Transcripts For CNBC Squawk On The Street 20150327

You see right there. And as for the tenyear note yield, which has been below 2 barely, but there it is still maintaining those levels. Lets get to our road map this morning. Begins with dow chemical which is splitting off and selling one of its units. Jim is speaking to chairman and ceo Andrew Liveris in a first on cnbc interview. Very excited. Yes. Yahoo approves 2 billion Share Buyback program. Well you details on that. And guess how much googles new cfo, ruth porats, making in her first seven months on the job . Its a big number. Well give you details exactly how much in a minute. Lets get to the Broader Market here. The government reporting Fourth Quarter gdp expanded at a 2. 2 pace unchanged from last months estimate. Corporate profits fell in the period while Consumer Spending up 4. 4 . Date coming as Oil Prices Lower and stocks look to avoid a fifth consecutive day of losses jim. As we come to the end of the quarter, of course weve got, what, two more trading days next week the institutions like to come in today, they dont they know the governments not that cool, and moving up stock prices in the last 15 minutes of the end of a quarter, so thats a little skulduggery but does tend to happen. I think this week is a week where people took stock and said we ran too much we ran too much after the fed, we ran too much in biotech, maybe there was a bubble. We ran too much in the industrials. Theres a lot of questions that were raised this week and the answers were not resolved in favor of the bulls so far. The idea of pain at the end of the quarter. I remember the idea youre not going to have corporations in there because of the blackout periods that take place where they will not be buying back their own stock and that seems to have been or has been an important component of demand for stock, that is, those buybacks. Well talk about yahoos addition to its buyback. Its not a loan in the buy back. This week merck with the buyback, a couple weeks ago, qualcomm. At same time whiting, nonbuyback. Oil Companies Issuing so much stock, dividends being cut for the first time. By freeport. The other side of the trade. I think the buy backs are very important. I think also the hoopla about what Warren Buffett did. There was no halo to that. Nothing else really ended up up because of what he did. Kind of a just it happened and no one said a thing top me when squawk was interviewing Warren Buffett he was as bullish as all get out. It didnt matter. It didnt work this time as opposed to the halo again rated by the big omaha love fest after the meeting. Talking about the kraft deal. That has been the beneficiary, that particular equity has been the beneficiary of that deal moving up yet again yesterday. That created the new company. David, it was zero sum. Almost like the Portfolio Manager sold other stocks in the consumer Package Goods to own the new the anointed one, so to speak. Right. Sometimes a deal of that nature you get a lot of people and there were people saying youre going to see the dominos roll but its not as clear to me thats something that has to happen near term. When i have spoken to people who advise in the industry, who want those deals to happen, many say, overtime you need scale went it comes to the food business. This is not a dominos situation where heinz and kraft get together will force another company to get together with another one. Its that not forcing mechanism. When the heinz was announced i called in on the show i was in mexico at the time and i said this is the beginning. You said no its not, jim. Kind of that was all that was the end. I didnt say anything. You right. Ever so often. No, its not, jim. Okay. Funny you remember that. Of course, kraft we when i get the b slap i tend to remember. Every so often something comes along i actually know something as opposed to you knowing almost everything got to pick my spots. Exciting time. One of the areas you know something, dow chemical announcing its splitting off a significant portion of its chlorine business and erjing with owen corp. A 5 billion deal. The new entity expected to have revenue of 7 billion. Jim, as we said a live interview with dow chemicals ceo Andrew Liveris. Your reaction to the deal. They hive off the unit get a nice consideration it would seem. A great consideration. This is the way you want to look at this if you want to do analogies here this is best part of ppg, spinning off its chlorine the really lowend chemicals to olin to create a new entity you might want to tender for. They have 12. 5 ebitda. A very big number for. They created olin using a date a couple days ago. Olin going up will be accretive to dow, be able to buy back 50 million shares. I think they can buy back a total of 8 1000. Put an 18 multiple, voila, 90 bucks. Accretive as a result of money coming in that be contributed to buying back stocks shrinking cap, higher eps and 18 multiples. Environmental, they give them to those. A business that chewed up a lot of cap cal its off the Balance Sheet. We talk a lot with nelson peltz, 23 minute interview he didnt like our graphics. Will you stop. I have been doing this i dont know how long. Thats a rarity. Best interview. Nelson peltz is unhappy when dupont sold its coating business to carlisle got a low multiple say 5 ebitdaing and translated when the Company Became public to the multiple dow got with olin. Its a winwin for both companies. Youll see olin up. Was it done by the activists . It was put in place before the activists joined the board. You dont want to this was in place. It changed dow chemical to a more proprietary Chemical Company, gets a higher multiple. Well speak to Andrew Liveris for more details. Im glad you noted this was in place before the activists. Often time activists take credit for things that companies have already put in place long before because they get into the stock. To your point, third point, was ray ray from foster wheeler. And steve miller. Heavyweights put on no doubt about it. Now the reason why i say that you know if you look at the previous quarters andrew had been Andrew Liveris had been saying this is noncore, and its none core because these are the part of the company correlates with oil. Every time oil goes down dow goes up every time every time oil doughs goes down dow goes down. This stock will be up substantially more than its up now. Might be up when we talk to andrew and he explains the deal and i think it will go up again. Its not kraft, thats obviously just a beautiful deal. But this deal will lead to a substantially increased praise for dow. People dont understand the economics of it. When they listen to Andrew Liveris, theyll understand how good it glizis. A quick note those two directors are being paid differently than the rest of the board. Was one of the situations where the compensation 250,000 each further 250,000 when they joined the board and a value increase in dow shares multiplied by 396,500 to be paid after three and five years. A different Compensation Structure than the rest of the dow board which is interesting. I highlighted in the harry wilson thing, of course mr. Wilson is getting paid by hedge fund but didnt get on the board because they got an outcome they wanted. We havent talked about nelson peltz attacking specific directors in dupont. No, we havent. And who he went on. Sandly cutler ceo of eaton. And another lady. Asked and answered. Will you stop i think whats important with the dupont that is he does not want that. Hes not his directors are paid like all directors, they work for the common shareholders another reason why i think nelson is a pure play generator of positive energy and positive stock price. Interesting. All right. Talking about, by the way, activists who sometimes try to take credit yahoo announcing approved new 2 million Share Buyback program. Using proceeds from alibabas ipo, of course which took place some time back now, the new plan will expire the 31st of 2018. When it comes to yahoo of course marissa mayer, many laud her for Capital Allocation or return of capital to shareholders. The big news of course took place this year when they said were going to spin off for alibabas stake 384 million shares that we have which valued aat 40 billion then less now into, nuco. Thats going to take place later this year. Pressure to return for capital, to cut expenses starboard, the activeist hedge fund which has a mall position percentagewise keeps writing letters. Theyve been worried about starboard. The deadlines closing soon. Theyre worry theyre going to come after them again for a proxy fight. I dont know the answer. I dont know that thats likely. But you have to put everything within that framework as well as they increase the buyback another 2 billion. Its time to go after women who have had unbelievable returns as ceos of companies. Oh, no thats what i dont know what thats all about. A denominal situation, marisa mire renegotiated the alibaba deal. They sold less which was key. Gets no credit whatsoever. Im watching tumbler, like what shes doing. I said negative worth after alibaba, and thats ridiculous. This is a profitable company. I think the stock should be bought. I dont care for alibaba stock. I like yahoo stock. Shes doing everything right. What more can these people sghan what do they want . What do they want . They want them to trim expenses which they feel are too high. When you look at per revenue, its well below their peers. Okay. They didnt have remember google has that gate search engine. The Previous Administration that ive heard from other people, right sizing the cost structure and achieving appropriate profit in the core business. Maybe not make acquisitions. Look does she have profitable growth for all . Not yet. Certainly going toward that way. The buyback has been additive. The company, the smoke comes through will be an Excellent Company that can make a lot of act question significants. Again, you have to look at what theyve done, been able to do in returning capital to shareholders making good decisions on Capital Allocations. That said its the open question, can you revive this business . Can you make this a Growth Business again . It is not. It is not. Im not going to disagree, its not. Ive go thegot to tell you if you made an advertising drive model on the web, its over. The google numbers, misstated low by com score, what their search was apparently was according to documents, their market share . Thats the problem, is that you have a company thats a dominant player blessed by the ftc and a business going handheld which does not allow for a lot of advertising unless its facebook which is brilliant. Its all meerkat from here. All meerkat. Periscope, meerkat. Yahoo did tell us the largest u. S. Video advertising platform. Im going periscope. I dont know about you. Up periscope. Im going to show people my commute on the subway. So exciting. People dick bought this started in january, wasnt able to monetize. Guys, its march. Im now a defender of dick costolo. Bizarre. My name is ten bears and i come in peace. Coming up well have a live interview with dow chemical ceo Andrew Liveris. A tufts graduate, i believe. On the 5 billion deal with olin. Blackberry reports a surprise quarterly profit. But it does miss on sales. Hear what the Ceo John Chen has to say about the future for the smartphone maker. Another look at futures, as we head into the opening for the closing day of the week. So whats going on today . News alert message email calendar update most of us admit to being overwhelmed by information at work. Thats why ibm created verse. It uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. It continuously learns how you work. And helps you prioritize the people and projects you need to focus on. Theres a new way to work and its made with ibm. Female announcer sundays your last chance to save big during sleep trains triple choice sale. For a limited time you can choose up to 48 months interestfree financing on a huge selection of tempurpedic models. Or choose to save hundreds on Simmons Beautyrest mattress sets. You can even choose 300 in free gifts with sleep trains most popular Stearns Foster mattresses. The triple choice sale ends sunday at sleep train. Sleep train your ticket to a better nights sleep proov of how much google wanted to lure ruth porat it will pay her 70 million over the next two years to be a cfo. That includes 30 million over the first 7 months compensation package includes restricted stock units and a biennial grant. Set to join google may 26th. Sometimes making good for stuff leaving on the table at Morgan Stanley. Its a bligig number. Willing to pay that compensation obviously a lot is in stock a lot of restrictive stock at google that vests over time similar to wall street in a way you wonder whether she will be empowered to actually rein in perhaps some of the more ambitious efforts under way at the company that could paint a different picture for investors. When i saw the pay package, i thought, yesterday you said, will she be empowered . I said for 70 million they better empower her because i think thats a statement which says listen its your airplane to cut expenses its your airplane to monetize. Its the monetize. Shell look at different product lines, as if she were at Morgan Stanley and say, that product lines not doing well lets put more money toward brokerage, take it away from investment banking. I think she will make critical decisions on Capital Allocations that will surprise us to the positive. Focusing as i do on telecom, having spoken to ergen the other day, google made some efforts in fiber. Its kansas city austin, texas a handful of places but spent some real money. My question ergens question too, as many others are they serious . Do they want to get deep into wireless . Would they be a buyer for the spectrum that ergen has or is ruth porat going to say enough stop it, its youre never go together going to see a return on capital. Look agent youtube, abc, nbc, cbs, fox, youtube. Youtube will be the dominance channel if im right how she will view the entity. Youtube is giving away its crazy. All of the Major Networks are worried about youtube. Only people not doing anything with youtube is google. They get criticized for revenue splits being they take too much. You could offer a package to people who want to advertise on youtube that would be worthwhile that they have not monetized. This my problem with twitter but twitters starting to do it. Google will say we have so much low hanging fruit we dont have time for than what do they have time for . They have time for a lot of kookie things. Fiber, fish or cut bait. They should have bought john legere hold up the flag. If they were to get serious, trying to build their own network, that even gets to a big number for google. Yes, it does. Then a 30 billion, 40 billion, 50 billion. Is this an excessive amount of money theyre paying her. By american standards but not Silicon Valley. You have a startup youre going to make that much. They dont want to underpay her. It is i think the average person saying thats insane. Right. Shes 57 years old, shes got a great deal of experience. Remember, think of the ftc action. Do they want to be zillow . Do they want to be tripadvisor. They can be anybody they want and maybe she sets trains the guns and therefore shes underpaid. Very interesting. You can say youre empowered but you have to have a lot of sway within the organization, which is more than just saying okay this person has it. You said the most important thing yesterday, Silicon Valley says women can have a legit role. The criticism of women in Silicon Valley is correct. Listen h. P. A hugely important part. I just didnt echo it. I kind of thats fine. No its important. Up next cramers mad dash as we count you down to the opening bell for friday. Also Andrew Liveris live with jim talking about the big deal today. Another look at futures. More squawk on the street right after this. Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . 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Its not going to be as smooth. They have said over and over do not judge us by the quarter, were trying to change things. You sell the stock, it went down to 88 you were doing he wants you out of the stock. He says right in the video, if you play that game get the heck out of my stock. I agree. He want is alongterm Shareholder Base which every ceo wants. What was tough, in minutes 24 through 26 of the video with the cfo where they told you about the possibility did you really watch 28 minutes with a cfo . The most exciting thing i did yesterday. You no idea what my life is. No idea. No i dont. I dont want to know. That was it right there. That is excitement for you. Piano music. I fell like i was sitting back at nordstrom watching the king gary freeman. I want to stick needles in my eyes. Next carnival . Carnival sometimes when you do a combination of fabulous raw costs and figure out how to make money from people on a ship you get this fuel costs, down 38 , falls to bottom line. Little things they do that they charge you when youre on the ship, huge. Wifi on cruise ships. They do. But its really good wifi. Very fast wifi. How do you get wifi . Super duper wifi. Google balloons. I will investigate. But Mickey Aaronson delivered. Think was ebola scare, here was issues involving navigation. Yes. And, david, look at this this is what you want. This is a chunk from the goonies vee verse reverse held and shoulders. Opening bell. 3 30. Were back after this. Female announcer sundays your last chance to save big during sleep trains triple choice sale. For a limited time you can choose up to 48 months interestfree financing on a huge selection of tempurpedic models. Or choose to save hundreds on Simmons Beautyrest mattress sets. You can even choose 300 in free gifts with sleep trains most popular Stearns Foster mattresses. The triple choice sale ends sunday at sleep train. Sleep train your ticket to a better nights sleep take a deeeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] hey, girl. Is it crazy that your soccer trophy is talking to you right now . It kinda is. Its as crazy as you not rolling over your old 401k. Cue the horns. Just harness the confidence it took you to win me and call td ameritrades rollover consultants. Theyll help with the hassle by guiding you through the whole process step by step. And theyll even call your old provider. Its easy. Even she could do it. Whatever, janet. For all the confidence you need td ameritrade. You got this. Na youre watching cnbcs squawk on the street. Live from the Financial Capital of the world. Opening bells going to be ringing in 20 seconds from now. Looking at a bunch of young, Global Leaders on the post. Doesnt get better than that. No it doesnt. Key to the market love asking that, anything . Okay. It will be dow because i think that this remember having Andrew Liveris, a company gone from commodity proprietary, this is internal activism. How important is that . The answer is very for companies that are international that you worry about the strong dollar worry about overseas. Dow takes the ball and runs with it. Well look at that stock in a moment. Let me give you the who did the honors here. Realtime exchange back at hq a mixed bag now. World economic forums 2015 young Global Leaders rang the bell at nyc. Nasdaq, the lawn of of the calamos divertable and income fund. Well speak with john in the next hour. Successful fund platform. Ive got to nail you on something. What . You have taught me also that when you see a stock up big on takeover biomarin is up a rumor someones going to buy them dubone that bother you . It does. I dont foe where the rumor i dont know anything about it right. My problem if you see first you want to know see if theres any News Associated it understand. Report overseas. Sometimes they start on twitter, which is frightening to me. Whats the market cap on that thing . Biomarin . Do you know . Symbol. Bmrr. J. J. Was on squawk i thought if he was going to be in the takeover thats a 20 bill. On squawk box earlier in the week if youre in talks to be acquired . Not typically. You dont. I question. Unless something developed in of the last few days. This man was on squawk talking about the earnings. Unless they dont know about it, which you do not typically see hostile, period although it does occur. Right. In biotech, occasionally as well. I think biomarin is worth a ton. Tell me. I have j. J. On all the time. Going from or man to mass. It looks like genzyme. If you remember the genzyme takeover, hes created genzyme im not saying sell own for earnings. But it seems unusual that he would be on squawk and at the same time talking to someone being acquired. I dont like the implication that someones saying forget that interview. Im thinking about all of the consolidation this year its not hard to make an argument. Theyre on the sidelines waiting and genzyme got a bid. Could biomarin get one of those, too . That would be johnson johnson, maybe another company, i dont know whether pfizer i dont know. Right. I just think that takeovers are ripe. But it did seem odd after the gigantic selloff in biotech this was floated. I agree. I didnt like that. Look, see if theyve been out there, some would he have been on speaking publicly if in talks . Take a look at whether selling stock, buying back stock at the company. Tell you that its unlikely,less as you point out, its hostile in which case how is anybody going to know . Hostiles dont leak because you dont have a lot of people involved, its within side. If valeants not involved, count me out. Actavis was the thing. That held up well. That is to be clear here, ill do a piece on this thats the kraft of the pharma business. Actavis is the kraft . What do you mean . 3g. They come in take over companies and tend do fine zerobased budget they find things and make a lot of money. Brent saunders is a legitimate to me visionary where the industry has to go. You think so . I do. Skeptical at the beginning. But dave pyott, now departed from allergan convinced me hes the real deal. I dont see why david would steer me wrong. Talking 125 billion Market Cap Company out of nowhere, a name people dont know how to pronounce. True. But its a 25 number that as pir aspirational 2017 number. Its not including the eye drug that could be gigantic for allergan. I think botox is the most important, undervalued drug. People hear it they think to make people look younger. Its a pipeline within a pipeline, its got migraine. Uses ive been speaking to him about that are gigantic for botox that will make it so earnings power will be there. I think actavis is real. Forest lab was undervalued when they bought that. They are inverted. They have a lower tax rate as a result. Are you surprised . Im not surprised but i find some of the fervor around this name and valeants, rollups, these guys dont cut r d the way valeant does. Hes pledged not to. There is something reminiscent of the late 90s. Dont go there. There is. When you hear these investors clamoring saying they know how to do it better. I find myself being skeptical. Why . Ive been on the planet for a while. The tax regime makes it so you have to accept the numbers can be higher. Every time they do a deal its accretive if they can buy something with a higher tax rate. They do many deals. Listen its working. Yes. Its working now. Thats what im saying. Dow is also working now. Lets come back to that. Well hear from Andrew Liveris in a bit with you. Stock up 3. 7 . You think it should be up more. The way you look at this thing, look at olin up 6 you get 50 of olin back dated to march 25th. Back dated not being cynical, just being the way they did the deal. They get rid of the commodity business. Ppg getting rid of its commodity business and ppg doubled in a couple of years after they got rid of the commodity business. Thats what im looking at. Im not looking at dupont giving to carlisle. This is a ppg but theyve got a better price. Youll see what happened with ppg. Olin is the bigger beneficiary with the deal. They are olin. They own 55. 5 of olin thats why its a good deal. People arent attributing what they should hear. This is a big deal because they got rid of the worst part of the business, a huge amount of cash, they can do a giant buyback and also own olin too. It not factored in. When we talked with andrew well take more sense of. It doesnt necessarily happen overnight. But ppg, did double the stock by getting rid of the business. A double is a lot to talk. A double. I think that you can put a 550 number youve got to find some multiple. Why cant you give a market multiple . 18. Yes. 18 is a reasonable multiple . I think so. Thats what im going to peg andrew wont tell you about the multiple. Are multiples too high in general . 18, thats pretty heady. Where Interest Rates are, i subscribe to the jeremy siegel. They are moving higher eventually. Eventually, every Hedge Fund Says 4 . By the time we do delivering alpha, what will they say . 7 . They have and smart. By the time they move higher well be needing a lot of botox. Well me. Youll still be fine you can use makeup. You think so . I dont know. Ill berestoline. Gravitys a powerful force. Lets get to bob pisani. Hes got more on whats moving this morning. Bob . Good morning. We have a mixed open health care doing well. Leaders biotech. Solar stock, another leader back up. Energy, oil tanked 35 minutes ago. Im not quite sure why. But that put pressure on Energy Stocks here at the open germanys up. The rest of europe is on the mixed side. Its a mixed open whats not mixed is the earnings situation. This is earnings warning season. Were getting a lot of them. We talked about sandisk yesterday, overnight genisy wyoming a Regional Railroad operator operator warned. They talked about the winter weather, weakness in commodities like metals and steam coal less shipments of the commodities hurting them. This is just been a downright awful week for the transports on concerns about Economic Data and lower commodity shipments. If you look at big names, we told you this week about kansas city southern. They said the same thing. They talked about weak demand among energy customers, down 11 this week. Union pacifics down 8 norfolk, csx, this is reason transports are having a terrible time of it down 5 . Its true this is the season for earnings warnings and the good news is that the street is absolutely obsessed with the earnings situation. There is an earnings recession going on and everybody, particularly analysts are aware of that. And the result this is the good news taking down numbers very aggressively. Look at this where we are right now. Energy, that is not a typo 63 decline in Energy Earnings for the First Quarter. Thats where were at right now. Were going into earnings season next week. But 5 of the 10 sectors are down. Its not just energy. Materials, utilities telecom, Consumer Staples are expecting negative Earnings Growth. This is all happening recently. Energys happened for a while but the rest happened recently. Whats going to happen now is the analysts are going to overshoot, theyre going to be too negative and i think that youre going to see very interesting numbers. Put up what the s p is expecting now. Expecting down 3 for the quarter. I think analysts will overshoot. I bet you if the number stays up by the end of the quarter, the numbers come out we will be slightly positive. We will just avoid the first negative quarter since 2009. Thats a prediction. But thats what i think is going to happen right now. Finallying i want to turn to our friends at kensho. Unusual situation coming up s p and the dow are negative for the quarter and nasdaq is positive but trending in that direction. This is a rare event. Those three indices only negative in the First Quarter four times in 20 years. Those are the four times the question is what we try to do with the data show you whats the logical trade given the information you have and Historical Data . Logical one, the best performing deal, is by nasdaq 3 of the 4 years up for an average gain of 2. 6 in the following quarter, the Second Quarter. Look at the second ter, the Energy Sector is up 100 of the time, 4 out of 4 with a better return. If the question is what is the logical trade given those set of circumstances, energy is the right trade. Not today, though. Energys on the downside. Dows down eight points. Back to you. Thank you, bob pisani. Did want to get to a deal weve beenful lowing for a while. I was away last week when Simon Property group raised the bid a bit. Its own stock price had gone up a good amount. The macer rich is considering that offer from Simon Property group. This potentially bringing in enormous consolidation to the reit industry but doesnt seem likely. We have not heard macerich. They have been meeting as well perhaps you hear something today, but from what i am picking up at this point, im going to leave it at that but it is unlikely that they are going to say yes. In fact, they are seen likely as saying no thank you. That is the case Simon Property group said it will go away its not going to undertake a proxy fight. Recall that macerich which is incorporated in maryland had a lot of defenses including ability to reclassify the board from nonstaggered to staggered it did that. Simon said well walk away. They had an april 1st deadline. When we hear from macerich perhaps today, perhaps early next week. But what they want to do is put out some sort of plan as to how theyre going to create the value inherent in the Simon Property group offer again. 95. 50 a share, both cash and stock, 50 50 the final bid. They did not want to go as high as 100 though some shareholders believed they where they should have ended up. Well see where this ends up. It doesnt appear youll get anything. Theres been radio silence from macerich, led some to believe theyre in talks with simon. Hope springs ecertainle. That is not the case. Expectations are you will get a rejection, along with some sort of koejentcogent explanation to do the value. I had on a Shopping Center company. No ones building Shopping Centers. The ones left are all raising rates. Putting in new tenantsing like tall salon, this is a great business. The stocks have been amazing. Simon property simon says the stock goes to 225 if they get this deal. The stock did move up initially on their initial bid. This was unsolicited, recall started with them taking a position late last year. And the question of course is you can say youre going to create a lot of value but right now youve got a high multiple. You have to maintain the multiple on whatever value you take. The entire premium doesnt come out of the names. I mean, this group has been been people dont understand this group post the Great Recession has been amazing because theres not a lot of credit to build new malls. Theres just a scarcity and there are great businesses. Every time rates move up in a real way, they get hit. Right. And thats they get theyre in the iyr, the Real Estate Investment trust and people banging it down. The stocks over the long term theyve been phenomenal. All right. Lets actually keep talking rates. I assume Rick Santelli usually hits on that when he joins us from the bond pits as he does right now. Rates are a big nail. Like to hit them with a big hammer. Rates, oneday, twoday, what should jump out at you, and it isnt the only dynamic but it is compelling, and after 90 billion in supply right around which we traded briefly above 2 , we settled below it and were now starting to ease back. Were only up three basis point on the week. Open the chart up to february and you can clearly see were hitting all of the technical marks, volatility hasnt been that aggressive but the trade really hasnt been that turbo charged. A lot similar features to the bund. Twoday bund this is like watching a very tired patients heartbeat. Its not very aggressive. Even on a yeartodate weve covered 30 basis points granted. But it really has been very orderly. Looks awfully comfortable, about 20 basis points. Foreign exchange where the actions at even though the euro versus dollar is unchanged, pound is doing better twoday chart shows you the most important element 110. 5 rejection. We had a wild change in the euro than was the exstrain yustraneous high tick. Look at dollar versus the chinese yuan look from october of 2012 that was the area we were comping to. Dollar was getting strong. It all changes, you can see on the middle to right side of the chart after last tuesday and wednesdays fed meeting. The notion of pushing the rate hike back a bit has put turmoil and brought the dollar down against that currency. David, back to you. Thank you very much Rick Santelli. Crude oils pulling back this morning. Jackie deangelis joins us from the nymex. Good morning. Its tough to say if the bears are back in town but we are under 50 a barrel, down about 1. 50 on oil. A lot of volatility lately. We saw a big upside move based on instability that weve seen in the middle east. Was also supported by moves that weve seen in the dollar as well. Goldman sachs out with a note this morning saying that we could see more downside ahead, saying that the situation in yemen probably will not impact middle eastern supply. Also looking at the Nuclear Talks with iran saying if we do long term get a deal with iran and sanctions are lifted you are going to see International Market flooded with iranian oil. That is going to be a supply issue. So maybe, again, were looking at supplydemand economics again here, we got a very big build this week more than 8 million barrels, in the u. S. In terms of inventories. Goldman saying they dont expect to see inventories start to decline until the Second Quarter of 2015. You can see the time line keeps getting pushed out further. I noticed the contango coming in a bit. If you look at december crude futures trading over 56. Only 6 bucks off where we are now when just a few week ago, a month ago, there was a 10 difference. For the end of the year were into the seeing prices in the futures market as high as they were. Back over to you. Thank you very much. Coming up jims going to talk live with dow chemicals chairman and ceo Andrew Liveris on the big deal with olin a divestiture they own 51. 1 . Streaming meets wrestlemania. Interview with the one and only hulk hogan. Recently honored at Madison Square garden i believe. How did i know that . Well be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. When the moments spontaneous, why pause to take a pill . 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. 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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. Time for stop trading. Two groups let us down biotech and semiconductor. Biotech is a bottom because of the celgene, biogen going higher. Talk about semis. David aldrich, hes a sky Work Solutions that had been along with nxpi avago and corvo, the four, theyre coming back. In other words, two groups that let us down bottomed now coming back i dont believe theres a bubble in biotech. I think some stocks got overheated. I dont think its bubbling in semis. Coming down you can barely see coming down. Thats done nothing but gone up. 90 i regard that as being ai hit. If you own it you hate me. 158 gain over the year. Theyre in every single cell phone company, five bucks with content in iphone. Youre a believer. Im a believer. I wouldnt leave that in i tried. Mad tonight . Im doing analysis of whats going to happen with the strant and retail group because ive reviewed every single one. I have a new name im going to crown the king of a whole new group of retail. So youre going to want to stay tuned. That was the monkeyes. Thank you. Remember michael nateismith invented whiteout. Hes coming back with Andrew Liveris. What am i talking about . Breaking news on consumer sentiment. There is it, remind me again, dow chairman and ceo, Andrew Liveris. Keep it right here. Introducing preferred rewards from bank of america the new banking rewards program that rewards our customers, every day. Youll get things like rewards bonuses on credit cards. Extra interest on a savings account. Preferred pricing on merrill edge online trades and more. Across your banking and investing get used to getting more. Thats the power of more rewarding connections. Thats preferred rewards from bank of america. Weve been thinking. 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Wti crude and brent reversing yesterdays sharp gain. Both up more than 10 for the week. A big show for you this hour. Lets get to the road map. Dow chemicals splitting off and selling one of its units. Jim cramer will talk to chairman and ceo Andrew Liveris in a first on cnbc interview coming up in a few minutes. Plus the euro almost at parity with the u. S. Dollar which should make it an ideal time to go on a shopping spree in europe but the deals might be harder to find. Jim stewart just got back from europe, hell talk fashion and currencies. Blackrocks cio of fixed income will join us live to weigh in on the fed what could be on tap after the market route and well see the rate hike. Breaking news on consumer sentiment. Rick . Absolutely. Our march final read remember the mid month read was 91. 2. The final read that goes into the books, 93. 0. How does that stack up . Well it is the lightest university of Michigan Sentiment survey headline number since november which was 88. 8. Of course, to give you perfect granular context, the High Water Mark was the first month of the year january, and 98. 1 back to january of 2004. So the last bit of data on the week, we see Interest Rates dipping down after supply and maybe quarter end and first couple year end in japan pressures. At moment tenyear notes up two basis points on the week. Simon, kayla, sara, back to you. Close, rick. David, kayla, sara. Thanks for breaking that data. 2 out of 3 isnt bad. Not bad, rick. Volatile week for the markets. Oil and mideast violence front and center. Crude backing off a bit here in new york from the highs that we saw yesterday. Double digit gains still for the week. Above, well just below actually, 50 a barrel tracking for a gain of more than 10 . Lets bring in a geopolitical analyst. In your note you dont seem to be too worried about the situation in yemen as far as it concerns the energy market. Thats not what we saw in the price action this week. New york we definitely saw sorry, theres a fire alarm here we definitely saw a big kneejerk reaction yesterday. But in terms of supply risks i think theyre relatively low. We havent got much of a danger to saudi production in the east which United States a major center of supply near the violence. I dont think theres that much risk which is the big Transit Route that runs nearby. The initial response the market is digesting that, i think its realizing we dont have supply loss of any significance at moment and were seeing prices come off a bit. Nobody thought that there was a risk of oil supply loss in yemen, as it is a small producer. But its the fact its that intermediary, it has a transit hub, one of the biggest in terms of volumes for oil tanker. That and this idea this could be a proxy fight its noisy behind you, richard there could be a proxy fight between iran and saudi, both giant oil producers. Why are you not concerned about that . Well i think that as you say a lot of the attention has been on the fact that theyve got sectarian tension. This is a new flashpoint but thats far from a new situation in the middle east. Weve had several years, weve got syria as a very active zone we have iraq. We have lots of these tensions. Yes, were seeing a lot of new headlines and comment tear but when we boil it down to market fundamentals impact i dont see a risk of additional supply loss interest this. And on the other side of the equation, weve gottitethe iran Nuclear Talks. Before yemen and before the bombings yesterday we all of the attention are we going to get a deal . Are we going to see progress in those talks. That would have been the story of the week in the oil markets, had we not had yemen become such a focal point in the oil markets. Im wondering with the end of the month deadline here for these talks, what do you expect the price action to do as those wrap up . Well i think were going to see the talks go down to the wire next week. And theres a lot of uncertain any the market about not only will we get a deal nobody i think can predict that with any certainty yet, but also what impact would a deal have on supplies . Youve got very different projections how quickly iran could bring oil back on to the market if sanctions start to ease. My view is i dont think theres a huge flood of iranian oil waiting to come back on straightaway but certainly if we see a deal announced, expect a selloff initially, a bit of that kneejerk reaction in the opposite direction but then the market will take some time look at details of the deal understand what it means for supplies over the rest of the year through the next couple of years, and whether it looks like a lasting deal and one that will actually really lift sanctions for iran. Quickly, we need to know a price target here because it looks like theyre all over the map. If you listen to Energy Ministers out of russia overnight, no chance well see 70 a barrel. Oust iraq we expect oil prices to go to 70 a barrel. Bulls are saying up to 100. Bears are saying down to 30. Where are you . Exactly. Its really suddenly got interesting. We have prices and forecasts all over. I dont think were going to see prices go down that much from here. Well get a little bit of a selloff in the next couple of months with seasonal refinery maintenance but Strong Demand numbers coming through, you know, the latest demand reading. Well put a floor under that. Maybe low 50ss but we should see recov iery into the 60s and heading towards the 70s at the end of the year. Wti 49. 71, down 3. 3 . Thank you very much, richard. Even more details are out today about the Germanwings Flight that crashed in the french alps. Prosecutors say that copilot possibly hid a medical condition from his employer nbcs Claudio Lavanga with latest. Reporter yes, this morning german investigators told us it did find two copies of the sick leave certificate issued by a doctor for an unspecified illness, so that it would exempt Andreas Lubitz turning up for work in days that included tuesday, the day when he flew that plane into the mountains. Well the Andreas Lubitz hid that information from the employers and from his work environment, clearly indicates that hed willingly boarded that plane though unfit to do so. Also suggested maybe, and only maybe is our own speculations he was afraid that whatever that illness was would have prevented him from continuing his dream job, being a pilot. Now the investigators are looking did we dont know what the illness is though six years ago lubitz went through sixmonth period in which he suffered a burntout syndrome some kind of depression. Of course, that could be related to this illness on this doctor prescribed for lubitz which should have prerented rentrentventing him from boarding the plane. They did not find any claim of responsibility or suicidal note than suggests, once again that that illness, warhere that was most likely related to reasons behind Andreas Lubitzs decision to fly that plane right into the alps. Nbcs Claudio Lavanga with the tragedy in the alps. Dow chemicals a 5 billion. Next the chairman and ceo will be joining cramer for a live first cnbc interview. Find out what he has to say about the deal what it means for the future of the company and shareholders. Well be right back on squawk on the street. The future of the market is never clear. But at t. Rowe price we can help guide your retirement savings. Our experience is one reason 100 of our Retirement Funds beat their 10year lipper averages. So wherever your longterm goals take you we can help you feel confident. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Call us or your advisor. T. Rowe price. Invest with confidence. I saw her face now im a believer im a believer if this dealing dow chemical spring part of its chlorine business, the worst part of dows business merging with olin which is um huge. Joining us dow chemical and ceo Andrew Liveris. Congratulations on a deal you promised would occur last year when you said youre going to get out of some businesses that kept your pricetoearnings multiple down. Explain it to viewers. Thank you, jim. Yes, we started the journey 2011, 2012 and did full strategicic reviews and commodity cyclical businesses unpredictable earnings highly volatile, no price control, and, frankly, a huge amount of capital tied up on our Balance Sheet we would get out of them. We made that announcement december 2013 and we said wed do it in 18 months. This is the original business of dow. We started with this business in 1897. So frankly, no differentiation available to us. We have better uses of the capital. This deal structure with olin is a winwinwin. Dow shareholders win. Olin shareholders win. And the combined company bks number one in their business and dow shareholders end up owning 50. 5 , they participate in the new growth company. The best way to look at this deal to analogize to other deals, for instance chuck bunch, when he decided ppg was too commodity oriented spun off a commodity business, georgia gulf phenomenally successful ppg doubled and coleman sold the performance chemical. You got a much better deal in terms of earnings. Before interest taxes, depreciation. Are those two analogies worth while for viewers to understand what dow did here it. The ppg analogy almost directly an al gis with a big exception, 12 multiple up front on pretax consideration basis. Those two models compare favorable to the ppg but that deal, reverse morris trust and the upside ppg saw from having ownership of the ongoing company, shareholders firstly got out of commodities, second shareholders got to participate in a new company and had upside in the stock is a direct analogy. Thats why its a winwinwin. Unlike selling to a private equity house where you basically lost the business and they go do what they do to remove costs which is a cost takeout deal this is a growth deal. Our shareholders get to participate and frankly, the equity upsides of both companies is what ends up occurring. Every reverse morris trust done ever precedent deal sees equity prices up for both because of the winwinwinnature of the deal. The ppg is an exact analogy to this deal. Andrew, obviously activist situations dan loeb in consultation with you, two Board Members compensated, strangely, by lobes people not in the same page as your other directors. They turned out to be winners here, too. Mouch how much of a role did they play in taking commodity business off of your Balance Sheet and putting it to this new entity . How much were they involved . Well so prior to the third point arrival in our stock, this was all done baked, cooked by our board as a part of our detail strategic reviews. So we believe we had a better pathway which was proposed, which was a split down the middle which played no sense. We now can put on full display. If you do logical exits like ppg did of low margin businesses high lick cyclical do them methodically you get the wentwin which you dont get if you hypothetically split down the middle. We put all of this in place prior to the arrival of third point, we have now moved on. And executed against all of the things we said wed do, we have exceed our divestment target substantially. The most important part of the question in terms of the new board, this was unanimously supported and approved by all of the board, including our newest Board Members. We have three of them. And those three Board Members were taken through an extensive deep drill since they joined the board. December, january, and february they saw in living color what we had decided to do these last 24 months and are entheseusiastic supporters of what the deal represents. Im trying to value the new dow. The reason is because theres companies when they get out of the commodity business and go proprietary they get a big pricetoearnings multiple. I cant ask you what the multiple is thats up to us. Wouldnt your business be less levered to oil, every time oilers go down the traders are taking the stock downen should you break that linkage with this deal . Absolutely im mentioned on your show before we prior to the deal twothirds specialty, onethird commodity. This deal takes us to 2575. We arent done yet. We are fully integrated into low cost positions. Some people make the mistake of thinking because were in ethylene were commodity. Pete who write about that a couple on the sell side who still write that dont understand the power of being low cost and value ad. We can sell out and sell up. We are now threequarters of our company are in that position. 25 of our products are in margin protected through i. Ppi and 35 of the new products launched in the last five years and we had record patents last year, and we launched 22,000 individual new product lines last year. This is an integrated Innovation Company based on science and technology not a commodity Chemical Company and will appeal to owners who want consistent earnings with Earnings Growth overtime. Thats what were creating here, much like what was done at ppg. Youll get a lot of cash. Is it possible you could buy another 50 million shares with the proceeds you get from this olin deal . Yes, thats a good way to look at the math. Were very committed to shareholder remunerration, use of cash to the Balance Sheet, debt pay down Share Buyback. The exchange upon close for our shareholders offered is literally a splitoff which means you could retire that amount of shares. Do you think that if you had any advice to individuals who owned the stock would you recommend that they tender for the shares . I look, i am not in a position to say do this or that. I think the Value Proposition or the synergies is compelling. Our shareholders will benefit whether they own it through us or own it direct. I think theyll own it direct because the new olin is a powerhouse. Its the new number one core Alkali Company in the world. They are growth synergies, not cost takeout. One example, jim, on the webcast this morning, they have a lot of rail movements. They werent on the u. S. Gulf coast. We have a lot of marine movements. They could get out of rail and do more marine thats a supply synergy. Theyre putting bleach in the Southwest Corner of the United States where they have no market thats a growth synergy. Those creates an olin worth investing. Shareholders can do both invest in the new olen and invest in the current and now new dow. Totally with you. Andrew liveris, will be able to make it more proprietary than a regular commodity company. Andrew liveris, thank you for coming on squawk on the street. A pleasure to be with you. Stocks both are moving. Olin the big winner, up 19 . Do you think there are more deals like this to come . A little bit more commodity, not that much. Whats interest, olin is dow. You see olin as the winner 50 on the 5 owned by down. They dont understand you have 550 in earnings power in 2017. Figure out you get at least a higher multiple two multiple points higher thats what commodities get over proprietaries. Great interview, jim. Jim cramer with Andrew Liveris. When we come back we may be finding some calmer ground in the Broader Markets but its been a volatile week for stock. Were should you be putting your money now . Well talk to the ceo about just that, coming up right after this break. Never before has this kind of passion this kind of innovation, engineering, design and performance. Been available. For this kind of price. The 2015 cla from mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. trader vo watching. Waiting. For that moment, when right place meets right time. And when i find it, i go for it. announcer vo 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. And now, get up to a twothousanddollar cash bonus when you roll over your 401k or ira accounts. Details at scottrade. Com retire. With market volatility in this environment, where should investors be putting their money . Joining us john calamos, up at the nasdaq. Good to see you. Good to be here. What do you do in a mark like this . The sense that were getting long only institutional holders are staying put, not exiting positions. Its really the shorttermers trading in and out. What do you do here . Well i think you know were positive on the market you know looking longer term but i think were in a period of increased volatility here especially with the threat of Interest Rates maybe rising. Thats causing a lot of volatility or increased volatility here in the market. Its still anybodys guess at this point when that happens, john. Some are saying its still going to happen in june some are saying, no maybe september. More and more people are starring to say, wait a second could that happen this year at all . Were watching the bond markets sell off this week. Im wondering, from the equity standpoint, what youre bracing for in terms of the feds actions. Well its typical of events like this. I think we discuss it almost every day, whats happening, whats happening and then when it actually happens its a surprise to everyone. So you have to get ahead of the event, not behind the event. One of the ways were we think is in fixed income use convertible bonds, convertible securities as a hedge against a rising Interest Rate environment because this can be very very difficult to time exactly when its going to happen. It will be just like every other time, when it happens its going to surprise everyone. John 44 billion in outflows from u. S. Equity funds so far this year according to b of a, merrill lynch. Thats the worst start of the year sirns 20nce 2009. Could it be shaken confidence in what were about to see in earnings . I think the market is nervous in here, but i think were still on a growth trajectory. We feel were in the mid phase of the market cycle, not the final phase of a market cycle. And in this phase we will see the transition from a kind of income oriented equity market so much more of a growth oriented market in this period. So thats what were seeing opportunities, valuations are very positive in that area. So we feel thats a thats a good place to be. You know what happens, i think in this is with the volatility i think individual investors get whipsawed out of the market at the wrong time quite frankly. John you mentioned convertible bonds as a way to find a safe haven amid of the volatility. Its interesting, oftentimes when you think of the issuers of convertible that its companies that either dont have a Strong Enough Balance Sheet to issue traditional Debt Securities and also willing to dilute their shareholders. If you hold the equity you have some delusion thats coming down the pike. How do you actually find good converts . Where do you go . Were finding very good converts not only the u. S. But outside the u. S. You have to remember convertibles are access to capital. Its companies that are looking for capital to grow their business they can issue equity or they can issue straight bonds. They can issue a convertible bond which means theyre issuing equity eight higher price and issuing bonds at a lower coupon. So its a its a winwin from that point of view. So as the economy grows, more and more Companies Need access to capital and that is really a catalyst for more and more issuance on the convertible side. Were seeing that in the Energy Sector. For now, well leave the conversation there. Right. John calamos of cal lo moes as set management. Watching the eurodollar 108 nearing parity with the u. S. Dollar. Couldnt be a better time to grab your passport and go on a european shopping spree. Turns out deals might not be easy to find so says jim stewart from the New York Times, just back from europe. Well get all of his reporting when we come back. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. 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. Im courtney reagan. Germanwings copilot Andreas Lubitz appears to have hidden illness from employers including having been excused by a doctor the work he crashed his plane into the french alps. The evidence coming from the search of lubitzs homes in two german cities including parents home in western germany. U. S. And iran continue talks in switzerland over tehrans nuclear program. Officials telling a. P. U. S. Is considering letting iran run hundreds of centrifuges in exchange for limits on the work at other locates. The Senate Passes the 2016 Senate Republican budget after allnight session over 50 amendments considered in a row. Because the house budget is different, two claim berchambers begin negotiations to meld it into one piece of legislation. Harry reid will not seek reelection next year, bringing an end to a 30year congressional career. The 75yearold reid says he has been contemplateing retirement for months. Thats your cnbc news update for this hour. Back to you. Welcome back to squawk on the street. The dows down ten points. The u. S. Dollars inching lower against the yen and euro this morning after the Commerce Department left its estimate of Fourth Quarter gdp unchanged. But with the euro approaching parity with the u. S. Dollar for the first time in more than a decade New York Times columnist jim stewart went looking for bargains over in europe. He joins us now post 9 with the spoils of his shopping spree. It doesnt get better than fashion and Exchange Rates. My favorite column ever. I have to say, it was so much fun. I found great bargains one of which im wearing at this very moment. Vie to say, its interesting that its not totally simple. It not just across the board. It doesnt mean just because the dollars down or up 40 against the euro that everything is on sale. But there are great deals to be had, if you can get to europe right now. The question for investors and looking on european stocks it seems like we saw this in todays session, when the euro goes lower and the dollar strengthens, the european stock market goes up especially the dax in germany. Is that justified . I think it is. Im very bullish on europe especially having been oxygen over there seeing this. Were seeing profit pressure in the United States and the flip side of this is the profits are going to swell in these companies and many are german. But i wouldnt ignore the sort of economies like italy and spain as well. Remember tour itchesism is a huge part of the business and this is the time to go. I think draghis deliberately pushed down the ureuro not just for germans but the southern tier. I look at porsche car, here in the United States its 51,000 base priced in the United States. Is it 40 , 50 less in germany . No. Its basically exactly the same. That means margin is going into porsche profits and youll see that in a lot of german exporters. Not the case of the wine market. That must have been tough work. Tough work. Wines a great deal now. First, as far as i can see, the restaurants they dont market up nearly as much as they do in new york and other big u. S. Cities where ive been up there. So its theres a modest markup anyway. The prices either have adjusted or more competition. I would say its 50 lower than the same bottles that i recognize the price here in the United States and thats at the retail store level. So both in restaurants and if youre going to put together a picnic, you can really splurge on a great wine without having to spend much money. Or wine cellar overall if you want to get serious over there. You think, how would i transport it back . Thats going to cost you. I certainly ate and drank only two toooo well. Ive been on a diet since ive been back. Shopping in milan, what a great city shopping. One beautiful store after another, hardly anybody there, the nicest salespeople. Everything was 50 off. You think europe has turned a corner . Do you think the worst is over . And with that manage to escape deflation . I think so but i think theyve just started the turn. I mean its qe just started, what, ten days ago, two weeks ago. Yeah. This is at least a yearlong project. It is going to take time. I mean to be honest in milan, which caters to a lot of foreigns americans, russians, there was pretty much nobody there yet. I predict that is going to change fast im think also you know buyers are starting to realize the great deals there. These things take some time. I think youre going to see effect six months to a year now. Tour itch,ism, the russians are not having a great bargain there, given whats happened to the ruble, or from the eurozone itself where its just the same thing. I mean its funny, i went into a shop and i said whatever my pathetic italian was they said no. Do you speak french . No. I said what do you speak . He said russian and ukrainian. I said thats not going to help me. He got a guy who spoke english. But its clear, he was saying we used to have a lot of Eastern European customers and were not getting them now. Theyre not there but the americans, british, other strong currencies theyre going to be pouring in. 78 euros, staying in hotels for 78 euros. You would make walmart proud. It was really nice. It was a fourstar hotel. I forgotten my adapter, they gave me that. It rained they gave me an um brel la. Its in the coolest neighborhood. It was a short walk i dont mind a bargain. Do you have to go back. Im planning another trip. When are you going . Fall i think. A real question, jim, for americans and the u. S. Economy, given what a boon as the week euro is not just tourism, manufacturing, et cetera, on the flip side you think its going to hurt this economy to have a strong dollar . I definitely think its going to depress profits. I suspect theyre going to give up profits. I think were seeing it now. Well see it further. The question is how long. Stock investors are looking to the future. How long is this going to persist . I think a few years. Tim cook said the best Companies Manage around currency, it wont be that big of an issue. At least for a couple of quarters its going to hurt. How do you see affecting that . The companies with big fat profit margins, like apple, have a lot of pricing flexibility. They can easily adapt that. Such demand for the Cutting Edge Products theyre in a good position. The standard commodity producer people with small margins, they are going to get squeezed. I think theyre going to have to serious problems. Weve started to see. Nike an example of company that did well. Underlying business managed to escape the Exchange Rate fluctuations and investors rewarded the stock. Companies like proctor gamble, i think, wringing their hands and, again, i would say the low margin global producers that will have the biggest hit. Jim intrepid reporting, enjoying fine luxuries with the cheaper euro. Good to see you. Racking up the passport stamps. Blackberry Ceo John Chen joins squawk alley live for a first on cnbc interview after the companys Fourth Quarter results. Find out what he sees ahead for the smartphone maker. Back after a short break. This is my body of proof. Proof of less joint pain. And clearer skin. This is my body of proof that i can fight Psoriatic Arthritis from the inside out. With humira. Humira works by targeting and helping to block a specific source of inflammation that contributes to both joint and skin symptoms. Its proven to help relieve pain, stop further joint damage and clear skin in many adults. Doctors have been prescribing humira for nearly 10 years. Humira can lower your ability to fight infections, including tuberculosis. 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[ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Welcome back to squawk on the street. Watching shares of finish line up a percent in todays trade. The athletic apairle and shoe retailer beat q4 profit estimate business 3 cents earning 88 cents. Sales came in better than expectations. Samestore sales rose 2. 5 . The company gave the go ahead for a 5 million Share Buyback program. As a result, shares up into n. Todays trade. Thank you, dominic chu. Lets get over to chicago, cme group. Rick santelli has our friday santelli exchange. Rick. Thank you. Good morning to my guest, peter bookfar. Thanks for taking the time, peter from thanks. Im sure you saw data. We could debate what it means. I have to two issues okay . To me no Conspiracy Theory here but i see one dynamic on the job side, i see one dynamic trying to evaluate growth at least in the form of gdp. They dont square very well. My second issues if you take out 80 billion in residual q4 inventory that number would have been closer to zero. Thoughts on both of those comments. The first point its the lack of productivity that is not letting the improvement in the labor market drive better gdp growth. Productivity growth is running at a half a percent yearoveryear. 2 the longterm average. That answers the first question. The second question is if you take out inventories in gdp, look at final sales they got revised upwards. Running 2. 3 . A big buildup in inventories in q3. Q4 numbers ratcheted down, thats a cap on the growth rate we saw in q4. Do you think its fair to say that the big bumpups in q2 q3 are inventory issues with the people in charge of the dynamics and logistics, maybe overreading sustainable demand. Is that a fair assessment. That and reversion to the mean after the soft q1 last year. All right. When it comes to inflation, we could think about it in Milton Freeman terms, think of lack of no velocity no growth no one ward pricing pressure but we see some weird things going on. We see the japanese doing all of the right things to manipulate inflation that sent showing up. We look at import prices germany up they were up large. Comment on those two issues. Well central bankers generally dont like the supplydemand curve. They want prices to go up they dont want them to go down where they should fluctuate based on the equilibrium. Theyre having success because of the consumption tax. We have sluggish retail sales in japan japan. In europe we have prices falling and increases in Consumer Spending. With respect to german import prices draghis mechanism in driving higher inflation is through the currency. By importing inflation. Well, hes beginning to have it. Because the german import price increase was the greatest since december 2010. Instead of sitting back enjoying low inflation and lower Interest Rates that come with that draghi wants to mess it up, drive higher inflation and wait to see what happens to the european bond market if successful. Its not going to be pretty. Lets split some hairs in the last 20 seconds the german economys on fire. If they went back to the d mark it would be a higher valuation than the current euro. Is it surprising one country in particular, whose economy is cooking in greece, no pun intended, is going to haven have inflation profile not only more aggressive but dramatically different from everybody else. Certainly. Add 40 of the economy as exports where the rest of europe, particularly france and italy, is less than half of that. Peter, always a pleasure to speak with you. Have a great weekend. Sara its all yours. Thank you Rick Santelli. Dow up 17 well talk to rick rieder oversees 700 billion in assets. What he thinks about the fed, when well see the first rate hike and tenyear yield near 2 , hes live after the break. Say youre a finance guy. A farmer. A researcher. You used to depend on experience. The internet. Your gut. Today you can use ibm watson analytics. It can make sense of all kinds of data. Uncover hidden correlations and new opportunities. And give recommendations with more confidence on who will buy. What to make. Where to plant. Which helps you make smarter decisions. Theres a new way to work and its made with ibm. Who do you work for . Your boss . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. 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. Stanley fisher speaking in frankfort this morning saying the nonfinancial Banking Sector is less vulnerable than it was before the financial crisis. Perhaps just another indication that the safety will cause the fed to raise rates this year or will the strong dollar and wild swings in Oil Prices Continue to hold the fed back . Joining us is the black rock chief executive officer and cohead of americas fixed income, rick good to see you. Good to see you, thank you for having me. So before the feds meeting last week in that statement where they said they hadnt decided on the timing of the rate hike you said the timing doesnt matter yet were trying to decide when its going to happen. Give us your latest take . Thats totally right. The markets focus is going to be is liftoff september or is liftoff in june . We belief the window is for them to move but they will probably wait until september unless you have a strong payroll report and other data. There are two other things to make more of the difference. Its their pace they move out of and the destination they go to. We think they will be deliberate. We think the destination is lower than historically. And with what draghi is doing, it is not that we think they are ready to go but should go. You mentioned payrolls to hit next friday. Thats pretty much been the only positive data point in the economy so far this year. Yes, winter is always weak but we keep getting the steady stream of soft data pushing the tenyear below 2 . Which very few people thought we would still be there, so why will payroll still be the determinant here . Its a great question. There are a few things that play here, one, you have to think about what happened in the First Quarter. We had tremendous weather effect like last year in the soft First Quarter. And the california port shut down that also dulled the data in the First Quarter. And theres clearly been a seasonal the first year around the First Quarter. We think the data will start to improve and get a better Second Quarter in terms of what Economic Conditions will be. And i would say the other part that is tremendously important, this growth of payroll is so tremendous. You think about where we were five years ago, that the economy is doing better than job growth. Weve completely flipped and some of that is catchup. And now we have grown. We have created 2 million jobs in the last seven months pretty strong numbers. Were about to hit, we were at 5. 5 Unemployment Rate and could hit 5 this year. Very strong some of it is catching up to what happened the last few years, but again why the fed has an open window to move. Greg,its sara. Did you notice that corporate profits were down capping the worst performance in several years, what is going on with corporate profits . Are you concerned about that . And what does that tell you about the broader economy . I would say there are a few things at play. One, theres no doubt theres the dollar drag thats affected companies recently. And no doubt some of the recent data has been a bit softer as youve had. And the discussion earlier that was on about such tremendously strong numbers on the economic side over the last few quarters. And what companies have done recently that some pull back would be expected. We are not terribly concerned about it going forward, especially given the nature to the dollar effect. And you mentioned the rate hike in june and said its on the table for the fed, why is the fed funds futures market now pricing in 10 chance of Interest Rates going up in june if youre confident thats in play . Well, i think june is in play. I think the base is in september, but i do think if you have a strong number june is still in play. I mean as you described earlier, vice chair fisher, its pretty clear that it could be june or september. They are going this year. I think you have to assume the base case is september, but you cant take june off the table if the data improves. But i totally agree the bar is higher to be june at this point. Meanwhile, rick companies are loving the sustained low Interest Rates. U. S. Marketed corporate debt issuance at a record high as if you know we thought we could top what we saw in 2014 where new issuance is 290 billion in corporate debt issuance so far this year. Do you buy it or do you stand on the sidelines because you think if rates are rising and the yield goes up then the price of the securities will just go the other way . So you brought up a point that not a lot of people talk about. When you keep rates this low for so long what it allows companies to do is to keep borrowing. Youre functionally transferring money from savers to borrowers, which made sense a couple three years ago. Some of the levels today, particularly in the Investment Grade paper, we think is has gotten fairly rich. But parts of the highyield market are attractive. We like and are getting paid in high yield for taking the yield risk, but like you say, some of the levels part of when you keep rates this low for so long you force a lot of Interest Rate sensitivity in the marketplace into investors. And we think were more cautious about some of the credit markets today. We like taking risk in places like high yield. We like to take risks in places like commercial mortgages or some of the Mortgage Markets or parts of europe. But there are definitely companies financing at incredibly attractive rates to them today. Just to wrap up the asset markets, what we have seen so far this year the defining factor is the stronger u. S. Dollar in terms of returns. Weak commodities you have seen it in bonds and equities is that going to define us for the rest of the year into the second half . So i think with the dollar, it had a tremendous move and part of why the feds said what they did is to introduce more of a twoway dynamic to the dollar. The dollar will strengthen. We think youve had a pause here because policy has paused. People dont factor in the trade deficit and the change in the trade deficit because of fuel. We think the dollar will continue to do well. You know i think one of the things i think is really important when you think whats going to happen over the next few months go back to the beginning of october and think about when the fed was more dubbish with the markets at a hard time and more hawkish at the end of october with the markets doing better we have a dynamic. Once you see the fed move and the uncertainty is out of the way, you have safer, steadier markets. We will see how this story plays out. Rick, for now, have a great weekend. Thanks, you, too. Lets go over now to john with a look at what is coming up next on squawk alley. Hey, sarah. The ceo of blackberry will join us, John Chandler in a first on cnbc interview to talk about the earnings with the stock up 2 . Also, tech in indiana. Sales force and others saying a new law passed there will prevent them from doing business in the state. Finally, googles cfo has a big pay package as you would expect. How does it stack up compared to others . Well get to all that and more coming up on squawk alley. 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. Help an oil company overcome minus 47 degree temps, 5 foot ice, and 16 foot waves, to safely keep crude oil flowing 365 days a year. When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. Good morning. Its 8 00 a. M. At google headquarters in Mountain View california. 11 00 a. M. Here on wall street and squawk alley is live. Welcome to squawk alley. Happy friday. Im kayla touche with john fort. Good to see you. First up today, details of incoming google ceo ruth