Transcripts For CNBC Squawk On The Street 20160328

Gains of lows. Overnight in asia, we can look at how those markets responded. Japans nikkei up about 0. 75. The yen has strengthened for several sessions in a row. The shanghai composite giving up three quarters of 1 . European markets are closed for easter monday. The tenyear note yield, watching that for a gauge on growth and inflation. 1. 9 is what were talking about this morning. Crude interestingly, a bit on the rebound, both brent and wti, still up less than 1 . Brent is above the 40 mark. Our road map starts with the last week of the quarter. The dow and s p hugging the flat line for the year. Where will we go from here . Bernie sanders gaining momentum over the weekend and the candidates are descending on wisconsin ahead of the april 5th primary. And microsoft throwing its hat in the ring for yahoo . Well look at potential deals that could take yahoo off the market. We begin with 72 dead and hundreds injured after yesterdays suicide bombing in pakistan. The christians were celebrating easter. Rehema ellis has the latest. Good morning. Dogood morning. Authorities are searching for the suspects in the area and in villages around the area in connection with the suicide bombing attack in lahore, pakist pakistan. We have reports of at least 72 people killed. 29 children. 300 people were injured in the attack. Depending on the nature of the wounds and the injuries, Authorities Say the number of fatalities could go up. This happened in a crowded park where people were enjoying an easter weekend when the suicide bomber detonated the device. Reports indicate that many people had lined up to buy bus tickets when the bomb went off. Authorities say the attack was deliberately aimed at christians. There are only about 1. 5 million to 2 million christians in this mostly muslim country. Now a Splinter Group of the Pakistani Taliban has claimed responsibility. This is the deadliest assault in this country since 2014 when there were more than 130 students who were killed at a militaryrun school that they atte attended. Back then and now pakistani authorities have called this a beautiful attack, close to a section of the country close to the power base of the Prime Minister. They are desperately looking and searching for suspects. Kelly . We eagerly await news on that. Rehema ellis, thank you very much. A busy week of Economic News begins with data showing Consumer Spending up 0. 1 in february. In line with forecasts. Personal incomes rising 0. 2 . This on top of the data released friday showing an upward revision in Fourth Quarter gdp to 1. 4 growth. Overall march has been a strong stock market month. Youve seen the rebound there, led by the dow which is up 6 . The s p 500 looking to bounce back into positive territory year to date. And mike santoli, i thought what was most notable about the data this morning is the pce price index increasing 1. 7 in terms of annual growth from last year. Its missing the mark on the fed forecast. Janet yellen, who about a week and a half ago when she led the News Conference said that inflation may be temporary. Shes wary to see inflation rising. She was right. She was. 1. 8 , if you look at the past two months. Clearly this isnt running away to the upside. Even with that people are talking about technical reasons why it has an upside bias. It does seem that all the data that you ticked off is about slow and steady, kind of what we thought coming into the year. Between the beginning of the year we have this huge recession panic and a huge is the fed behind the curve panic and were about flat for the year on the markets. Im thinking about the interview in the journal this weekend where kaplan sounds more like janet yellen and that fisher who dissented more. It seems as though the view is coming around to, mike, the janet yellen view of the world. They called it the decline of dissent at the fed. We were hearing at the past meeting it looks like after the past meeting, a lot of these contrary voices out there seeming to contradict what janet yellen had to say. And now everyone is reading from the same book, were okay. We have the core of the fed speaking this week. Janet yellen speaking on tuesday. Bill dudley, in the inner circle, will be speaking out on thursday. Those are the folks who matter when it comes to determining fed policy. It will be nice to see more philosophically about the dollar. Dudley a few years ago said the fed has a special responsibility to Pay Attention to the fact that 60 of the worlds Financial System runs on the dollar. Like it or not, those moves can impact monetary things at home. In asia they were talking about a newfound focus on the Federal Reserve. Heres what was said about the u. S. And what is going on in the international economy. We understand that were in a Global Economy a global Financial System. What happens in brazil or china, in Southeast Asia or south america has a huge impact on the u. S. Economy in terms of employment and inflation goals. We have to take that into account. We have to understand whats happening around the world, how it impacts the u. S. Economy. We also need to be cognizant of the fact when the fed acts t does affect the Global Economy. Understand those feedback loops and all the ramifications. San francisco fed president john william observe os on our morning. How much weight will the fed be putting on International Developments and what does that mean for the trajectory of policy and the market . I think International Developments is a way of saying are the markets in panic mode or not . The markets respond to these global influences. Its more important when the u. S. Is growing at 1. 4 , it makes it more important on the swing factors of growth. Want to show you shares of pandora sliding this morning. Brian mcandrews leaving the company to be replaced by tim westergreen. Mcandrews did not give a specific reason for leaving. Shares down almost 10 in pretrade. Only to say the proper team and strategy is in place. Another founder returning as ceo to steady the ship. And a company seemingly to not know what its mission is going to be. Losing to sp losing to spotify and missing out on the opportunity to sell. They have been struggling. Pandora for a long time was seen as this Disruptive Technology that was going traditional radio out of business. It had streaming, the users, then what happened . They have been resolute in saying we have going after the huge pie of terrestrial radio. In reality the users, they only have so much time in the day to listen to music. Theyre switching among things. I dont think the business is broken. But is it as big and as immediate an opportunity as they thought it was going to be . Strategically it sounds like theyre trying to move beyond radio and do more with music. When you have a service thats so appealing when it starts, so disruptive, people will start chasing that. Theres no shortage of places to look. Apple music, many others. Can pandora find a way to reinvent itself into something relevant across the Music Industry . They talk about live events, having more immediacy out there. The big trick is if people expect things to be free and nearly free and consume allyoucaneat in terms of content, can you pay the people who produce it . They have not gotten that fixed yet. I was at a fitness class thing a week or so ago where the instructor kept apologizing for the pandora ads. You have to pay money to get rid of those. Thats exactly the point. Even for this business, i dont think they were making a mint, but it was something important enough to them, they werent paying up for this. At one point there were two in a row. They should go to spotify, you can listen to free. This will not help pandoras share price. Certainly not. Well keep an eye on that. Lets talk generally broader markets now. Lets bring in our panel here, gabrielle santos, and Brooklyn Dwyer from bmp paribas. Brooklyn, on the Economic Data out this morning, would you agree the inflation number was most important when it comes to determining fed policy and market implications . Certainly matters a lot. I think the disappointing print there highlights a couple of things. One is that we should be less fearful of runaway inflation. Some of these ideas that brew in markets. We can discount that. I think youre right in saying that Janet Yellens trajectory and her complacency with inflation has proven to be right right now. The other side of the data that were important is the revisions to januarys data which showed consumption was really weak. Those two pieces are key. What does that mean for the markets that there are major pockets of weakness and the u. S. Consumer is a major part of this economy, its not humming along in terms of spending, were not getting core inflation that is meeting the targets what does that mean for the stock market . Its a confirmation that the u. S. Consumer is a new consumer after the Global Financial crisis. We are not seeing the Consumer Spend 100 of the gas savings. Were not seeing that excessive amount of spending. But its Strong Enough to keep gdp around in line with that 2 average. In a way, it is another way to dispel those recession fears. But its a confirmation that growth will remain around this recent trend of 2 . Brooklyn, you know through all of the noise of this whole year, weve seen the tenyear treasury note yield remain in a very narrow band. Here we are, 1. 9 right now. Its sending a message of slow, steady growth. Not too concerned about an immediate pick up in inflation. Is that what you see for the rest of the year . Do you think we get a bit of acceleration which is a Consensus Forecast is looking for . Its funny. I think the tenyear yield could drop even though we get a pick up in inflation. A bit counter intuitive there. We think the trajectory for or likelihood of fed rate hikes is slim. Right now it looks like this market turbulence continues to show its head every couple months. We think that will keep the fed on hold now and Slower Growth. This kind of fading gasoline price savings and impact on consumption is going to mean Slower Growth ahead. Thats going to keep the fed on hold for later. That longerterm trajectory of lower rates is probably going to hold down that tenyear treasury for quite some time. Friday morning our markets were closed, we did get corporate profits part of the gdp report. Ugly. Was horrible. Down 15 after there was some special forgetters there, like the bp oil spill. A lot of it was energy and gas. Even stripping out factors it was down more than 7 ithe Fourth Quarter. You wonder if it will rebound. Theres been a debate playing out, are we getting a clearer read from the gdp accounts . The accounts are more than gaap. Its basically the raw profits that will not be massaged or overstated for any purpose. I see it more as the baseline longer term. Not necessarily quarter to quarter moves, but shows we had a profits recession. Gabriela, here we are again, going into a few weeks, well get analysts numbers and theyre downgrading the forecast for earni earnings. What does this next cycle look like . The profits that we saw on friday confirmed that we had already been getting from Standard Poors figures. Meaning last year was quite a weak one for profits. Not just energy and materials, but the whole affect of the dollar and the concern there, the impact of the dollar. So i think if we look to this year, the key question is where is the dollar going to go . How low can Energy Prices go . Our view is that weve seen a lot of this pain behind us. Its probably already reflected last year. So we are feeling more optimistic about corporate profits because we see a fading of these headwinds this year. Especially in the second half of this year. Youre right, in order for the markets to move higher you have to see profits come back the way that we are expecting this year. Or expectations go so low that they can only beat when the actual bottom line number comes out. Thank you guys for joining us on a monday. Gabriela santos and Brooklyn Dwyer. Bernie sanders says he has momentum after sweeping the democratic caucuses over the weekend. On the gop side major tensions between trump and cruz. Lets get to john harwood. Berniementum, is that a thing . A little bit. Bernie sanders has always done well in smaller states, whither states, caucus states. Look at the wins he had in alaska, hawaii and washington. Big numbers here for sanders. Were talking about 70s and 80s. Hes rolling, right . Look at the delegate totals, hes not rolling that much. Hillary clinton with the superdelegate shes what is well over twothirds of the delegates she needs to be nominated. He needs to collapse confidence in her campaign to switch the superdelegates. This weekend will not do it. Hell have a chance in wisconsin which votes next week, try to knock her off in a big state. But he has to have not just wins in big states, but big wins. On the republican side, Donald Trumps lead in delegates is shakier over ted cruz. He still has an advantage. He still can get to 1237, the delegates he needs. He has to keep rolling. He has to keep winning. The polls show, for example, in wisconsin, a case where the winner takes most of the delegates, not all, trump has a lead but a narrow one. Well see how the trash talk plays out over the next week and whether it shakes trumps lead in wisconsin and states elsewhere. Still a chance for the stop trump forces but donald trump has the edge. The trash talk very much alive on the campaign trail. John harwood, thank you. When we return, yahoo in the m a spotlight. Well explain the latest. Plus douglas holtzeakin with eyeopening thoughts about the cost of deporting immigrants. Dow futures up almost 43, nasdaq up 16, and the s p 500 up 5. More squawk on the street live from post nine at the New York Stock Exchange when we return. , you can fly across town in minutes or across the globe in under an hour. Whole communities are living on mars and solar satellites provide earth with unlimited clean power. In less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. And if you thought that was amazing, you just wait. Welcome back. The battle for starwood is not over yet. Anbang has come back with a higher bid for Starwood Hotels. Shares up 2. 5 in pretrade. This is the latest in a bidding war between marriott and anbang. The nonbinding offer is worth 82. 75 her share, when you add the value of a spinoff, the transaction is worth 88. 66 a share. Shares are trading around 84 and change this goes back to april of last year, this saga. Every time it seems like, now we have no, now we have the final offer. Anbang seems determined to own this property. Seems like it will be determined by marriotts pain point. How much more do they want to go back and get the deal done . What can they assume in terms of efficiencies and values that they can create as a company. This is a consortium, anbang, yes, but j. C. Flowers and others. They clearly wanted this property. Marriott made a strong case to its investors that it needs to be bigger to be internationally competitive, and starwoods footprint is more international. They have a million rooms that would put them as the next biggest in the space. If this deal falls through what will happen . I think it will be more inferior for marriott shareholders if though have to keep paying up more. Interestingly, investors its trading as it continues to be a bidding war for this stock. This latest deal is 81 per share. Starwood hotels is trading 84. 25. It continues to be propelled every time they come back. Just note on the deal price, this is 4. 75 per share more than the original buyout offer from this chinese company. We knew this was coming. We knew they were serious about gaining foothold in american hotels. As previously announced, starwood plans to convene its Stockholder Meeting for the 28th, today, and immediately adjourn it. Starwoods board has not changed its recommendation in support of the merger with marriott. They are going along as if marriott will happener. Arne sorensen came on with us that day, they are after the Luxury Brands like w hotels, and st. Regis resorts. There was a question asked about sheraton as well. This is a prize, this is a fight. We will talk about a bullish march leads to a weaker april and up next possible warning signs for stocks. Looking at futures again, just about eight minutes to go before the opening bell. S p up about five. More squawk on the street straight ahead. 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. Sara, well start off on my righthand side with the fx markets, the dollar and Dollar Strength here. It could be a big deal. Were less than a month away from corporate earnings season. The strong dollar has been cited in the past as weighing on corporate earnings. Well see if the strong dollar is a warning sign this time around. Stronger dollar, maybe weaker commodities. Oil and gold fall. Maybe a sign things are not as good for that particular part of the complex. And icy ipo markets. The renaissance ipo market is not performing as well as in the past. Banks under pressure. The financials under pressure. One of the worst performing sectors in the overall market. And transportation stocks, huge rally off the january lows, up 26 . Maybe showing signs of weakness again. Again, sara, some warning signs, a lot of fed speakers and a big jobs report this week. Back over to you. Well see if we can climb the wall of worry again. Opening bell just moments away. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. 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. Welcome back. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell is set to ring in just about 30 seconds. Talking on a merger monday, no major news to kick things off. A couple smaller things were watching with regard to yahoo maybe microsoft getting involved. There the latest twists and turns with the Starwood Hotels deal. You know a couple other things that could move the needle, but nothing major. Watch starwood. That stock probably will trade above the likely new value of the bid. People think this bidding war is not over. 88 and change we understand. Pandora well watch. Here at the big board, shepherds board ringing the bell. At the nasdaq, east side house settlement. Lets look at pandora, which just replaced its ceo, bringing back founder Tim Westergrin there. We wi this company in the midst of a transformation trying to get beyond the radio service. When you have a founder come back, especially at these Tech Companies t means there was strategic cross roads, they had a difference of opinion on how to proceed. Stakes are high for pandora. Yahoo some companies trying to make a bid, but there has to be some outcome here. Is it aol style . Is this company, your former employer, left hanging . Yes. All these reports, all these players trying to jockey for position is pushing yahoo towards a full sale process of the core business and not just lets wait and see what comes through the door. So starwood has proposed a new slate of board members. Is the starwood proposed board on a different page than the actual yahoo board. Starboard, yes. It seems like theyre both trying to engineer the sale of the current company. The current board is dragging their feet, giving lip service, but not saying we want to send this to the highest board. So starboards board is trying to find new hands for the asset. Whats interesting about microsofts potential role, they might throw money behind a private equity bid. Microsoft has some agreements with yahoo and saying maybe we want to preserve those revenue streams. You mentioned starwood starboard lets got it hot, Ticker Symbol h. O. T. We got word a few minutes ago that anbang has upped the ante for starwood. 88 and change. Starwood shares up 2. 3 . The only stock doing better on the s p now is marriott which is the biggest gainer. Up about 2. 7 . Starwood hotels just below that. On this idea that the chinese firm will take it, and starwood will not shell out thats the way marriott will trade. If it is less likely the deal is happening. That 88 amount is notional if they spin it off. Well be looking at 82. 75, so maybe thats not cash in hand. Interesting. In this case it will be some average of what people think is likely between the actual deal and the spinoff happening. Marriott shares up 2. 7 . Gamestop getting crushed, missing on revenue. This came out after the bell on thursday. Ugly quarter, ugly guidance. This one continues to suffer. On a day, by the way, where facebooks oculus is set to hit the market. Virtual reality. Gamestop trying to say we have a couple billion startups within our own company. They have a string of stores aimed at servicing apple computers. Gamestop has been running fast to get away from the idea of just console sales. They did the used game exchange. All of it has worked on some level. They kept going a lot longer than people thought. The other one i would watch is Berkshire Hathaway getting an initiation from ubs with a buy rateding with 234,000 price target. Thats up about 34,000 from the current price. Just 34,000. Well, its about 15 upside. Basically be an alltime high for berkshire. This is fascinating. We talk about buybacks, the Warren Buffett philosophy on this is not what you would expect. Hes not necessarily against it. Thinks it could make sense. Saying if a company cant grow a dollar, it should not retain a dollar, it should give the capital back to you to do something with it. Berkshire indicated 1. 2 times book value is where it could get involved in the stock if it felt like it was trading at those levels. Some are putting that as a floor in the analysis. Profit improvement at geico. We talked about the challenges coming up with driverless cars. For the time being, geico continues to be a profit center. You have to like the Railroad Business at this point, too, if you want to like berkshire. If you took what Burlington Northern santa fe, if that business lost value like other stocks did, its a long way back. What is also interesting, a broader call on the market saying an uncertain economic and market environment will benefit the likes berkshire with its strong Balance Sheet, strong permanent capital, cash generation, industry leading portfolio and businesses, which means it can do m a and build for the future, leading to multiple expansion. The stock is trading cheaply. Definitely a defensive stock. Also interesting talking about the buffett premium. They have their Shareholder Meeting coming up, streaming on yahoo next month. Well hear about nevada furniture mart. They think the buffett premium has declined overtime and he set up the structure in a way that can be sustainable. Apple could be a mover. There was a bullish note from rbc and Capital Markets about apples ability to generate more cash and return more cash to shareholders. Apple trading up 0. 25 . Saying they may announce plans to boost buybacks to 40 billion to 50 billion annually. Could raise the dividend to 2 plus. Apple on news on apple tv, finally get nothing its own content with will. I. Am, a show about apps. Not sure about this one. It will be interesting to see how that does. A quick mention on two stocks that will join the s p 500, we have pepco leading, being bought by epsilon. Lets get to bob pisani on the floor with more on whats moving this morning. Mixed open, japan we saw a fractional gain. Most of europe is closed for the easter holiday. Lets skip over that. Go straight to what were expecting here. Were coming towards the end of the quarter here. Some very interesting gainers and laggards going on. Lets take a quick look here. Despite the talk about energy, materials rallying in the middle of the quarter that did happen, the big gainers here have been the telecom and utility stocks. Put up the chart here. Telecom up 13 . Utilities up 13 for the quarter overall. Not far from historic highs. Look at that. Telecom just off an eightyear high. Industrials are all right. Everything else is lagging. Everyone thinks energy has had such a great quarter. The rally from the middle of the quarter is strong. It doesnt show up on the quarter. Financials are lagging once again. The rise in the hope for a rise in Interest Rates. Healthcare being used as source of funds to buy Energy Materials recently. Specifically biotech. Mixed picture of a defensive play. Now, we this might continue. We asked our friends at kenshow what happens when you have low volatility, a stronger dollar and positive gdp growth. The answer is you get defensive. Utilities, health care and Consumer Staples outperform in low volatility, stronger dollar, low gdp growth environments. I think the bigger concern is what happens when we start getting into q2 in a decisive way. The middle of april here. Since 1995, we have seen look at the numbers. 8. 7 to the decline on the downside for q1 earnings. Thats terrible. If that continues, well have the worst since 2009. I dont think that will happen, but still poor. Revenues down 1. 1 in the revenues. Also not very good. January 1st we were expecting that to be up 2. 6 . As far as the earnings for the sector, Everybody Knows how awful energy will be. Its not that great in a lot of others. Thats not a typo. 99 decline in energy. We are just on the cusp of going negative on Earnings Growth for the First Quarter. Materials down 22 . Industrials down 13 . Even financials are down 8 . The only growth area is telecom and Consumer Discretionary and healthcare. Thats about it. We are not expecting any positive growth in earnings until the third quarter. Q2 is already negative now. Were talking about four straight quarters of earnings decline. Thats a problem for the market. Want to note the fed speakers this week, we could get market moving news. Janet yellen speaking tomorrow at the Economic Club of new york. We dont have a topic. Shell take questions. Alan blinder will be there. That could be market moving. Bill dudley speaking on thursday in virginia on the role of the Federal Reserve. These are all voting members, and Loretta Mester speaking friday at the harvard club here in new york. Loretta none to be a hawk on the fomc. Right now fractional gains in the Dow Jones Industrial average. Bob pisani, thank you very much. Plenty of Economic Data to digest and look forward to. Lets go to Rick Santelli in chicago. Good morning. Good morning, sara. This morning the consumption, the spending side was revised real light. Subtracted 0. 4. Many continue to talk about that. See if theres any implications or volatility to the numbers, of course. As steve and the gang continue to point out, none of the data is super highly accurate. You have to take a bit of an averaging view with all data. But these trends still arent anything to write home about. Look at the intraday 10, low yield made as the data was relesir released at 8 30 eastern. It is coiling quite tight. Fairly close to the median aspects of the range over the month. And many continue to debate the issues of nonvoters getting hawkish. Maybe theyll be more hawkish if they were voters. Bob pointed out the fed speak, the questions and answers. I dont care much about the questions. Its the squishy answers that we had at the last press conference. Hopefully we can narrow those down. There definitely seems to be a bit of mobility to what actually is going to have to occur to see more normalization. If we think riskon, a lot of things fall into place at this point. Certainly not the fed tightening, just doesnt seem to fit with the markets. Look at the hyg, the high yield, starting on february 1st. Look at that pattern. Moving higher. We know that the spreads from barclays are narrowing. That all fits. Look at the crb index in the same period, from february 1st. Thats the riskon trade. I know energy is a big part of that. In the end, those two are married together. Both those issues have huge ramifications for the stock market. Last and certainly not least, even though much of europe is closed, we see the dollar drifting south. Almost down a third of a percent. If you look at it beginning in february, its not exactly the opposite of the previous two riskon charts. It is close. It underscores all this angina about the Dollar Strength. Yes, weve had a bounce but still far below levels of december when we did see a normalization or the beginning of the year when we saw more volatility. Kelly, back to you. All right, rick. Well see you in a bit. Lets look at oil prices now with Jackie Deangelis over at the nymex. Good morning. Good morning to you. We are bouncing around the flat line but holding under 40 a barrel. That does have the momentum pointing to the down side. Dollar still in focus. Talking about a range of 37 plus or minus five dollars. The next catalyst is the april 7th meeting in qatar. Ive been getting questions about this i want to focus in what will happen here. This is owe pep ppec producers nonopec producers getting together on a freeze. Not everybody appears to be showing up. Some opec members like libya not coming. The Iraqi Oil Minister resigned on friday. Its unclear if theyll have a delicate there. Russia is interested in a freeze, but the u. S. Has not said anything about that or going to the meeting to talk about it. Theres a lot of uncertainty about what will happen midapril. That could impact prices from here. Traders are telling me investment analysts are telling me that they think oil prices could see another leg lower from here, especially if we see the fluctuations in the dollar that weve been seeing. Sara eisen, back to you. Jackie, thank you very much. When we come back aceo shuffle at pandora. Shares are getting slammed now on news its founder is coming back to run the company. Well take a closer look at what is at stake here for the online Music Service when squawk on the street comes back. Frank abagnale. Convicted felon and con man. That was a long time ago. You know, they made a movie about it. You were shown to be quite skilled at fraud. Times change. Now i help catch the bad guys. Me too. I help banks detect fraud by applying cognitive analytics to public financial records and social media. So if somebody said, catch me if you can. . We can. Lets do a sequel. It could be a buddy movie. I would like to have a buddy. A dollar sign looks like an s. When you send financial info through a website, look for a url beginning with https. The s is the difference between an encrypted site and one thats not. S equals secure. [light instrumental music] checking in on shares of pandora, sliding down almost 10 this morning. For more on the changes, joining us is michael pachter. Michael, whats your view on the stock. What do you think about these moves . You know, i love the company and i think that they will thrive in the next several years. I think that mcandrews probably got bounced for being a little too ambitious, doing way too many things at once. Investors, you know, who bought into an Internet Radio company now find themselves with a company thats positioned to go from domestic only to international to ad ondemand. And they already added a ticket business. I think the ticket business was a mistake. I think hes paying the price for moving into that. I think hes now running into competition from Services Like spotify that are massively successful. If you think they should be focusing on the core of what pandora does well, what about all this competition in this space . Its been probably driving down margins and making it more challenging to continue to make inroads. Thats 100 correct. Theyre going to probably be unprofitable for a few years. Theyre probably going to burn cash for a few years. Its going to cost money to move internationally and go ondemand. The end game there is the consumer can get a complete solution of discovery and ondemand and merge those two together. Which is a compelling offering. Its something spotify doesnt do well nor does apple. I think they will compete favorably. I think the guy who invented the Internet Radio service, Tim Westergren coming back, its running something completely different than what he created. I think thats like jerry yang coming back to yahoo mark pincus coming back to zynga. Investors dont like it. There you go. Investors dont like it right now. Are they going to give the company those several years that you say it might need to actually, you know, realize this opportunity . I think if they start to actually succeed by attracting subscribers to their new ondemand service, yes. It will look like netflix. I know that you guys all love netflix, you know i hate it. But netflix doesnt make any real money and they burn cash like sailors. The street loves them. If pandora emulates netflix, burns cash, breaks even on eps basis and starts growing subscribers, the street will reward them. That wont start until 2017. Its interesting, the netflix analogy, they have a lot of original content you cant get anywhere else now. Theyre still ahead of the curve there. You read about spotify, i cant remember the big song lean in whatever it was, that spotify helped develop and then became this huge sensation. They support artists. Theyre trying to get new music out there. What is pandora offering that is unique and compelling enough to drive that growth thats so important for the street . You know, i would say customization. Theres Something Like 50 million or 60 million songs out there. The average person has heard about 100,000 of them. Discovering another 4 million, 5 million songs and another several hundred thousands of artists is analogous so new content. If you start hearing things you have never heard before thats a fulfilling experience. People are willing to pay for that. Spotify has done well with recommending artists. I think pandora can do equally as well. If you hype that with Internet Radio where you discover artists, determine you like them and add them to your list, thats original content. Well see if they can get it right. Thank you for joining us. Pleasure. Michael pachter there. Shares are lower this morning of pandora. Well be right back. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Our next guest anticipates the u. S. Dollar strengthening more as the Federal Reserve gets closer to resuming Interest Rate hikes. Are headwinds from the strong dollar creating a risk factor for overall markets . Joining us to discuss it is eric valoria. How much stronger are we talking about. Dollar index went up 1 last week. People seemed worried about it. We think only gradually stronger. In the nearterm we see potential for the dollar to continue in this consolidated phase, which it has been in since the beginning of the year before gradually resuming strengthening trends. So, we got a taste from nike about the strong dollar drag on earnings. Well get earnings in full in the next few weeks. How big of a hit are you expecting from the currency . Well, generally we forecast currency trends and look at fx markets with the focus there. Overall we think that given some weakening in corporate profits and fx having somewhat of an influence on that, that could have influence on the broader risk environment that would then weigh on some risksensitive currencies. Could support safehaven currencies. We see the expected and actual Monetary Policy actions from Central Banks as a key driver in Foreign Exchange markets. Whos in charge . With correlations, theres always someone leading the charge, whether its the price of oil, the u. S. Dollar, stock market. Feels like were in a moment where the dollar is leading. Would you agree with that . Well, we could say that the expected Interest Rates and Interest Rate differentials are probably the most relevant factor influencing currency markets. Right now the Interest Rate differential suggests that the dollar could have room to strengthen gradually overtime. Thats probably the key focus for Foreign Exchange markets. Expect a stronger dollar, thank you. Eric valoria, thank you. When we return, breaking news on pending home sailors, plus an exclusive with ubers ceo, Travis Kalanick. G our resed 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. 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. [ thats a good thing, eligible for medicare . But it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare Insurance Company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. 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Carl quintanilla, david faber, everybody is off. Stocks started out looking like futures would open higher. Weve largely give than up. The dow hanging on to a gain of 17 points. S p barely higher right now. The nasdaq in negative territory. Crude oil prices have turned lower even as the dollar is lower. Lets get to the road map. The First Quarter is almost over. Will the market rally fade . Find out if you should be getting out of stocks now. Plus anbang sweetening its bid for starwood. We have the latest on the hotel battle. And ubers ceo, Travis Kalanick weighing in on the future of the company. Lets get straight to Rick Santelli with breaking news on pending home sales. Holy cow is all i could think of. Up 5. 1 on the february read of pending home sales. Now, of course 5. 1 is the year over year number. If we look month over month it was up 3. 5 . Thats very solid as well. Both are extremely above expectations. Like all data point theres ther some revisions. Last month, down 0. 9, now 1. 5 . Overall, even with the revisions, some Pretty Healthy numbers there. Personal spending, of course, this morning was a bit of a downer. All in all, yields are close to unchanged. Euro the dollar started out higher this morning before the 8 30 data. Now down about a quarter of a cent. Rick santelli, thank you very much. Lets show you stocks now. They are mixed. Seeing some marginal gains in the early market action. Dow is up 20 points. Is it a sign the rally is fading . For more lets bring in larry mcdonald, help of global macro strategy at acg analytics and erin gibbs from s p capital iq. Larry, we are getting some good nick data, pending home sales just the latest. Heres the key. The Economic Data is telling us half the picture. As the data comes in stronger this is a cycle weve seen twice since september. Data comes in strong, dollar reacts, youre strong on currency, you know a lot about the dollar. As the Dollar Strengthens, that crushes commodities and emerging markets, hurts china, then we go into another risk off. We have been through this twice. Credit risk is vetoing the policy path and its overpowering Economic Data. Erin, i wanted your take on equities. Were not seeing much reaction in stocks. The dow up about 10 points. It cut its gains in half it does feel sluggish. Coming off a low volume week want direction do you think stocks are headed in . I see somewhat similar likellik like larry. We have people spending money, yet we have this huge drag on overall earnings from the energy side. You see that ultimately in the earnings. 1. 5 Earnings Growth. The second worst year for Earnings Growth since the economic recovery. For me, that means well see us hovering, going back up and down but staying relatively flat. We could see another down week this week if theres any negative news. There really are not fundamentals to push the market higher how. On that note, erin what are you seeing in terms of earnings expectations outside of oil and gas, which we know will be weak . Bob pisani brought up the fact that the weakness is spreading. After that weak corporate profits number and the Fourth Quarter gdp report on friday there are some questions about the rest of the economy and sectors. If you take out Earnings Growth if you take out energy t doesnt look so bad. Right now about 4 to 5 Earnings Growth per year versus 1. 5 . Thats still not great. Typically we want something in the high single digits, low double digits to consider it a healthy economy. There are still a lot of weaknesses, materials. Concerns in staples. We dont see any Revenue Growth in all. When you look underneath at the Profit Growth but in the Revenue Growth, again, across the different sectors, were not seeing a lot of strength exempt for some in the Consumer Discretionary and healthcare. In the face of that larry, i know youre worried about credit, the chief u. S. Equity strategist from city growth, the worry is the pain trade could still be higher for the broader stock market. What has worked twice now in both cycles, both times credit risk vetoed the feds policy path in september and march. Both of those rate hikes in september and march were vetoed. Defensive stocks did extremely well leading into the veto. Right now the entire street once again is telling us well get a hike in june or september. Theyre all unanimous, all on one side of the boat. You try the other side of the boat. Eric what will you be watching . After a slow week, well get all sorts of Economic Data and more fed speak what you are looking at . For us this week, its about the fed. Im looking at high yield. That is an indication of where we see some bigger risks. Erin, hang on. Sorry to cut you off. We want to take you to georgia right now where the governor is speaking, of course, about the religious freedom bill. Have a listen. I have examined the protections that this bill proposes to provide to the faithbased community. And i can find no examples of any of those circumstances having occurred in our state. It is also apparent, as i have indicated, that many of the examples that are being used are occurring in other states that have taken very different statutory language and placed it in their states laws. House bill 757, as you know, appeared in many forms during this recent legislative session. Had the bill been the socalled path to protection act, i would have signed it. I have no had no issue with that bill. However, other versions of the bill contain language that caused me some concern as it caused many others concerned concern, that they may, in fact, encourage or allow discrimination that it be sanctioned by the state. I have appreciated and do continue to appreciate the efforts of the members of the General Assembly as they attempt as they attempted to address my concerns, and other ways that have been expressed as concerns by others in our state. What i do today is in no way disparaging of their motivations or their efforts or of those who support this bill in our state at large. Their efforts to purge this bill of possibility that it would allow or encourage discrimination illustrates how difficult it is to legislate on something that is best left to the borrowed protections of the First Amendment to our United States constitution. That may be why our Founding Fathers didnt attempt to list the circumstances of which religious liberty could be embraced. Instead, they adopted what the Late Supreme Court Justice Scalia classified as negative protection. Now what that meant was they simply said were not going try to tell you what religious freedom does for you. And what government is going to do for you. We will say in our constitution, enshrined in our First Amendment thereto what government shall not do. And that is establish a religion or interfere with the free exercise thereof. They had previously proclaimed, as we all know in our declaration of intense, that it was our creator who had endowed upon us unalienable rights. That is god had given us rights that included liberty, which embraced religious liberty. They had seen that it was clear that liberties were given by god and not by mans government. Therefore they deemed it unnecessary to attempt to enumerate in statute or constitution what those liberties included. In light of our history, i find it somewhat ironic that come in the religious Community Today feel that it is necessary for government to confer upon them certain rights and protections. If, indeed, our religious liberty is conferred upon us by god and not by manmade government perhaps we should heed the handsoffed odmonition. When legislative bodies attempt do otherwise, the inclusions and omissions in statutes can lead to discrimination even though it may be totally unintentional. For chose in the religious community, some of whom have resorted to looks like we dropped the shot there. That was george governor nathan deal vetoing legislation that he said would encourage this is a win for business in the sense that it was largely these companies lobbying against this legislation. I did not realize until looking into this story that georgia is number three in the country in terms of filming locations for hollywood outside of new york and outside of california so this is a big business that took in 2 billion. Lets get everybody on board here what was happening was a religious freedom bill, the Lgbt Community suggested could be used to discriminate against them. This is an lgbt victory. The governor is saying he will put the fear of discrimination above that religious freedom. As sara points out, it indicates that business and tech in particular is beginning to ring the changes, or keep the lid on the resurgence of this type of debate which after the gay marriage ruling in the Supreme Court we knew would be the cutting edge. It was up to governor deal to veto it. He has an interesting background. Formerly democrat turned republican, coming out in what is seen as, yes, a victory for lbgt and business. Anbang has raised its offer for Starwood Hotels as it seeks to challenge the merger with marriott. Theres two things you need to know about this offer thats come through. The starwood board saying, look, the chinese came back to us on saturday with an offer, an unsolicited offer again. Weve then managed to raise that over the weekend. It started off being 1. 49 above what marriott is offering. Over the weekend they raised that to 3. 22. Remember that the china offer is all in cash. Marriott increased its cash portion of the offer it has on the table. But this has always been a cash offer from the chinese. Theyre inching higher along the way. The other thing to recognize is that it is not as yet a confirmed as a superior offer from starwood. In other words, theres still work they think they need to do. Because the regulator was getting itchy about the fact that they would have 15 of the assets outside china t would appear with this offer that they have come to over the weekend that thats not primarily a concern. The indication i have from sources familiar with the situation is that its not the reason its not yet a confirmed offer. The ball goes back into marriotts court. Are they going to come up and match this raise their offer . Are they not . Some are suggesting that the board at marriott might have some difficulty raising the offer from here. Theyll happily come along to starwood and say deal off. Ill take my 450 million breakup fee. We spoke to arne, the ceo of marriott last week on the show. I asked him specifically then if the chinese come back with a higher offer, will you come back with a higher one yourself . Have you told starwood this is a final offer . He said, no, we have not told them its our final offer. No, we havent. But again, were not going to talk about what might happen. I think we have teed up something which not only values extraordinarily well in the market today with the Closing Price on friday when combined with our cash offer, but it also offers a unique upside in the future. Starwoods shareholders will own a significant stake of the surviving company. Theyll be able to ride the upside in the portfolio which should be enhanced growth and we think a bright future. Thats a unique part of our bid. That is always the choice. Do you take the high cash offer ultimately . Do they recommend the high cash offer from the chinese or do you take a lower mixed offer . Another wrinkle in this. Because marriotts offer on the table has a big stock componenc, if marriott stock starts to rally, their bid looks better in a competitive fashion. People have got you would expect this type of reaction. Marriott could walk away here. I want to know what happens so my spg points. Nothing. Nothing happens to your spg points. There is talk if marriott became the owner, it would be less independent than if anbang were the owner and they could combine the loyalty programs. The promise from marriott is theyll run both programs simultaneo simultaneously. The hotel chains are becoming more like Online Travel agencies. They recognize the value of the database from the spg and marriott rewards. Thats a huge source of value for them. Thats partly why they raised the offer. I wonder if anbang wants the assets, get funds out of china. Protesters disrupting a memorial for victims for brussels. Well talk to the former assistant director of the fbi when squawk on the street comes back. L ild portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Unrest in brussels over the weekend as protesters interrupt a memorial and raids continue across europe. This as a Suicide Attack killed 72 people in pakistan on sunday. We go to brussels live this morning. A lot of developments over the weekend and this morning. Belgian police saying they are still appealing to the public looking for help in identifying a man seen on Surveillance Video during the attack last tuesday. A man in a white jacket and a bucket hat has been missing. They believe hes been a suspect in the attack. Over the weekend there was a individual charged with murder, attempted murder and belonging to a terrorist organization. Local reports said that man, faycal c. Was that man, but it turns out he was not. So that man still remains at large. Raids did continue over the weekend. 13 different home searches took place across the country. Nine people taken into custody. Three of them have been charged with participating in a terrorist group. They did not specifically say whether they were linked to last tuesdays attack. You were talking about the protests that took place behind me over the weekend. A group of right wing demonstrators demonstrating anti isis slogans game to the square. It was a tense moment, they came in facetoface confrontation with protesters paying their respects at the vigil. Police forced them back using riot canyons and water. Today belgian officials have refused the death toll from tuesdays attack, that number is now 35 that does not include the three attackers. Among them two americans that the state department has confirmed were killed in the terrorist attacks. Guys, back to you. Thank you very much. For more we are joined by former minufbi assistant direct chris swecker. After we learned who is not involved, this faycal c. Brussels is coming from such a running start trying to get ahead of this problem and not to mention trying to fend off future attacks, chris. What would your recommendation be from here . Theyre overwhelmed. The eu and belgium are hampered by loose laws when it comes to pretrial detention, detention or human course penetration of organizations like isis. Agent provocateur laws. They need to loosen up all of that and join the rest of the world in terms of being proactive with prevention rather than investigating after something happens and kicking it down the road after something happens. Do you think they will . We a we saw a huge change in the dialogue from france after november 13th, but still theres a Large Population of people who feel as though they dont want to they feel privacy, security are sack ksacrosanct. Do you think this will change the hell proceeding there . It will be interesting to see what happens. Theres tension between privacy and safety. In europe and in the eu in general they have always bent over backwards towards privacy. I think youll see them revisit that, being much more proactive in this sense. Theyre not theyre not going to move quickly. The other thing is they seem to move quickly when something bad happens, but you dont see a lot of enforcement activity between the events. Precisely, when we had know they had been caucus in their overnight raids. This is a place where theres a large amount of International Business going on. Do you think this will turn people away longer term . I dont think its any accident that they chose brussels for the attack and the airport because thats the home of the eu. This is not just an attack on belgium, its an attack on the European Union in general. Will it affect business . I think in the nearterm people who ordinarily would be traveling to brussels and belgium in general probably wont coming from the u. S. If nothing bad happens, it will pick right back up again. The problem still is not solved. The treaty in europe is difficult to work with. You have Syrian Refugees moving freely between borders. They have a serious problem. Chris, i wonder with pakistan over the weekend, these attacks are becoming so regular, almost every day somewhere around the world some type of massacre or attack happens. What is the danger in becoming numb to this . If this becomes the new normal and what the danger is there in terms of fighting it. That can very well happen. The steady drumbeat of attacks tends to numb the population. Everybody is shocked whenever something bad happens, but in between you dont see a whole lot of Critical Mass developing to make changes, particularly with the things we just talked about here in the u. S. Its different. We do get motivated and we do a lot of activity between the attacks. You can see the fbi and other Intelligence Services are in a fullcourt press pretty much all the time these days. Yeah. Hopefully that will do more to fend off any attacks like this. Thank you for joining us. Thats former fbi assistant director, chris swecker. We are almost at the end of the First Quarter of the year. Mike has been crunching the numbers and talking to analysts and traders. Well look at the technical field position. Well look first at the s p 500. Heres the past year. We are in the 2030 range. People thought that was important because it would open up this way to get up to the change we were in most of last year. This was a lot of time spent between the alltime highs and around 2050. Weve been stuck below that point for most of this period. Heres the other context. After the september selloff, we this this rally here. 12 in 26 days in the s p 500, similar to here that had a lot of people saying does that mean we have to roll over this way . We started to correct in a gentle way. It has not been dramatic. Today were staying with the idea a pull back to around 2,000 would not be a big deal. People are saying the stakes are getting high if we get below that 2,000 level. I want to look at crude as well. Lets clear that off. Crude oil has been really one of the main drivers of this rally. This does not look like the steepest rally, but its a big one here. Up to 39 right now. In the mid 20s. About a 50 move if you were going to get bullish on stocks after this move, you had to think there was more upside to crude. That remains to be seen. Around that time we had a top in crude. Did you see this kenshow stat over the weekend . We reached the end of the First Quarter, you raise the losses, you are basically flat overall. They crunched the numbers back 36 years, that tends to signify the median gain of 2. 2 for the 12 months overall. It may be an indication if we hold the levels youre talking about, an indication youre flat for the year overall. Flat for the s p 500 would be 2043. We have to go up a bit from here in the remainder of the quarter, which is three more days. But it will show us we basically have been sliding sideways, albeit in a jagged way. The lining at the end, summer is almost here. Sara . A big weekend for bernie sanders, sweeping all three democratic caucuses on saturday. How will it influence the Clinton Campaign . The latest on the race for the white house when we come back. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Good morning, im sue herera, here is your cnbc update. Pakistans Prime Minister visiting the injured in lahore. The blast killed at least 70 people in a crowded park. A breakaway pakistani faction of the taliban claimed responsibility. Four more people wounded in last weeks terror attacks in belgium have died bringing the death toll to 35. Four americans were killed in the attacks. Belgian prosecutors say three people have been arrested on charges of participating in terrorist group activities. Rockets fired by taliban fighters are striking the compound of the new parliament. Three longrange rockets were fired from a hilltop several hundred feet from the parliament building. And aerial footage shows the famous ruins of the historic city of palryma. A kremlin spokesman said only russian air support was provided. No Ground Troops took part. That is your cnbc news update. Simon, back to you. To the race for 2016, of course exactly where we are on the gop nomination. There is a promise from donald trump and ted cruz to deport some of the 11 Million Immigrants in this country. Douglas holtzeakin was director of the Congressional Budget Office and an economic adviser to john mccains 2008 campaign. Welcome to the program. Thank you, simon. How do you get to this figure remind us how you get to the figure of 400 billion to deport those that are undocumented. Well, there are really four stages to deporting somebody. Step one, you have to detain them. Find them. Number two, they have to be housed during their detention. Number three, they have to face a judge. Number four, you have to deport them. So, in looking at the implications of saying well take 11 million undocumented immigrants and deport them, we simply followed our noses and added up what it would take do at each stage. Put this in context. 400 billion would be 10 roughly of the federal budget . Yes. This is an enormous amount of money. Its a scaling up of Immigration Enforcement that wasnt very hard to imagine. Were about 5,000 i. C. E. Agents now, he would need 85,000 apprehension officers, 12,000 new courts, 37,000 chartered bus rides, chartered airplane rides. The scale of this activity is not something americans can appreciate in terms of numbers. If it were to take place in two years as donald trump suggested t would take 6 of the labor force. That would have an implication for economic performance, probably a loss in gdp bigger than recession. The argument for many is their argument goes our jobs have been taken potentially by these people. I assume the logic would be this is a reallocation of those jobs to other people within the economy. Are you saying the economy could go into recession as a result of this . Yes, i think thats the right way to think about it. 6 of the labor force would go away. We have unemployment thats under 5 . You couldnt plug the unemployed into those slots in some sense. Would have to have that plus more people. There might not be skill matches. And nothing takes place that quickly in an economy. In two years of pulling people out we wont get automatic replacement. You not only lose their productive capacity but you lose their purchases. They live in housing. They buy things at restaurants and stores. Theres clothing. Theres big implications that would look a lot like an economic downturn. Since you published the report, theres been a fierce debate online. Some people saying this is the law. What are we saying . The law is too expensive to implement . Of discussion youve seen what most caught you. You are saying this would be a huge deal for the economy and maybe people dont realize that. Of the stuff you witnessed online what most took you back . The most important thing to recognize is we are not taking a stand on whether this should be done or not. Were trying to price out the implications of enforcing current law. Weve done that before. Were not trying to price out enforcing it all in two years. And the things that you read online and hear about is, well, youre saying were in favor of illegal immigration. Absolutely not. The question is what do we do with those here illegally . One possible route is massive deportation. Were trying to figure out what that would cost. There are less extreme steps, fines and the like that would be less expensive and less economically impactful. I will ask something from your political expertise here. When donald trump says he is going to send undocumented workers back home as fast faster than your head will spin it will be so fast is the direct quote, do you think its politics bluster . Surely donald trump would not want to preside over a recession early in office. I think the most generous interpretation is they have to the thought through the implications of campaign promise. Certainly that happens. No doubt about it. It could be that in the end hes fixed to a policy that says we will deport everyone here illegal illegally, but it does not happen in two years, it takes 20 years to enforce the current law. Theres a lot of latitude here with the same objective with different timing. One last question, as a policy prescription, as you run through the options and you still think within your estimates that 20 of people would return any way. They would say, okay, im going home. You are suggesting that if, for example, there was a policy of giving 1,000 to each undocumented worker who went home and a free plane ticket, potentially that could cut into the problem . Right on the paper, right when it was announced 20 of people would go home. Were looking at the costs of the remaining 9 million, and looking at the legal avenues to deport them. If it were the case that we would put cash on the table and say please go home, there would be some take of that. The exact magnitude, i dont know. We could take a look. Thank you. Thank you. We had a news release come through from marriott. Already this morning the chinese have come through with a higher offer for starwood. Its an allcash offer, that beats the cash and stock offer you have on the table from marriott. The release from marriott seems to suggest theyre sticking by the offer that they have at the moment. It seems to me its a holding release in advance of starwood actually nailing its colors to the marks and saying, yes, this offer from the chinese is superior, its documented, what you are going to do, marriott . So a holding release from them, but i think presumably the Shareholder Meetings scheduled for today still go ahead . Starwood said they will adjourn it immediately. Reconvene perhaps april 8th. Today was the day both sides were supposed to vote through the original deal. Yes. The chinese came along and twice now have tried to counter that. And said we still want it. Anbang with its additional upbid. Still ahead, arent venture capitalist tim draper joins us on squawk on the street, his take on Virtual Reality and how the president ial race is affecting silicon valley. So you can invest with more certainty. Mfs. Thats the power of active management. 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. Anything worth pursuing hard work and a plan. At baird, we approach your Wealth Management strategy the same way to create a Financial Plan built to last from generation to generation. Well listen. Well talk. Well plan. Baird. Shares of pandora sliding this morning. Ceo Brian Mcandrews leaving the company and will be replaced by founder and former ceo Tim Westergren. Mcandrews did not give a reason for leaving other than to say the proper team and strategy is in place for pandora. Shares have fallen over 28 over the past 12 months. The average target price, 13. 50. Implying a possible 36 upside. Back over to you. Okay. With the dow practically flat on the session, lets send it over to rick for this mornings exchange. Thanks, simon. I would like to welcome charles beaterman. Aloha, charles. Aloha to the world from honolulu. When i read your paper i was a bit floored. Everybody has a short, medium and longterm view. And you have been pretty bearish overall. But you definitely overtime have been less bear iish on your medm term call youre getting less bearish. Can you tell viewers why . Were shortterm bearish now because theres been a massive slowdown in new stock buybacks. In february it was the most stock buybacks in quite some time. In march it stopped. Insider buying was very strong in february. Insider buying is very weak in march. Its like the companies and insiders were buying in february when the market was cracking. And now that the markets rallied, they stopped buying, which, to me, is shortterm bearish. Our shortterm indicators are neutral to negative. Our medium term is bullish, but not as bullish as it has been. Longer term we dont see any real Sustainable Growth in the u. S. Economy. Why do people keep thinking the u. S. Economy has to rebound when we have governments doing stupid things like raising costs on businesses in california and chicago. They want to raise taxes for everybody so the pensioniers can get payments they deserve. Its making it impossible to grow the economy worldwide with all these worlds. Yet everybody expects growth to be resurrected because its easter, and growth will happen coming back from the dead. Listen, charles, you hit on a key point. One of the issues of the fed is the Global Economy just isnt what they wanted it to be. The problem with that mentality is is that rearview mirror, 2 economy. In the windshield were 2 economy. Thats not good enough but certainly good enough to continue to normalize. If we wait for the rest of the world to do you a kumbaya we could be waiting for a generation. Your final thoughts . I dont think the u. S. Will grow at 2 . Why . Were slowing down in real estate. If you look at the real numbers, underneath the Government Press releases youll see massive slowdowns in new home sales. The markets have stopped growing. You know, were not doing well. Yet everybody expects the fed the economists estimates are that there will be a rebound at the end of the year. For the last five years the economy will start growing sustainably by the end of the year. It cant happen and it cant happen with the systemic problem swres problems we have in terms of government headwinds. I want to stop you right there because were out of time, i agree on the longerterm view with you. For the cnbc pro subscribers, well see you online. Up next, uners ceo, Travis Kalanick speaking out with us. Hear what he had to say about a future ipo and the state of investing in technology. Ow. Are you okay . Yeah, i just got charged for my credit monitoring. Thats how i know its working. Ah. You know you can go on creditkarma. Com and check it out there. Its completely free. Really . 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Comcast business. Built for business. Ubers ceo, Travis Kalanick sitting down with cnbc in china they talked about ipo plans, evaluation and the companys own fundraising campaigns. Have a listen. Private markets are incredibly liquid. Lots of folks getting hundreds of millions or billions of dollars in investment. Theres a lot of money out there looking for the next big thing, looking to invest in technology and innovation. And what that means as well with our competitors around the world, theyre going out there and getting that investment. Because of the way our system works, we cant be in a position where, well, were running a small profitable business but theyre deeply investing and were not matching that. So our strategy is to make sure that we are raising as much as our competitors are. That our Balance Sheet is as healthy as theirs is. Remember, we have lots of competitors all over the world because were global. But the second part is to more efficiently spend every dollar. And if you do those two things, where youre on even footing from a Balance Sheet perspective, especially net cash, and you are more efficiently spending those dollars thats on the income statement, then you eventually you eventually do well. And so thats our strategy, as it relates to funding and how we think about things. But whats really been happening over the last six months is that we have just been watching literally hundreds of cities go profitable. We have just tightened up the operations, things are, you know theyre just, you know, were getting good at running profitable cities. And, of course, you know, it may be in an almost amazonian kind of way, i like to take our profits in some places and then invest it in others and thats working out well for us so far. So when did does that bring breakeven for the business as a whole. I dont know. And the reason i dont know is because, you know, im not yet sure how much investment china will how much investmentel it will take to get to profitability in china. But im optimistic that, you know, within the next, you know, couple years, you know, were going to start seeing chinese cities start to prop up and be profitable. So all those salivating Investment Bankers hoping for an ipo this year, they should forget about it. Most definitely. And look, im an entrepreneur, i want to move as fast as i possibly can. I want to build something that endures. And weve raised, i dont know, in the last 18 months, Something Like, you know somewhere in the neck of the woods of 10 billion. Were not in need of public capital, if that makes sense. But there also, of course, is that sort of i call it the moral obligation with investors who put money in. They need to see liquidity, and, of course, we have employees as well who put in a lot of blood and sweat and tears. And to make uber successful, and they own equity. And so we have to ultimately find liquidity for all shareholders. But im going to make sure it happens as late as possible. And so what does that mean . Two years, three years, five years, ten years . Ill ill keep you posted. I have no idea. I will give you my number. Okay, fair enough. Put that on speed tile. And let me know first. Because i would like to hear that. Fair enough. I think its interesting there is so much capital around at the moment. Particularly for Technology Companies. And particularly for Technology Companies in china. I mean, theres a lot of money going around right now. Does it worry you that theres malinvestment taking place . I know a lot of people are speculating about unicorns being overvalued, and that the because there is so much liquidity, a lot of it is going into the wrong kind of innovation. Does it both you . I think at some point its gotten to the irrational place. And thats a little bit unfortunate, because i think it tweaks like, its hard to run an efficient marketplace when theres too much money floating around. But at the end of the day, its just the reality. Theres a lot of money going after an incredibly huge market. Thats, of course, transportation, thats my perspective on the industry that were in. But theres other industries, as well. And so you what i like to say when you get into something that feels like a bubble or at least feels irrational is that you still want to build a company that has a strong disciplined businessbuilding culture. And when the irrational comes, you have to find ways to sort of contain it. And we spend time on that. Because its important that in our cities where, you know, so much of our team is operating in these cities around the world, you know, its important that that right culture, that right businessbuilding culture, sort of, you know, pervades all of them. Uber ceo, Travis Kalanick, speaking in china, guys. A place that uber is not yet profitable in. They just revealed within the last month, they were losing 1 billion, burning through cash. The local competitor there. They have done so much to not only be a competitor to uber in the private driver and car system, but also to be the technology that the taxicabs use. So their whole approach of a partnership is one that has uber potentially on the sidelines in one of the most important countries in the world. To me, the key is his statement that we are not in need of public capital. It doesnt seem that 10 billion they raised recently is going to outlast his ambitions. So he at some point has to go back to the wealth. But can he mark that business to market . I mean, thats always you know, its half the stop. Not just blood, sweat and tears with uber stock. What is that stock worth . That is a pandoras box he doesnt want to open, clearly. When were talking about vcbacked companies. Youre absolutely right. But to say that uber itself may not need to go public but there are a lot of employees watching that line where the remuneration comes when they do and investors, all sorts of different structures that rely on them going public and doing so at a certain price relative to where they got in. Or the nature of the financing change as you go along. So you get more for your dollar. Unlike the staff that deal changes as you go further. And to a certain extent, diluting and ultimately, builds to a point where the private investors get a lot of as it grows. Uber might have it for much longer. What was the valuation . 62. 5 billion as of december. The company can raise as much private capital potentially as they need. The question is, are they still making money or continuing to your point about china . They make money in the u. S. And finance that out in places like china. You should be a banker. Up next, jon fortt with ally. Good morning. You were talking about pandoras box. First, oculus. The people who had orders of that Virtual Reality headset are getting them. How does it stack up versus others, including hdc and sony and yahoo . Microsoft apparently encouraging certain bids for yahoo out there. What does microsoft have in the game . And finally, pandora, a new sea sweep. The founder coming back and ceo. Is this going to be enough to turn around that companys business . All that and more, coming up on squawk alley. Here at the Td Ameritrade trader group, they work all the time. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. When a moment turns romantic why pause to take a pill . 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Start your trugreen lawn plan today. Trugreen. Live life outside. Good morning. 8 00 a. M. At yahoo headquarters in sunnyvale, california. And squawk alley is live. Good monday morning. Thanks for joining us here on squawk alley. Carl is out today but jon fortt, kelly evans both here. Good morning. Also joining us from palo alto today, tim draper,