Transcripts For CNBC Squawk On The Street 20160303

Debate on deck tonight. Europe with minor losses and claims were slightly elevated. Well get ism services in about an hour. Of course, were just a day from jobs friday. Energy pioneer Robert Mcclendon dies in a horrific car crash. This is a day after he had been indicted. Were going to go live to oklahoma. What jay my dimon told cnbc about the lie of hitz bank. Mitt romney is expected today to deliver a harsh set of words on donald trump, describing the frontrunner as a phony and a fraud. First up, though, futures are a little changed as stocks hover and jobless claims rising. Thats a bit higher ahead of the number tomorrow. Jpmorgans jamie dimon joined squawk box earlier this morning and had a pretty upbeat take on the economy. Take a listen. The average economy, more people are working, wages are going up. Theyre spending money, their Balance Sheets in better shape since its been recorded, the consumer. Theyre buying cars at alltime records. Home sales are going up, home formations are going up. Thats pretty good. We all want it to be better. The irony here is that jpmorg jpmorgans desk underweights. They say if a recession happen this year, youre talking easily a 20 drop in the s p. Though, they have not done that. Thats the first time theyve gone underweight. Its only 5 . Theyre saying use the strength. Its interesting. The strength in part is not by jamie dimon. Were up 10 from the lows we had two or three weeks ago. 10 almost and that, of course, coincided with jamie dimon suggested hes buying back his own stocks. On that note they say the 12month u. S. Recession lows have risen on a third and they say without a recession they dont see a potential for Earnings Growth for the rest of the year or for multiples to expand. We do get jobless claim, carl, as you mentioned. They went the wrong way ahead of the jobless report. Remember last month it showed it was 53. 5. So still expanding which is part of the economy, but last month it was the slowest rate in nearly two years so the question of whether the manufacturing and pain spreading throughout the economy, that ee going to in part be answered by that. The Bigger Picture of why weve rallied shortly, it may not be a great but its less bad than people think. Out of a really out of the case here. If you look at the expectations on Interest Rates, its not a 60 chance theyll raise rates this year. Not till december though. At least its moving. You know, construction spending, auto sales. You know, we continue to get these positive surprises coming through. Adc, adc, in front of the employment report adp was stronger than expected. Oil prices, we had the highest intraday. Copper is at a threemonth high. The Chinese Commerce has stabilized a little bit. Youve got this sort of confluence of factors, david. High yield has stabilized. Inflows in the last couple of weeks which is very important given the outflows and the fact there was very little going on other than a lot of pain in the high yield. Negative Interest Rates still with us. That seems to be of concern. It doesnt seem to be working much for mr. Kuroda in japan. Perhaps some relief there, sara, as a result of failure to get things going . All you hear about is the question of failure. The question is what mario draghi does. Theyre expecting a package including an expansion of quantitative easing. How the market judges that with the rejection of the Interest Rates that we saw from japan. Whats it going to be . What is he going to add in to this special sauce that i dont know about . Exactly. And you have before they went into the silent period. It could lessen it. So actually, yesterday, you saw the banks rise here, you saw the banks rise over 3 in europe on the belief that negative Interest Rates are less likely to be perhaps as easily pushed forward by the ecb. Thats very important. And dimon says its not going to happen here. And janet yellen if there are any questions doesnt know if its yet legal the last she told us. All right. Well, listen, the Business World this morning, of course, reacting to the energy titan audrey mcclendon. Good morning, scott. Good morning, david. They call yesterdays news heartbreaking. It is widely believed that ward and his company may have been the unnamed coconspirator in the criminal case against Aubrey Mcclendon. Other people talking about what Aubrey Mcclendon did to transform his hometown, all of which makes the events of this week that much more shocking. The indictment of a single antitrust conspiracy count that could have landed the chesapeake founder in prison for rigging oil gas and lands and then the news yesterday of the crash just after 9 00 in the morning. He was driving his suv at a high rate of speed in a 40mileperhour zone. Authorities said he had a chance to correct his course after he crossed the center line. Didnt do it. Didnt stop. The vehicle slamming into the wall and bursting into flames. It is an unlikely ejd for a career that has been all over the place, a man who made a huge bet in natural gas when others werent doing it. But back in 2011 he talked to r. K. Kelly about his work ethic. I go to work every day, work hard, try to create value and make my employer, who is my board of directors, my shareholders, happy with what i do, and i think what we do matters. But aubrey mccollect don was a man with Big Personality who made a lot of bets. He made a bet that natural gas would make a comeback. Of course, it did not. Now this investigation that was supposed to look at the entire industry but this marquis case was going to start it off has been completely thrown up in the air. David. Yeah. Thank you very much, scott. Of course, you hit on some of the key points here. Mr. Mcclendon, no doubt, a pioneer in many ways beginning in 1989, buying up vast tracks of land, really introducing the idea the use of fracking for natural gas. And in a sense creating the environment that led to significant financial losses down the road given the abundance of natural gas in this country, specific to yesterdays events, mr. Mcclen con wdon was supposed to present himself, turn himself in at 11 00 a. M. He got in the crash somewhere around 9 00 in the morning, i believe it was, perhaps a bit later, but never made it to that designated time to turn himself in. In speaking to a number of people over late yesterday and this morning who are both his friends and his financiers and people who are eninvolved in his business life, they describe it as scott said, so many ups and so many downs, at one point a billionaire. Most recently having spent both 10 billion in equity that had been raised. Perhaps as much as his new company after leaving chesapeake a couple of years ago. It wasnt clear that he had anything left. And, in fact, the indictment itself may have really presented him from accessing others. Again, we cant draw conclusions about the crash itself. He was a very generous man, people say, but he had been abandoned by many of his friends ore the last few months and its not clear if he had had to report at 11 00 a. M. That he would have been able to afford the bail to have gotten out of jail or even a lawyer. So these are some of the things at least people are sharing with me this morning. Of course, he had a stormy end there at chesapeake after carl icahn came in and pressured the board. He was pushed out. That board at least saying they were not aware of certain dealings that he had. He had a hedge fund within the company. He did take loans from his ownership in the wells that had been drilled. But most importantly in 2014 he could have drilled wells but he didnt. He actually ended up adding more debt. And many company, of course, finding opportunities to have raised equity. Certainly that may have opinion the case for mr. Mcclendon, but no doubt his imprint on this country in terms of natural gas, natural independence and what has happened will be very, very longstanding. Age 56. Yes. Isnt it interesting to see gas today hovering at 17year glows because of this glut, this excess created by the u. S. Boom. It wasnt that long ago that all these terminals were being created to import natural gas. That was in 05, cheniere and the like. All of them or a number of them, cheniere, freeport, theyre going to be exporting stlachlt started at cheniere and others will follow. Thats showing you what has happened in the last ten years and this is the man perhaps more than any other that is responsible for it. All right. Were going move to politics. Mitt romney is expected to speak this morning at 11 00. Chief washington correspondent john harwood is in d. C. With what we can expect later this morning. John . Sara, this is what it looks like when the big guns in a Political Party want to take down someone whos taking over their party. Thats donald trump. You see super pac attacks and social media attacks. Now mitt romney is giving a speech in utah today and hes going go zreeextremely hard at Romney Donald trump. Hes going to call donald trump a phony, a fraud, a huckster. Hes going to say that mitt romney is playing the American People for suckers and that the his words are as worthless as the Trump University degree. Hes going to go on and say his foreign policies are dangerous, his economic policies are going to tell the United States into recession. Those are extremely strong words. Heres a challenge for this message. In 2012 mitt romney embraced and accepted the endorsement of donald trump after donald trump had raised the birthertirther i. Some thought that was risky. Heres the video. Hes tough, hes smart. Hes not going to allow bad things to happen to this country that we all love. So, governor romney gorks out and get em. You can do it. Thank you, thank you. So voters will consider that embrace when they listen to mitt romneys message. And, of course, donald trump has been fighting back really hard. Just on television this morning he was saying that mitt romney was a failed candidate in 2012 and hes somebody who can be successful who can make america great. There are a short number of days when donald trump has to be stopped if hes going to be stopped and its not clear that thats enough time for the republican establishment. Hes given it a shot. Our colleague would tell us the game is up here. How significant do you think it is that the Koch Brothers are indicating they will not get involved. They will not put millions of dollars against trump as many had speculated they might. How significant is it, john . I dont think it will. Mitt romney was the leading kaejt and he hardly has run it. I think the diseasent elements are going to play out in what we call the free media, television, Live Television noose coverage, debate. Weve got a debate tonight. Ben carson is not going to that debate. Youve about got john kasich, marco rubio, ted cruz. You can expect them to go very hard after donald trump. And the question is can donald trump turn all this to his advantage and say, hey, look, theyre all piling up on me and our friend larry kudlow has been making case this is the kind of wisteria we saw against Ronald Reagan in 1980. You can expect donald trump to try to turn that rhetoric around as well. So a very complicated question. And when you have party elites trying to convince voters that theyre doing the wrong thing, you dont know how those voters are going to take that message. Thats going to be key for today and into tonight, john. Thank you very much for that. Well talk to you soon. As mitt romney does lay out that case against trump, well get full Coverage Later this morning on squawk alley. First the banks. Now bill gross is saying stay away. Take another look at the premarket. More squawk on the street continues post 9 in just a moment. . patrick 1 how about done . patrick 2 thats the kind of control i like. And thats what they give me at national car rental. I can choose any car in the aisle i want without having to ask anyone. Who better to be the boss of you. patrick 1 than me. I mean, you. Us. vo go national. Go like a pro. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. What will you do . Ctric nissan leaf. How far will you go . How much will you see . Electrify the world. Now with a classleading 107 miles on a charge, the nissan leaf is the best selling electric car in america. Does he have a point in your view. U im not sure about that view. Its a little obvious hes commenting on equity names. Ill take the other side though. To me when you talk about as you poejted out one of the worst performing sectors in the market. When you talk about from the peak declines of 25ish to 30 , youre heading into a different credit environment which were kind of expecting at this point at least in our estimates and at least they still trade to discounts. To me we priced in a great deal of bad news. Fundamentally when you look through the loan books it looks like if you see deterioration, its not that bad. It ought to be manageable. I want to buy them at this level. Were seeing them base out. To me its how it should play out. I mean youre a bank handler, so thats your focus. Thats what you do. For other people who have other parts of the market to perhaps would be more interested in, what would you say about the potential gains . What are the price targets . What are the fair values . Sure, simon. Those are very, very good questions. The big question mark i run into when i sit down with institutional investors, it has enough bad news washed out. Do we understand the pain at this point. The answer to that unfortunately right now is no. We can take guesses at it. Ive done some analysis. I feel like i have a reasonably good handle which is why we got more constructive about a month ago right in front of when actually mr. Dimon bought a bunch of jpmorgan shares some of from my perspective actually, this is quite a good time to buy. With that being said, the stocks, if we head into a cycle term tend to move sideways for a while and then we see the absolute upside. I believe right now were in the beginning of that phase. Were not going see that upside until we understand the credit loss. Now you confuse me. On the one hand, you say there might be a buyer here and then you seem to have qualified it by, a, not telling me how much it could rise and then were at a period of time where it could move sideways. Im trying to get into the fullness of the answer. When we see a cycle turn, im not smart enough to know whether were heading into a recessionary environmental or not. Id rather plan for it. If we we are and its a garden variety cycle section, the growth and potential pain, then what we typically see is a four to sixmonth sideways bank while the markets catch up. There for it would sit up. So youre sitting in sectors that have actually done relatively better, it might be a good time to rotate out of those. Then eventually when we get to the bottom of this where we understand what the extent of the pain will be, theyll begin the upside. I just doan know exactly when that will be, simon. Got it, got in. Thank you very much. Thank you for the analysis. Up next, were counting you down to the opening bell with our cash and taking a look at futures under a little bit of pressure. Can we see gains for a third day in a row. Dows future down. More squawk on the street straight ahead. Good. How was your commute . Yours . Good. Xerox real time analytics make transit systems run more smoothly. And morning chitchat. Less interesting. Transportation can work better. With xerox. Thank you for calling. Well be with you shortly. Yeah right. Xerox Predictive Analytics help companies provide a better and faster customer experience. Hello mr. Kent. Can i rebook your flight . Im here Customer Care can work better. With xerox. Wait im here mr. Kent . Hey kevin. Hey, fancy seeing you here. Uh, i live right over there actually. Youve been to my place. No, i wasnt. Oh look, you dropped something. Its your resume with a 20 dollar bill taped to it. Thats weird. You want to work for ge too. Hahaha, what . Well were always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. Why dont you check your new watch and tell me what time i should be there. Oh, i dont hire people. Im a developer. Im gonna need monday off. Again, not my call. Big day for the market wls its romney, trump, corporate news. Well get to kroerg, intel, American Eagle and more in just a minute. 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In the meantime lets bring in our capital director of floor operations who joins us at post 9. Good morn dwroug, mark. Good morning. A pleasant followup to tuesdays rorkt shop. The bulls have had to be pleased. Do they deserve to be pleased . I. The rocket shot did not have a very large dollar for Short Covering whereas the minor rally yesterday was led by shortcomings. So its kind of a reverse of what you would ordinarily expect. Europe looks like its taking a break after a fiveday rally, so i think we may do a little consolidating here today. He thinks the next move will be at ease. Jpmorgan taking small underweight equities. A lot of folks believe the rally weve had is ephemeral. Do you agree . I do agree. And i think we see zero before we get to 1 . Well get to zero before we get back to art at the big back court. Sin dax pharmaceuticals. Kroger will be a big move, sara. I know youve been watching it. Potentially an opportunity for profit taking. Lets show you the opening trade on kroger down as much as 8 . They topped earnings estimates but samestore sales has slowed for kroger which is the biggest grocery extort in the United States outside of walmart. It will open down 7 . Krogers projecting a saling growth of 2. 5 to 3. 5 . They talk about how its been a big fuel spend for margins. They have an ak question designati acquisition. You heard walmart talk about it, supervalu talk about it impacting kroger. The talk about disinflation and the rise in Consumer Prices in food can really hurt some of the grocers up here. Kroerg can say its the 49th straight quarter in a row of same store quarter notes. It is unusual see such a sharp down move in kroerg. Not a lot of concern here because according to analysts, they tend to be conservative when it comes to the outlook for 2016. Well see how shares react throughout the day. Potentially a chance to lock in profits. Its been an out performer on this overall market and some numbers that theyre not used to seeing, that same store sales growth slow down. Meanwhile costco missed by 4 . Sg a was a little heb but they did have positive comps. And then a o. Maybe its back. Aeo is down 4 not being treated as well as abercrombie. They had some specific brands. Intimate brands area, i havent heard of it, they had 25 sales growth in that brand. Limited brands came out with better sales growth numbers. I wonder about this Team Phenomena because an ber krom by, theyve been fighting them off and it looks like some of their strategies are starting to work. Before i let you, i want to ask you about a line in your nfp tomorrow. It could be distorted by dubious season alt. Can you explain. Weve had some distortions in previous numbers. We had a number, i think, two months ago that made it look like there were 200 some odd thousand payroll jobs and when you took it apart, a lot of it was by adding seasonal adjust and part of the model. I think this number may also be distorted. Back then it turned out there were only 210. So well wait and see. Initial claims were up again. Theyre higher than they should be. Were really at a 5 Unemployment Rate. So there are some distortions here. That will be a project for tomorrow morning. Thank you, art. Art cashin. Lets mention where were at on herbalife. It said overnight it has a problem in the way in which its counting its active subscribers. This is a company whos been under a huge amount of pressure as bill akmon is selling it short. There appear to be a number of missteps in the statistics that they brought to the table. Remember kre lejtsly the journal wran an article suggesting there was nothing on either side for criminal charges. I guess in a sense, david, this kind of opens up the pandora box again for those who say herbalife runs its business. This chain has no impact on the revenue or earnings that herbalife has reported for any period. It does appear they screwed up the calculation. I guess what theyre saying is this new supplementary metric, which is what youre talking about. But no impact. But given the name and given the history, youre going see a reaction and youre seeing it right now with stock down 7 . A big upgrade for disney. Did you see this . Piper takes it to overweight. Price targets 120. They thought specifically about the studio slate which is probably not a surprise to a lot of people. Parks getting traction and they say this might been an early s espn fees may outpatz. Those concerns may be, i think, the main concern of investors across the media landscape. They may be right. Those fees are still scheduled to go up but the question continue to be will the prevalence on the skinny bundle or the prev lags of the socalled skeny bundles that do not include espn keep pressure on them. Not just them. This is a question that comes up time and again. It is the focus of the industry. Not just the threat over the top, meaning broadband and compilations that you can access through the broad band. Not through the cable subscription and the skinny bundle offered by your cable subscrib subscriber. When they think about their fuehrer business lines, any of these praerms, they have to think is my network a musthave in this world of an ott bundle whether apple offers it at some point or a big programmer gets everybody together around a Certain Service or the skinny bundle. Am i a musthave. Are we a musthave. You name them, simon. Are they a musthave . Espn may be for a certain amount of people. Absolutely. But given at 8 bucks a month, it might not be. As farr as this call is, theyre sporting out the sporting costs. The rates are actually flat for three years, very important for espn. They say that will lead to margin skpang. Theyre focusing on it. There was a note out this morning from suntrust which actually has a buy on u. A. With a 110 target but noted anecdotal evidence that under armour was showing up at t. J. Maxx and offpriced store. They say they should return to normalized levels. Die das reported earnings and the germans. The loss narrowed for adidas and the firm is expecting about 10 to 12 sales growth, which is very strong. Last year lost its second place spot in the United States. So potentially fighting back strong. I wonder how much of it was the kanye west easy shoes which have been such strong performers helping to bring adidas back into the cool spot. Can we just mention toomey in j. Samsonite, excuse me. The deal price was reported to be did we have a price . Clearly that is changing right now but its not quite that price as well and of course bidders come come in. They say its a pretty appealing luxury brand. Its up that so its down about 13 , 15 over the last year. You introduced me to tumi, didnt you . No. A few months ago. Oh. They do reiterate their december view for the year, which is helping not just joy but cat which along with disney and intel both upgraded are the best reporting dell. Lets head over to dominic chu. You talk about this idea that we could have some jockeying for position ahead of the okay nomic data coming out, especially the jobs report on friday. Whats interesting about the way the setup is going right now, is you take a look at some of the early action today an were seeing some moves higher. Again, you can see industrials right now trying to eek out a very light game. Tell con services leading, although douchblt health care, staples, paying dividend type stocks. As we set up for how the week is shaping up ahead of the big jobs report, its interesting here. Energy and financials, two of the financials are the ones leading this week, so perhaps a little bit of it there. Down on the week so far. Sensitive when you have the fed issues in play and what not. Thats going to be a concern. As you take a look at tenyear yields, playing a big part in the overall trade today. Largely unchanged on the day so far although we are moving higher throughout the course of the week. Of course, you put it in context and, of course, we know we werent anywhere near these levels. Now, lets take a look at the Economic Data because so far on balance the ones we had, major Economic Data has been on balance. On tuesday, manufacturing came in better than expectations. Adp jobs came in better than expectations. A little bit of a misyear. Iam services. The big debate is whether its justifying the kinds of moves weve been seeing. The jobs numbers will be key tomorrow and the guys are saying theyre keeping an eye on oil. Not much happening right now. The other thing is to keep an eye on whether we see any activity perhaps transportation stocks as well. Back over to you. All right. Dom. Well keep an eye on oil and wait for the jobs number and now well keep an eye of Interest Rates. For that we head to Rick Santelli in chicago. Rick. Good morning. A twoday chart tells you all you want to know. We going sideways and yesterday and today are somewhat dicey stock days. Not that they didnt spend time in positive territory, not that we cant come back from a dow 38, but it certainly sees as though the catalysts, our jobs, jobs are important for the fed, the fed is really whats understand scoring many markets and there you. Look at the year to date of two years. Heres whats fascinating. Okay . Two years flattened out, year to date. We settled at 65 last year. So were down 21 in two years. Year to date, settled, well, at 227. Whats really fascinating is its down 43, okay, and im sorry. We settle the 2s at 105. Thats down 121. The low weve come from all the way in the 80s is 65. The lows in the tenure was 166. Lets look at boons. Its interesting. Theyre down exactly the same amount as tens. That spread is something you want to watch the difference between the two and now that its gotten back into that 20 range there is some resistance there and, of course, mario draghi and company will be on tap next week significant. Are they going to go more negative . It certainly seems so. Negative outcomes follow anything it rates no matter where they are. The german stock market put a big circle around 10k. The last chart is a december 1st start to the euro versus the dollar. Also like the dax, traders are looking at a single level. Thats important. 108. You can see all the work we everybody done at that level. Carl, back to you. Thank as lot, rick. Oil is down 9 . Lets get back to jackie. Thats right. Were holding after the bearish range yesterday. Even though were down a percent theres a close. A close of 35 will be a key movement to the upside but right now the tone is a little caution and a little sensitive so its definitely something to watch. I think whats going to be more interesting is the natural cash day tachlt plat is expected to see a drop. That is significantly less than the fiveyear average and thats due to the weather were seeing across the country. But remember its reflecting this. Its down 8 in a week, 20 in a month. 17year lows. Very significant. You ear not going to be using heat or necessarily cranking up the air conditioning but the prices could go lower from here. Well see what the d. O. E. Says. Thank you. Tomorrow meg whitman of h. P. An exclusive interview. A lot to talk about there. Meantime the dow is down 56 points. Were back after a short break. Welcome to opportunitys knocking, where selfproclaimed financial superstars pitch you investment opportunities. Ive got a fantastic deal for you gold with the right pool of investors, theres a lot of money to be made. But first, investors must ask the right questions and use the smartcheck challenge to make the right decisions. Youre not even registered; im done with you i can. I can. Savvy investors check their financial pros background by visiting smartcheck. Gov everhas a number. Olicy but not every Insurance Company understands the life behind it. For those whove served and the families that have supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. The number. Tweet us your predictions. Consensus is about 200k. Tweet us at nailthenumber. Thats quality. Quality plus. Allweather. Thats going to be useful. Just erase the name. Put it through the wash and it will come off nicely. Besides getting tote bag the other interesting nugget, what its going to mean for it. And the week after that is inflation. We know inflation is key and jobs are up there. You were talking deflation and food prices. Its not uniform. You know, were seeing the core inflation rate actually rise. Do you know they flip out . I was aware of that, thank you. But i still count it in my life. In europe they strip out alcohol and cobatoe bay coas of course they do. Up next, what the chart is telling us, squawk on the street will be right back. Well take a look at how its doing when we come right back. Man 1 i came as fast as i could. Whats up . Man 2 this isnt public yet. Man 1 what isnt . Man 2 weve been attacked. Man 1 the network . Man 2 shhhh. Man 1 when did this happen . Man 2 over the last six months. Man 1 how did we miss it . Man 2 we caught it, just not in time. Man 1 who . How . Man 2 not sure, probably offshore, foreign, pros. Man 1 what did they get . Man 2 what didnt they get. Man 1 i need to call mike. Man 2 dont use your phone. Its not just security, its defense. Bae systems. Smaller is better, at least for stocks. Good morning, eric. Thats right. No matter how you look at this year, the big trend is the smaller stocks at the s p 500 have been taking over. Take look at the chart. If you bought the s p 500 companies on an equal weighted bases, you had dollar in each, you would be outperforming. The true market which is weighted by market cap, thats in the bigger names like wall matter, facebook, amazon. Take a look at the blue line. Thats the s p 500. Thats where weve seen ujds performance. Remember, february 11th. Thats the one weve seen. The orange is up 10 president 5 . It beats the market by two percentage points. We know Fund Managers get paid for 2 alpha over the course of the year. Over a month, thats a big deal. What are these names . What are these smaller companies. Cincinnati financial, ross stores, campbells soup. Theyre not the biggest names that get the most attention. And if you look at yesterday, in fact, half a percent. So thats a big difference finance just one day. But this is a shift from last year. Last year we know it was the Big Companies that moved the kneel. The key is will this last . Will this be the trend for this year . I know jims not there. I put on my trader hat. We have another half a percent to go before we find out if this is going to be a real trend this year and if mega caps dominance will return once again. Back to you. Were always looking for patterns. That is a good one. Eric chemi. When we come back, well get factory orders in a few moments. Later well go back to oklahoma, the home of the late Aubrey Mcclendon and talk to a board member charles maxwell. Back in a moment. Trolling for a gig with braindrone . Cant blame you. Its a drone you control with your brain, which controls your thumbs, which control this joystick. No, im actually over at the ge booth. Were creating the operating system for industry. Its called predix. Its gonna change the way the world works. Ok, im telling my brain to tell the drone to get you a copy of my resume. Umm, maybe keep your hands on the controller. Look out ohhhhhhhhhh. You know what, im just gonna email it to you. Yeah thats probably safer. Ok, cool. Whyour boss . Ork for . 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. And casuper food . Is that recommend sya real thing . Cedar . Its a great school, but is it the right one for her . Is this really any better than the one you got last year . If we consolidate suppliers, whats the savings there . So should we go with the 467 horsepower . Or is a 423 enough . Good question. You ask a lot of good questions. I think we should move you into our new fund. Sure. Ok. But are you asking enough about how your wealth is managed . Wealth management at charles schwab. In new york state, we believe tomorrow starts today. All across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. Like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. And in syracuse, where imagination is in production. Let us help grow your companys tomorrow today at business. Ny. Gov thats like my grandma the kcooked, my mom cooked. I make a lot of banana bread because the baby likes bananas. laughs whatever home means to you, well help you find it. Zillow. Good thursday morning. Welcome back to squawk on the street. Im Carl Quintanilla along with sara eisner, david fasther, and simon hobbs. Oil, by the way, unable still to crack 35. Okay, here we go then. Roadmap for the next 60 minutes on cnbc. Mitt romney taking on donald trump this morning but will it have an effect on the frontrunner. Plus the latest on the death of Aubrey Mcclendon. And the resurgence in the Housing Market of flipping. Active flippers now at the highest level in nine years. All the details ahead on cnbc. First up, though, the market a little bit softer even though we got some decent action in asia overnight. Retarms remained a story. Of course, claims were a little elevated. Whether or not it means something for the jobs number tomorrow. The claims number went in the other direction. Economists say not at the level thats worrisome. Oil is down. That could be a big reason why. We wonder whether it affected it. Yesterday we saw a big rise. Potentially pressure in energy. Were watching Energy Stocks and financials which has been leading in the rebound. Chesapeake is up 12 . Yes. Why would that be . Its not due to Aubrey Mcclendons death. Hes been aa way from the company for a while. Its more trying to continue to make a path forward despite debt, a great deal of debt. But its up dramatically from its lows. Its morer natural gas. Thats why the stop has been moving up. A lot of them are higher. Gold is higher, interestingly, though the dollar has been high and the stockmarket has been reboundinging. Gold continues to march higher and people are wondering why that is with all of this focused in question, whether they have the bullets and the power to fight it. Even on gold the minors have been huge beneficiaries. Also some underperformance among retailers. The part of the story, theyre not doing well. Lets head over to Rick Santelli in chicago. Hi, rick. Thanks, carl. 53. 4 on the february read of nonmanufacturing ism. The bigger side, this is not good. A twoyear low. A twoyear low. You have to go all the way back to february of 2014 to find a lower read at 52. 6. And last month was a 23month low. So were not making any improvements here. Last month stands revised. Lets get some internals, shall we, in front of employment. Lets look at employment. Not good news. It dipped below 50. 49. 7 versus 52. 1. The other biggy is always new orders. They dipped to 55. 5 to 56. 5. All right. Lets move along, shall we . January factory orders read 1. 6. Its a whole lot better than our last look. And january final on durable goods, this is a biggy as well. Durable goods, 4. 7. It isnt a bad level. 4. 9 was our last read. So we want to continue to monitor that. Lets go through the internals quickly. Extransportation is 1. 7 versus 1. 8 and if we look at a proxy for investing by business. Capital expenditures, wed have to look. 3. 5. Not bad. Pretty solid reads. Back to you. Thanks very much, Rick Santelli. Lets dig deeper. Steve liesman is with us from hq. Steve, the Bigger Picture here is weve rallied call it 10 from the lows two or three weeks ago on the stockmarket. Part of that is on the belief that the data is getting better. Does that still hold . Yeah. This is the beauty of cnbc simon. I have a little different take from rick. It has hit a multimonth low. I dont know about you. I think the market is out there breathing a sigh of relief whether it sees a number, still suggesting expansion in the Services Sector and not showing. You can see there from the history of this indicator here, of this index rngs it drops down below 50 when we have to worry about recession. Picking up on what you were saying when we look at theory cent indicators or the hits and misses of the last several weeks, we can see it. They were all a bit better than expected. In case you werent interested. Heres the nonfarm payroll estimate for tonight. Looking for 2,000 although we had the strong one on adp. Were looking for wages not to equal that nice number in january. Still a trend growth. An unchanged employment rate. Youre right. The Economic Data has turned better and the story has been with the stockmarket trading on fears of no recession, but, sara, not a lot of trade on strong growth in the economy. Let me just explain whats happening here. There are two surveys of services. The survey we got last week was disappointing. Its okay but not as bad. Its the one with the much longer history. Also that jump in factory orders was the most in seven months in january. Thank you, steve. Steve liesman. Were going to talk more about the impact. Stocks are in the red. Lower oil prices along with weaker than expected Economic Data rattling investor confidence. Stocks hold their recent gains ahead of jobs reports wchl l. Lets discuss it now. David, the data has looked better. Is it that expectations were getting too low or solid data that shows our economy is on an upswing . I think expectations were way too low. When the stockmarket was out there, they said, oh, we must be close to recession. The numbers that have come out in the past few days are pretty slow but in the u. S. , were basic le growing at a 2 pace. The trick is this is an economy that in the long run can only do 1 . S so were still growing. Josh, is that how you interpret the marking at. I think people got too worried. I see that much more on the risk camp. I think is the economy continues doing more or less what its been doing throughout this recovery which is growing at a moderate pachls but given the diminished proi ten chal of the growth of this economy, i agree. It continues. The question becomes is it solid enough that the Federal Reserve has to raise Interest Rates. You do think theres gap at what the market is expecting, not an increase until december versus whats actually going to happen is that its not as bad as the markets thought . I thits really important to recognize that its a derivative market and dis extorted. I think most strategisted and economists will think what we tell them in two weeks and that is, okay, theyre not going to raise rates four time bus two or three times. I think thats what theyre thinking. Dont trust the federal funds future market the tell you what they expect to do. Its distorted the cash market and by arbitrage its affecting the futures market. David, many are thinking there will be an impachkt were going have mitt romney in just over an hour suggesting that donald trump is a phony. There are people who are going to call up and say lets say trump wins through here, what are the implications to me as an investor. First off, people have Strong Political opinions in this country and i try to focus on economic division. I think we have a division of power in this country. Its highly unlikely if the democrats are in the white house, they would not win the house and even if trump were, heed have to come up with an approach. So whatever extremes we hear on the campaign trail, i think governoring will be a muddled affair going forward. Im not asking you to be political. Do you have a feel whether it geesd tr the tock market . Good for the dollar . Where are we headed . This is happening before our eyes. I dont think its going to make that much difference unless we get into some foreign confrontation. The real issue is would a president obama implement the policies hes out. Its very doubtful whether he would be able to talk about the things on the campaign trail. Josh, we are heading into a week where were going to get decisions from the ecb and a key one from the bank of japan where theyre questioning their faith in central banks. How important are the decisions and the Market Reaction . I think its important. I think theyre going to continue on this easing path. I believe theyre starting to discuss that. The fed is looking to back away. I think theyre going to continue on this pachlkt i think its going to be low and slow for the fed. Maybe a couple of moves over the rest of the year but slow and know does not equal no. Your view ahead of tomorrows jobs report. I notice that the Employment Services number dipped and jobless claims went the wrong way. How are we set up for tomorrow. I think with can show it. Thats super, super strong. We dont need that to continue nudging the Unemployment Rate down. Anything na n that 150 rate will continue nudging the Unemployment Rate down. Which also gets into the politics. Gentlemen, well leave it there. David kelly and joshua fineman. Speaking of, that mitt romney is expected to bash donald trump at 11 30 eastern this morning live. Will it make an impact . More on that when squawk on the street comes right back. My name is melissa snyder, im a Customer Relationship manager with pg e. Ive helped customers like plantronics meet their Energy Efficiency goals. So you save energy and you can save money. Energy efficiency and the environment go hand in hand. And i love how pg es commitment to the environment helps a Community Like santa cruz be a better place to live. And being able to pass that along to my family is really important to me. Just being together and appreciating what we have right here in santa cruz. See how you can save energy at pge. Com. Together, were building a better california. Welcome back to squawk on the street. I im seema mody. The move comes just days after the struggling Solar Company delayed filing. It delayed filing its annual report amid an internal probe. Shares are off more than 60 just this year. Carl . See ma, thank you very much. Meantime former president ial candidate mitt romney will lay out his later. John harwood with the latest. John . Heres why its urgent for Republican Leaders who want to stop mitt romney excuse me stop donald trump to act out right now. Take a look at these poll numbers from michigan, which is the big upcoming primary next tuesday. Donald trump has got a double digit lead. If he wins that state, it gives him momentum. Makes it difficult to slow down. So the 2012 nominee, mitt romney leader of Establishment Republicans if you like that phrase is takes him nona in a blistering speech. He calls him a huckster, a fraud, a phoney. Hes going to say that donald trump, his words are as valuable as a degree from Trump University, hes playing americans for circumstances and all theyre going to get is a hat. He says his Foreign Policy is dangerous and Economic Policy will dip the United States into recession. When he was running, he accepted the endorsement of donald trump. Take a listen. Mitt is tough, hes smart, e hes sharp. Hes not going to allow bad things to happen to this country. So governor romney, go out and get them. You can do it. Thank you. Donald trump is firing back this morning. He reiterated what he said over and over. That mitt romney was a failed president ial candidate in 2012 and you can expect hes going to repeat those lines in the debate tonight. That is going to be a high station stakes debate where all of the candidates, john kasich, marco rubio, and ted cruz will go after donald trump. What is all this about . Do you think he still wants his hat a tiny bit in the ring here . I dont think thats it, david. I think all of a sudden lead oers testify republican elite, donors, elected officials, lobbyists, people who have been more or less in charge of the Republican Party have conclude thad they have a very narrow window to take donald trump down. They think that both on his persona and on his policy prescriptions, hes anxious a threat cal to what they want leading their ticket and theyre trying to train all of their ammunition on him now and try to stop him before march 15th. If they dont, then youre going to have talk of splinter, third party. Republican senator ben brassman has talked about third party. The weekly conservative magazine is talking about third party. So i think what theyre trying to do is do it in a short time. Isnt it about the new psych. Advance of the gop debate . If romney say this now this is with reference where rubio behave and he went on the attack. Now youve got romney using the same type of language that clearly setting up megyn kelly. Thats the republican establishment if it exists joining together for a tv event this evening. Simon, thats what im talking about. All hands s os on deck. Donald trump has a chance to turn it to his advantage. To leverage it and say, hey, you dont like the political establishment . Hey, im your guy. Its worked for him so far. Youve talked an narrow window but when the other candidates have to get two thirds to get the majority. When does the window absolutely shut . Is that florida . I think march 15th is the date. Thats when they switch to a winner take all system. Right now its proportional and because ted cruz did so well in texas, he didnt get that many fewer votes. Once you flip it over to winner take all, then a frontrunner starts to lengthen his lead. I think thats why theyre looking at march 15 as the effective end day for this particular phase of the antitrust campaign. Meantime on the other side, Hillary Clintons email scandal continues. Granting immunity to the staffer who set up hillarys email server. Eamon jarvis has that story. With Washington Post reporting this morning with the department of justice has granted immunity to a former hillary staffer named brian paglia know. He was also one of the people involved in setting up Hillary Clintons primary email server. Theres intense investigation by the fbi and what could come oup it if anything. Heres what we know so far. 2 2,079 have contained classified emails and 22 have been designated top secret. None of those emails according to the state didnt were marked classified during Hillary Clintons tenure. Where we go from here is obviously anybodys guess. It goes without saying that there are enormous political overtones to this and the question is whether north any adverse outcome of this investigation could impact Hillary Clintons president ial cam pape. Youve already got folks like Michael Bloomberg circling it. Well see what happens. Thank you for the update. Coming up tomorrow, meg whitman, ceo of hewlettpackard enterprise will be here. She also recently weighed in on the republican race. Well hear her reaction. Were back after a quick break. Welcome back to squawk on the street. Rick santelli. Id like to welcome firsttime special guest tim quest. Nice to see you this morning. A great to be here. Thank you. I wanted to make sure i had you on day withwhere people are looking at things like, i dont know, ism manufacturing, not considering a rate of change, twoyear low, but i think its above 50. I think theyre missing the point there. Sequentially it was still negative. In my world when i look at gdp and job growth, its all about productivity. Tell me how you model it and what youre seeing and maybe a little about todays number. The engine of prosperity is purchasing power so what we did is model three inputs, not 200 of them. We modeled a unit of output, a rate of growth and a dominating currency. Then we spread that out over time and we depreciated the currency and what we discovered is growth will rise and peak as it falls toward zero if you appreciate that currency. It t problem today is its masked by the flow value. What about the reserve lending. Thats a topic youve written about extensively and you can translate it for our viewers because its pretty deep. Right. Rising cost diminish the ability to consume things, so they have to replace that diminishing capacity with something else. Depth. That leads to the graph. We will have it up. Youre looking at gdp, Consumer Prices, and federal debt. Recently from 2001 forward, consumer prizes rise faster and debt increases faster than gdp. What that tells us is that principally growth is a product of depreciating currencies. Thats the energy of prosperity. Rising debt are the ends of prosperity. Tim, in the final half minute that we have, you know, the feds are into it. I think you ought to send a cop of this to janet yellen. Your final thought . Right. The problem with it is they believe if prices fall, then businesses have to lay off workers and we fall into a recession. So what they do is try to increase prices. The problem is if you depreciate the currency, you undermine the consumers capacity to buy things and purchasing power is the engine of prosperity. Rising debt, rising prices are its enemy. Excellent. Tim, i understand it and it was a bit greek to me when i first read it. Thank you for the explanation. Were definitely going to get you back. Carl, back to you. Well see you in a little white. Ahe Aubrey Mcclendon, dead. Well get to a former chesapeake board member in a moment. We were born 100 years ago into a new american century. Born with a hunger to fly and a passion to build something better. And what an amazing time its been, decade after decade of innovation, inspiration and wonder. So, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. Mom, dson. Now that fedex has streamlined our ecommerce and helped us grow our business, i think its time we start acting like a business. Ok. Here we go. Oh, look at this. Ok, so number one. No personal items are permitted in the workplace. So those will need to come down. Well be doing some mandatory testing. And theres also a strict no dating policy. Uh, but honey, were married. Thats going to be a problem. Grow your business with the online shipping tools from fedex. Welcome back to squawk on the street. Jackie deangelis. Natural gas, a withdrawal of 48 cubic feet. That was a little bit steerp. They were looking 37 to 41. Let me put this in context for you. The fiveyear average, weve seen drawdowns. Last year at this time, over 200 billion cubic feet. You can see because of the milder temperature that this isnt as significant but also keep in mind these prices have come down a lot. Flagd the 160 range. 20 in a month. We havent seen these price this low since 1999. Were heading into that inbetween phase. We have warm weather coming up in new york next week where people wont be using their heating or air conditioning. Its well over the fiveyear average. They could see a little more volatility, could see more downside. We were trading 163 before this report, trading at 166 now. Sue herera with the Business News updates. Two women who attacked police with a gun and hand grenade were shot and killed. They escaped in a vehicle and hid in a building a short distance away where they were surrounded by pleeg and feed as part of a militant group. Google will donate money to help with the zika virus. Google says its seen a 3,000 increase. Astro not scott kelly back home. He was greeted by clothe friends and family including his brother, fellow astronaut mark kelly and his wife Gabby Giffords and dr. Jill bide june the golf shot of lifetime for an 11yearold. He made a holeinone on the first hole of the day. He got a well deserved pat on the back by tiger and as owe can tell the crowd went wild. Thats the news update. Back to you guys. Thank you very much. Meanwhile Aubrey Mcclendon is dead after a car crash, a day after being indicted. Scott cohn has more. Hi, scott. Reporter no surprise. The Law Enforcement telling cnbc the case against Aubrey Mcclendon will be dismissed now, but the broader investigation into these alleges violations in the oil gansd industry is ongoing. And as this town, Aubrey Mcclendons hometown comes to terms with his death yesterday, the mystery surrounding it deepens. Why would he have slammed his suv into a wall 24 hours ago. Was it because of a medical issue . Was it intentional . We dont know yet. It will take some time to sort that out. What sort of stress must he have been under to finally go away in this scandal over alleged antitrust violations. We know that Aubrey Mcclendon was a man who made big bets. The most fachlt, of course, was the shale and hydraulic fracturing of aisle and hydraulic gachlts he also was plunging a great deal of his personal wealth into the company even though the price of natural gas was plummeting. In 2011 he told r. K. Kelly about the importance of business and predictability. We have to have certainty we cant play out your budget if we dont have some idea of what our revenues are going to be. Reporter now, the topic of that discussion was hedging, obviously very important in oil and gas, but the fetd says he was seeking another sort of predictability in term os testify price of land they were drills in. Again, that investigation despite Aubrey Mcclendons death is continuing. Thanks. Joining us on the phone is charlie maxwell, now chairman of american dg. Welcome to the program. What is your reaction . Of horror. Aubrey was a controversial figure but he was also a very large figure. Hi had a great influence bus he had charge and courtesy and a good knowledge of people and an ensigh clo ensigh clowe paedic nature. He had a personal level of his staff and people and company and i would says he almigh s hs h s the local Oklahoma City thunder and national help and so on, his interest in cultural events and pushing forward of the community makes him a largerthanlife figure in oklahoma. Looking wider than that at the u. S. , this Huge Development in energy in the last five years forecast you had to select any one individual that was most influential, youd have to choose, u think, Aubrey Mcclendon and so on who have developed hydraulic fracturing and horizontal drilling. Its access to the shale bids which were there, he didnt originate these things. But they iorg nice it to create this new wave of new supplies from the shale bid in both oil and gas thus reducing the u. S. Imports of oil, of putting a lot of money in the pockets of u. S. Con suchlers who payment p and giving america a real boost particularly in the areas of Transportation Fuel costs which went down as we all know for the airlines and railroads and truckers and so on. His effect was countrywide. Worldwide when we look at the potential for these that spread to other countries and to also. Its a major lifer that eat been tack from it. Yet there will be people who follow the knows will will say on tuesday they indicted him for the acquisition say he had been rigging prices and he died on the way to reporting for that and arguably may not have been released because he didnt have enough money for bail. How do we weight that against what you said. How do we come awayy your view . I guess the first thing is we really have no reason to assume that he was guilty. I think it has to be left neutral, hanging in the air. There may be suppositions that individuals want to make. But the facts that we have are that he has that they have dropped the suit. It will never be tried. And we may never know the answers to it. I think that like many people, winston churchill, franklin roosevelt. Im thinking of people who are fame for having done wonderful things but also famous for the opposition that they stirred that this man will continue to be controversy but looking at the whole of his life which may be difficult especially after his death. It will be seen that he was a very positive force in the world. Mr. Maxwell let me ask you finally, ask you the question thats on many, many peoples mienlsd. Knowing the man as you did and his high tolerance for risk, for debt, his ability to set up whole fleets of planes to take his staff to the oil fields. Do you think knowing the nan that you do, his character, that it is likely he decided to take his own life . I couldnt really in any honor effort way speculate on that. Im long im retired from the board of chesapeake now for three years. Im not intimately aware of the situation anywhere. Im retired. I cant speak on that except to say we dont have any evidence and we should not jump to quick conclusions. Its been a pleasure to speak with you, sir. Thank you for sparing us the time. Yes, thank you. Charlie maxwell joining us there chairman of american d. G. Energy. When we come back on squawk on the street the flippers are back. Gross profits at a tenyear high. More when squawk on the street returns. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card theres Something Weird happening in the metals mark and it couldthat golds bounce is just beginning. We discuss on tradingnation. Com. More squawk on the street coming right up. Lets get a check on the markets. The biggest lag ard on the s p 500. Among the names weighing the most are pepco holdings, next tara, American Electric and e e ente entergy are down. Simon . Home flipping is on its way. Theyre at a the highest level since before the crisis in 2007. Diane d diana olick is live. Take it away. That may be a sign of overheat orange the market. Close to 180,000 singlefamily homes and con dose were flipped in 2015. A flip is defined here as a home that is bought and sold within the same 12 months. Flips made up 5. 5 of all sales last year, and that is the first increase in the flip share after four years of shrinking. Flipping increased in 5 of the u. S. Markets and the profits are growing as well. It yielded an average dproes profit of 59,000 nationwide, the highest since 2005. The return on investment was close to 46 , up if from 44 in 2013 and also in 2005. Why do we keep talking . The peak number were all sales. So where do you get the best returns on flipping . Pittsburgh, new orleans, cincinnati, and new haven, connecticut. The biggest dollar returns are there. You put them down. House flipping today is nothing like it was during the last housing boom when flippers were put nothing money down. Using that easy credit. Today even with investor loans, they have to have some skin in the game. That said flipping tends to artificially inflate home prices and flipping can be a sign that prices are already too hot because Everyone Wants to get in on the potential profits. And, sara, if you want to hear from flippers themselves, theyre online, cnbc. Com. Diana, i just want to ask you whether this ma by a moment in time as to where we are on the recovery. And its actually about people who have bought or booked their property off plan as its been built and then decide not to occupy the property and therefore flip it and try to resell it onto the market. In other words, not that its a huge sign potentially but actually that they believe its going to top out or they dont want to follow through with what theyve promised. Possible . No. These are real investors who are in the market. These arent buyers going in the market saying i could have got more or bought more. Theyre investing, not living in them. Putting money in to rehab them in low income neighborhoods. Who knew. I didnt know cincinnati was a popular homeflipping city. When we come back, three new york judges will decide whether tom brady will be sitting out the first four games of the new season. Is it all worth it for the nhl . Well weigh in after the break. We are seeing stocks off the lows. The dow down 20 points. The nasdaq also down about 7 points. One reason why, crude oil just reversed course and now turned higher. 35 barrel for wti crude. We were tracking crude and here we are on the tight correlation path. Crude was under pressure and the market opened lower. We could see three games in a low. Youre up 20 . Its huge given where we came down perhaps not such a big deal but as far as from the bottom its huge and centered now on 35 Barrel Energy is at the top of the sectors and consumer discretionaries and financials have been the keys to this rally once they turn around and go higher the market can actually rally. I mean the idea of any Net Interest Margin they could hope for with rates up at least a bit from the lows that we saw. Better Economic Data. Well see what happens with jobs tomorrow. Lets move on now to the seemingly never ending deflategate saga. It heads back to court this afternoon. The nfl appealing a courts decision to overturn tom bradys four game suspension the fight over underinflated football will cost the nfl, the patriots and Nfl Players Association about 20 million. 13 million spent by the nfl alone. Joining us now is nfl super agent drew rosenhaus. This case involves a straightforward exercise of authority granted under the selective Bargaining Agreement to the commissioner and they want to make sure that a court agrees with them. Do you agree with them . Ill tell you what i do think. Its nonsense that this is still going on. Theres so many other things that the nfl could spend their money on. I thought they got it wrong in the first place. Theres not a lot of conclusive proof that brady, the patriots did anything wrong. The patriots lost the first round pick. A Million Dollar fine. Enough is enough they should have moved on. This appeal is going to take years. Theyre even talking about the supreme court. Come on. They have Better Things to do. This is a joke. They do and they might decide not to hear the case if it was presented to them and sent it back down but i hope we dont get there along with you. That said, why is the nfl persisting here after the lower court ruling. Is he saying i dont want my authority challenged . That has a lot to do with it. They want to reestablish absolute power. On a larger scale lets hope that the nfl pa and nfl come together when it comes to personal conduct or team punishment. We have a more objective opportunity to make decisions. Tom bradys case should have been heard originally by a neutral arbitrator. Lets hope that the union and nfl can get together and take it out of the commissioners hands. If the commissioner wants to make a penalty at first and then its decided by a mutual arbitrator thats the system we all want and then we wouldnt have this nonsense. We wouldnt spend 20 million. Lets put that money toward retired players. Lets put that toward players that have post concussion issues. Lets give this to players playing the game right now. This is really sad. But drew isnt that effectively what the nfl is saying . Theyre saying lets keep these decisions within the process that we create. Whatever processes those are and not have people appeal through the federal court system unless theres really some wrong doing, something really terrible has gone on in the normal state of affairs this should have been settled at the game level and thats what the nfl in fairness is trying to enforce here, arent they . I think thats a good point. I think that everyone should learn from this ridiculous case and lets not have this anymore. Lets not go to court anymore. Lets not spend tens of millions of dollars in attorney fees. Lets not have an absolute system. The popularity of the nfl has never been higher. Is there anything that could derail that . No. Lets face it. The nfl has gone through everything that you can think of. Off the field stuff. Players getting in trouble. Controversies with their super bowl team. The ultimate quarterback. Absolutely not. The nfl is unstoppable. Controversy is just a part of it but i do think that this is something that the nfl and the union can learn from and come together and reach an agreement and change the cba. Bring in a neutral arbitrator to resolve these things in the future. Im with you. I hope this is the last time that we discuss this in deflategate but im happy to have you come back. Thank you. Lets hand it over to john with a look at whats coming up on squawk alley. Take it away. Thanks, good morning. Heres one we havent seen in quite awhile if ever. The last cycle of president ial nominee from a major party coming on to take down the presumptive nominee this time around. Romney on trump coming up this hour. Plus the venture capitalist that invested earlier in uber and others and disney is up about 1 . Town day for the dow and s p on an upgrade. What does that say about espn and more . All that and more coming up on squawk alley. At mfs investment management, we believe in the power of active management. By debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. Good morning its 9 00 a. M. In Salt Lake City utah and 11 00 a. M. On wall street and squawk alley is live. Welcome to squawk alley for our thursday. Kayla is back from london. Good to have you back. Along with henry, the founder an