watch. So certainly, its going to be shipping. Just not maybe to the volume of the iphone. But millions of shipments is still what wall street is expecting. 1 00 eastern this week. Cant wait. Kayla, thank you, on the west coast as we await the big apple watch launch. Up next on the program, its clear the new ceo of mcdonalds has its work cut out for them. The company posting february sales that were much weaker than expected although the stock has recovered. More on that when squawk on the street comes right back. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Welcome back to squawk on the street. Were watching shares of blackberry down around 5 in early trading. Gold manman sachs is downgrading. Blackberry is in a situation where losses will widen in the years ahead. So the turnaround perhaps running into a bit of resistance for blackberry. Back over to you, sarah. Investors not taking it too well. When we come back the incoming ceo of deloitte joins us to give us her take on how u. S. Businesses are dealing with what has become an increasingly challenging global environment. Were back on squawk on the street after a quick break. Theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare changes. When frustration and paperwork decrease. When healthcare becomes simpler. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Is this a critical time for the professional Services Industry . Ringing the nasdaq bell in support of International Womens day. Lets bring in cathy engelbert. She is deloittes ceoelect. Welcome to the program. Thank you, david, so happy to be here today. Is this a more challenging time . If so, why . What were seeing is Companies Looking at a rapid pace of change. The ding tall economy. Were also seeing regulatory change. Companies are trying to make sure they grow and grow profitably. What should they be focused on as they try to navigate that as we said at the outset, very complex world that perhaps is somewhat new to them . I think what theyre really focused on again is evolving with this pace of change. Using technology as an enabler instead of making it disrupt the business. I think those companies that figure it out quickly and have the right strategy the deal with cloud and cyber and digital and Everything Else those are the ones that are going to get ahead and drive their gretowth and success. I think its timely that youre coming in here on International Womens day as the first woman in charge of a major accounting or consulting company. The banks the big banks and the financial firms, why dont we see more female ceos . It is great to be here on International Womens day. The u. N. Has a great u. N. Womens program. Theres empowerment principles. I think the conversation has to just keep going around women in business, women believing that they can have a successful highperforming career. So i see lots of positive signs. Very optimistic. I see a lot of our clients making strides in women empowerment, Economic Empowerment as well. So really optimistic about where were going. Cathy, will you do anything material at deloitte to better promote women within that organization . Yes simon. We have a Great Initiative for the advancement of women. This is really my becoming the ceo is a testament to our long commitment to diversity inclusion, and i intend to really focus and really pay that forward for our future diverse leaders at deloitte. Do you think its a wage issue, cathy . Because as i understand it women still make 80something percent of what men earn and in Financial Services in particular, that number is a lot lower. 60 to 70 . Why is there such a gap with everything thats being done with the awareness thats being brought to this kind of issue, and what can you do as you consult with all of these companies, particularly in the Financial Center . I think this is a conversation that we must continue to have about wage inequality. I think the conversation obviously has been started, and i really think this is about women making sure that they raise their hand theyre building all their capabilities getting assignments that ultimately will really close this gap to close to zero. Is there a difference cathy, since you clearly know Financial Services extremely well is there a difference between being with an accounting function or being within a consulting function and being at an Investment Bank . Because thats really i think where a lot of women particularly struggle with the boys. Yeah, as i mentioned, i think whether youre in Investment Banking or whether youre in the fortune 500, and depending what level you are, i think for women its about knowing that we can do this we can raise families we can take care of elder parents and we can balance it all. I think it comes down to that. To build capability so that women are considered for promotions and leadership roles, and we are very committed to that at deloitte. Back to the broader trends were seeing from some of your client base. How optimistic are they . How much hiring do they plan to do in this year ahead . I think here in the u. S. , i see lots of optimism. Here at deloitte well probably hire 24,000 people over the next year. Were looking for all different types of diverse skill sets including data scientists and stem graduates as well as our traditional accounting audit and tax business. I also see we serve over 80 of the fortune 500, and, you know, were really seeing some optimism in the u. S. On making sure that were there developing our own people into the work force and making sure they are, again, driving their own success and growth. Can you quickly put it in some perspective for me . Has it been typical of years past or is it an up tick . I think theres definitely an uptick in the u. S. The challenges are fwloeblglobally. Theres an uptick in hiring in transforming businesses using technology as an enabler, but certainly from a jobs perspective, really see an uptick in u. S. Jobs. Why isnt it better . Why arent they raising wages and spending more on their businesses with Interest Rates at zero, and now the Unemployment Rate at 5. 5 . I think that is the challenge with the unemployment jobs report from last week looking good, but the wage issue, not being where we want it to be. So thats an issue of driving that into our economy, and when we have a better economy, people make more and people are driving to their own success and development. So i think that will all be part of the confidence in the u. S. Economy that were looking forward to. Thanks for joining us. Thank you so much. Appreciate it. Youre welcome. Kathy mcdonalds says same store sales in this country fell a worse than expected 4 if for the month of february. Europe, the only region coming in better than expected. It comes after the newly appointed ceo steve easterbrook, who is an englishman, took the reins. So are investors still expecting a turnaround . Joining us now, rbc capitals managing director david palmer. Welcome to the program. Its interesting that the stock has actually recovered today. Yes that is interesting. We wouldnt have expected that. Certainly this was an ugly month. Its not a very important month. Its obviously a very noisy month as well because of the weather effects that are playing with their sales. But clearly, these guys lost a lot of share as well. You know im not sure if you saw the New York Times over the weekend, they had a fascinating article about mcdonalds. I didnt realize that roughly 2 3 of customers still order through a drivethrough counter. And therefore, the suggestion seemed to be actually delivering the food fast reducing the complexity of the menu seems almost everything because if the cues are too long people simply drive away. Is that your analysis of whats going on . Simplicity and its not just our analysis but its the analysis of the company. When it comes to this theyre going to be simplifying the menu, doing so on a regional basis. One of the ways theyll be freeing up not just the local energies and the innovation, but also the rationalization of that menu is going to happen through a more regional approach by finding that worst 20 to get rid of this year and hopefully that doesnt just help on throughput, but helps them execute that core menu. It looks like theyre beginning to ask franchisees to spend 100,000 to get this create your own sandwich which again reduces the wait times, increases the investment im sorry, increases the wait times. Youve got to sit at a table and wait for the sandwich to be brought to you. That would seem to be at odds with the general philosophy. That 100,000, well have to see if that ends up being the big investment or if they just go through some sort of lighter customization tactic. The test market the 900 stores there. But the big deal for mcdonalds is just freeing themselves up through a variety of things. Just getting the sales stabilized. Getting some marketing done this year. So youre positive i think on the stock, and on the outlook, easterbrook is about a week in. How long does it take . At a company with more than 36,000 global locations. Yeah. Well, as you know the u. S. Is a little over 40 of that company, and the u. S. Has been their biggest trouble spot. So all eyes are on the u. S. For sure. This regional approach the quality upgrades also the technology stuff that should help them in the second half of the year. Thats when we and i think the company would be looking for them to get the stability, and at that point also, i think youre going to get some help from refranchising, perhaps some debt leverage to also help shareholders get more positive. But to call the stock to 115 plus the dividend thats quite a big call. This isnt our favorite stock in the group. Theres others like yum and chipotle that we would put above this, but mcdonalds, we like it here and its based on the second half call. The valuation is compelling. And we do think that the company is beginning to be managed better here under this new management. Its really a call that these guys are going to manage it better, focusing on the u. S. For starters. Good to see you, david. Thank you for your time. David palmer joining us there. Straight ahead on the program, were counting down to apples big event. 1 00 p. M. Eastern in San Francisco. Find out what you should be doing with the stock now before they launch the watch formally. Before the break lets get to sue herera for a cnbc news update. Hi, simon, good morning. Here is your cnbc news update this hour. Were paying more at the pump apparently. According to the survey it rose 21 cents in the past few weeks. However, that is still 97 cents per gallon less than a year ago. Chinas imports sank again in february. Data sews imports shrank more than 20 compared to last year. Chinas exports surged in january. Price list says it has a quicker fix for its ignition switch recall. The company will now replace the entire ignition switch in more than 700,000 suvs and minivans. Chrysler announced those recalls last june. Simon Property Group has made a 16 billion offer in cash and stock to buy macerich company. A move to combine two of the largest Shopping Mall owners in the u. S. Squawk on the street will be right back. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. The world of tech will be closely watching San Francisco, where were a couple hours away from apple kicking off an invitationonly event dubbed spring forward. The Company Expected to unveil new details about its longawaited apple watch that we first glimpsed last year. What should the investor look forward today . Joining us now is the managing director with raymond james. Good morning. Good morning, simon. What will you be looking for . Well probably not a lot of surprises given all the Media Attention already. You know theyll obviously introduce the watches with a series of price points. And, you know, to me probably the most interesting thing will be what price points and how broadly and how quickly can they get the distribution ramped. Right. I thought we already kind of knew that, that there were going to be three. And then a 10,000 gold watch further up the range, no . But theres a lot of bands and accessories and so forth, and so how they intend to fill out the entire broad price range is still uncertain. The journal has an expansive article today about how this is a huge move for the company, moveing into lifestyle. Arguably a big bet with its brand and image. I wonder, if you gois sguys who are factbased, are able to appreciate the dangers and rewards from taking this step. I understand from the journal, theyre beginning to set aside part of the store to actually have an appointmentonly area where people can match up with the watches. I mean it is quite a big leap of faith here, isnt it . Yeah, although i would argue theyve been managing a lifestyle brand for quite some time. Part of the magic of the iphone is clearly the ecosystem. When you talk about, especially in international markets, the type of sales that iphone has. A lot of these markets, because of tar i haveiffs and so forth, the iphone is an 800plus product. Maybe not so much in the u. S. Where we get subsidized, but internationally, i would argue the iphone is very much a lifestyle success story. I think theyve got a running start. Start. I dont think its quite as big of a leap. Everyones trying to model the number of watches that will be sold. I think the estimates are anywhere from 20 to 40 million this year. Is that enough . Where are you . Because i know youve also done some surveys. What does that do to apples top and bottom line . Anything material at this point . Yeah obviously when youre running close to 200 billion in revenues, its hard to move the needle. The watch market today is 30 billion or so. So theyve got to not only take some share, but actually grow that market. Theyve done that in smart phones and tablets before. In terms of the interest level, the surveys that we do suggest about 10 of iphone users have serious interest in buying an apple watch. That would be about roughly 30 million users. And whether all those come out and buy in the first year well see. Yeah. But in general, terms of sensitivity, every 10 million watches is depending on price point, probably somewhere in the 25 to 40 cents range on an annual basis. I just wonder whether we know what it will be given that we dont know what apps will run on it yet. That was so important for the iphone. All the ideas bernstein putting forward this morning that if the censors are good enough it becomes for many people a musthave Health Monitoring device further down the line. Perhaps regulated by the fda. They question whether they could sell a billion watches moving forward. There are clearly a lot of unknowns, at least arent there . Yeah theres a lot of unknowns. A billion would be tough without a significant price decrease. I think apple has shown it wants to dominate the high end of the markets, where the vast majority of the profits are. I think it brings up a good point. A lot of the success of this device as a category is not going to be the first year. You look at the iphone, if sold exactly 5 to 10 million in the first four or five quarters. The ipad sold about 10 to 12 million. Both these products really required a very robust App Ecosystem before they really became mainstream. And i suspect that will be similar with the apple watch. Regardless of sales here in the first year i think if they can garner good momentum, youll see a lot of growth in years two, three, four and beyond. It is beginning to be fascinating to see what they come up with at 1 00 eastern. Thank you for your time. Tavis mccourt joining us from raymond james. Thank you. A hostile bid in the reit sector and a large one at that. This morning at 9 00 a. M. Simon Property Group releasing a letter and an offer to acquire mallbased operator macerich for 91 a share in cash and stock. 50 50 would be the composition of said 91 a share offer from Simon Property group, which has been trying to engage macerich in a potential deal for months. In fact, back in december and again in february simon and its ceo david simon had tried to link up or at least get a friendly deal going with macerich, but was not able to do so. Thus deciding this morning to come with what we term a bear hug, or more or less a hostile offer for the company which it is offering 91 a share for a company that does line up geographically quite well with Simon Property group. The largest mall operators in this country. Most of its operations or its larger properties, i should say, are in california and arizona. Though it also does own the very wellknown Tysons Corner in virginia, and a number of properties right here in the northeast and the city of new york. Its a fixed exchange ratio. We have heard nothing at this point from macerich which is yet to respond to the press release and letter which were put out at 9 00 a. M. Eastern time. Macerich is incorporated in the state of maryland. Its board of directors, nominations for which are actually the window for which is open right now, and it is something that conceivably simon could avail itself of the it decides to move not from a bear hug, but to a proxy fight and what i would call an allout hostile offer. That window will close on december 31st. There is an overlap in the share base, and one would expect that simon will be checking with those common shareholders to see what their thoughts are about whether or not they would vote in favor of a slate for simon to actually go after the board of directors. Well see where this goes from here. Macerich shares are above that 91 price. There is thought to be at least the potential for a white knight here. Westfield, the large australianbased mall operator and unibi are a couple of names that conceivably have the wherewithal to pull a deal off. General Growth Properties is off the map because they have agreed to buy certain properties, which were not named from simon if it is successful in seeing to completion its offer at this point. In the past its gone after out theman. Well see if they succeed this time. With the dow up about 78 points at this hour. Coming up squawk alley will be live from San Francisco as we count you down to the apple event. Theyll be there to weigh in on what to expect. Were back here after a quick break on squawk on the street. Can data help cure a disease . The right treatment for you is out there. The problem is some of its in this lab. Some of it is in her head. Some of its in this new journal. And the rest of it is in your personal medical history. Ibm watson can not only read this data, but understand it. Its trained by doctors. And its always learning. It can help find hidden correlations and help your doctor recommend Treatment Options for you. Theres a new way to work and its made with ibm. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Rick santelli has the exchange for us. Id like to welcome republican congresswoman diane black. Thank you for taking the time congresswoman. Youre welcome. Its good to be with you this morning. One of the issues that was brought up in the president s budget and it seems to have simmered down a bit, was the notion of quote unquote Free Community college. This did come at a time where tennessee had already made a play into this space with their program called tennessee promise. I guess the definition of free is different from a federal and state level. Maybe you can explain where education ought to be and how your plan is basically withhat the people of tennessee want but maybe it wont be a perfect fit for the entire country. First of all, there are very large contrasts between what the president was proposing and what weve done in the great state of tennessee. On one size does not fit all. Whats good for new york is not necessarily whats good for the state of tennessee but it is good for us. Second, the president s initiative would have allowed anyone to have applied and gone to Community College for free. Ours will be for students graduating from high school and they must have already worked on any other scholarship, so it would be after all other scholarships had been exhausted. And essentially also a great difference is that we pay for it through lottery reserve funds, which means its not a debt to our citizens. Its not an additional tax on them. But the president s initiative would have cost 80 billion in a budget thats already difficult very different from what the president was proposing. I will say that the state of tennessee also a little different than other states in that we dont have an income tax. So for the current fiscal year you look to be balanced budget. Is that a state amendment or something that tennessee strives for through its legislature . We actually do have something in our constitution that says we must balance our budget and must do our budget by july 1st. So we do that here in the state of tennessee. I will tell you it worked well for us. Our governor works with the legislature and we are the Lowest Per Capita debt in the entire country. So we do pretty well here. The tennessee promise works for us because were using reserve lottery money and not putting an additional burden on our taxpayers. When i look at the federal program, should that perspective ever resurrect itself heres the issue that i see. When you look at kindergarten through 12 we see that many students dont come out, common core aside, with the necessary math and reading skills that they should. The federal program looks to be a bandaid. So in essence, what we may be doing is just trying to get where we should be anyway when students graduate high school. Is the Tennessee Promise Program more of a remedial lets take these students back and do what we didnt do the first time around, or are you truly trying to build a different type of education profile . Last 30 seconds, congresswoman. Sure. And i will tell you one of the things the governor has done is his initiative has been to ask businesses throughout our entire state. What is it thats really needed for you to get a good work force . And theyve been told that if students had just that little bit of additional education in a Community College setting, that it would be very helpful for them to have a skilled work force. So once again, its a state initiative and were responding to what our job creators really need and want in their businesses. Congresswoman, thank you very much for explaining the program and being our guest this monday morning. Sarah and simon, back to you. Thank you. Thank you for bringing us that conversation. The dow now up triple digits. Apple is expected to unveil new details about that highly anticipated watch. But just how wellpositioned is apple to make a big splash in the smart watch market. Joining us now post nine the former apple ad consultant and creative director ken segall author of insanely simple the obsession that drives apples success. Good to see you again, ken. Good to be back. You worked with steve jobs. What would he have thought of this apple watch . Thats always hard to say. I think he would be pretty excited today. This is what he lived for, unveiling the big product and changing the word. You were the one that dame up with putting the i before the product. Theyre going away from that. What do you think about that strategy . The i certainly had a good run. I remember back in 2006 we had a conversation about the i. Its not really surprising. I think to brand a product as apple instead of i makes a lot more sense. Obviously theyre positioning this as a fashion piece, not just as a technology product. Can apple do both . I think they can. This is an incredible thing. If youre looking at differences between apple and samsung for example. Samsung came out with a watch first. They came out with one thing. Everyone who buys one is going to look identical. Apple actually studied the market and did something that i think is really smart. This whole fashion approach. Talk about the intersection of art and technology. You go to adept store, there are thousands of watches to choose from. Apple has done a good thing by making choices available to people. The more you think about it the more of a bold step it becomes. The top of this company to drive into an area that is almost the antithesis of everything theyve done before. Multiple choices. I think theres a huge risk if it goes wrong. Its easy to say its a great move in advance of law firmunching it. What will people say with a 10,000 gold watch if it doesnt sell . How could that impact the brand . Im not sure how many of the 10,000 watches they actually expect to sell. Apple is a mainstream company. Theyre making this range of products available. Obviously youll get a huge quantity at the lower price range. But the fact that its a luxury watch as well, the very high end is interesting. Absolutely, if it failed it would be a terrible thing. Thats a very big if. I think apple studies these things very well. Consumer electronics become absolute quite quickly. Ive struggled with that one myself. Youre not going to want your 10,000 watch to go obsolete in a year or two. Well find out today if theres a plan for upgrading. Do you think theyre going to follow the same script in the past where they come out with a new model every year or so . Or is this going to be Something Different where you have the watch and just perfect the apps over time . I wonder what theyre going to do with that. I think its a similar ball game to be honest. It will evolve and the apps will get more and more abundant and do things that nobody could ever imagine. You know its the very beginning of a new platform. You said steve jobs lived for days like today because it could change the world. Do you think this watch could do that . I think its the beginning of real mainstream Wearable Technology. Weve seen a lot of things out there, but nobody has the ability to do what apple does to really come up with a world changing device. I think its this platform thats important. If you look within sports wear there are many people that believe the future is not in something thats atashed to it as much as actually in your clothes. The future may be what youre wearing rather than one object. Well see. I think apple this is their first try at Wearable Technology. You look back in a few years, and it will feel somewhat small compared to where it goes. If you look at the missteps in Wearable Technology i think of google glass. It was hailed as revolutionary, what went wrong there . Whats the lesson when it comes to apple . I like to look at this as showing the difference between apple and samsung this shows a real difference between apple and googles philosophy. Its a device thats cool and techie. But people who wear glasses dont want to wear glasses as a rule. Although people have moved away from watches with phones they didnt leave their watches behind. It doesnt look like im recording our conversation. So you sound relatively optimistic optimistic. Do you have any predictions . Is this going to do what the ipod did for mp3 players. To be honest i had my doubts months ago, but the more ive seen especially since apple has shown what its doing, i do think its the beginning of a new platform. I think Wearable Technology will become a lot more mainstream with this and only get bigger from here on in. Always good to get your perspective. Worked with steve jobs at a l. Now over to john forthwith a look at what is coming up next on squawk alley. Ive got a feeling, john. Yes, we will indeed be talking about the apple watch. Its pregame time. Were going to have guests joining as well. Also, were going to have the first papal investor talking about apple pay. And the ipo market appears to be collapsing so far in 2015. Weve got Renaissance Capital here to talk about whats going on all coming up in squawk alley. 80 of the poor in africa are rural farmers. 96 of them are doing rainfed agriculture. Theyre all competing with each other; theyre all making very low margins making enough to survive but not enough to get out of poverty. So kickstart designs low cost irrigation pumps enabling them to grow high value crops throughout the year so you can make a lot of money. Its all very well to have a whole lot of small innovations but unless we can scale it up enough to where we are talking about millions of farmers, were not going to solve their biggest challenge. This is precisely where the kind of finance that citi is giving us is enabling us to scale up on a much more rapid pace. When we talk to the farmers and ask them whats the most important thing. First of all they say we can feed our families. Secondly, we can send our children to school. Its really that first step that allows them to get out of poverty and most importantly have money left over to plan for the future they want. Anything worth pursuing requires knowledge, hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Lets give you a quick market check. The dow up triple digits right now. A hundred points after that brutal sell off in friday. Southbound 500 up 3 10 of a percent. The nasdaq falling a little bit behind. Very little in the way of economic reports. Were sort of digesting that better jobs report on friday what its going to mean for Interest Rates today. Over to you kayla for squawk alley out in San Francisco. Thanks so much. Good morning. It is 8 00 a. M. Outside the center in the arts theater in San Francisco. Just two hours from now, apple will unveil what the apple watch can do. And its also 11 00 a. M. Here on wall street and squawk alley is live. This is one device. And we are calling it iphone. And wed like to show it to you today for the first time. And we call it the ipad. Apple watch is the most personal device weve ever created. Out on