Transcripts For CNBC Squawk On The Street 20150409

Road map begins with retail results. Costco sales, bed bath earnings dis appointappoint but walgreen off to a good start. Alcoa, the q1 results miss on the top line. Profit did beat. Shares lower in the premarket. Greece makes its payment to imf. European stocks at new intraday high. Christine lagarde first on cnbc later this morning. But first, davids got breaking news on intel. Thats right. We want to tell people about the talks that have been going on between intel and altera first reported march 27th, have ended. Yes in fact without a deal. Jim seems to be excited about that. I knew it was phony. I knew they were talk bug just another let me give you details. Just furiates a march 27th story, intel in advanced talks to by altera that got the stock price up and frankly intels as well what happen i can tell you now, intel made an offer, in the low 50s, which is significant premium to where altera was trading and a price that altera stock despite the move up on the wall street journal story never reached it was not a price altera was willing to take. And so while they had talked for months and there had been a good deal of Due Diligence on intels part unable to agree on price. They have not spoken for the last week intel has abandoned any attempts to acquire altera. Of course, when the story was reported by the wall street journal, it was greeted positively by shareholders on both sides. Altera is one of intels biggest customers and it indicates and this is something that will continue according to my sources a willingness on the part of intel to consider large acquisitions under its new management. This was not a deal that involved a great deal of cost synergies but more about growth. Altera is a faster growing company. But they simply could not agree on price. I have not been able to determine the price which at least altera felt like it was willing to sell itself. That may have been as high as 60 or above and intel unwilling to go to that level again. My sources indicating it was in the low 50s in terms of its offer price. Could not agree. The two sides have not spoken. I am told for the last week. And there have been no talks, no plans to begin talks. Again, although one always wonders, jim, whether shareholders hear a report and say, come on really youre not going to get involved . I thought it was broadcom. I thought stories were dead wrong. They already have a partnership, they didnt need to do the deal the partnership is great, put them ahead of xilinx. Not unlike when they tried to talk in the 90s the deal failed. The deal failed because the broadcom was erratic man and it made more sense to be broadcom if they did not need this deal. See broadcom trade up. Im no more official than the journal with the altera to be bought on top of farm sickpharmacyclics. Lots of people wondering what happened. We can tell you now, talks ended without their ability to reach a deal. I mean a big scoop. It is in fact there were talks, there were talks. They were talking seriously jim, intel was trying to buy them. They were willing to off ar price 53, 54 a share. Altera chose to walk away from that. That stock was up for a long time and it shouldnt have been. I knew it didnt make sense, they werent going to make a deal. Altera unwilling to accept the price. Intel was willing to do a deal. Altera didnt need the deal. They were killing xilinx. Well see what it does when it reports earnings in a couple of weeks. Now up 3 . Absolutely. Whether its more likely one. Look, broadcom didnt want to sell in the 90s when intel wanted to be in mobile and set top box. They may not its totally Different Group now. But it certainly made more sense that they were willing to pay up for broadcom. Altera could make sense for intel because it would raise their muttable. But the idea that was if you read the stories, a done deal what i was offended by. People jumped to conclusions, and it was a strongly written story that had a lot of people believing a deal was hours if not days away. To be more circumspect, be more careful, logical in the way it has to be. We know intels out there. We know theyre going to be aggressive. That is clearly a takeaway here. This would have been 16 billion, 17 billion, assume low 50s 53 54 300 shares of altera altera. Broadcom would be 40 billion if they did it. All cash. Whether its tech or oil, after yesterdays news everyones trying to figure out whos next how big these deals can get. Ft saying it just the beginning of huge large cap consolidation in oil. People say, exxon, like in 98, bp am ma co, exxon goes exxon mobil, another big deal because of the deal yesterday. If you want to know who looks like bg no one. That company was sorry. The only thing they had going for them the chair, everyone revered because he ran schlumberger. If you bought from andrew youre an idiot. Theres no way you want to be on the other side. That was 50 premium for a company in the most glutted area of natural gas, liquefied natural gas, the worst single area to go into. There are Oil Companies worth doing. Yes, i understand somebody might want to go for marathon conoco these companies are proud companies, and they dont want to sell. But b. G. . B. G. . Brad brad gilbert is b. G. Great tennis pro. Are we in a new chapter of m a . Linked today you mean new, stupid chapter . Maybe. They overpaid. Wait, who . Royal dutch. We talked about that yesterday, of course. We have a smaller linkedin deal why didnt they buy whiting . Why didnt they buy continental . If its a new chapter, theyre paying too much. Pioneer, you need permian you didnt say about mylan perrigo. This deal makes so much sense. Well do more on that later in the faber report. Carl, to your overall drop another bomb . Well try to give people insight into whats going on with the mylan situation. Second only to 2007 given the kraft deal the shell deal but weve got deals, as we reported falling apart, not getting to the finish line. Were in a strong m a market for all of the reasons we cited for years. One drug company, its valeant, its actavis, its mylan, its teva perrigo, and not talked about much meloncrot. Also inverted. A st. Louisbased company thats got that of course. Perrigo is where . Perrigos an Israeli Company with michigan plants that is in pennsylvania that is chiefly an irish company. And mylan is its a melting pot. Mylans in the netherlands, of course they inverted through the abbott deal. Yeah. Its great country. Brent saunder figured it out. Watch malloncrot. Sorry wall street journal. Its 192 bid this weekend from j and j, im not playing that game. I go to david. Is this a done deal . He said do not put that in your do not put that in your game plan. So i left it out. So suddenly i wake up the paper next day, im an idiot i didnt say that the deal was done. Thank you very much for making me not look like an idiot. You are welcome. Can be an idiot for other things, love for the apple watch. On sale tonight 3 00 a. M. Pacific, are you going to be up . Ive got two bands. Going for two bands, one watch. Will you order 12 01. Not like people going for the who concert two weeks early. Im going to the store. Online ordering only. I want to know i saw i got the right size. But i do like to i want to put it on again, because its not an i want to buy the more expensive one. I want to buy the little more expensive, because ive the got the breitling. Well aware of the breitling. Keep waiting for the breitling to make a move to the left. Its coming. Its coming to you. Its not even water resistant. Maybe in his will. From hitting the wall to straight to david. Why should i throw it away. I think you might like it. Walgreens, Boots Alliance revenues amiss. The drugstore operator planning to close 200 stores to save costs. Shares of bed bath falling in the premarket. Quarterly revenue below consent consensus consensus. Costco, 2 comp stores shift in the easter timing. Bed bath spending too much on technology. They have a big Brooklyn Project thats going to open but remember, a lot of the companies when they do omni channel, missed goldmans number for guidance. They came in 507, 532. They have an opaque Conference Call. But in the end, to be able to keep up with jones, meaning amazons you have to spend a fortune and theyre behind the curve. Interesting omni channel initiatives but at the same time, they didnt spend enough money when they should have. Costco, i think one off and you want to buy on weakness. Still 4 . I like the weather. Walgreens, remarkable. My Charitable Trust sold it. I feel even more idiotic about that. Why did we sell . Up 20 points but there was not enough because that combinations proven to be powerful. Something from the Conference Call on walgreens, they continue to explore opportunities to expand the network. I told you buying a pharmacy business you didnt believe me. Top priority for capital use, m a. If people buy jpmorgan put it out. Would they conceivably try to overbid the unh deal for catamaran. Catamaran, they stole. Remember, greg got rid of it. It makes too much sense. People putting out express scripts. Perhaps rite aid could be down. Its an 8 stock. They want to be in pbm. Cvs is killing it with that pbm. That seems to be the if thats the model. I have no idea whatsoever whether any approaches made. But thats interesting headlines. Tobacco has to come out. Youre a pharmacy benefit manage get rid of tobacco. You can be Health Care Company and kill people at the same time. Its not synergistic. U. S. Pharma sales up 6. 9. Thanks to a strong cold and flu season. Perrigo said it wasnt a strong cold and flu season. You had to be on the other side of the street to catch the flu. Apparently. A lot more to get to this morning, including of course reaction to alcoas results last flight. Later on today, imfs chief, Christine Lagarde, whose group received the loan payment from greece. Stay tuned for sara eisens live interview. A look at the premarket. More to get to. More squawk on the street from post 9 when we return. It took tennis legend serena williams, fencing champion Tim Morehouse and the rockettes years to master their craft. But only moments to master paying bills at chase. Com. Depositing checks at the atm and transferring funds on the mobile app. Technology designed for you. So you can easily master the way you bank. Hello. I am here to offer sophisticated investing strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com premarket. The miss overshadowing the beat on the bottom line. Yesterday, Klaus Kleinfeld said he was pleased with alcoas results. I think you see its a Strong Operational performance on the quart, and the transformation is well on track. Looking at revenues revenues year on year up 7 . Mainly driven by organic growth in the auto as well as arrow sector thats whats happening. When you lift the hood on the profit side you see record performance on the upstream side, again, super good First Quarter and you see a very very good performance on the downstream side. Thats what surprised a lot of people the upstream stuff, jim. All of that capacitys come out. When you refine in brazil and sell in dollars, that actually helps. Right. Strong dollar player. Trying to say there were a bunch of articles saying strong dollar could hurt them because people dont know what theyre doing. I emphasize, the thing they said about 7 its becoming like 3m, doing a lot of proprietary product, theyre getting rid of high cost commodity operations which are important. Theres increase in demand using 6. 5 demand. All the analysts cared about throwaway line how china is overproducing. On page 11 after tax, ordinary income decrease 30 for grp, one different division. This is a great mistake that people do not understand. This companys going to be dramatically transformed by the end of the year, if youre five months rti deals going to close. The alcoa story is aerospace of which, by the way, nine years production, 23,700 engine needed one of the big of the players in an individual plane and lightweighting for autos remarkable. One line was bad and that was packaging and, by the way, extrapolate Constellation Brands the soda business isnt good. They did lose cocacola business. This was a great quarter, and no one cares. Any play book, earnings season play book . Too early. Yesterday cummins downgraded by goldman and the truck orders were remarkably down horrible in china. Now a lot of that was a pull through from last years regulation. Truck orders down for february that was bad. But the takeaway for europe is europe is europe seeing better auto. But we can say we saw german numbers very good. Gross domestic product for china, not giving up on it. But i would say nonresidential construction takeaway terrific. The auto race was fantastic. I really saw a lot to like in the economy, in three, big areas, nonresidential construction, auto aerospace. Auto and aerospace, a lot of new products. New tire rims worth a billion in sales. A lot to love here. The analysts focused on the fact that aluminum is at the threeweek low like aluminum is iron and this companys valai or cliffs natural. Owe contrary. Thank you. I like the quarter. But im the only one who liked it. Glad im your friend. Youre right. Its not this youve got to close the deal with rti and the first deal was fantastic. You look at engine dont go walking into an engine on a jet but youll see a lot of alcoa. This is a hexcel play. People have to understand Klaus Kleinfeld fundamentally changed his company. It doesnt mean six months from now when the titanium deal closes youre looking at aerospace and lightweight play that has other stuff you dont like. Well get cramers mad dash as we count down to the opening bell. One more look at premarket on whats a busy morning. More squawk on the street from the nyse straight ahead. 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. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. 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. Make me a higher love bring me a higher love front row tickets to that steve win wood concert. Did you really . Take me to a higher love thats when i was somebodien. Lets get to the mad dash. Okay. Disappeared on us. There it is. United continental. Justice department theme. Raising numbers. The blessing of the airlines of having all of these all of the mergers here they had they did a number today, this is a passenger seat mile number which indicated that youre going to get much higher revenues, 6 to 7 higher than people thought looking like 1. 10 versus 1. 45 versus 1. 10. This breaks what people thought was going to be the breakdown, when you have oil stabilizing they hedge badly, united continental, you can make a case this is going higher as southwest, which also plus one. I was looking for mine us one. Big bears in the airlines have to deal with 6, 7 times earnings factor which means youll get run over by alcoabuilt plane. They are generating cash, which is shocking to talk about. Turn on investment fantastic. When it comes to antitrust, i point out our own parent company, comcast time warner cable, a question mark. At t direct we dont know yet. Baker hughes halliburton, i dont know. Maybe, maybe not. Tobacco, ftc, still havent heard anything. Even others. Theres a lot of antitrust. Too big . No . I think that they got a little nervous, they blessed this and i think, kind of like they got a lot of heat for it. A lot to keep an eye on. They created a Company Called Constellation Brands by giving them madello. Rob sands conservative, they gave low guidance. Constellation if you bought the stock when they did the deal . Yes. Oh. One of the largest sellers of corona and modella in brooklyns. I have 140 tequilas. They bought a good tequila. Smart acquisition. I thought theyd buy george clooneys. Hes having too much fun. This is not done. Those who sell here are going to wish they bought it back. This company, rob sands, cash machine. The growth here i thought this was an interesting extrapolation. Klaus kleinfeld talking about 1 to 2 beer can growth offsetting soda 2 to 3 but not totally. Put this together if Constellation Brands is going mid single digit, okay and Klaus Kleinfelds beer can business growing 1 to 2, theyre growing three times the size of the rest of the beer market. I rest my case. Tap, ive got to tell you, theyll pay anything for beer. I come underneath everybodys beer. On my block, ive got lower prices than everybody. Good to hear. Bar san miguel. Address. Smith, union. Get off the f train. All right. You know you can get down here, not on the f but the 1, 2, 3, 4, the 5. Opening bell coming after this. Squawk on the street. Live from the Financial Capital of the record. Opening bell in about 15 seconds. A busy morning as alcoa gives some investors reason for optimism, mixed picture on retail. M a train continues in technology with linkedin. And theres the opening bell. S p at the top of the screen. Down here, Physicians Realty trust a Health Care Reit doing the honors. Nasdaq, mr. Met and the new york mets as 2015 baseball season is under way. He looks good. Beefed up a bit. Our phillies hes feeling good. Though were. 500. We won yesterday. Managed one run yesterday, feeling good. We won yesterday. Exciting. Were not mentioning l brands enough which is an incredible story. Thats less wexner, shooting the lights out. 9 , i was looking for 5. 8 . This is thesis that you can craft, the mall is not dead. The mall is not dead. Okay . They do see flat to down Single Digits low Single Digits, i think, for april was it april . Let me see. Lb, flat to down low. They have been known for the conservatism, what you have to do these days. You cant put out a big number and just say its you cant you have to go you have to shoot low so you can do high. You say the mall is not dead . Its not dead. I want to understand that comment a little bit more because there are plenty of retailers suffering, depends who you talk to in approach to the mall. Which runs arent dead which ones are dead . Some operators have mastered the way to look at to be able to offer product and they tell you, les would say, if they made it more interesting, offer better product, people would still go. Sears, jcpenney not looking the way i would like it to. To your point, watching simon try to buy macerich there are good operators. No growth in malls at all. Right. A Shopping Center mall if you look at what federal realtys doing, mixed use, apartments fabulous tenants with exciting profits, or if you look at Restoration Hardware not a mall store but Museum Dedicated to furniture what the stores look like. Companies are doing forward thinking they had to be worried about amazon from day one. All they do is think about amazon. Nordstrom, the same way. Nordstroms able to bring in a lot of people. Macys delivered excellent numbers. So, just dont write off the mall. Pier 1 is a beat by 3 cents at 39 cents. They guide lower than expectations. Div hike as well. I feel bad. Alex smith, he had a big turn and told you when they started doing omni channel, really terrific. Its finally come. A horrendous stock, tough stock to own. Pulte, downgraded over jpm to underweight. Housing is vulnerable not only going to underperform, but that housing is vulnerable after a strong year so far. Thanks for nothing. A hold on the stock that was doing well. Lennar and Toll Brothers had been sensational in the housing business. The housing business away from the major Home Builders has been not so good because of the credit issues. So good operators have done quite well. Toll was at 32 33 forever. Lennar in the 30s. Look at runs that theyve had i dont think a guy who sat out the rally in pulte can say a sell without feeling like wow, i didnt do it. By the way i did not mean to jump express scripts when i said walgreens was interested. Im saying people are saying walgreens would be interested in pbm. I jumped that would be an enormous deal. Express scripts is so big. That being said walgreens, i had one phone call during the break, somebody on the call they were very very clear in their intent to pursue m a. Some people are quickly taking a look and wonder diagnose i dont believe weve seen the background on the ka ta ma ran at least the thought could walgreens try to play there. Ive got to look. I havent had an opportunity to make extensive calls. But to their point of being aggressive on the walgreen call saying were going to use capital for m a and buy backs, mib maybe theyll get involved in buying pbm. They talked about government regulation they said additional m a is coming. People are jumping to the conclusion it is express scripts. Rite aid, able to intergrat well. I totally get it. Be careful. Unlike news organizations you say see a stock up its 100 bid and its this weekend. Look at top s p gainers, right, express scripts, broadcom marathon right, names three we mentioned, which is yeah. Put them out there. I didnt mean to jump any of them. People, theyre all logical, this is what people are saying. Its like you know david, when you speak to people these are ones im not like pulling them out of the cloth nobody knows how much work you do better than i do. Express would be enormous. Come back to our story at the top, intel has stopped its talks, ended talks over a week ago to acquire altera. They had been in talks for some time. Good due dill gentigence was gone done. Both stocks down. Intel moved up on reports of potential deal and altera skyrocketed on those reports, not that bad. Altera shares had been down 8 in the early going. You can see down 6. 5 now. Intel paring its early losses at opening bell. Do they think people will come back in. A question is lets see what alteras earnings on because one would expect if youre willing to reject a price in the low 50s, you must be doing fairly well. You clearly think that multiple, jim, thats a low 20s multiple to ebitda that were talking about. When anybodys willing to pay over 20 year of ebitda for your business, youve got pay attention. If intel could be in any communications, people would get excited about intel again. Theyre viewed as pc company. You know broadcoms got communications. Broadcom will be what you hear next. Thats not farfetched. Interested in doing deals and not just cost synergies, that would not have been the key. It would have been about growth. Alteras a faster grower than intel. Higher value added. Frankly, when you saw what happened to intel just in terms of the talks, people got to feel like ive got to do a deal. Guys out saying that the next quarters the bottoming in margins. I do not see that to be the case. For intel . I dont believe that. Dunkin almost at 52week high. Credit suisse looking at improved income scenarios for lower income americans along with pricing. I like the term dunkin, the fifth time maybe fifth times charm technicians are telling me if it can break out, go to 52 53. The language they used was great. Im going to adopt it. Improving macro for lowend consumers which is saying gasoline doesnt cost as much. Nice. The possibility of wages growing at low wage Retail Services jobs. Thats where the wages are going up fastest. Right. I think that starbucks has been amazing. Starbucks split today, so people will sell half of the stock they get in a lot of cases keep the rest. You get a churn going. Starbucks, i think numbers very good. Coffees come down in price, not that that should matter. More levered dunkin than starbucks. A part of the actual cost i like the way retails acting here. It makes a lot of sense its doing well because gasolines not going up. Thats that scare that oil went up very big, now we realized its not going to happen. Constellation is up too, thank you. That was stupid. Rob sands is bankable. The market does dumb things because it looks at headlines and doesnt understand theres a tradition of certain guys saying things on a headline and when you get to the company, bingo. I did want to come to twitter, which is down today. Your comments yesterday, of course about expectation, nothings going on. Rumors involving twitter. I can tell you, there are no talks going on for twitter to be acquired, as far as im aware and reporting has indicated. Thank you. However there is an expectation well get an announcement from twitter, unclear what that is perhaps some sort of joint venture. Got to move into the realm of speculation here. So lets see. I dont know but i can tell you that to the points to some of the rumors out there and reporting as well what was it . The Daily Telegraph and usa today a story on the stories. Contacted goldman. Youve taught me you can contact a banker it dont mean youre in talks. There was not truth to any talks going on. No truth . Of an acquisitiontype. However, there is i do expect we may see something of an announcement that could be significant involving some sort i am being vague here i dont know. Well see if we get something but i did want to share. Ibm mentioned twitter twice on the call which i thought was curious. I think they were trying to affiliate with something thats viewed as hot. Right. I think twitters going higher, i think that twitter, those who use it the User Experience has improved dramatically in the last three, four months. I thu thatink thats worth noting. I had been somewhat critical. I hadnt noticed. It gets lost. A couple zyn. Ga. Too early to buy zynga. They have a 1. 50. Pink cuss is back. Its like gandhi ii the movie. Its the lowest since early march. Zyngas a punch line. What can i say . That whole era. Look at this mylan labs. Ive got well talk about it. No. In a minute. Surprise . Give me a chance to catch my breath. Look at my notes. Intel thing was a breathtaking thing. Way to start the show. Good way to start the show. Dows up 38 points. Pisanis on the floor. Good morning. Modest gains, health care gaining, energy great. Nice turnaround in oil today. You know Interest Rate sensitive, utilities, telecom are lagging a bit. Real actions in china. Talking about the strange action going on. Look at the hang seng seven year high, 2. 7. Up 8 this month. Mainland chinese investors getting astute. Piling money, taking money out of real estate putting it into mainland china, talking shanghai. They seem to be pouring money out of shanghai and sh. Nechlt zhen. Theyre getting sophisticated. A lot of strange traffic going on between the mainland and hong kong kong. That new connect between shanghai and hong kong have gotten very active. Nice rally in europe as well. Look at greece theyve got greece did make the payment to the imf. Portugal up 31 this year. 31 portugals up. France got to be up 20 . Nice rallies across the board. You mentioned retail sales. A couple of things here l brands margins improved one great standout. Victorias secret bath and body works strong. Kato and stein mart, double digit comps. Theyve got a presence in the south. The weather was warm somewhere that may have been an issue. Their numbers above everybody elses. Costco you know gasolines a bigger thing, negative 2 comp largely gas, take gas out, positive comp. The first negative comp since august 2009. Buckle, zumiez 5. 5 below expectation. Buckle negative. Aeropostale trying to change things around. Teen retailers struggling. For march retail sales a dis disappointment. We had an easter shift. March should be frontend loaded more with the easter shift. Were not seeing it right now. You mentioned bed, bath body work, you mentioned guidance. Stock is down. Outlook for 2015 only talking 2 to 3 Comparable Store gain and thats the problem. Overall, earnings were in line. Constellation, you mentioned constellation, what impresses me, were at historic high for constellation. Look the beer sales. Mexican beer sales are on fire 11 . What . That is way ahead of the industry expectation standards. They should be delighted. Put up constellation. Were at historic high here 120. Ill check that. I believe historic high for them. An interesting note this morning, talking about the earnings recession. They are noting with the price of the s p right now, its expecting 9. 6 Earnings Growth. Thats what the pricing. We know were not going to get that. Put together optimistic Earnings Growth with economic uncertainty, downside risk. What happens here is when you get that divergence usually its pricing that has to come down not necessarily the earnings going up because its slow moving around the earnings shift. Pricing moves a lot faster. David, back to you. Thanks very much bob pisani. Yesterday 11 30, unexpectedly, its fair to say we got a proposal from mylan to acquire perrigo for 29 billion roughly or 205 a share, in cash and stock, although the composition to upset offer was not made clear, nor were ratios of anything of that sort. Expectations given mylans size and the size of perrigo, which would almost be identical, there would be a good amount of stock that would need to be used. Mylan, for its part given the abbott labs transaction it doid in to invert itself took it down put more debt on the Balance Sheet and fund a good portion or lets call it half and half lack of a better term. I dont know. What is most interesting trying to answer the question as to why now. Clearly, there have been talks between the two companies. This is made clear in the letter that accompanied this proposal and i use that word intentionally, proposal, not offer, dealing with irish takeover law given where perrigo is based or has its headquarters. Headquarters. Because it also pays a lower tax rate as a result of its inversion. The question as to why, though not in a position to answer exactly at this point. I will tell you, people who know both companies well indicate there have been conversations, businesses line up well as you might have expected. You know perrigo has the royalty from the acquisition of alan nutrition, the store brands that many people know. You buy in walgreens, its the walgreen store brans and the likes competes against branded products. Specialty pharma deals are being rewarded by shareholders. Take a look at mylan which moved up sharply. Why . The continued question why are they trying to avoid something . Trying to avoid the clutches of Teva Pharmaceuticals . A question asked a lot yesterday. I dont know the answer. Teva had a presentation yesterday at barclays somebody ran generic business didnt give an indication one way or another. Theres a coalescing of thought around the idea teva might want to do something but thinks mylan is expensive. You have to ask the question that they really wanted to buy mylan, why wouldnt they have done it before mylan inverted, when you needed a vote to do so and you could have potentially had that vote be the proxy, if you will on whether or not to sell to teva and was smaller then. Now added 8 billion in market cap with the deal. Paragos trading below the offer price. Perryigo perrigo, in talking to people familiar with the situation, did not expect this to show up at their doorstep this proposal. It was unexpected. Theyre going to take their time. Dont expect well get some sort of resolution here in any near term. The indications im getting, theyre going to take time and reviewing the offer. They have Morgan Stanley working at perrigo. So well see what they choose to do and what mylan chooses to do and what teva chooses to do. But nobody argues what the Strategic Logic of potential deal. When you think about a teva mylan, israel and West Virginia getting together no offense to either one please but culturally that could be interesting. Read the book a novel came out in 70s, texas israeli war. No. Unbelievably bad. I do think my brotherinlaw gave it to me. I do think that the fact that you mentioned the key words, specialty pharma. When this things over theres going to be like three specialty pharma companies. Now watch this horizon pharma. They want to be specialty. Thats that hybrid model that people like one proprietary drug growing, theyve got generics. I happen to always like perrigo. When you buy pepto bis mal i love to chug it ill buy the store label because it looks exactly the same. With the blog activity on pharma m a is any indication, theyre all over the map today. Final word from me on this i didnt go into the intricacies of dutch governance but its a netherlands based company, mylan, it does have a lot of protections preventing anybody from making a hostile offer but it doesnt make anyone from making a bid. Its hard enough to remember what happens going on in m a in United States in terms of law. Big interview, the managing directinger of the imf, Christine Lagarde. Hear what she tells sara eisen about the greek bailout situation and of course their forecast for growth in both developing and emerging markets. Dows up 31 points. Back in a moment. The pursuit of healthier. It begins from the second were born. After all, healthier doesnt happen all by itself. It needs to be earned. Every day. From the smallest detail to the boldest leap. Healthier means using wellness to keep away illness. Knowing a prescription is way more than the pills. And believing that a single life can be made better by millions of others. 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I was born and raised in the cupertino area. Its a fantastic area to work. The new technology that we are installing out in the field is important for the customers because system reliability i believe is number one. Pg e is always trying to plan for the future and we are always trying to build something stronger and bigger and more reliable. I love living here and i love the community i serve. Nobody wants to be without power. I dont want my family to be without power. Its much more personal to me for that reason. I dont think theres any place i really would rather be. Trading. I know i may sound like a broken record, and i mean to because under armour today its piper, after meeting with finished line saying extraordinary growth. I say kevin plank is out to win. This company has got the wind at its back all over the globe. By the way, curry, turned out to be a good guy to ling with a lethal threepoint shot this is shoes, clothing china. This is greatness under armour. Alltime high going back to 2005 ipo. Think tried to short kevin plank. One of the most Dangerous Things in the world. Walk off the plank if youre short kevin plank. All right. Whats on mad tonight. Talking about consolidation, put together maybe the best Real Estate Investment trust growth story out there other than Simon Properties and federal realty wow. I think deb is fantasticen this is a great deal. They did that deal earlier this week. Right. That was a deal by the way, announced, came out, it was good, stock came up. The way it should be. Mylan is up more than perrigo in two days. Wreaking of something. Thats the teva question. Which, by the way, not by any means guaranteed tevas going to make a move. What a chance to buy mylan. Could have done it previously much cheaper, and had a vote in front of them. I like the ceo of perrigo. Hes very selfefacing. He did not talk the stock up on mad money a month ago. I was saying, cheer up, your quarters good. I was trying to get him excited about the stock, but hes hes more calm than i am the way i put it. See you tonight, mad money 6 00 p. M. Sara eisens live interview with Christine Lagarde of the imf as the dow crosses into red. Back in a minute. I care deeply about the gulf. I grew up in louisiana. I went to school here. Ive been with bp ever since. Today, i lead a team that sets our Global Safety standards. After the spill we made two commitments. To help the gulf recover and become a safer company. Weve worked hard to honor both. Bp has spent nearly 28 billion dollars so far to help the gulf economy and environment. And five years of Research Shows that the gulf is coming back faster than predicted. Weve toughened Safety Standards too. Including enhanced training. And 24 7 on shore monitoring of our wells drilling in the gulf. And everyone has the power to stop a job at any time if they consider it unsafe. What happened here five years ago changed us. Im proud of the progress weve made both in the gulf and inside bp. [ 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. Welcome back. Good morning, welcome to squawk on the street im Carl Quintanilla with simon hobbs, david faber at post 9 at the new york stock exchange. Sara eisen live in washington where shell be speaking to Christine Lagarde of the imf later on. Well check in with sara in just a few moments. First, the markets have given up early gains, dows down two points s p up fractionally. Oils the story, along with retail sales and m a, which continues to chug along. Lets get over to jim youriuorio. We got the wholesale sales and inventories numbers and they were disappointing. The sales number came out at down. 2. Expecting plus. 3. The inventories numbers came up at plus. 3 expecting plus. 2. What we wanted down here was to see a decent sales number compared to the inventories number to try to convince yourself that were chewing up inventories and that was going to cause a need for great he production. We didnt see that. Stocks traded up on this maybe because a tightening is less likely. Tenyear yields 1. 91 where it was when it started. Simon. Thank you for that. So 17,906 on the dow. European equities on the other hand climbing today, after the imf, greece made its 500 million repayment to the imf. Oil regaining some of its losses after that washout. Wti back above 50 a barrel. Joining us now at post 9, citis chief economist. We bring in scott wren senior Global Equity strategy at wells fargo investment institute. You think the market can rise 8 with two Interest Rate increases . I think it can, simon. You know really the markets prepped for an increase hike or two. I think theres a little bit of concern over when the initial ones going to be. I lead towards september, certainly not june. But also i think that whats going to happen is consensus expectations for earnings not only this quarter, but i think for the entire year, are too low. Well see decent economic growth, modest and were also going to see some modest earnings gains that are better than what many people expect. Was this your note this morning . We think the media will cover this earnings season as though the skies falling in and point out all negative possibilities that may accompany an earnings recession, dont buy it, is that you . That is me. I mean do not buy that. I mean you have a job to do. Theres a lot of things to talk about during the day. But the sky is not falling. We may stumble here a little bit in earnings, you know, weather, the dock strike the dollar. But i think when you look ahead, remember, earnings are a lagging indicator. Thats what happened in the past. We want to look ahead. That modest growth modest inflation environment, is still well intact. Were going to see that through the rest of the year. Good morning, an honor to have you. A flash. A former member of the bank of england Monetary Policy committee, now head of citi. You find the conversation tedious what the fed might do. But is our friend scott right here, there will be two rate hikes by the end of the year. Everythings possible. Everythings likely. No, i think recovery in the u. S. Is sufficiently soggy that i think the odds on one increase, at the very end of december, are about as far as i go with a material risk of an increase until next year. It depends on whether the weakness in q1 is frosty the snowman again like last year last year we didnt make up for it we got 2. 3 instead of three. We wont see an increase until the end of the year at the early earliest. We must keep rates until the end the year . Not emergency situation. Not an emergency molnetary poll. I smaller Balance Sheet, negative rates. Simply in an economy but still disinflationary pressures but negative output gap left so we need stimulus. We dont get it from the fiscal boys monetary boys have to do it. The only way to do it at the moment, keeping rates low. Scott pointed out, its our job to carry headlines of the day, today one of the headlines that greece has made its payment to the imf. And will interview Christine Lagarde later on. Important questions particularly if youre european. Are they important questions for american investors. If there is a mishap and theres grexit it will cause a flight into safety in the u. S. Dollar, which would cost the u. S. Stock market to tank, the dollar to go through the roof and further, downwardly depress long yields. Bad news for the u. S. Economy. Its unlikely fortunately, although the europeans, both sides of the negotiations the creditors and the greeks giving it every effort to make sure theres isnt a mishap. Theyre risking unnecessary failure of negotiations by grandstanding on both sides. Im sure you have a great deal of respect for jamie dimon at jpmorgan. What did you make of his shareholders letter in which he looked at movements weve had in the bond market and said be very careful here. We may have a major structural problem with the markets that they cannot handle financial crisis. Well, weve never been able to handle financial crisis well. We have less liquidity, his argument, this time around. 40basis point move in yields in a short space of time. We will see. Markets are meant to be shock absorbers and movement in prices are the right response to news. Scott, more tactically, its telling the only sectors in the green at this moment at least are energy and health care. Arguably the two sectors m a speculation is running at its most torrid pace. That is healthy . You know carl i tell you, when m a froth really gets going, typically the markets hit higher valuations. I worry about it more than certainly biotech, to me looks look its certainly run hard over a long period of time. And thats you know responsible for probably 80 , 85 of the outperformance of the health care sector. Right now the m a situation, its not worrying me too much only because i think valuations theres a lot of talk valuations are stretched, stocks are expensive. Not based on the work were doing. Were slightly below the 30year median for the s p 500. Valuations are not stretched. On that point, well leave it. Scott, willhem, thank you. Sara is in washington. Wow want to raise the kurt on this one. Good morning, carl simon, david. An important day for the imf, the day that a very critical greek payment was due to its creditor. We know its come in theres a question about what happens next. It was a pretty lastminute call, and theres another big payment, almost double the size of this one, due from greece to the imf in may. Well ask about that. Keep in mind the managing director of the fund Christine Lagarde did just have a meeting with the greek finance minister here in d. C. On sunday. Well find out about what they talked about, how those greek reforms are coming about, whether theyre go to be able to make key deadlines. Shes here today at the Atlantic Council to give traditional connectoff speech to the Imf World Bank meeting, that is next week. Well bring you headlines from that speech and get a chance to talk to her about the outlook, whats changed, is it really all of the Winter Weather thats affecting the United States . And, by the way, what is the concern and what is going to happen when the Federal Reserve raises Interest Rates . A unique perspective from the imf on the impact of Global Markets and the global economy. Much more coming from here the Atlantic Council in washington, d. C. , with the manager director of the imf and thats in the 11 00 hour of squawk alley. We cant wait for that. Sara eisen in washington. Early easter hunting look at costcos march sales number. Helping things over at l brands which posted a 6 rise for the month. Why is it good for one, bad for another . Well talk about that with the dow almost perfectly flat, in a moment. Ou 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. Costco reporting this morning that comp sales, sales that stores open for more than a year, dropped larger than expected 2 in march, hurt by the timing of earlier easter. Combine with the negative effects of the harsh Winter Weather, west coast port slowdown. Could we see more headwinds . Joining us at post 9, the managing director of Specialty Retail analyst atstearn. More red than green, people considering march a oneoff given the weather. People expecting march to be a good event. Look at Limited Brands we cover, comp phenomenal. High single digit comp. Doing it with inventories down 10 per square foot. Comps are going in the right direction. The stocks going in the right direction. Up 60 since august on last year. So, thats really what you want 30 see, momentum on the top line with wellmanaged inventories and if you do that you have earnings visibility with retailers. Limited brands multiple alltime high people want visibility. What about everybody else . Everybody else is more volatile. Look at handbag names, michael kors and kate spade, more volatility, what happens go on in that space . Seeing stability and a lot of investor interest is the offpricers the west coast port disruption lower gas prices Burlington Coat factory, ross stores, those stocks making new highs, too, those are stocks people feel comfortable. To your point, no euro no hong kong protests to worry about. Youre able to separate all of those sort of temporary dynamics from whats really go on in the consumers mind and you think its positive. They dont really know what theyre doing. We looked at holiday, it was okay, it was good not great. We had a slowdown in february. Things are starting to bounce back in march. Easter shift is hipping everyone, Better Weather for the apparel categories. April will be ugly because the easter shift reverses but look forward, its all about Inventory Management and promotional activity. When we do our checks were the leanest level weve seen in 2 1 2 years. Companies are doing what they can do to support their own gross margins. Does Consumer Spending take off in a big way . Is that possible . What is the major break on that given all of the talk about gasoline prices . On the low end, youre see a step change here. Not only is the Lower Energy Prices benefiting them there, but if you listen to some retailers like target t. J. X, like a mcdonalds, the wage increases on the lower end at lower end . Thats helping their spending. Theyre going to spend dollars in the areas like offprice retailers, lowincome retailers. That part of the economy, that part of spending i think you see a step change. For everyone else steady as she goes. Inventories relatively low. Bed bath suggest promotional pressure is going to continue, right . Its not like its come off completely. No. Its company by company. Again, back to michael kors we think they continue to be promotional. They have their margins, 30 , those have risk to the downside. The gap, which will report comps later today, a good comp because of the easter shift and weather. But their inventories, though lean seeing more mark downs. Specific channel by channel. How sensitive is the consumer to Interest Rate rises at this low level . Its tough to say. Theres no real weve tried to back test it look at correlations. It all over the place when you look at it. Its a difficult question to answer especially consumers on the low end, burlington ross. You have the super highend. A lot of vashlt. The level of the stock market . The level of the stock market is a good thing for the highend retailers, it gives more disposable income to those, you know, go in. Having had gains, phenomenal gains over two, three years in the stock market are you in cumulatively then or do you need to see further rises. I think where we are, its all beneficial. And i think when you talk about that kind of impact thats more of the high end. For us it would be tiffany in terms of Consumer Spending. Finally, im thinking of retailers that rely heavily overseas right . Look chart nike versus ralph lauren. Its like a v go in absolute Different Directions but a lot of the same issues. We dont cover them. The twoweek cover high fx exposure fos and tiffany, both going in the wrong direction. Fossil transaction risk 35 of the sales. For tiffany, translation and the transaction risk u. S. Tourism. 25 is tourism. Theyre getting hit on both end than creates a difficult dynamic a company cant do much. Good to see you. Thanks for coming in. Next its been one year exactly since la quintas ipo and during that time the stocks up 35 from its ipo price. What i their secret . What happens now as blackstone exits . The ceo will join us after that. Help brazil reduce its overall reliance on foreign imports with the launch of the countrys largest petrochemical operations. When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. Investors in hilton are having a good week. Analysts refusing to rule out a report having paid 32 times earnings for the waldorf, chinese insurers might buy blackstones remaining 5 controlling 55 stake. One of the main reasons every analyst entertains the idea the private equity giant blackstone halted offering of hilton in the First Quarter, despite the fact its trades at alltime high and despite offloading below 50 would allow hilton to enter the s p. Joining us now, separately is another recent blackstone lodging projecttege celebrating the First Anniversary here at nyse, la quintas ceo, wayne goldberg. Good morning. Welcome back one year on. Its surreal its been one year. You priced at 17 trade at 23. Its consistently executing, saying what youre going to do and delivering results you commit to. Youre the fastestgrowing brand in the fastestgrowing area of the lodging sector, select service, which one analyst described to me as a place where you have to carry your own bags to your room. Why is it doing so well in the economy . Well, first of all, the sector continues to be the sector where the last number of years the growth has been in our industry and the reason for that is the investors, the Franchise Partners and folks investing, realize thats where the returns and the return on their investment is. Why . Why should it be there nowhere else. Were able to deliver returns. Were more robust through cycles. Theres less volatility through the cycles. And its also where the consumers have migrated because consumers have realized thats where the value is. Interesting. You are quite anxious blackstone sells down its stake. They sold 600 million during the First Quarter. You talk about Free Cash Flow and paying down debt. Where do we get to by the end of the year. Focused on continuing to delever our business. We will be below four times this year, in 2014 we paid down 205 million of our debt 195 million of which voluntary. We are on a path to continue to do so and get below four times. And theres significant reasons to get below four times. First of all, we get below 4 1 2 types, which were close, we get a reduction in Interest Rate which is meaningful to investors and shareholders. Below four times we have a cash sweep that would go into place at beginning of the 2016 that we will avoid. It gives us flexibility, ability to determine what to do with that cash flow. That was a technical argument. If im trying to keep up with whats going on here what is your basic message to me why i should invest for the next two years given that the lodging cycle may turn . We have been the fastest growing, select serve brand against those that we compete the most directly with for the last ten years weep believe, based where we are we are half of the size of our largest competitors, we believe that we continue to be the brand, that has the ability to continue to be the fastest growing. We were again in 2014. Again, were not in 35 of smith travel researches 628 defined market tracks today. Youre in texas. We are. 30 of hotels are in texas. How is the clearly the slowing rig count, if nothing else affecting you . First of all i like to say we 70 of the properties outside the state of texas. We have a handful of properties in markets that are impacted, we have accounted for those, forecasted and expected those to be impacted. Those properties however, in many cases, have been in our system for many years, they will continue to do well. Theyll continue to produce positive cash flow and be profitable. They just wont perform to the level that they had the last couple of years. How much of the pipelines in texas. Over70 of our pipeline outside of the state of texas and feel very good lower gas prices is a tail wend. If you think about the segment, retail, when consumers have more disposable income retail does better. Some of our biggest customers are retail. Retail consumers do better. All hotels have additional demand generators, leisure is a big market and does better. Theres a lot of demand generators, each in oil markets for hotels. We see the outlook very positive. When you read big macro think pieces about the death of the texas economy, what do you say . I remember when 150 barrel of oil was going to destroy the Hotel Business didnt happen. 45, 50 a barrel of oil is going to destroy the Hotel Business i dont believe its going to happen. Plenty of demand generators for our business based where were located and distributed. Well very fee good. We have improving economy, outlook for travel international and domestic. International, where we have exposure mexico central south america, very positive. We see Consumer Confidence on the rise. Demand is strong. We continue to see the ability to have octobercupantcy from youre a good advocate. Why is there one brand . A single stand alone brand is a negative. What i said to Franchise Partners and vendors at our conference i challenge people when i hear that show me a metric, one location one place where that has a negative. I argue that its a positive. Were singularly focused. Weve grown against all of those competitors that are multiple tiered, have multiple brands we get 48 of members from loyalty program. Our advertising awareness is at an alltime high tie ford number one in our segment. We have all of the metrics would say that it doesnt hurt us, it actually helps us and i challenge people to point to an area where it is a negative. Congratulations, one year at the new york stock exchange. Thank you. Wayne goldberg joining us, la quinta quintas ceo. After falling 7 yesterday, oil bouncing back. Where prices may be heading next, when we return. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. Cnbc news update at this hour. Iranian president says iran will not sign a final nuclear deal without a provision lifting all economic sanctions on the first day of the agreement. He made the comment during a speech marking irans National Nuclear technology day. Defense secretary ash carter arriving in south korea as he continue his asian tour. Hell meet with u. S. Soldiers in the country and tour u. S. Military facilities as well. The pentagon saying he will reiterate the strong commitment the u. S. Has to korea. Apple sees demand for its new smartwatch exceeding supply when it goes on sale april 24th. The watch and only be preordered online starting tomorrow. And voluntarily recalling 30 toushgs ,000 cases humus. The routine test tested positive for listeria. Theres no evidence any has gotten sick from the product. Back to you. Welcome back to squawk on the street. Im jackie deangelis. The department of energy out with weekly Natural Gas Storage report. An injection of 15 billion cubic feet, it is sending prices lower. Traders are saying that they expected to see or start to see builds. Were getting into the in between period you dont need heat airconditioning demands starts to drop off. Last year at this time and with the fiveyear average, weve seen a couple of withdrawals because of colder weather. Right now seeing builds definitely going to send gas prices down. Traders looking at 2. 25 as potential target unless Mother Nature throws us a curveball. Reprising a story at 9 00 a. M. This morning intel has ended talks to acquire chipmaker altera, after a number of months of negotiations between the two companies, significant Due Diligence on the part of intel. They could not agree on an appropriate price. But intel, at least in the view of altera was willing to pay. As i reported earlier, sources familiar with the situation indicate intel had offered a price in the low 50s, allcash deal, may have even been as high as 54 a share. However, it was rebuffed. And it has not had any discussions with altera having walked away from discussions over a week ago, according to people familiar with the situation. The talks themselves first reported on by the wall street journal march 27th in which it said it was in advanced talks to buy altera. That sent shares of altera up and intel up on our report of course, this morning both stocks came down. As you see now, alteras made up a good amount of ground. Intel back to being positive on the day. The deal itself in the low 50s, would have been at least 15 billion, 16 billion in cash for intel, marking the largest deal it would have consummated, again, if it had been able to get altera to agree to the price. But it does indicate according to my sources, a willingness on the part of intel, and its relatively new management to entertain large acquisitions. This would not have been a deal about cost savings as much as it would have been a deal about growth. Altera is a faster grower. Reporting earnings in a couple of weeks, perhaps well get a sign to the health of the business. Perhaps more sign why it was willing to reject an offer that valued over 20 times ebitda. Low 20 multiple on ebitda. That being said that moved back up, and share of altera perhaps, investors expected to pressure the company to sit back down with intel. No signs that i was able to garner that intel would be willing to do that though one has to imagine, given its willingness to pay, perhaps as much as 54, it would be willing to, if ailltera were to face some insurrection. That has to be the reason why the stock has come back so sharply, having been down originally 8 . The whole thing feeds the argument we hear again and again, we were sitting here when they warned on revenue, now when the market or were for a big deal average lap Global Companies struckling for growth and looking to m a as the answer . No doubt about it. Many of the things have been in place for a long time megastrong, m a marketser the response of the acquirer stock, in this case intel did go up but your points a good one. Go to m a as one in the play book of trying to get growth. Many cases we of course see horizontal mergers or things that are driven by cost savings to get growth. But in this case, looking for Revenue Growth that altera potentially would have bought to them. They appear to be willing to do so but not enough for altera to say yes. Stubborn. Sara eisen sits down with the imfs Christine Lagarde. Sara . Well we have a lot of topics to get to with her. Top of mind of course today, that critical deadline for greece to pay the imf. Its payment, weve heard its done so, but a lot of big payments coming down the pike. Well ask her whether she has any assurances from greece that they will come through. Well talk about the global economy. Well talk about the u. S. The Federal Reserve, and maybe even the fact that german bund yields for eight years went negative today. How crazy is that . All when squawk on the street comes right back. It took tennis legend serena williams, fencing champion Tim Morehouse and the rockettes years to master their craft. But only moments to master paying bills at chase. Com. Depositing checks at the atm and transferring funds on the mobile app. Technology designed for you. So you can easily master the way you bank. As we roll into earnings season, what stocks are likely to move the most on the earnings . Gee to tradingnation. Cnbc. Com or check out the live version on the 2 00 eastern time hour of power lunch. More squawk on the street after this. 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. [ male announcer ] some come here to build something smarter. Some come here to build something stronger. Others come to build something faster. Something safer. Something greener. Something the whole world can share. People come to boeing to do many different things. But its always about the very thing we do best. Markets slightly negative overall. Energy sector rebounding today. Dom chu has more at hq. Good morning. Energy standing out as Top Performing sector. Todays Oil Prices Make their way higher at least wti crude, after yesterdays selloff. Up a percent on the crude prices. Among leading stocks in the s p 500 for the Energy Sector offshore and drillingtype Companies Like inensco, halliburton, up there as well Exploration Production represented by flu field, all stocks up by 2 or more. A nice smaller pop but still energy in focus for many investors. Energy and biotech, dom, thats for sure. Mylan and perrigo, both higher one day after mylan proposed an off to acquire perrigo for 205. Barbara ryan was on the phone with us as that news broke yesterday. Youre here on set this morning. Good to see you back. Thank you for having me. Its like pictures of the food chain, youre not sure which fish is going to eat which one first. Used to call that the pacman strategy years ago. Whats the play book here . Whats the play book here . I think its everythings up for grabs. As we were talking about, david was talking earlier this morning, about teva i think certainly it is like Musical Chairs or a land grab companies feeling that if we dont get into the game now, whats left to do . These companies, we were talking earlier offset if you look at the market caps of these companies today and compare them to four, five years ago, unbelievable. One deal after another, for multiple years look the perrigo, even mylan, and the size of these companies, through the consolidation of the business at some point these Companies Just are too big to acquire teva actavis. Right. Exactly. Thats a company that teva probably looks at and goes my god we could have done that ages ago, what were we thinking in. On the action this morning, im interested to get your opinion, mylan shares up another 5 . Its up more than perrigo, seeking to acquire in part because of the idea teva will come in. Does that comebination make sense . Culturally two very different companies, or is it possible that teva would consider a perrigo, does that combination, would they consider coming in over the top there . I think theres a couple of things at play. One the markets pleased and impressed that mylan is being as aggressive as it is to go after perrigo given what that means for their Growth Outlook and stature in the industry down the road. I think thats one thing. Certainly the second is, you know, accretion that would come from this financials. And lastly that mylan, too, is in play visavis teva. I would say that tevas a cultural challenge almost for anyone and i dont mean that in a malicious way but the challenges that teva and its Senior Management and board have had, you know are not new, thats been going on for quite some time. Any company would have to deal with that. I think, too, the market probably you know has been wanting teva to do something substantial for yitquite some time. If not now, when and what . What about the roll of pfizer . There some speculation on trading blogs it might get involved. Mylan is its a really good question. Heres my point of view on that and this is just my point of view. People have talked about pfizer splitting into three pieces right . My point of view was three years ago that wasnt possible. Now the company has positioned itself so thats possible. When they bought his para, i took that as a tell they will likely split the established products mature brands from innovative core. You follow that logic further, right, established products business, right, would make total sense to my mylan, perrigo, Something Else and think about the fact that pfizer has 45 billion outside of the United States, that they want to use, right, you put all of those things together absolutely pfizer could be you think it makes more sense than teva mylan . Yeah i mean, teva might think that thats not the case but i think from a market perspective, yeah, i think that would be a better fit. Investor perspective, to buy one of the big behemoths . Youll get a pop there in. Absolutely. If pfizer wants to split, right, theres two things that have to happen. One is they have to have a pipeline in the innovative core in order to get paid. And they can get a multiple like a big biotech, theyre never going to get that as pfizer. People view it a financial story. These companies are get larger. To be a Global Participant and a major top player, that business would have to do an acquisition. I want to caution people mylan has significant antitakeover defenses as a result of being incorporated in the netherlands. I learned a new word from you today. Makes it impossible to take it over from a hostile perspective. In terms of overall trend, youve been around a long time dont rub it in. So have i. Youve seen the cycles. Where are we in this one . You know, i think that these things, as you know tend to go in waves. And one begets the other. You know in order to remain competitive, these companies are going to have to continue to consulate and roll up the industry. I think it will continue for quite some time. Interesting to see pfizer move on the things youre saying now, thats how active it is. Good to see you back. Thank you for having me. I hope so. Enjoy it. In the meantime dollar index is edging high after yesterdays fomc meeting showed a fed divided. Then historically on when it raise rates. Is a june hike in the cards . Jpmorgans chief u. S. Economist and joins us now. Good morning. I would have thought yesterdays statement was kind of a little bit old given weve had a poor payroll figure since then what happen are you telling clients . Yeah, i think two things to keep in mind. One it is old, weve had some data since then thats been soft, most notably the payroll data. Second i thought the reference that there were several participants who still wanted a july hike sorry, june hike that we also knew from the march it rate forecast theres a core of hawks who wanted june or something earlier. I didnt think we learned that much new. June, to me still seems unlikely unless we get blowout data between now and then. What does this mean for the markets. How sensitive do you think we are . With the signaling going on clearly nervousness, clear le they want to telegraph to be as dovish as they possibly company are we like a stretch elastic band waiting to ping as far as marks are concerned or will we take them in its stride. A dovish message over the last few weeks. I thought the comment tear yesterday was dovish. It seems to me a, were still pretty primed i think for a september lift up. And theyre trying to tell us in addition to that theyre going to be very gentle in raising rates. Whether that forecast actually pans out i think, is another matter. I think youre right the market is sensitive here to the fed communications. You know the fed, i think, clearly, is trying to massage the messagen one of the things that stood out yesterday in the minutes the fed is going to be sensitive to the dollar and and theyre going to condition any rate hike on the dollar stabilizing. I think theres a back and forth between the markets and the fed, and the fed is clearly i think trying to influence the currency marks in particular. Mike we had Larry Summers on squawk box earlier this morning. Theres been some back and forth between the two of them on the blogs. His point today was, he calls it secular stagnation, this idea developed economists ten years out, hardly anybody sees 2 . Call it what you will nobodys looking for growth the way we did structurally before the crisis. Do you agree . I agree. I think the feds, you know you have been seeing that in their forecast. A couple years ago looking for 4 numbers. Now looking for low to mid 2s. Everybodys ratcheting down their expectation for longterm growth. So i do share the broad sentiment there that demographic and productivity trends are leading toward slower than Slower Growth than weve come to be used to. What does that mean for Asset Classes . What winds in that environment, classically i guess its fixed income. But were already up there. Right. So, i think that was the big story of last year was that fixed income markets it seem like they realized a trend growth was lower and started pricing in a lowerterm funds rate. Sure. A lot of that may be behind us. You know where things go from here i think, is obviously anyones guess. There is not a clear let me ask the question is there a clear asset is there a clear asset class that does well in the world that youre painting as a picture . Not really. I mean in the long run, stronger productivity growth is not only good for the economy, its good for assets. So having lower productivity and growth is on net, you know its something that you have to revise your view of what Asset Classes are going to deliver on a sustainable basis going forward. Good to see you, mike. Jpmorgans chief economist. Coming up new high valuation for sea geek. Higher ticket prices for the masters and of course for baseball season as that kicks off for 2015. Dows down 49 points. Back in a moment. Oil prices rebounding today after yesterdays sharp selloff. Of course that 70 billion deal between Royal Dutch Shell and bg made news. Joining us by phone is Matthew Beasley head of Global Equities at Henderson Global investors. Good morning to you. Good morning. I want to read you something out of the ft comment section. He says the long dearth of big transactions in flrg is over and every company in the sector will be nervously considering whether they should kill or risk being killed. Is that fair . Yeah. I do think yesterdays transaction between bg and shell is a special situation. You had a willing buyer in shell who had been looking at these assets for some time knowing they were a good strategic fit for their business and a very willing seller in bg. With some change of the Management Team operational changes ahead of them but more cautious view about operating they were facing that you had a willing buyer and seller. I dont think it means were about to have a wave of m a sweeping across the Energy Sector. Really . Today another paper makes the argument back in 98 bp does am maco exxon not will be to be outdone does mobile. You dont see a repeat of that dynamic. Somebody like exxon mobil has a strong Balance Sheet, where they are absent might be willing to contemplate deals. Bp as one of the large major has a lot on its plate dealing with the ramifications with the issue in the gulf of mexico as well as the challenges in russia its not necessarily clear to me that they will be keen to follow where shell is leading. Then i look across the north american sector i see a sector where there is not a lot of costs really to take out, so much of the production is outsourced to the oil services companies, there you might see following what we see with baker hughes and halliburton but im not sure many asset rich organizations are willing to sell out, sell those assets. What could be typical lows for their sector. You say youve run a slide rule over halliburton post bhi. Had that deal made sense in retrospect . I think like shell bg deal announced yesterday its hard to judge if these deals are going to make sense until we get two or three years out, a sense of what a normalized oil price is. I find it fascinating as an investor when i look across most analyst models and expectations they have for normalizing 80 oil looking two or three years out, look at the huge disconnect between that and where the futures strip currently is pricing 65 or 60 oil out to 2017, 2018 and i think something has got to give. I think its very hard for us to judge the merits strategic merits of the deals today, when the financial returns of these deals is so uncertain and dependent on where the oil price ends up looking two or three years. Matthew, in the meantime for people who want to follow the money for this year what names would you put on the table as potential bid targets for say an exxon . I think people will look at those companies that are of right size. Companies where acquisitions can occur without lots of equity issue wans or the majors where the size of the deal is not prohibitive to maintaining the ongoing dividend. That was notable yesterday in what shell was talking about with bg. This is about as big a deal they could muster while keeping a decent Credit Rating or decent in their eyes and be able to satisfy the dividends that they have promised to their shareholders. If you had to give one name as a potential target what would it be . I would look at the u. S. Emp stocks like apache anadarko where there has perhaps been some change in the Management Structure and the assets room for a strategic change under a new owner. Matt, good to talk to you. Thanks so much. Exciting time. Matt beasley joins us from Henderson Global investors. Were almost at the alley. See what jon fortt has in store for the next hour of cnbc. Good morning, jon. Good morning. Big show. Weve got International Monetary Fund Managing director Christine Lagarde live with us and linkedin bought linda. Com for 1. 5 billion. Like a 20year overnight success. And well be talking to the stars of hbos Silicon Valley on its way back. All coming up on squawk alley. The pursuit of healthier. It begins from the second were born. After all, healthier doesnt happen all by itself. It needs to be earned. Every day. Using wellness to keep away illness. And believing that a single life can be made better by millions of others. Healthier takes somebody who can power modern health care. 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