Transcripts For CNBC Squawk On The Street 20150428

Our map goes Something Like this. A lot to talk about. We will start with a stunning quarter boating estimates on the top and bottom line. Company increased capital return. Over 60 million iphones. It looks like apple shares will open at an all time high. It is a busy morning of earnings as well. Shares of merck, pfizer and Bristol Meyers all moving higher in the free market. Numbers from ford disappoint. North america the bright spot. The Company Continues to lose in south america and if europe. We will interview the cfo bob shanks a little later on. Apple poised to open up 33 if profits. More than 61 million iphones were sold. Revenue in china grew 71 from a year ago him apple boosting the capital return program. Tim cook on last nights Conference Call. Take a listen. We are in the very fortunate position of generating more cash than we need to run our business an keep making these important investments. So today, were announcing another significant update to our capital return program, expanding its size to 200 billion through march of 2017 to reflect our strong confidence in what lies ahead for apple. Of course jim the record cash now at 194 billion. Pointing out they can combine gm and ford and tesla and still have some left in the bank. My answer is why the heck would they want to do that . Okay. This is one of those quarters where tim cook really had to restrain himself. As a matter of fact, there was one moment he was talking about the apple watch. By which the way show wes are up. I went to my help my mess engs. I checked my stocks. He didnt say the watch is being blown out and of course he gets called out and says look the demand is the far greater than the supply. The demand with everything with the exception of tablets. What happens when you do that . You can raise price. Thats what they did. The china story. Its really extraordinary. There is a great moment of kind of a geopolitical moment where he says the great middle class of china is buying this phone i absolutely love. That then switching, thats another great team the other guys there was agree bury samsung call. Its funny, you have to remember apple is one of the largest employers in china. Certainly employs a great many more people there than they do in our country. Because some would say, when you are that relying on that market things can change and we know that certainly from so Many Companies that we follow. But in this case i think the retort is they are a very important part of the chinese economy in terms of the paychecks they send out every week. Now Greater China has the second biggest market. Obviously, the stock, jim, 136 after hours. We are beginning to hear some reports out today that all the good news is baked into a name baked up. We x out cash. In this company you can actually do that. You get 12andahalf times earnings. I mean thats what a deep cyclical is trading at. Davgsd i loved your job comment. They talk up front 670,000 jobs related in europe. A lot have to do with app writing. 2 billion thrown into ireland and denmark. Why is this important . If you create jobs then the heat is off. If you suck jobs away from europe the heat is on. This is very well played. I wonder whether there isnt an expectation you will get product announcements into june. People noticed they lowered the apple tvs, theyre doing that to clear something out. Is something new going to come or are we going to see a new iteration of a tv. We decided we dont know what television means anymore. What is this point . What is this obsession . I mean it seems to be the when thats breaking its like theyre the first Record Company to roll . Is that whats happening . Compelling content is the only thing i can think of. They think people want i. Hbo now. We already had an Analyst Report yesterday right here about adding what 5 bucks a share is to time warner price. But apple tv new products well see. Maybe well even get a new 20inch ipad people have talked about. Long rumored. For sure. I had you picking revenue down 29 on ipad. If you buy the ipad the market share is still theirs. Tim cook there was a time when his narratives were not that good. Now his narrative is like it is a great hbo special. Not amc. The last thing he says is i think hbo has incredibly great content. Our great content. We have only been at this a couple weeks or so, period. And cut. Apple tv. He leaves you wanting the second series, first series is a buy. Second series i got to see it how long . They didnt break out watches. We did not expect them to do. You did talk to intel yesterday about the whole movement of wearables. Heres what he said. This button is actually a computer that i walk around with. This is cury basically the first adaptation of a wearable. With a small little battery, this can be powered a month on end. Imagine your steps, your environments. All kind of things. Look i got the apple. All right. Can that do more than this . The apple iwatch can do a bit more than this right now. Give us a year or two, we can take the technology and put it in a button. You have a year or two . That was gooth good. I thought conversations the q from bond. I thought it could blow my head off. All it can do is a little computer i was fanning out last night. Ceo salesforce. Com. I remember when he had all this information. The iteration also of his watch i can do is take a web call. He had his whole business on the watch. Really . He had all of his lines of what he had done that day on his watch i kid you. He had major, he will lose his eyesight at the very least. He knows lou to program a watch. I cannot program i am thankful you have the mickey face up. I got it set by the way, at apple, i had took a switch out. Where is the brightling is what i want to know . We may be in San Francisco the theme is the same. Where is it . A brightwing from canal street. It was ten bucks. I could not advance it. I was with the usualic wis requisit people who made much more than me. I was the poorest person at dinner. Thats okay. Can i handle that. Good. Thats a good this inc. To get over. This is a town where a billion here every person in the 1950s, it is an incredible place. Place. The the chew of people expected to be millionaires is outstanding. Currency affects causing pfizer to trim a full year guidance the q1 profits beat the strength of new products. Then there is bristolmyers beating on the top and bottom line raising the low end. Merck appears to be jim, at least the winner this morning. Has been the stepchild, red headed stepchild of the group. They seem to not do things right. Last night we got a terrific report of the diabetes drug fought having side effects. This morning we get some more data on a small cancer. They are buying back more stocks. It looks like merck, which had been the Company People thought the most to disappoint blue it away. Pfizer does lowerer that full year. 1 live in to 295. Estimates 210. Bristol my i have not seen. I imagine you have. I had to gargle with saltwater and say bristolmyers. You are looking at this play as a cancer play. Theyve just become this oncology biotech masqueradeing as a big they got that in the market t. Multiple on Bristol Myers is not a cellgene. Did you the other day, there was this rumor floated by jokers they were going to buy cellgene, sorry it wont happen. Bristol myers is a little bigger. Not much. Pocket change. The point is. Its too expensive. It has moved up dramatically as a result of tear manyics. Im not going to disagree. Bristolmyers had good expectation, merck had good expectations. It gives us a chance to ask you what happened to biotech and why . Holy course, i thought there was a seat change going on yesterday, people decided they wanted to own freeport upgraded today by morgan stanley. I think people felt the multiples had gotten away. Then you come back and say, what am i going to boy, parker ha napin . Some Mining Companies that frankly have really no upside . What was behind that yesterday . The drug crisis t. Fact that after mergers, it does appear older drugs get moved up in price. What happens we will see people mit get that. I think you are right. Is there a concern about patents and things after that nature . I know its a challenge. Cellgene is a very expensive stock. We will larry from gilead this week. I think david is right. There is this ground swell wait a second when you buy horizon, they buy drugs that are not doing well and then suddenly they raise the price. They also have a better sales force and the numbers explode on drugs that cost much less and i think that article presumed the backlash. There will be no backlash. Yoke this is smart enough to catch on. You do not . No i do not. Valiant lives. Slashes r d, raises prices basically is the airline of drug companies. Ford here First Quarter profit 23 cents below wall street estimates. Revenue also shy of consensus the stronger dollar impact sales t. Commentary from shanks on south america, jim, in his words, the external environment in south america has deteriorated to where we were a few months ago. That number in south america, that has been by the way a terrific line item for some of these guys. It does appear south america is in major turmoil. You will hear that from whirl poly. It does a gigantic result of it. The currencies are weak there. A lot of people talk about venezuela, as a failed slip. Although north america, they see operating margin up a tick. And the f150 is going to get there. I also didnt think asia pacific was all that bad. But north america cant carry i. One of the things is that you know im wondering, ford and gm. The european line is bad. Im beginning to wonder if its because they dont have the right costs. Holy cow, some of the german companies, i think when you see fiat. I think there is something the matter with gm hopeful. Remember i told you i ate crow last week i will eat more crow. Its like when you go to the restaurant. You say ill try the crow again. Maybe its better than the last time. I got salt in the wounds from gm i say you got to be careful with these, with the autos. They dont have it. They just dont have it. When we come back we will discuss the wireless wars with the always color john legere. The twoday fed meeting begins more optimism about what they are doing in greece. China settled back and well get with aetna and whirlpool and more when squawk on the street begins from one market in San Francisco. Hello. I am technology that is changing investing forever. I am a fully automated Investment Advisory service. I can help you choose the right portfolio. Monitor it. And even rebalance it. Ive been called innovative. Revolutionary. And just plain smart. Id blush at the compliment if i could. But i cant. So. I wont. Say hello at intelligent. Schwab. Com state of emergency in effect in baltimore. Violent protests and clashes with police in that city yesterday afternoon and overnight after thousands mourned the man who died from an injury he suffered while many police custody. Darcy spencer joins us with the latest from baltimore. Good morning. Reporter good morning. As has been reported baltimore is under a state of mortgages. That means National Guard troops have been brought in to restore order and keep things calm here. You can see this is city hall in the heart of baltimore. National guard troops have been progressioned around city hall. You see heavily armed. Maryland state troopers are here as well. Theyve ericed the metal fencing you sometimes see on the National Mall out here around city hall. There are also some military vehicles positioned out front as well as some Maryland State Police cruisers. We den know if this is the result of any kind of threat that may have been made towards city hall or as a precaution to protect this valuable government building. As you know it was crazy here last night in the city of baltimore. We havent seen anything like it since the late 1960s with the looting, with the ri oughting and fires being set to building whether its the cvs store or an Apartment Building complex for senior citizens. They went up in flames. There was another building set on fire earlier this morning. The good news is that no one was hurt in any of these fires, but there were at least a dozen officers were seriously injured. Some remained in the hospital after violent clashes with protesters. There havent been zras, protests or looting that we know about and no clashing with police it seems to be calm today, but the guard is here. They want to make sure that things remain that way. Schools have been cancelled for the day. The other big thing here is there with is going to be occur few put in place tonight at 10 00. Everyone need to be off the streets until 5 00 in the morning. So theyre hoping a combination of things they are doing will make sure there is no violence that breaks out tonight. Back to you. Darcy spencener baltimore. Thank you so much. When we come back we will get cramers mad dash and count down to the bell and get a look at the premarket, what the fed will do at their meeting, a statement tomorrow. More squawk on the street 80s from one market in San Francisco in a moment. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . We are seeing an amazing transformation thanks to consolidation. Yet the story isnt getting nearly enough attention. I think its time to wake up and do buying for energy consolidators. About eight minutes to go before the opening bell. Time for a mad dash San Francisco sometime w. Le start off with coach. Yeah. You know there is a magic number, david, that most companies cant come back from which is Comparable Store sales that are below or my fuss 20 minus 20 . Thats where the companies have been stalled. It happened once with young. They got it back. Kfc. Coach down 20 north america. Now what really surprises people is there have been a lot of runways that this was the turn quarter coach. If the turn is minus 23. They got a far way to go. I think the coach, while down is not down enough. By the way, another one in Comparable Store sales i should have mentioned earlier that were abysmal, the Container Store. That is a tough quarter. Has it had a good quarter sense it went public . Sample not really. The Container Store i think people will rethink the notion of gift wrap of this kind of the model people dont know what to do with this stock. They try to call bottom in coach. Its better to try to buy companies doing well. Buy a viet corps. Boy colombia. Dont bottom fish. People who bottom fish in j. C. Penney are trying to get out of the bottom. They should have gone with nordstrom. You are uncomfortable. Do you think they have a chance of coming back . Look, i have to go with david novak. He said if you have a story that is compelling overall, the chinese did not have a lot of problems with young and regulations in kfc. If that goes away people have short memories. They will go back. By the way, this hand bag business, kohrs is not doing well. There is one accessory thats selling well. Im wearing it. You got me . And im not wearing a fossil. You have a mickey mouse. I have to change that. We may come back. I want to mention that move yesterday was quite significant the move yesterday in dupont shares, it would steam e seem on iss recommendation of course in favor of two of the nominees. Now its interesting, the csa said they went to buy. This is this whole issue of who is causing the stock to go higher . And whether nelson peltz leaves does the stock go higher . You know this is the ultimate hot button. Its something we discussed when we did the interview. There is a thesis here if nelson peltz goes away the stock goes down big. What you saw yesterday is a partial victory, some regard as a full victory. But you know what in the end, the earnings werent so hot. Dow chemical which had blowout earnings cant get out. The only one doing well is a total commodity place. In the end, lets not forget these are companies. Sometimes it doesnt matter who necessarily is on the board. Because if you have the wrong product mix in this ag business is horrendous for everybody. I think its a moment in ag where you are beginning to realize that everyone was growing the wrong crop. You know that north by northwest, the scene. Where cary grant is running from the plane . In there the guy is dusting crops where there aint no . They are dusting crops where there is corn they got to have soy. That is hurting the business. You heard it there. We got to have osy. We have the on bell we are back from San Francisco right after this. Sosy. We have the on bell, we are back from San Francisco right after this. Osy. We have the on bell, we are back from San Francisco right after this. Yosy. We have the on bell, we are back from San Francisco right after this. Sy. We have the on bell, we are back from San Francisco right after this. Y. We have the on bell, we are back why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the well equiped volvo xc60 today. Visit your local volvo showroom for details. Here at td ameritrade, they love innovating. And apparently, they also love stickers. Whats up with these things, victor . We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. Td ameritrade. You got this. You are watching cnbc squawk on the street live from one market on a foggy day in San Francisco. While over on the east coast the opening bell set to ring in a minutes time. We have got into a lot. Apple will open with earnings up 33 . A couple beats and a rays out of merck an aetna. Jim. I think aetna is the stock to watch. Why . Because United Health had an unbelievable quarter. The stock is going down. We talked about biotech going away. There is a code word of this market that have been the Domestic Health care where you could hide because you didnt have to worry about the growing dollar. Yesterday people said this dollar, its not strong anymore. Lets sell United Health. Watch aetna, see if they can change the tide of this. We will get to the opening bell and get you a look at the s p at the top of the screen. Electronic company veri fverifone. I have felt verifaone is central. Apple pay, i mean discover hat fallen in line. I look at. That i look out walmart look out target. The customer wants to wand their way. People want to wand. If you wall into wall walgreens yet . You will be wanding. Believe me. Thats doing this . Well now i just go im going to go. The actual motion. Right now im going. I was talking to somebody yesterday, they went to annual t. Cafeteria, everyone is paying with their watch. A whole line of people. She pulled out her credit card. What is that . Exactly a. Piece of plastic. Okay if you were with the people that run vis vis sarsa, since when is paying so difficult. Its not the turn table. Its the reactionary view. Ups beat revenue in line. They backed the full year. Kurt cuhn a longtime cfo will be retiring after many many years. There was a belief if ups did not make the number this time there could be heads rolling. Ups was not as bad as people expected and i know im not a chartist. But it has like the best chart of the transports which were awful yesterday. Again, one of the thesis of this strong dollar so strong oil. Oil can go highner that environment. So just yesterday was a real contrary day. We got to watch to see if there is any changes, it was a bad day yesterday. The averages. A lot of people trying to understand it, figure it out. Some saying you know what hedge funds started to get hurt again, bringing up the period you had freddie mae and fred my machurt. It got hurt. Yesterday but however, i mean comcast broke, yes, but nobody seemed to get hurt. Amac broke. Maybe there was pain as a result with that and thermoelectron. A lot of the hedge funds trade quickly. Comcast went up and apple went up and charter went down. That was incredible. People cut rick immediately and suffer as a result. I dont know if that had a big impact in the market movements yesterday. Definitely that theme of hedge funds getting hurt was around. What was so strange, it was almost like the weekend. People reassess the euro is going down. There is too much money making the euro stronger than we think. One of the sure bets remember with 80 90, it looks like thats not happening. If thats the case you have to be in a whole new set of stocks. The problem is the whole new set of stocks you got to be in are reporting bad earnings. What does that say for the market . People are confused. They are doing well and buy stocks of companies not doing well. People are going to look at apple and say, wait a second, its time for them to get better. Is this all we get from apple . There will be a revulsion against tech. 50 is not good enough i dont know what is. I think people honestly figure they dont know what to do they dont know whether the dollar is didnt going up or the oil is done going down. They dont know when they have the best drug stock will be the worst, the one we expected the least of. So there is kind of a sense of, well, wait a second, lets step back. I think you are seeing the step back. Its hard not to pair what ford and whirlpool is saying him whirlpool is off 15 bucks. A large part is brazil. Lets say you think the dollar has peaked. So what would you want to do . Buy some whirlpool . But no you know, home depot was doing very badly yesterday. It wasnt whirlpool u. S. That did badly. There is what do we do . They sold retail yesterday, biotech yesterday. They bought gold. Morgan stanley went up put the whole dubai on freeport. What are they doing . Theyre restructuring. New mont. Sell the gold of banc of america t. Oil Companies Capital there, mostly gold has gone down and up and the mining comforts of gold are up and up. So people are. To that whirlpool quarter, do you want to do business in brazil being the economy is flagging . Petro is up. They reported. One of the funniest pfingst that happen for this pvr, i make the joke, pbr, people were cheering they were getting the numbers up. If they looked at theb in, wait a sec, we have numbers, the numbers are the worst. But we have them. We have numbers. The other thing when you look at any company that does business in some of these countries, the currencies are still declining, cocacola is hedged again the euro and the yen. If you have a lot of businesses in latin america, the currencies are interesting. Of course i think of the areas, directv has a lot down there. Just in general, latin america. I dont know i havent heard yet. At t will close that deal in the future. On that note by the way, it is worth looking at shares of dish. We got a report yesterday from the journal saying the fcc may reject dish networks attempt to benefit from billions oof dollars in discounts. Remember in the 80s, we had three positions, they bid with small businesses. They were able to therefore get significant discounts and apparently that is being looked at closely. The shares are down. Although not dramatically. That would not be food. Lets go back a second. You were right. Im dismissive of. That there were a lot of arbitrarys, last night it took it down six years. So there are factors that are that can rip him. But the directv. A lot of people pulls back. If that widens at ts quarter. They will buy. At ts quarter was good too. The question is there a strategic rationale behind the deal . Im sure the regulators are consultants. Thats a place to hide. The phone companies to hide. With ideals you mean . Cummins, stock not reflecting optimism. You mentioned the transports. I mean cummins you got, these companies trade together. Cummins with parker hanopen. Cummins, look if you are an Industrial Company you may, you do not deliver the numbers, you just dont, particularly because you got china. Go back to honeywell, remember honewell started this. Honeywell had a good quarter. It wasnt enough. United not good enough. There is a theme here t. Theme is that you do not have a Strong Enough europe to capital good sales and china continues to go down except for apple. But we were right near the highs. Oh, yeah. You are making it sound like 2025 yesterday for a while. No look there are things that are going right. I find that people are so confused right now. When you are really confused . What do you do . You do some selling. Apple hit that all time high. Well get to that in a bit. In the meantime Mary Thompson is on the big board. Good morning, mary. Reporter good morning, charm. We have a friend of what you say mixed or weak open here on wall street. A quiet open is what im trying to say on a day when earnings are in focus and the Federal Reserve begins its twoday meeting. We have treasury yields higher weakness across the boards in most of the sectors we are seeing. The major sectors, the s p turned lower, we are seeing strengthened banking stocks pretty much a weak open. Lets look at the dow stocks. Apple coming out with strong were than expected results. Stock is continuing to move higher. As carl mentioned off the best levels of the day. Pfizer coming out with stronger tan expected results. It did lower the revenue guidance slightly again, impacted by the stronger dollar. Gets about 60 of the revenue overseas, merck coming in and raising guidance for the year continuing with the drug theme the drug stocks higher right now. They got turned a little lower. Bristolmyers lower, despite the company raising on the lower end of its guidance, coming in with better than expected results for the quarter. We want to look at biotech. Of course this was one of the weaker groups in yesterdays session. You can see it is rebounding. It was close to its 50day moving average, moving above those levels right now. Also we are watching the transports which had a tough day yesterday despite better than expected numbers from jet blue. Which benefitted from lower fuel prices and a load fact orl. We want to end with good bad and ugly we know the guys bhengsed them earlier, look at that aetna came in with bet were than expectled results. It benefitted from a number of its clients and higher membership, whirlpool, the problems in brazil impacting its stock, coach has had miserable north american sales. So again the market is showing very modest gains on a day when we are still sift iing through a lot of earnings david back to you. Thanks, very much Mary Thompson. We do want to revisit a story that is a fascinating one the story between mylan and perrigo and get to that fascinating letter sent yesterday by plymylan. Perrio rejected mylans latest offer, 6. 2 shares and 60 bucks in cash. Whats interesting there, the expectation with the people familiar with the situation that mylan will continue to come after perrigo. It is not anywhere done in trying to improve on the price it will eventually pay. Here we got some time to go. The clock has not yet started and will not start for quite some time. What we did get last week before it was quickly rejected was that firm offer if you will or at least the idea of commencing a firm offer. We got the mix, in other words, cash and stock and got assurances on the antitrust side. All of which at least for its part mylan feels is important in the market to understand and perrigo to understand. When it rejected initially perrigo said its all about price. Price, of course, been do up as i reported last week but the expectation is that it will go up. The question for mylan, of course given the large stock component of its offer, how does it convince perrigo its stock is not greatly inflated as a result of the bid for it. No doubt it is in part for that. Even though that deal seems a long way of having any hope. In that, i would direct to you yesterdays letter which we briefly mentioned since it did hit during our show. A letter like this is worth repeating. I got some parts in terms of, let me read to you, there is rob cory, during our meeting talking to the ce of. We touched on tevas many struggles, over the last several years and the result of strategic confusion, tevas consist under performs and our increasing need the find new source us of future growth. For your leadership you have the opportunity to set the right tone and show the world there is a new teva. Instead you chose to demonstrate the old teva is very much alive and becks questionsant tevas credible. That was the nice part of the letter. What may be most important for those looking at what are they willing to accept here. They tell you, they say 25 times ebitda seems like a reasonable factor. That gets you to somewhere around 125 per share. Ebitda is what they want to pay. They want everything taken off the table in terms of an antitrust risk. Oh, by the way, they want it in cash. You do that if you the teva and you are in business. Mylan has anything at its disposal and the most talked about schticking. There were in that letter is a letter you would write someone, it was a poison pen letter. The nuttiness of the board and the corporate board. Yesterday i tweeted and said its i rarely seen anything like it. Activists, dan lobe has written nasty letters. But from a corporate board, it was fascinating. When i met you, you seemed like a nice man. Five pages. It was so personal so to make it so, were never the price that youd have to pay is so great, but we really hate you guy, are you a second rate company its funny like two gen eric companies. Its not like you are sitting here talking about a company like regeneron or gilead who just invented something. These are not companies that have the right to have a food fight. Its a food fight. It is it is indeed. Teva for its part says it will keep its pursuit up. We will see how it goes. Dean warner needs to get involved. Drunk fat and stupid is snow way to go through life son. Lets head through the bond pits. Rick santelli is in chicago. Good morning. You look at the curves the two year and 30year, they are up three basis points. If you look at the midzles, fives and tens are up two huge basis points a. Parallel shift on a first day of a twoday fed meeting. You look at with one day and two day of tens you can see there are a lot of technic also on the one day we traded above the overnight high yield we popped. All those yields fit in nicely with taking out yesterdays high yield. You open up the chart to 17. Remember, the last fed meeting was the 18th of march. Today is the 30th. 30, 30th session. That continues to act as though it wants to close in the range between 1 quick and 199. 29 in the pocket. This is the 30th session. Why do i bring it up . Its very compelling. Traders are high away ware and the spring is coiling. If we look at a twoday boone, a couple fascinating things. We are see whats lining up as a resistance points in terms of yields. That would be 17 basis point. Remember the low yield close is 7. 5 basis points a. Twoday of the euro versus the dollar. It keeps moving up. The top of the range is 110. Youd see these are the highest levels on a closing basis. Since april 3rd as i look up at Foreign Exchange a couple things jump out at me particularly every major currency is doing a bit better against the dollar t. Aussie dollar commodity currency on fire today. This whole commodity talk, we have a lot of oil. We use a lot of oil. All of a sudden we are seeing commodities do it, im not the first to say it. Traders are definitely buzzing about it. The last chart, if you have the euros moving to the top of the rank, it seems to have an effect on the equities in europe. Look at the twoyear dax, its the same against the dollar oust euro. Thank you so much. We are keeping a close eye on apple. Its off about a buckandahalf. People think this is curious. Right. Thats whats really spooking people now should apple be falk. Its had a very big run. Dont trade apple. I think there are plenty of reasons oto own apple. We are in a battle between what rick said about the commodities, wauven aetna, it is doing well. You have as to watch retailers which did terribly. There is a trade. If you boy commodity, i seen people think stupid is wood. Its a sign that maybe the dollar has peaked. Therefore, you dont need to hide in home depot. Aetna is saying you can still hide in the United States and make a lot of money. Apple is say,ing, wow, i dont know . Isnt apple saying who is the incremental buyer . Did you see that . Im looking for it. Waiting for it. A viewer pointed out the margin alibier of apple is apple at this point with that kind of capital return. Maybe. I dont take im sure some people are thinking, this would be a nice leap if i bet on apple 1 twlix. Be calm. Apple owners be calm. Its not the end of the world. Its the beginning. The ceo john donahoe prepares to sell off its unit. Linkedin reid hoffman twitter reports tonight with gopro. We will look at markets as we gain reaction to a lot of earnings. A lot more squawk in the street from one market continues in a moment. Good. Very good. 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We will rock you anthem call 1800royal caribbean or your travel agent today one of the winners of the morning, of course merck, up almost 3 bucks to 60 after the Company Comes in, beats by a dime, raises guidance for the full year. Januvia clarity there as well. People felt this januvia had side effects that will hurt people. There are obviously a lot of pressure. They have a lot of companies in it. We will get more with jim, we will get stop trading in just a moment. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Time for cramer to stop trading. I was going to mention the banks, we think Interest Rates are going higher. Because everyone is focused on sky works solutions. If you want to figure out what can turn apple. Watch sky works. They have a great share of your iphone, people are saying wait, this is saying iphone sales are peaking. Thats what the stock is saying. I think that judgment is wrong. I think the apple stores will open in china. What people are really worried about is that if you notice sky works, that theyre saying the marginal buyer of iphone has one. I think that doesnt add up. Sky works will be, if that bottom, i think apple bottoms. What a show yesterday, by the way, too. Thank you so much. When we come out of here. The executive producer. She stacked them on top of each other. I wanted 23. My voice gave out. Mark benioff is running his company on a button. Thinks the watch is too fat. Tmobile. We will go more in depth with mr. Magenta. In a battle with oracle and i think cybersecurity is the theme people will return to. It has to do with our enemies who seem to be everywhere. Thats a west coast show right there. We are bringing it. We are bringing the west coast. If tim cook would call me i could fit him in. There is no assurances anymore. You never know. We have to see. We have to consult our watch. It was cold. But the sun came out. I know. It will get warmer. We will see you tonight. Requested mat money 6 00 p. M. Eastern. We break the confidence. Done donahoe and kurt kuehn. We are back in a minute. The microsoft cloud gives our team the power to instantly deliver critical information to people, whenever they need it. Here at accuweather we get up to 10 billion Data Requests every day. The cloud allows us to scale up so we can handle that volume. We can help keep people safe and to us that feels really good. Good Tuesday Morning. Welcome back to squawk on the street live from our bureau at one market in San Francisco. Sarah simon ho obbbs. Lets get to breaking news in chicago on consumer confidence. Reporter absolutely sarah there is a disappointment on the first, consumer confidence. These are both april reads 95. 2. Were expecting something north of 102. Last month we had revisions from 101. 3 to 104. 2. Its the exact weakest read of the year. If you look at where it was in december it was 93. 1. We have minus. 3 minus 3 on richmond fed. Last months minus 8 was unchallenged. This is now two months in a row of negative richmond feds. We havent seen Something Like that since february and march of 2014. Its not a market mover but definitely worth paying close attention to. Carl back to you. Rick santelli, thank you so much. Apple shares sliding this morning after hitting that all time high t. Company reported earnings that beat analyst ximt estimates over 60 million iphones sold. Joining us at one market in San Francisco is a technology analyst. Go remember to you. Its good to have you. Great to see you, carl. We have been talking about the stock off the early all time high. You took it off the focus list why . Thats right. We were going into expectations that likely consensus numbers would move higher and we were setting up the supply chain to deliver more units. Apple beats. Those numbers are coming higher. Because there are no more near term catalysts or what . We think the stock will continually to move higher a. Near term we think have come and gone. We look to the june world wide developer conference and our iphone launches later in the year. Right now the iphone 6 is doing great. Its ban great stock. We have very happy with whats done. Fear term, wenear term we are almost done. Consumer is june. It would seem you can start to get that buzz you often get around apple pretty quickly if there is something coming in june. You are right. June is close. When we look at the stock, just this month is up over 8 . Which means its ever a 90 annualized rate. Its had a great run. We think we may pause a bit here. Taking it off our focus list. In june, we expect them to talk a lot about Apple Television and rebroadcasting content. Of course we all know about the apple watch that they have been launching. Its been rolling out. When does this become material t. Watch you are wearing right now . We are modeling ability 3 Million Units next quarter. An annualized rate of 20 Million Units. That takes it to 5 of the installed base. We think still iphone is the pain driver. I dont have time apple watch, apple passbook tv broadcasting rebroadcasting, there will be more important. Right now, its not a needle mover so to speak. How much of the base migrates to a watch . We are estimating 5 t. Price point is pretty high. Plus the apps, we find to be lacking. Overtime it will get better leak the original iphone did. We are estimating 5 of the installed base to buy an iwatch. What are your thoughts about the increase obviously to 200 billion over time the next couple of years . Well, a lot of people expected that to happen. Thats why we see the stock may be not up as strong as people think when they see a 200 billion headline. Thats a big number. Expectations as you know thats the part about meeting expectations, we felt that increased the dividend 10 . They increased it 11 . We had them taking the stock buy back up pretty much to what they did. So we think it was pretty much expected. Its a good thing if they did not put that out, that would be bad. People talk about the being the off season for phones even in that sort of lull period there is still obviously gaining some share, right, in phones . Does that set them up nicely for the holidays . Are you right. When we think about looking ahead for mothers day, fathers day, 4th of july coming up we are looking at nontraditional gift giving phone seasons, unlike christmas and chinese new year. So we do expect a slow down in a reported decline in iphone units. To your point, you are exactly point on were about 20 of the installed base has upgraded to iphone 6. That means 80 still has to upgrade. There are still a lot out there. We are seeing people swiping over from android. What about new products . What about the continued seduction of an apple tv product that really is a game changer, not what were dealing with right now . You know thats a very insightful question. To be honest with the market cap of apple, theyre going to have to do something to grow their available market. Things beyond the watch even and we believe such as tv rebroadcasting, advertising, being able to buy things as you watch television. As you are watching that frozen show to buy that on our elsa dress directly through your television. We see this all coming. Apple pay is only in the United States now. We think it will go global. We think it will catch on. They have to widen their available market with the market cap. One last question, jim, if you sit out apple for a while. Do do you do instead . In tech . Tech is a tricky business. Similarly we layout a lot of different stocks we have throughout our investment horizon. We sell ply keep apple at a buy rating. If it does pull back, we will be a buyer on that. We step aside you a our topics side. We have a 145 target price on apple. Good the see you again in the flesh. Simon. Hey, earnings at ups beating estimates this morning on new dimensional pricing and high revenues as least in this country as ecommerce continues to grow t. Delivery giant sticking with the full year guidance it lowered in february when it sent ups stock reeling with that 200 million overspends for last seasons holiday rush. Joining us now first on cnbc the chief Financial Officer kurt kuehn who first announced he will retire after 38 years of service with ups, kurt is also a member of the cnbccfo council. Kurt. Nice to see you. What a good day for you. Good morning. Great. As the busy day on many fronts. So how is this new dimensional pricing as you call it working for you . Where you charge for not just the weight of the package but the space it takes up in the van . Yeah, the vast majority of our loads at ups actually phipp up with cubic capacity before the weight limits. And so really the cubic size of the package is what drives cost in our networks. So with the proliferation of growth and ecommerce and other things, we have seen a gradual deterioration in the amount of weight for a given size of a package. So this charge really is an incentive for our shippers to be more efficient to make sure that they dont put a small item in a large box. It did drive up revenue in the quarter, but ultimately the goal is to help our customers shrink their package sizes down to make things more efficient. It helps us to operate bettered and also more efficiently. You know kurt you have clearly in public struggled as an organization with this huge explosion of packages at the Holiday Season as a result of ecommerce. All the unfulfilled deliveries in 2013. Than this huge 200 million overspend last year, too many staff, overproductivity. What will you do this year . What is the plan now . Well, certainly you know this ever increasing spike between our average volumes during the year and then the Holiday Season. It does create a great opportunity. There is tremendous growth. But it also is a challenge to ramp up 60 or 70 with our airplanes and drivers and sorters. So it is a challenge for us. But we are, you know, we have ramped up capacity. We are learning for better ways to hands him that spike without over investing the other 11 months of the years. So well get it right. Its a great problem to have. Most companies would be jealous of having the problem of too much demand. But it has created some operational challenges for us, of course. You know during your time at ups, you successfully took it through ipo in 1990, a huge ipo at the time. Of course you were also a part of the team that tried to take over the tnt. The dutch Logistics Firm for several billion euros. That was pushed back. Now your rivals fedex, are doing it for 5 billion wind chill that comes 12 of the european market. How do you feel about that . Well, you know, there the still a ways to go. Tnt clearly has and fedex have regulatory hurdles to pass. I am sure the eu will take a hard look at that proposition also. But weve moved on. One of the real stars for this quarter was our growth in exports, moving across europe. Up over 9 . In fact, simon, over the last decade, weve compounded growth at almost 9 per year in shipments moving across europe. So ups has a great platform in europe. We are very focused on continuing to grow that organically and acquisition. Europe has a great story for us and it will continue to be. Yeah besides that european export growth which i know you cited plus 9 . Im curious what you saw in terms of the impact of the strong dollar. Obviously, it hurts you like a lot of other american companies, what about trade patterns . Did you see a dropoff in u. S. Exports and other interesting dynamics as a result of these crazy currency swings . Yes we have indeed. That keeps us hoping. Yeah exports from europe to the u. S. Are up double digits. Exports from the u. S. Back to europe are very sluggish right now. So it does force us to adapt and change in some case we have to realign our air network. So that is an area that we have to stay busy and then fortunately, we do have some significant hedges in omni euro and omni pound for the next yearandahalf or so that are helping to buffer the Economic Impact at least during this volatile period. 38 years, kurt. At ups. Thats an awfully long time. It is a vast organization. Anybody who understands the numbers, what you do every day at that business. How do you feel about leaving . You know mixed emotions. I never thought 38 years ago when i started as a driver during peak season that id end up, you know representing ups to the media and to the investor community. So its been a very fulfilling career but its you know, its time for me to step aside to you know the next generation are smarter and, you know have more knowledge and new insights for this ever changing world. But its been a great experience for me. And its good to see you, kurt. Thank you, the cfo the outgoing cfo of ups, thank you. Meantime, a state of emergency is in effect in baltimore as violent riots erupted after the funeral for freddie grey a man who died after suffering a spinal cord injury. Ayman javers is live. Good morning. Reporter we have a heavy National Guard presence at Baltimore City hall t. National guard set up a protective corydon around the inner harbor area. If you have been a tourist in baltimore, you know its a that cuss of a lot of attention the maryland National Guard, fencing off the city hall here state police and National Guard troops here, fencing off the area last night we saw about 15 Police Officers injured and just 27 arrests in that violence and looting and burning that broke out here in baltimore yesterday, late in the afternoon, today so far all is calm. We can hear some Police Sirens we seen no major activity here. A little evidence of some looting. Even here in the downtown area, we are quite a ways away from the roy oughting. We see broken windows. The fix at the cvs here told us they had difficulty overnight. A 7eleven with windows broken in clearly some concern there might be a repeat of yesterdays violence, overall, guys very calm in baltimore this morning. All right eamon javers thank you. Up next, an interview with john donahoe plus a take on the antitrust case against google. Squawk on the street live from the New York Stock Exchange and live from one San Francisco, well be right back after this break t. Dow is down 82 points. [ 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. Dont just visit new york. Visit tripadvisor new york. With millions of reviews and the best hotel prices. Book your next trip at tripadvisor. Com today. Ebay in the midst of spinning off the pay pal unit which will become a separate company this year as paypal quits the marketplace in sales. That was for the first time ever. So what does it all mean for the future of this company, soon to be too . Joining me from new york is ebay ceo john donahoe john nice to see you, sorry you are fought here since we are, of course, appreciate you taking the time. Im sorry im not with you there as well. It looks chilly. Its a beautiful, sunny spring day in new york. John you know what i have no audio whatsoever right now. Im noll not hearing you. If you will stand by for one moment we will see if we can correct this. Im not sure what happened. John, can you talk again lose . Sure can you hear me now . No i got nothing. Were going to john sit right there. Of course, thats why we wanted to have you here because i would absolutely be able to hear you if you were sitting next to me. Lets take a blake, well see if we can fix our audio problem. We will be right back with john donahoe the ceo of ebay. Welcome back to squawk on the street. We have a developing story and news alert. We want to draw your attention to crude oil. Whiches a turned positive on the day up twothird of a percent. You seen the the screen the reason why is a report from al arabiya a u. S. Car go vessel and 34 crew members have been taken by Iranian Military vessels and have been taken to a Southern Coast port called badar abbas in iran. Again, nbc news and cnbc has not confirmed this report. This is an al arabiya news report saying they have taken 34 crew members to a port in eastern t. Price of oil is moving on this. We want to call your attention to whats hang there. David, something we will keep an eye on with kwhapd in the markets and oil. Back over to you, guys. Tanks very much. We have rectified the problem on my own, moving around here a lot from the cold and disconnected a irwoo. We are joined again by john donahoe who was kind enough to stand by if new york city. John, it is good to have you. Thanks, for your patience on us working with that audio problem. David it looks as though its warmer here than it is there. You guys look cold. Its a sunny spring day in new york. Sorry im not out there with you. We are sorry you are not as well. Attorney general, of course we will be joined by the gentleman who will be taking over as ceo on the marketplace. Let me start right there, if i can. When people think about the split of this company. When they approach a slit. They say perhaps pay pal, of course, with 17 growth as of your last quarter. In ebay less so. Is that the way people should be thinking about it and, if so does ebay marketplace become more of those capital return Slower Growth dividend paying kind of companies . David, we think we will be creating two Great Companies with ebay and pay pal. As you mentioned, paypal will be a fast growing payments market. Ebay market place is a great business. Its got 80 billion of volume 150 Million Consumers around the world. Growing at 5 in the First Quarter and as you said its a great business that produced this strong margin strong cash flow. So it can offer investors good Growth Prospects as well as the potential for Strong Capital returns. So we think as a stand alone company it offers a very attractive Value Proposition for investors. And it will generate as much as 2. 1 to 2. 3 billion cash flow to that point. You believe there is Significant Growth yet to be had at the marketplace business . Absolutely. Ecommerce is still growing double digits and the marketplace is the only Third Party Marketplace that doesnt compete with its sellers. Strong global foot print and they are focusing strongly on core customer ininvestoring in the underlying core platform so it can continue to expand internal nationally. Upgrading the User Experiences, the new ipad app is the freshest ebay experience yet. I think there is a lot of Growth Potential in the business. I am very confident what devonn and his team will do going forward. John, yesterday, we were joined by Innovation Partners out here. Hes a fan in a way of ebay. He was somewhat critical of the marketplace business. I want you to hear his remarks about the Customer Experience and respond if you can. When i look at ebay i always have mixed emotions. At one level they built an enormous and very valuable franchise. At another level i find at this time most frustrating Shopping Experience on earth. That it really requires an emotional and Time Commitment to shop on ebay that i just plain cant muster. So i look at this and i think to myself did i wish that john and his team at ebay theyve named all tear buildings after their product lines. I wish they had one named after customers, because at the end of the day, it just the Customer Experience hasnt improved materially in ten years. Your response john. Well i think i beg to differ. As you can imagine with what roger said we are very customerfocused organization. Our User Experience has changed materially over the last ten years. We have the leading commerce platform. Our mobile volumes are growing significantly. We have the largest mobile commerce platform. Our mobile experiences are great experiences, as a thirdparty marketplace, it will always be more challenging because we are connecting buyers and sellers around the world, but were doing it from a way thats producing good growth. Last year was a tough year. Growth is coming back. Growth was in double digits. We can get back to double digits. I think it has a strong future ahead of it. John, 13e68specifically, to you, it was noticed, of course much of your Conference Call was dominated by the gentleman who will be ceos of each of these companies. Have you pulled back from daytoday and if so what is that like . Are you making yourself redundant . My focus is always as to ensure we are executing on our plans and delivering on our commitments, increasingly with devonn and dan, we are focusing them on getting each business ready to become an independent standalone business an bob swan our cfo and i are focused on it that it happens that each business is set up to be successful. And so we are working closely on that and i am optimistic we will get to the separation in the Third Quarter, which i think is a fast time frame and its the right thing for each business and for ebay customers and shareholders. Yeah, i mean, the Third Quarter is fast approaching with the end of june. You will be chairman of paypal. On the day this was announced. You and i did an interview, we focused on it to a certain extent. Programs it hasnt been focused on enough. Your decision to step back at ceo of either company, which is a rarity to be seen when a company is split. Why did you go that route . Why did you choose not to become the ceo of one or the other business . David, as i said then there are really two factors going on. One it was the right thing to do for ebay and its shareholders because by not going to either company, that allowed mr. Etoo focus on the operating agreements of the two businesses from a completely objective manner. And it was important to get those done quickly and done in an effective way. I think we have been able to do that. The second reason is ebay has a history as you know of healthy succession. This will be the third succession in ebays 20year history. Meg served ebay for ten years as ceo. Ive just passed my tenth anniversary at ebay. So we have a tradition which i think is somewhat unique in the internet of trying to have healthy succession process. And im pleased we will be doing that for the third time in our history here in the coming months. John you fought a long and im sure tiring battle with carl icahn. I would have argued you certainly emerged victorious although, then obviously, the decision to split the company. Which he can come back and claim credit for. I noticed you recently added an icahn representative to the board. Why did he do that . Well hes a significant shareholder. So as we evolved to two separate boards. One for ebail, one for pay pal, we are confident. We have one apparels representative will be joining the paypal board and weve added some other great board members, the ceo of American Red Cross the president of velcro the person that stepped down as ceo of wellington. So we are building two strong world class boards which i think will again support each business as they become independent companies. And finally, john to give you an ton here to correct something i think in the ft yesterday we may have reported and perhaps reported somewhat incorrectly as a result of it. Where does ebay stand in terms of google and the antitrust going on in europe . That comment was taken out of context. The fact is we are not actively involved in that whole situation. So the conversation i was having at the time had in ug to do with the european antitrust case and that case is still in its early innings. We will see how it plays out. Its not a situation that were closely involved in. So its not as though according to head lean you are back in google. You are not. Were as i said were not directly involved in that one way or oomts. We are focused on growing our business. And indeed, you are, coming off a Strong Quarter at both the marketblase and the paypal business. John donahoe sorry im not in the sun, sorry you are not here with us in your home tunetown. We appreciate talking to you soon. Thanks, david. I want to point out whats going on with the stocks right now, losing from earlier gains, heading south as we speak. The dow is down 81 points s p 500 down. 4 of a t. Nasdaq is down. 6 of 1 . Coach, whirlpool and the report out of al arabiya, that Iranian Forces have seized a u. S. Cargo ship. Obviously, not confirmed by nbc news. We are keeping an eye on the impact moving the price of oil higher. The euro is also surging right now. The dollar continuing to come off those strong levels it hit earlier in the year. Still, many of the top minds on wall street see the dollar is resuming its strengthening trend and the euro against the u. S. Dollar. We have the exclusive results of the cnbc fed survey. I think its safe to plan a trip to europe . You want to Pay Attention to this. The parody is the prediction. First thing i want to tell you is our 38 respondents to the cnbc april fed survey see no Silver Lining around the greenbacks recent strength. Let me show you here. 78 say the strong dollar is a negative for corporate earnings which weve heard throughout the reporting season here and for Economic Growth and im going to show you that quite specifically. In fact, its gone even further than we had last time. If you look at the next chart here, what you see is that in march when we first asked this question the stronger dollar was seen reducing gdp, call it a fifth of a point. Now its up to a 33rd of a point. So rethinking just how damaging that strong dollar is for the economy and some of that you can see here also about the same impact in terms of inflation, thinking a quarter point off inflation all in 2015. And so what you have here now is a stable gdp outlook. We ask for the year over year 2. 7 a bit higher. That number maybe will be higher still if we didnt have the strong dollar effect. Take a look at 2016. You see 2. 8 . You can see its come down. We were 299 with 2. 8. About ten basis points off. That here is the prediction. You see not quite as negative as it was in march. We saw 95 prediction for the lowest level would be in the current downturn. Its up a little bit but still, parody as sarah suggested is the prediction. So weve gotten the worst of it sarah. There is still some to come if indeed, this forecast of the respondents in the survey does come out to be true. Those cfos will not be happy to hear that. Right. Thank you, steve. Very interesting. The latest results from our exclusive survey. We have a quick market flash on ibm. The reason why we are doing this, ibm has improved an 18 increase to its quarterly cash dividend. That quarterly payout rate goes to 1. 30 per share. It was 1. 10 prior to that. Ibm knows its the 20th year in a row and theyve paid consecutive dividends. Still an interesting theme here developing the Shareholder Capital return plans in play apple obviously with a massive one, this time big blue. The worst performing stock in the dow for the last two years, simon, increasing its dividend. Back over to you. Straight ahead on the program, stocks climbing during the course of the last week but fading in yesterday and todays sex. So what should you be doing right now . Plus the ceo of tmobile. The always outspoken George Legere after earnings this morning. Squawk on the street will be right back. Man you run a business. Could be any kind of business. And every day youve got important decisions to make, like hiring. Where are you gonna find those essential people you need . With ziprecruiter, its simple. We post your job to over 100 job boards with just a single click, so you can reach millions of qualified candidates. Then well give you the tools to help you manage, screen and rank your applicants all so you can find the right one. Try zip recruiter for free today. Heres your cnbc news update at this hour. President obama welcoming japanese Prime Minister shinzo abe with full pomp and circumstance. Trade and Security Issues topped the agenda when the two met afterwards. They will hold a joint press conference at noon. Cnbc will take that live when it does happen t. Death toll above 4400 that devastated nepal over the weekend. Many have yet to be recovered. Over 8,000 people have been injured. The Supreme Court has begun hearing historic arguments in cases that could make samesex marriages legal. Both sides gathering outside the courthouse this morning. A spacecraft supplies the International Space station blasted off for kazahkstan. The docking scheduled for six hours after liftoff was slipped back because of problems with two navigational antennas. Thats a cnbc news update for this hour. For now, back to you. Stop shaking off earlier gains, leding for a second down day t. Dow is down 75 points. Earnings front and center. Apple dragging the dow down here after reaching an all time high earlier this morning. Commodities and the dollar all moving on reports of a seized u. S. Vessel yet to be confirmed. The chief Investment Officer of portfolio strnls for Merrill Lynch. I know you cant talk about individual names like apple. What have we learned from a noisy mishmashing earnings season . Essentially, analysts cut their numbers the worst since 2011 because of energy because of the strength in the dollar. It looks like they overcut. So net half of the s p is reported. They are reporting betterthanexpected earnings. So i actually think the environment looks pretty optimistic. The market is not that expensive. Pockets of the market are still pretty cheap, particularly in Big Technology and old tech feels cheap. It seems like it reached melt item in the last few days. Investors dont have the same kind of patience when companies are citing the weather the poor congestion, the strong dollar you name it. The other concern is gdp is not coming out the way serve forecasting. Everybody is confused why the economy is not picking up. Some of the recent data is the consumer hasnt responded to oil. We have starting to see the Consumer Spend kind of that middle class spend particularly on restaurants, kind of dollar source, so this is where we can actually maybe have everything into the second quarter. Consumer confidence is disappointed today. You were saying upstairs before we came down that you felt there was a bull market about to begin in the nasdaq. Thats correct t. Key word is to begin. We broke out to a record all time high in the nasdaq. It took 15 years. Whats important is as were hitting these highs in all the indices, whether the nasdaq the s p. Even in small cap. Breath and volume are confirming these breakouts. For the nasdaq because you are now in record territory, you are just inner theing the new secular bull market. What does that mean . It means weve had the breakout in the dow and the s p. But we didnt get in the nasdaq the nasdaq is two years behind and now we think that you have broken out and now part of the digital age, parts of technology, is going to drive this index further. So you are in the first inning. You are in the first inning. How much further . If we are correct. We are in the new secular bull market. Secular bull markets on average last 13 years. So you have another ten years in this market. A part of the problem, is though, as you say that the leadership ras come from biotech. That appears to be breaking down, today and yesterday. Thats just two days. Okay. There is a little bit of noise, right . Markets go up and down stocks go up and down. There is a little bit of noise. There is always noise during earnings season. What i love is how everyone stays so pessimistic. When im out marking, there is still a lot of clients anchored more in fear not trusting the marks because were at record all time highs, analysts not trusting earning, how many times to we do into earnings season and we are worried about whether its earnings margins, top line the wall of worry. The world of worry still continues which leads the market higher i think. Equity valuations are above historical average. Why dont you share some of the nervousness that others do about that fact. There is not an indicator on this planet, sar remarks that can forecast the market on a pe ratio. You have to be other factors that actually drive. You have to have normally a very expensive market and Something Else happening that will hurt the economy. Whether you get a huge increase in oil. Wars impact our economy or whether or not the fed takes away the punch bowl over a period of time and you wind up in a recession and takes down the economy in earnings. Not necessarily. Cried oil is down dramatically. Short term you will have a pop. Hedge funds get a short crew. I think you get a camera rally here. Not an explosive move. Stick with it is the message, Marianne Bart el Merrill Lynch with the dow down 42 points. Over to you in san fran. Its a big hour for squawk alley. Reid hoffman, john legere. Sue derek all ear here at one market. Its an hour you do not want to miss. We are back in just a moment. Dont go away. Has the big macro and the dar come to an end . Experts say is this week will hold the key him find out why on trading nation and catch our live with power segment and power lunch. More squawk on the street straight ahead. 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. We will rock you anthem call 1800royal caribbean or your travel agent today welcome back to squawk on the street. We have a developing story here with regard to a possible u. S. Vessel seized by iran him we reported on that earlier. We now have per nbc news citing u. S. Senior navy sources that there are no at least u. S. Navy cargo ships that have been seized. Again, there are reports out of the middle eastern news service that warships in the Iran Revolutionary guard forced a u. S. Navy ship into an iranian port. They say those reports are false. The officials go on the to say as far as they know there are no confrontations between any u. S. Navy ships and guard forces from eastern. Officials have now skill gathering information. We have a special report from reuters, officials saying there are no ships seized in those circumstances here. Sar remarks mr. U. S. Navy officials are saying there hasnt been any kind of a confrontation at least for now. We will bring you more details as they become clear to us here. We are seeing an impact in crude, sill elevated. Lets head over to chicago. Rick santelli has the santelli exchange. Rick. Thank you sarah. Id like to welcome my guest. My housing guide. Marc hansen. Thanks, for taking the time. Likewise mark thank you. What are your thoughts on this mornings case schiller data release . Overashching that. Rates are down 100 basis points the year from last. Theyre down 100 basis points from last year to the year before. Rate versus a never ending cycle. Of course, what that does is that increases the affordability so house prices can keep going up. 4. 2 worse with a 10 increase in affordability due to the 1 drops in rates year over year sounds to me like an Interest Rate adjust negative. House prices are losing their steel. Its obvious in the data. Let me interrupt you, mark i get you, its the sustainability issue. So we have 4 gdp. Sustainability is what everybody strives for, heres my problem the journal talking about apple today, they at the hot selling iphone price went up. So its about 660. If you look at a mortgage, a 30year mortgage at 3. A 5 . Each one of those increments roughly is 50 a month. So you are telling me that basically, for maybe somewhere between an iphone and an iphoneandahalf will make all the difference in housing gosh, im having a hard time grasping that to be frank. Rates dont move slowly. They move over a very short period in dramatic fashion. You know that, way down or way up. And when rates plunge 100 biefls points, it creates some increment am and a lot of pull forward demands. This case shiler from february is a reflection from seven months earlier, its september, october, november, when that was occurring. That fully explains the monthstomonth, the nice gains we saw. If you look at new home sales, building Pricing Power, look what happened to builder stocks when the earnings came out last week. They plungeled. Look at new home sales the prices on a yearoveryear basis at the median. Builders are losing Pricing Power and thats the best realtime reflection of current and user now end user not speculator. The resale market is full of speculators, 40 of all houses and equal match let me interrupt you there. So 40 speculation. Historically, and we only have 30 seconds, if you go back in time is there any correlation with a certain level of speculation and ultimately some type of correction a negativetype correction in housing . At the end of the day. In 2006 we saw 40 speculation. Now we see 40 speculation as thrown out by last months 2014 second Vacation Home survey. Numbers that we ran on the internals. But our thesis is that speculation cant continue forever. When it falls back on the shoulders of the end users or the market normalizes thats when were going to see serious price corrections, akin to what we saw back in 20062007. Maybe not as deep mark, were out of time. But its fascinating, because obviously speculation does help the housing market. But in the end it really isnt the point. We want to see Home Ownership and all the cottage industry. And user demand. Thats what drives sales. Exactly. Thanks mark. Carl, all yours. Thank you very much, Rick Santelli in chicago. Welcome back to one market in San Francisco. Our own josh lipton joining us after talking to apples ceo tim cook following the companys Conference Call last night. Josh good morning to you. Stocks off about 2 this morning. Thats sense that things cant get any better than they were posted last night. You talked to him. What was the mood . Tim is always in a good mood. But you did know the numbers were a good call because he did seem to be in an especially good mood. When we talked be on the bottom, be on the top. Iphone shipments better than expected. Some numbers that struck me when tim mentioned that only 20 of the iphone base has upgraded to the 6 and the 6 plus, 20 , the bulls love that. That does suggest theres more room to go. Obviously china surprised everybody now. Greater china, including hong kong and other areas, their second biggest market surpassing europe. Tim called that out. Iphone you saw strong doubledigit growth in most regions, china was a standout up 71 . Tim mentioning the relationships theyre building in china. Theyve paid out now 5 billion to developers in china. Last year, they paid out 10 billion to all the developers that 5 billion struck me as well. Building those relationships. Jims point this morning in the 9 00 a. M. Was take out cash its at a 12 times multiple. And people, i think theres a discussion this morning about how do you value apple pay . Thousand do you value the potential of apple pay through the watch. Did you get any sense of that from tim . Theres no financial analyst who thinks that has any kind of material financial impact. Thats about strengthening the royalty of your customers, the dedication and commitment of your fans. Carl. Adding discover one more step they moved to canada. But thats going to be a story that plays out over the next several quarters. Incredible action. Nice to see you in person. Lets get back to post nine and simon hobbs. Here in new york, its btig charity day and with it comes big celebrity star power, inevitably we sent our own bob pasani, lets cross live to him now. Hi, bob. Were having a lot of fun here on the floor of btig 12 years they have been donating everything on this day to charity. 30 million. Steve starko is the founder behind me hes been trading all morning. Look who is joining us here Shaquille Oneal here since the very beginning. Shaq your charity day tell us what it means for you . Ive been here on behalf of apollo jets and steven starker, good friends of mine. I met steven many years ago, he told me about the calls, great cause, make a call, make a trade, make a difference here at btig, the charity of my choice is odessa quality of life fund. My mothers charity. This is 1995 weve sent about 150 nurses to nursing school. My grandmother who passed away of cancer in 1996 we raised a lot of money to send nurses to school. So steven palagonia of btig this is a great cause. And youve become a tv commentator in the last couple of years. Tell us what thats like and how youre enjoying your new role in life . Its fun. Im up there with great guys ernie is the best. Charles barkley is a hall of famer, kenny smith is a great player. Think we have a great show. You know our producer allows us to add a lot of humor to our show, so we do a great job. Its a pleasure having you here. We got a lot of people here, some of your colleagues talking with Mariano Rivera some of the guys from the yankees that are here. Steve starker. The founder and the man, i want to talk to you about the salary cap for the nba, can i announce this officially steve starker is the owner of the tlabtatlanta hawks. Minority owners. Thank you for driving up the salary caps. That was mr. Palmers fault, not ours. This is called the pasani effect, we have a lot of volatility. We started with an up opening, headlines about a some notes out of iran about a potential seizure of a u. S. War ship. Markets plummeted, biotech under a lot of pressure apple went down 1. 5 . It looks like markets stabilized over the last five minutes. Thank you for coming here, shaq, we got a lot of people here Mariano Rivera and arod is here and ill be talking to eli manning. Dozens of celebrities here for a good cause. Lets go, keep trading, dont stop because of the cameras there. Keep trading, the clear word from shaq. Back to you. Bob pasani on the floor of btig. We send it back to San Francisco with john ford with a look at whats coming up next on squawk alley. Were going to be digging deeply into apples blowout quarter. Trying to take a look at whats next for the company. Reed hoffman, cofounder offed linkedin will join us and john ledger. Bring us your aching. And sleep deprived. Bring us those who want to feel well rested and ready to enjoy the morning ahead. Aleve pm. The first to combine a sleep aid. Plus the 12 hour pain relieving strength of aleve. For pain relief that can last until the am. So you. You. And you, can be a morning person again. Aleve pm, for a better am. Dont just visit new york. Visit tripadvisor new york. With millions of reviews and the best hotel prices. Book your next trip at tripadvisor. Com today. Good morning it is 8 00 a. M. At apple headquarters in cupertino, california also 8 00 a. M. Here at one market in San Francisco, squawk alley is live. Whatever happened to predictability the milkman the paper boy the evening tv everywhere you look everywhere you go theres a heart i to hold on to everywhere you look everywhere you look good Tuesday Morning from a windy and chilly San Francisco. We are still live here at one market. Our new studios in the city by the bay. Joining thus morning, jon steinberg, ceo of the daily mail north america and with us john ford, kayla tausche, cold enough for you guys . And the chimes are going off . This is San Francisco. Yesterday, i dont know what that was. And to think that were wearing sunscreen after yesterday. What a show we have today. Joining us in the next hour is a great lineup, former yahoo president sue decker and the