Transcripts For CNBC Squawk On The Street 20160504

We read the tea leaves on the data thats driving down the market this morning. Cbs and time warner are on the move both after reporting earnings. Were going to dig into those quarters. Well also talk to cbss chief executive. Tim cook calling the u. S. Government dysfunctional on mad money with jim. Well hear from the apple ceo and dig in on what last nights primary results may mean. Stocks are poised to open lower a day after falling to their lowest levels in three weeks amid concerns about slowing economic growth. Speaking of the economy, data from adp shows the private sector added 156,000 jobs in april, that is below consensus and marks the smallest increase in three years. 156, we were looking for 196. And everybody wants to know, jim, what this might mean for friday. Yeah. I think that were back into a mode which says this roving bull market that weve had in cyclicals maybe give that a break. Go back into the clorox market. Remember, it is just bull, bear, bull, bear, we rotated out of all these companies that were just kind of the soft Goods Companies and went very hard into if you have to use an analogy freeport and suddenly we find out that was wrong that only works when things are better and when the dollars weaker and when oils going higher. So we have a mixed picture now of i want to pull back and say, you dont want the fed to tight if youre a bull, you dont want the fed tight. And these numbers say, hey, fed, you should wait and brexit. I know i find it really boring. Its going to get less boring. Yes. Exactly. Its going to happen right after the fed meeting. And i think everybodys going to be saying are you crazy . If you dont know the results of brexit you cant do anything. When i see our election and see everyones kind of pulling back from being one world, maybe theres a brexit ground swell. There may be. I wonder on that note though given we now have a likely nominee of the Republican Party in mr. Trump, do you think people have been focused on it . Or when will they start to really focus on the uncertainty that any election brings regardless of whether its the republican or democratic candidate. Does that not happen until the fall, really, in terms of people really looking at what the implications may be . Yeah, i think that theres a lull. I mean, there will be conventions and speeches, but i think there was a little bit more of a foregone conclusion than the media wanted to admit throughout this period. But i would say that this is a moment where we go back to earnings. The companies that reported good numbers yesterday despite the fact that we had big futures pull down. You saw cvs report a very good number and the stock went up. Thats cvs charlie victor, not the one were going to talk to today. And you saw clorox up. That was a terrific quarter. Im saying gravitational pull on soft good stocks, gravity really did work yesterday and thats part and parcel of the new rotation. Were going to see companies that beat on the top line today, twx. Yeah. Cbs. Priceline. And then zoetas comes out another company saying guidance is better because of the lightning dollar headwind. Thats what pfizer did yesterday. A spinoff of pfizer, maybe great minds think alike there. I just think that were these are all companies, pfizers, these dont need a strong economy. Think about it i know it seems ridiculous we could go looking for biden in freeport and chesapeake last week and then today say what we really want are these Consumer Product companies and we like media. So it is just one after another after another. When i look at what time warner and cbs are saying, theyre saying, hey, listen, we got oversold. And were good. Thats true. Time warner is very good. Lets move onto that actually. Better than expected quarterly numbers, always adjusted operating income grew to a record 2 billion. Cbs also well ahead of street estimates ad sales driven by political spending, super bowl helped boost quarterly revenue. 10 , doubledigit top line growth at cbs. I mean, i know they have the super bowl, thats a big number. Thats awesome. By the way, to put in contrast its 3 at time warner. So well have im sure a lot to talk to Leslie Moonves about. Phenomenal was used twice in the call. Yes, hes very excited about the up fronts. This is cbs, that they are very well positioned and they will sell more inventory than they did last year when he claims that they pulled back and waited for the scatter. So leslleslie is probably looki back a bit. Of course all of this mr. Redstone, the national his competent and whether and when that trust will take over. But the numbers themselves at cbs of which by the way mr. Moonves is also chairman. Right. Were really quite strong. Quite strong. Talking about even if you back out the super bowl was really terrific. Shift in dollars, one of the most interesting things was how about the kind of subtle shift saying digital, you think digitals great, of course digital is a little miscounted, but you need digital in order to augment us. But its really the return of broadcast. Although their Digital Product is going to have star trek. In production today. Wow. Theres a big all cbs all access is what they call it. I read the corner and went winning team, i want to join in. Its great. Having worked there already its like a winning team when i worked there. Radio being spun out like outdoor. It was a perfect quarter. They bought back a lot of stock now. 500 million worth of stock. Thats a lot. You see the way they shrunk over the last few years. Never getting a high eps number. No Revenue Growth. They have it. That 10 number is something. Even with the addition of the super bowl. We ought to just have them on the show. Okay, lets do that. Lets do that. Time warner numbers also were not bad. Theyre pretty good. Calls going on right now. There are a couple of things i can share with you. Best quarter Revenue Growth for turner in almost three years. Domestic sub Revenue Growth on track to be in the low teens for the rest of the year. Advertising up a solid 5 saying again the Conference Call for time warner going on right now despite fx head winds, of course those not quite as strong. Scatter pricing continues to be up well into double digits and they expect total Revenue Growth to be in the mid to high single digits. That also from time warner, so well see advertising. Political of course adds to that as we know. Thats a very good point. Thats a little onetime. But i do say these guys both say content is king. Game of thrones figures in time warner, game of thrones is loved in hbo. And showtime with cbs and our colleague. Of course it cost them some money too because it was very expensive to ramp up for it. Cbs theyre talking about winning the whole demographic. They do like the thursday night Football Games. The reason why im spending more time is just if you take a couple months ago these were the disasters. This was all taking place on a week where the new fronts are taking place in the hulus of the world are making their pitch, the latest buzz word is not cord cutter but cord never. Have you heard this . Oh, yeah. 18yearolds who have never had a cable box in their house. Well, talk to some of the younger people in our office or anybody you may run into whos lets call it 25 and below they to carls point have never had a cable connection. And many will say, well, when you start a family, when you have more people in the household, the economic value that will be presented to you by the bundle will be such that you will choose to do so. Im not as sure. Once you have that habit of never having that video connection, its not clear to me that youre going to somehow one day decide you need it. Plus the proliferation of all of these different bundles over the top give people that opportunity. So this overhangs we can sit here and talk about 10 Revenue Growth and its great and 3 at time warner and they can tell us going to be on every platform. The world is changing very quickly. You dont think that les made a very strong case that you have to have the Number One Network . That you have to be watching the Number One Network . I thought he made a strong case. But whats the demographic of that network . Do you feel you need to watch the good wife . When im in it. I think well ask les when we see here but my takeaway was all access, showtime, streaming will beginning to make a significant contribution. I agree. When do we not think of them as a Television Network . Right. I also feel its kind of a throwback. Look, theyve made a comeback. People are starting to come back more. Nfl does figure in over and over. Of course it does. Without a doubt sports programming figures importantly for cbs and then of course the ncaa and the nba on tnt. Yeah, those are important components of their programming. I still wonder though in this world that we are headed into, slowly but with great certainty where younger people as they get older are not going to have the bundle anymore in the way that we do, whats going to be part of it. And whether or not that economic value that goes to the content companies will be the same it is right now. What happens if espn adds a viewer. Adds who . Adds a viewer. Are you suggesting thats going to happen . Im just suggesting this seems to be the rebirth of time warner, which didnt we pronounce them wasnt time warner dead . I mean, i went by a cemetery i always hold my breath theres the time warner tombstone. Honestly, i remember when jeff was saying great america. Forgot. Thank you. It was stuck at 60 and he was saying this is ridiculous. It was, it was ridiculous. The market is telling you it was. The stock up 14 this year. Ill take that. Yeah, i bet you will. You look at time warner, look at cbs and say people are going back to watching tv and these cordnever people, good luck. And you dont think the political cycle is masking any of this . Cnn. Local is pretty good for cbs too. Who was good . Local. I thought you said merkel. I was going to say urkel. Whatever happened to urkel . Where is that guy . I dont know. I never watched that show, i have no idea what show it was but i remember nothing gets past him. When we come back tim cook using one word to describe the government. Stick around to hear what he told jim. Take another look at the premarket. Nasdaq now within 1 of correction. That level is 47. 08. Well watch that when we return. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. There is only one place where real and amazing live. Seaworld. Real. Amazing they found out whos been who . Cking into our network. Guess. I dont know, some kids in a basement . You watch too many movies. Who . A Small Business in china. A business . They work nine to five. They take lunch hours. Like a job . Like a job. We tracked them. How did we do that . We have some new guys defending our network. New guys . Well, theyre not that new. Theyve been defending things for a long time. [ digital typewriting ] its not just security. Its defense. Bae systems. I think government in general has gotten quite dysfunctional in the u. S. And some other countries as well. And so what that does, i believe, is put more responsibility on the everyday citizen and companies to help promote change and improving things. And i dont mean to play a government role, but its not just government who can change things. Thats tim cook sounding off on the government last night on mad money with jim. A day after the journal did a page one story about benioff. Im so glad you mentioned that. That piece was fantastic. What youre hearing when you see in ceos its like, geez, maybe i have to be more like benioff or what tim cook just said. Benioff is people dont know mark he started by tweeting to try to stop an indiana law. The heat when you even mention which side he is on just distracts the point of view of what tim cook and benioff are trying to do, which is influence change and just saying its no longer the government because the government is abdicated. When he says dysfunctional is abdicated from anything. Howard schultz has also been quite outspoken in certain areas. Yes, he has. I do wonder with some of these ceos all of whom either control their company or have significant say or incredible long string of success, but what is what are a boards thoughts when the ceos out there on something . And whats the communication like . Raises the ante. Youve got to deliver the quarter so big or else why are you spending any time on that issue . Thats what its very interesting. Remember when Doug Mcmillan came out i think some degree at walmart against an indiana law that im not going to give the specifics of because i dont want to make this about the law itself, but he joined mark benioff, maybe through tweeting, maybe through a the business guys overrun and then say you may not act at the super bowl and the reason is remember whos an advertiser. Theyre about money and we control the money and whos going to go where. Its happened in georgia, North Carolina and other states. On apple itself people said his appearance on mad money was desperate. Whatd you think of that . You know, i saw that i was like desperate . Then he goes to the 1,400 desperate ceos have come on mad money over a period of 11 years. I mean honestly, okay, look the stock first of all, do you know apple has had 47 declines of the same magnitude . 47 declines. Of what of 12 decline . As opposed to just thinking about the days. I think tim cook hes changed many ways about how he deals. I think he just felt like its not a bad time to tell people that the futures bad and not as bad as people think, the values there and inexpensive stock. I think the idea that hes desperate just has to do with the idea that you think that people dont change. You just think he only talks when hes really just trying to talk his stock up. Cramer bounce, no. And im saying that said this morning watch the morning show and i love that show, im just saying i think he felt like, look, let me be more control of the narrative. And i think a lot of it has to do with the Conference Call than what happened. Because if you read the Conference Call theres two Conference Calls. Theres the what tim cook has to say and then theres the questions from the analysts. And the questions from the analysts are almost entire like now that youre a value stock, now that youve run out of gas, now that trees you want that Conference Call to control then all you say is, you know what, we are done. And i think hes trying to get beyond the analysts. He does care about wall street, because the Conference Call was a great call because they made the quarter and then some stuff about hong kong and china and slow down. And then analysts who they may have buys on it, they should have sells on it given those questions. They should just own it. I dont know what theyre afraid of, but just own your negativity. Say, listen, im really negative. These are apple cord cutters. They want to cut the cord. Yeah. Are they cord nevers or cord cutters . You dont like the cord nevers, do you . The cord nevers, no. Reading his quote in the New York Times. Whos given him the hardest time on iphones. Happens to be the most rigorous and i make that point because tonys been around for so long. You dont want to go against tony. Thats how good he is. But he gave a quote to the New York Times which basically said, listen, glory days are over. Tim cook is talking about a Service Revenue stream that i completely agree with. At one point i feel like i was ahead of these guys, hey, listen, man, the Service Revenue stream i keep seeing how much im paying you and i dont know im paying you and i dont even care. I dont care how big it is because i have to have it. You ever lose your pictures . Yes. Yeah. Not a good feeling. If i lost my pictures, i have tremendous pictures of me and my father, it would just be a disaster. Of course it would. So i pay whatever. Fine, right . The music. Im a member of the family. I like the music plan. The revamping it as we speak. Yeah, they didnt need to but i like the watch. One day were all going to wear the watch. Okay. Were going to wear it. Fitbit reports tomorrow. I think they want to take back the health and fitness. They are really about health. Tim cook talked about that. And he also ran the autism commercial last night that was amazing, you know, for those who have that terrible disease. Apples trying to solve that. Were going to talk more about their music revamp a little later on. But desperate . Come on. Well get the opening bell in a few moments. Well count down to that with cramers mad dash. One more look at this premarket. Futures down an implied 80 points. Were back in a minute. music plays throughout uh oh. Whats up . Does nobody use a turn signal anymore . Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. The mad dash. Its hump day. We got about six minutes before the opening bell. Were going to talk a little zillow. Call me spencer. Yes, spencer. Ill be spencer for a moment. So this was a remarkable quarter. And it put to rest a lot of issues. I now look at the arc of what happened, david, they bought trul ya. And it was trulia at the time bad action. The government delays some of these acquisitions. During the delay trulia had a lot of problems. By the time it finally closed, ras had a lot of problems. A few transactions currently use them and yet this is my favorite line, according to google trends more americans now search for the word zillow than for the words real estate. So zillow, kleenex, google, spencer should be very proud. He should be. Im not sure where he is. I dont know where he is either. A victory lap around the set. Geez, this would be his moment. And you think this is sustainable . Yes, di do. I actually think the numbers are quite good. I think trulia was a real issue, but now i think they did one buys number two. And you immediately expect there to be this great move. But trulia needed revamping. Had to spend a lot of time on it. Trulia was down 20 in traffic and now its back up 3. 9 of all tractions in real estate done by these. Going to be much more. Mark benioff is the guy who has threatened various boyboycotts,e other activists are trying to be active. I was pointing out it was benio benioff, that was the piece we were moving around. We go way too quick sometimes and people cannot hear yeah, but spence, i thought hed call in frankly. Ill call you spencer as you asked. Dont call my shirley. Dont call mie opening bell a few minutes away. [woodworker] i live in the fine details. Thats why i run on quickbooks. I use the payments app to accept credit cards. And everything autosyncs. Those sales prove my sustainable designs are better for the environment and my bottom line. Thats how i own it. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Youre watching cnbc squawk on the street live from the Financial Capital of the world. Well get the opening bell in just over a minutes time. A lot happening today. Obviously people paying a lot of attention to politics in the wake of the indiana primary. Donald trump with a pretty clear path now to that nomination. And sanders over clinton makes that race a little more complicated. Sohn Conference Begins at new. Very easy to craft a difficult scenario. None of those people is associated with buy, buy, buy. No. None of them are associated with particularly good performance numbers of late either. Awe, david, why do you get the facts in the way of a good story . That irritates me. Every so often they get things right. Maybe they will again. Well, david makes a great point. We have spent just like we had mr. Hancock here from aig, a lot of these guys who talk have been so wrong people at home saying why dont we cover. And the answer is they got things to say and every so often theyre interested. Right. Theyre interested. Part of the debate. Not everybodys nfl, i dont know, theyre interesting. Theyre interesting. They have a conference and you listen because theyre thoughtful. Doesnt mean they make you money, but theyre thought provoking. Yeah. Jeff smith will be there. Every now and then theres a darden that comes along, right . Thats true. I had jeff smith on my panel at milken the other day and he spoke positively about his new relationship with his new friends on the yahoo board which he is now a part of. Dont forget i think Marvell Technology might be interesting. Why . Because theres a new chairman, rick hill, going to fix that s. E. C. Issue. I dont like that business per se, but anything can come back in tech. Tech has been very weak, by the way. Once again very weak. Down here at the big board chase for business and gregorys coffee celebrating national Small Business week. Over at the nasdaq its 1800flowers. Com celebrating ahead of mothers day this sunday. Doing anything for mothers day or skip it like im thinking of doing . Its a hallmark holiday. Yeah, my mother expects us to lisa doesnt watch the show so i figure i got a pass. I figured id ask out loud. I got cards in the bag going to mail them, what do you think . I think you should draw her a card. Like the smiley faces . Yeah. Okay. Good. One day shes going to watch the show and destroy me. Right now its free passville. Shes never going to watch the show. No. Like she has time. You think she doesnt do anything, dont you . You think she just sits there at home. Thats what you think all day, dont you . Last few weeks youve been positive on etsy. People kind of chuckled behind your back. But im like carrie now in the gymnasium scene. Theyre going to laugh at me. Let me tell you what you got coming. Delivered both on the expense side and top line. They actually made money, david gap made money. Not just like the nongap of adjusted ebitda. You mean gaap as opposed to g. A. P. No. I thought the quarter was magnificent. The number of merchants, number of people going. This is the kraft amazon, its happening right here, right now. Thank you for brooklyn. Thats right, it is. Publicly traded company in brooklyn. And there arent too many that have come out of new york, certainly the tech scene here. Well see after sin co using vacant chipotles. I think chipotle is doing quite well with the buy one, get one. Youve been tenacious on chipotle. I think 4 30. First public profit marketing growth coming down costs coming down. Look, these guys were the poster boy for overenthusiasm. I think if you look back, david, they were less happy to do with the enthusiasm. Chad dickerson what did it go public at . It opened at 30. And never saw an up day yeah. Etsy was a it was a little early. Now its back and i think we recognize that in many ways etsys got a longterm business now. Under armour i did want to hit on one of my favorites of course, which is that ongoing struggle between Energy Transfer and williams to well, really to kill each other is what it is, actually. Im laughing its like the biggest Pipeline Company in the world. Right. Were talking one of the largest infrastructure deals of all time. But whats really happened is the two partners are just at each other constantly. This morning we got an ak from Energy Transfer saying williams were count claiming we think youre in breach of our merger of course youve already sued us for breach of the merger agreement but perhaps more importantly here et also told williams it doesnt believe after consulting with legal advisors that the merger agreement requires ete to structure the existing transaction as williams has proposed. Its also told them that its not required to do so under the merger agreement and any alternative structures that might have been considered after consulting with its tax advisors at latham watkins, the law firm, concluded there will remain substantial risk to material taxation and therefore no chance of restructuring, both suing each other counterclaiming for breach, williams also suing for interference and attacks personally against the man who controls ete. They hate each other. They just hate but remember, you dont need in a pipeline merger its like you can close it and everybody goes. Everybody goes away. Theres no reason to keep everybody around other than those guys who like do the but the question is really where does this thing end up . Its uninvestable at this point. Thats what most people say. Just stay away. But as sagas go its one of the more interesting ones ive encountered in some time. And well see if ets able to get what seems to be really somehow to get out of this thing and pay them something to do so. Or they going to be forced to do the merger. Or will they be forced . Speaking of getting out of this while you were away, this quintiles. What in the world . Been on mad money repeatedly, mr. Pike, it was a great story. Down again. Did they not prepare their Shareholder Base for the idea of merger of equals or some sort of a deal . This thing has really not been well received. Theres a lightning bolt. It was kind of like we all thought quintiles was the best way for companies to be able to get drugs approved. Why wouldnt it still be when its merged . It is. I dont think its that bad a deal. But im now on the wrong side of shortterm history. Well, shortterm is a keyword though. Meanwhile time warner so great that they kept you know, those clowns who wanted to break out hbo, theyre revealed as crusty and bozo. Mo, larry, curly, all those people wanted to get hbo intraday the highest level of the year for twx. Wow. Under armour is basically lowest close since february. This would be the lowest closing level. Cmo is leaving, briang they add Sports Authority liquidates all that inventory, theres going to be some promotions this spring. Its interesting i had Columbia Sportswear on, colm, thats a good company. And they admitted they got hurt on the liquidation. Remember, Sports Authority was kind of like you took the merchandise in but you didnt get paid for the most part because they closed. Thats true. Some people are it is no longer with us. No. Nor is daves outdoor. Daves outdoor no longer with us either. Remember daves outdoor when tony soprano got involved of course. Of course this is not criminal, its not like that. But what happened is you sent the merchandise, and then they filed. Right. Thats kind of it. I remember my father shipment bags and we said he sent 10,000 bags to clothing company, this is when i was in fourth grade. And they locked the doors and my dad was stuck with 10,000 bags. I carried a lunch bag all the way from fourth grade to twelfth grade. My father said what are we going to do with them . Stacked them in the laundry room. Thats what happens when some of your customers go out of business. Thats what happens. And plus people concerned about these high level but when kevin plank comes on i think hell explain it. Priceline the biggest loser. Did you see the guidance . They beat guidance is 11. 60 to 12. 50. You got to be kidding me. Were looking at 15. Streets at 14. 96 as they launch this new brand campaign. I think they are underpromising and i think they can overdeliver. But, wow, that guidance was like, wow. Yeah, especially after the loss of the ceo last week. Yeah. That was a raised eyebrows. That was suboptimal. Suboptimal situation. He made some ill advised decisions apparently. Apparently he didnt choose wisely. Chose poorly. Right. I did want to mention medivation, said the bid is inadequate. You cant act by written consent to replace the entire board of directors, its a very powerful weapon. So there has been certainly in my reporting as well some questions to whether they will be forced at some point to put the company up for auction. Reuters saying, you know, theres interest from pfizer. I cant really confirm that. They have not gone to an auction at this point. In fact, lets focus on tomorrow. Reporting its earnings, this Oncology Company with a key prostate drug theyre looking for broader indications for later this year. And that will be at least perhaps help to them to articulate why the values a lot more than what they think sanifi offered. Have a drug and people get very excited about it. This is one where i think obviously people know the results must be pretty terrific or else they wouldnt be able to go crazy for it. Well see. Tomorrows earnings for medivation will be a good tell. This is part of whats rotating into. Biotech is down today in general, the nasdaq, like i said the nasdaq is in some sort of bizarre bear phase. Its really kind of ugly. Just really ugly. Yeah. So once again looking at a triple digit loss to start the session on the dow. Banks are leading us lower, jpm and morgan. Lets get to bob on the floor. Good morning, carl. We have moderately positive start to energy. Youre right, financials are leading us down. Look at the sectors, also weakness in consumer discretionary. Also weakness in materials as well you see that small increase in energy. But financials been a problem after a pretty good start to the earnings season. Theyve generally been down in the last few days. Also weak are some of the metal stocks. Overnight we had news from bhp and vale. Brazilian government is suing them around the catastrophic dam failure in brazil suing for 43 million them and vale. You see those stocks trading down here 4 each essentially. Also theres been a lot of discussion about the overall market tone and the political season with donald trump now the presumptive nominee of the Republican Party, Hillary Clinton the presumptive nominee of the Republican Party, a lot of people asking what trump versus clinton will be for the markets. I dont see impacts. I dont see trading on that right now. These are the themes related to the market right now and not to the election. Weve had choppy data hard to figure out, recent dollar weakness but some are debating whether that will continue or not. And weve had oil well off of the lows but production is high and were not going to go much further past 40. These are the three issues affecting the markets even today. So the pain trade right now look what weve been doing here. The s p was 18. 30 in february. Were at 20. 50, were 120 points higher in the s p and only 2 off the recent highs. The pain trade seems a little lower right now. On some earnings front, ice they had a nice baetd on their earnings but not up because of that. Theyre up because they have declined to make an offer for the London Stock Exchange. Now, remember, London Stock Exchange and negotiations with deutsche, ice implied they were going to go in and perhaps make a bid, but they have said this morning they are not going to do that. This is a bit of a surprise. They said they have received insufficient engagement from the London Stock Exchange about details of a potential combination. And thats primarily why the stock is moving to the upside. Finally, in a somewhat similar space, a bit of a surprise there commodities and foreign fx below expectations. Trading income a bit on the light side. Right now the dow down 126 points. Carl, back to you. Thank you very much, bob pisani. Lets get to the bond pits. Rick santelli is in chicago at the cme. Hey, rick. Hi, carl. Well, theres no doubt the 8 15 eastern data was weak on adp and kicked off what was mostly a round of weak data. Outlier being smaller than expected trade deficit. Look at intraday of 10 at 8 15 eastern, you see the drop. We have managed to come back and we were over 180 before this happened. Now lets look at some oneweek charts. Popular things on this floor you always see traders holding their charts up to the light because there are some counterintuitive and not relegated to Foreign Exchange though many are, look at a one welcoweek of tens pre much synonymous with oneweek of bund with same downward drift similar to the crb index with the same oneweek downward drift. You would think the dollar index would give more kick to the upside, but i think the extra volatility and Foreign Exchange period has made many traders a bit gun shy. And the last chart dollar index is in a zone we havent seen since the beginning of 2015, and i think thats something to pay close attention to for the macrotechnicians out there. We still have some important data in the form of nonmanufacturing ism. I will be bringing that out at the top of the hour. Carl, back to you. Thank you very much, rick. We are getting a bounce in crude ahead of inventories in about an hour and a half. Jackies at the nymex. Hi, good morning to you, carl. Thats right. Crude prices are heading back towards that 45 mark. The api was out last night with its inventory build 1. 3 Million Barrels. It was a small build but at the same time distherereats and gasoline grew. Part of this is seasonality and expect eed increase in demand coming from summer driving, winter maintenance, switching to summer gas, a lot of people caution me. Look at the charts from last year, similar season runup and in june prices went down again. The reason that happened was because of the oversupply. Bob was talking about people being a little skeptical about the rebalance happening. And hes probably right. A lot of people are impatient that the u. S. Is Still Producing just under 9 Million Barrels a day, that opec is producing at record levels and that these numbers arent coming down fast enough to get that rebalance that were expecting in the second half. Barclays actually issues a note today saying in the second half its looking for crude prices to be about where they are now. So they could drop a little bit and then come back. Back to you, carl. Jackie, thank you very much. Lets get to dominic chu for a quick market flash. Good morning, carl. Were watching movers coming out of todays sohn Investor Conference here. First of all whats happening with trip advisor shares still down on the day so far, but its one of the best ideas coming out specifically coming here from nick danher who says that tripadvisor is what he calls the disrupter of the travel market and its grown into one of the largest and most influential travel sites in the world with a highly engaged audience. They also believe its relatively undervalued and on its way to closing the monetary gap here. It says it could be as valuable as possibly a priceline or expedia in the long run. As a result those shares you can see off of their at least early lows so far but still down so far on the day along with the rest of the overall market. Also want to call attention to here as welcoming out of that conference is one coming from david rosen at Rubric Capital management saying that kraton performance partners, poll mers rather, a Specialty Chemical Company has about a 700 million market cap but says its a high quality Chemical Company under valued by the market, Small Cap Company of all. He will be on fast money at 12 30 p. M. Eastern. Again, those two shares early movers to sohn, guys. Back to you, carl. Thank you very much, dominic chu. When we come back, shares of cbs have soared more than 1700 percent since the market bottom of 09. The man whos been at the helm during that entire runup, les moonves, meantime dow down 23, worst twoday loss for the s p in about two months. Back in a minute. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Apple music reportedly set to make changes to Music Streaming Service and give it a new interface at the companys upcoming developers conference. According to bloom beberg the revamp first was met with tepid reviews and advisors brought in. Trent rez nor of nin inch nails charged with making this more interesting i guess. Again, i think this is the dynamic of an apple that says, okay, were delivering a product, maybe this isnt exactly what the customer wants so were going to adjust. That was one of the themes, lets make it better, lets make it better. I think the idea of executives being dynamic about the recovery of the business is one weve seen throughout this earnings peri period. We know youre not happy with our product and were going to make it better. I think when apple does something it is going to be the best of whatever it does. Between the watch and music maps. And maps of course. Maps theyre trying to improve. Look, do they do things that are not perfect . Sadly, yes. Well, its a high bar to which they have to try to adhere expectations. But did i ever like this thing that they make me use . This hewlett packard, did i ever like it . Am i like, wow, this is so great, have you seen how cool this is . My kids like, dad, get rid of the typewriter already, will you . Its like an olympian. This is a doorstop to my kids. Its a doorstop this hewlett packard. Just saying. I hear ya. Doorstop. Understood. Stops the door. We will get stop trading with jim in just a moment. Later on this morning short seller jim chanos is going to join the fast money halftime ahead of his presentation at noon at the sohn conference. That begins at noon eastern. Its time for cramer and stop trading. One that had really a bad quarter is anheuserbusch. And that was because volume is down 1. 7 . A lot of that is brazil weakness. Anybody that has too much business in brazil is not doing well. I would point out Global Brands are doing better. And corona on the eve of Cinco De Mayo, plus 22 . Extrapolate that to Constellation Brands because corona in this country is not inbev. Boston is doing sam adams is doing terrible. Its doing terribly really. Yeah, so there really is a lot more theyre trying to revitalize bud light here in the states. Its still the biggest seller. Thats what my wife likes. Im a coors guy. Really . Yeah. People i know used to call it girls light. Just saying, jim. Sorry. Whats on mad money tonight . I cant dont know. Here it is. Its a first, breaking news oh, weve got irwin simon girls light. Wow. Irwin simon looks at a better than expected quarter. Frank slootman strongest quarter in all of technology, watches the show wants to come on. Okay. Silver bullet. You know, the we are who im from denver. I know. Girls light. Yep. Jim, well see you tonight. Im not drinking anymore coors. Im drinking guinness. There you go. As of tonight. Even on Cinco De Mayo when we come back, breaking news, cbs services les moonves. Flip your way through your last 9 shows with the tap of a button. Change the way you experience tv. Xfinity x1. Going to go straight good wednesday morning. Welcome back to squawk on the street. Im Carl Quintanilla with simon hobbs and sarah eisen. Markets cutting their early losses about in half. Dows down 52. S p back to 2056. And oil getting a little action ahead of inventories. Lets get to rick santelli. Ism services, rick. Absolutely. April read on ism comes out at 55. 7. Definitely better than we were looking for. Sequentially higher following a 54. 5. When was the last time we had a number 55. 7 or higher . Well, that will take us to the last read of last year when it was 55. 8. It definitely is a High Water Mark of this year thus far. And considering everything going on with the weak adp, what was the component for employment 53. 0 up from 50. 3, new orders 59. 9 versus 56. 7. So this is a pretty good number. Now of course we have others. Lets look at factory orders for the month of march. Factory orders were expected to be up six tenths, they are up 1. 1 following a slight revision to down 1. 9 last month. If we look at durable goods orders this is the final read for march expecting up 0. 8, it was and follows up 0. 8. Maybe the most important aspect here is that proxy for business, capital spending, capital goods orders, nondefense, up a measly one tenth but better than unchanged last month. Back to you. Well take it, rick. Thank you very much. Rick santelli there as the data breaks. Meantime, you saw the charts there. We are off our lows though the market arguably is still continuing to selloff with the dow hovering around three welcome lows. And of course investors remaining cautious ahead of the friday jobs report. Lets bring in global head of equity strategy at j. P. Morgan private bank. Steven, the data we just got was actually quite good. Sure. At least the Headline Services ism. Well come back to that in a moment. Do you feel the market is vulnerable here . I think its a bit vulnerable. While the data today was a bit better on the manufacturing side, the Employment Data was a bit weaker and i think we just went through were finishing up an earnings season where expectations are very, very low. And, yes, they were a bit better, but were still looking Earnings Growth rate running about 6 year over year. I think its healthy to see the market take a bit of a breather. Were still constructive longer term but have a price target right now in the s p 500 of 2025 which is slightly below where we are today. 2025, well, its 30 points below. You think were going to decline 30 points by the end of the year . Is that what youre saying to the end of the year . At this point we dont see the upside to the earnings adjustment. As you look out into 2017 there is scope for an earnings recovery as a lot of headwinds this year of very low oil price as well as stronger u. S. Dollar start to become tailwinds. But i think its a bit premature to focus on next year when were just at may this point. Speaking of earnings you say youre selectively adding to technology. How do you navigate what was a mixed disappointing bag of tech earnings . Yeah, we saw an exciting tech seasons where you had a lot of winners and losers. I think areas like cloud computing, like mobility, big data are very much intact and wed look at the price action weve seen across the space and add selectively to parts technology, and also health care. Theres a lot of uncertainty around the election and some concerns around pricing at certain companies. In reality if you look at the Earnings Growth rate in the health care sector, were seeing a 5 year over year increase. If the market is posting a 6 decline, i think that would look attractive. Preferably Higher Quality companies with dividend yield. You know, i dont remember you as being particularly bearish ever, steven. For you to say im just thinking about it. Its still in my mind, the s p is going to decline by 30 points to the end of the year. But actually next year could be better, but its too early to be focusing on that . I wouldnt necessarily say were bearish, its more balanced. Focusing on rotating exposure away from broad market in the u. S. To some of our sector calls. We still very much like the Dividend Growth theme. And actually right now were a lot more constructive on european equities. You look at the performance yeartodate, europe has lagged the u. S. Well, yes. A lot of that can be explained theyve been terrible. European equities have really not performed at all well, ruling out the bullishness. Yeah, 7 year to date but i think scope for improved performance, we think the underlying Earnings Growth still has a lot to recover versus the u. S. And valuations are attractive. The burning question that im assuming youre increasingly getting from clients is how do you factor in a Trump Presidency or whatever probability you assign to that now that we assume hes going to be the nominated by the gop . What are you telling clients about that now . What does it mean for the market . Its still too early and im not going to talk about politics. We have a lot to fe foe cucus o. I think that could be another point of volatility throughout the summer into the fall, and another factor that were looking at right in terms of not raising our price target through year end. All right. Steven, good to see you. Steven reese joining us there from j. P. Morgan. Thanks, simon. When we come back with ted cruz dropping out of the race, what trade may mean for china, taxes and the economy. Later on this hour les moonves of cbs first on cnbc. More squawk on the street after a break. We need to be ready for whatever weather may come our way. My names Scott Strenfel and im a meteorologist at pg e. We make sure that our crews as well as our customers are prepared to how weather may impact their energy. So every single day were monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. During storm season we want our customers to be ready and stay safe. Learn how you can be prepared at pge. Com beprepared. Together, were building a better california. Trump winning indiana, cruz stepping aside, the general election picture got a lot clearer last night. Our chief washington correspondent john harwood now joins us with the breakdown and where we go from here, john. Well, you know, it seemed improbable given the unbelievably vitrealic rhetoric the day before, but last night after indiana gave an overwhelming victory to donald trump, his most effective political opposition, ted cruz, melted away. And trump came down in his victory speech and had this to say about the opponent he just beat. Just so you understand ted cruz, i dont know if he likes me or if he doesnt like me, but he is one hell of a competitor. He is a tough, smart guy. [ applause ] and he has got an amazing future. Hes got an amazing future. So i want to congratulate ted. I know how tough it is. Its tough. Its tough. Ive had some moments where it was not looking so good, and its not a great feeling. And so i understand how ted feels. And heidi, and their whole beautiful family. And i want to just say though that one tough competitor. Now, of course the problem is that trump needs to unify the Republican Party behind him. And that question that he identified, i dont know if ted cruz likes me or doesnt like me, listen to this from cruz last night. He did not say he was endorsing donald trump though he is suspending his campaign. I am not suspending our fight for liberty. I am not suspending our fight to defend the constitution. To defend the Judeo Christian values that built america. [ applause ] our movement will continue. And i give you my word that i will continue this fight with all of my strength and all of my ability. Now, what form does that fight for liberty take . Theres talk within the Republican Party of a third party effort by conservatives. Ted cruz is a leader of the conservative movement. Its not clear that thats going to be well funded enough to compete in a general election, but whether or not donald trump can fore close that possibility and unite the party as much as possible is going to be key to his attempt to overcome the lead that Hillary Clinton has in the polls so far, carl. All right, john, thank you very much for that. John harwood. Of course global fear sending stocks lower today although off the lows of the day as the race pivots to a general now. Likely between clinton and trump. Is wall street ready for whats to come . Joining us at post nine former white house aide, good to see both of you guys. Welcome. Good to be here. Is trump need to worry about a third party . Absolutely not. I think he needs to focus on unifying and the general election against Hillary Clinton. Whoever thought when we woke up this morning that the republicans would have a candidate before the democrats . 17 all the way down to pretty much one. And now you have hillary still having to deal with the pebble in her shoe, which is Bernie Sanders. Keith, how big is that pebble . Not a very big pebble at all actually. Bernie sanders has no chance of winning the nomination. He won last night, but it really means nothing. He got five delegates out of it in terms of a net gain. But the reality is scotties right, it will be a race between donald trump and Hillary Clinton. And the Republican Party is more divided than ive ever seen in my entire lifetime. Thats troubling for a republican activist and many others who are saying they will not support trump in the general election. But its interesting, last night exit polls out of indiana 70 of independents went for Bernie Sanders. Those independents, those are the millennial looking for jobs. And they trust mr. Trump to have a better jobs plan probably than actually Hillary Clinton right now. 70 , that is very, very high right now of independents going for a candidate. And thats Bernie Sanders. And those folks said the majority of them would probably look at donald trump over Hillary Clinton. Youre half right. The first part is right there was 74 of independents i think supported Bernie Sanders, but thats been typical everywhere he goes in every state. And the majority of democrats still support Hillary Clinton. The other thing is those independents did not say they would vote for donald trump in the general election. They said they would clearly vote for Hillary Clinton. The reality is though barack obama lost independents in 2012 and still won the general election. Its not a requirement that Hillary Clinton win independents. She has a structural advantage that the republican candidates dont have. Even if she just wins the states that obama won in 2012, she could actually lose florida, ohio and virginia and still win the general election. But youre looking at those unfavorables. Lets go and call out the person mr. Trump has high unfavorables, who had second . Hillary clinton. And she has high unfavorables with women, this great female card that we keep talking about. She has a very high one and shes a democrat, the party for women. So its one thing to have high unfavorables with women within the Republican Party, but that means thats a very ripe, very opportunity for republicans to go after that vote and bring them over. Let me ask you this, scottie, everyone is arguing today about whether trump needs to pivot. Right . On the one hand thats generally what candidates do in a general, but hes iced the field by giving some Straight Talk and those argued its served him well and why change . Hes going to pivot where he doesnt have to deal with 17 others and always having to steal all the air in the room competing with 17 others. I think were about to see and were seeing this with neutralizing the gender card, policy versus policy, productivity versus productivity, and who has a better plan for the future . We want to eliminate all of the emotion, all of the smoke screens and mirrors that we have seen the other side, other candidates use in the past. Thats why i think youre seeing this gender card be such an issue the past few weeks. You just mentioned jobs plan. Its not clear to me really what trump or clintons plan is for creating jobs. What have we heard from him besides the fact were going to take them back from overseas . Thats a very big part. Youre seeing where hes going to incentivize American Companies to stay here and hire american workers. But he has insulted mark zuckerberg, jeff bezos, called for a boycott of apple and nabisco. All liberal companies that probably would not support him anyway. But when youre sitting there the companies . But conservative but conservative look at carrier number one reason probably why he won indiana which is a shelve ri manufacturing state which in 2008 went for barack obama. So they were looking for real hope and change. The reason why he overwhelmingly won that state was because he did offer them from very beginning that he was going to incentivize Companies Like carrier not to close their doors and stay here. Its not like Hillary Clinton has been talking a lot about her specific job prescriptions. Well, i think both candidates have been focusing on what the primary issues have been during those campaigns. Clintons campaign is focused on increasing the minimum wage, which is something Bernie Sanders has said too, although not as much. Shes talked about rebuilding jobs in terms of infrastructure, which is something actually donald trump wants to do too. I think the problem the Republican Party is facing is that they have a nominee now who has been saying things that completely contradict what the Republican Partys been saying for the past three decades, how they plan to reconcile that will be the great rubiks cube of the election. Example . Look at the issue of trade, infrastructure, spending. Trump has called for Infrastructure Spending. But the Republican Partys been against Infrastructure Spending for the past ten years, especially since Barack Obamas been in office. Not necessarily. No, you go back and look at the reason why we got into 2008 was irresponsible spending by the Republican Party. Hang on. I would never describe trumps spending plan as irresponsible, but theyre fairly limitless, arent they . The deficit is going to balloon hugely. That depends on what economist youre talking to about whats actually going to be at the bottom line. So top hes already saying hes going to eliminate departments. Hes going to scale down the department of education, hes going to sit there and look at obamacare. Minuscule part of the federal budget. Last night he said he was going to increase spending on military. Needed. Infrastructure and said he was going to reduce the national debt. You cant do those three things consistently. You absolutely can unless you raise taxes. One last question on coal. Hes making some big promises to some of these coal and steel states, any explanation how hes going to bring that market back . Thats for him to announce when you read his plan on that. Thats one thing he will be announcing in the near future. Something hillarys not done either at this point. She got blindsided by it yesterday. She will win pennsylvania which is a state trump has no chance in winning. You dont know that. The game has changed. Nothing is traditional this campaign season. Since 92 has won an important state for sure. Thank you both. Thank you. Coming up on the program, priceline out with the results a week after the ceo departed under unusual circumstances. Well, he left because he had an extramarital affair. Well have the very latest from that particular Conference Call. The stock is sharply lower as they essentially guide down for the Second Quarter in the opposite direction cbs out with a beat. The cbs les moonves will join us in a few minutes. The thing is, most businesses arent getting the most out of it. The ibm cloud is uniquely designed for all kinds of data. Like data from the Weather Company for 2. 2 billion locations. Or billions of healthrelated data points. Even social sentiment in real time from hundreds of millions of people. Its all in the ibm cloud. If you combine that with the data your business already has then things get interesting. So right now were working with a retailer to blend social and Inventory Data to help predict demand. 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Priceline Online Travel giant beating expectations in the First Quarter as growth in hotel night bookings accelerated to up 31 on last year. Guiding for a slowdown this quarter to just 15 or 22 . This of course is the first set of results since ceo Darren Huston resigned abruptly last tuesday due to an extramarital affair with an employee. He will receive no severance and has agreed to forfeit more than 30 million in equity awards. On the Conference Call this morning it was left to pricelines cfo to handle the detail. Dan fin gan saying it would always have been difficult to keep the First Quarter growth going. The bookings in the middle east and asia are being affected by ramadan falling ten days earlier and soccer fans in europe are probably more focused on the start of the european championships june 10th. The last two weeks of june, the first two weeks of july, so at the outset with all the teams still playing, people are paying attention to the tournament and not necessarily booking travel. And their teams get knocked out and the tournament wraps up, typically people will then book their summer vacation. Theyre not going to forgo their vacation. Chairman jeff boyd avoiding mentioning Darren Huston by name on the car describing instead the circumstances in which hes had to step back in as acting ceo as unfortunate. Asked how long it would take for the board to find a replacement, jeff boyd told analysts to use their common sense. We need to have a person who has broad experience and demonstrate a track record of success in managing large global organizations where technology is a very important part of the business and where they demonstrated their ability to deal with changing Market Conditions successfully. You know, just one last note, priceline is renowned for being conservative in its guidance, has guided down before notably in the past. And the most conservative of the conservative is jeffrey boyd in many senses. So whether hes decided to just ease down those expectations slightly in order to clear some concern out of the way is an open question. Of course they look for a replacement now, sarah, to Darren Huston. With that busy day for economic data. Lets get to the cme group. Rick santelli at the exchange. Good morning, sarah. Thank you. Id like to welcome my special guest tim and the reason i really like tim hes my productivity guy. We had productivity today, tim. Im going to give you my assessment. I like patterns. We had backtoback quarters of negative productivity this year, q1, q4. Yep. Last year same thing prior to that you have to go back to 1983 and 1996 to find the only forward examples in my database which goes back to 1965. Any comment on that . Hi, rick, good to see you. The comment would be why . We want to get to the root of why these things are occurring. Of course economists like to talk in terms of total factor productivity growth and solo residual and nobody understands what theyre saying. Ultimately you could be on the federal reserve, tim. You could be on the fed. You sound just like they do. Im sorry, continue. Right, well, ultimately for the simple way to think about productivity is doing more with less. So how come we have to keep doing more with less and how come its eroding returns . Well, the answer is very simple. If you boil productivity down to input, labor and capital, were commoditizing capital, money, that means were depreciating it. If its worth less, you have to put more of it in to produce the same return, so therefore unless you commoditize labor as well, which we do, by shifting jobs offshore so that we can preserve some productivity, well, ultimately your money doesnt go as far as it used to. That applies whether youre a producer or a consumer. Thats the root cause. All right. Now, many talk about how we are becoming japan. Now, when i look at japan i do see a productivity issue because like compound interest all the hundreds of billions of dollars your economy doesnt generate in growth because of low productivity start to stack up. Are we turning into that japanese model, tim . Well, its a great question. Your colleague, becky quick, had bill gates on squawk box monday who observed that it appears that were all becoming japan except we dont know how japan became japan. And im oversimplifying. But if productivity is the difference between labor and capital, what is happening is that large governments like japans all over the world are stealing from their citizens by creating money to purchase debt and rising prices, rising debts are the enemies of prosperity and the net effect of that, again, is that your money doesnt go as far as it used to. So then producers cant produce as efficiently, consumers cant consume at the same pace and the whole Global Economy flags. Well, i tell you, tim, it really gets you thinking. And im not sure how we can fix this, but based on indiana last night theres going to be a whole new group of people dealing with the issues in about six, seven months. Thank you for your time, carl, back to you. Thank you very much, rick santelli. When we come back cbs Ceo Les Moonves on the other side of this break with the dow now down only 35. Im sharon epperson, heres your news update. The navy fighter killed overseas has been identified at Charlie Keating iv. He was a grandson of Charles Keating jr. The u. S. Highway Traffic Safety Administration Says it will make a major safety announcement at 1 00 p. M. Eastern today. The New York Times reporting announcing at least 35 million more takata airbags will be recalled, more than double what is already the largest auto recall in u. S. History. Officials say a fire that forced the evacuation of the canadian oil san city of fort mcmurry could worsen today. More than 80,000 residents were forced to flee as flames moved into the city destroying whole neighborhoods. No injuries were reported. Unicef good will ambassador Orlando Bloom traveling to wartorn Eastern Ukraine to raise awareness of a Global Education crisis. The actor visited School Children in classrooms near the front lines. And thats our cnbc news update for this hour. Back to you. Even Orlando Bloom ages. Thank you very much for that. Oil is catching a break this morning. Lets get to jackie at the nymex. Good morning to you, simon. Department of energy out with weekly crude inventory report a building crude of 2. 8 Million Barrels larger than expected. The surprise was on gasoline. We got a build of 536,000 barrels looking for a draw, some of the support and bump up we got this morning was from that expectations and you can see prices are coming off a little bit but still over 44 a barrel. Expect this to be a range bound trade between 40 and 45, thats what a lot of folks are saying. Back to you. Thank you very much, jackie. Last night cnbc reported a beat on the top and bottom line with advertising spending in connection with the super bowl and the president ial campaign helping to Second Quarterly revenues up. Leslsli leslie, always good to have you with us. Great to be here. On the Conference Call you talked about a stronger hand to play in the up front season and the expectation will be you will sell more than you did a year ago. And looking for as much as doubledigit price increases. Why are you so confident . Well, there are a number of factors that are going into it. Number one, were finishing the year very strong as the number one watched network for 13 out of 14 years. Secondarily the scatter marketplace is extremely strong. Thats the pricing thats sold after the up front. So as we head into this day, or this period of the up front, we see a lot more money coming into broadcast. So its the perfect time for us with our ratings, with the marketplace being extremely strong, we cant wait to get into next years selling. And last year of course as you said on the call you made a decision not to sell as much inventory, which worked out well given strength and scatter. But this year you do expect to sell more. Thats exactly right. Last year the pricing wasnt what we wanted, so we decided to pull back and we only sold about 74 of our advertising. This year because pricing is going to be stronger we anticipate that number to be in the high 70s, maybe even 80 if we get the numbers that we want. And we expect the advertisers will want to buy more here being that they had to pay more during the year in scatter. So were very excited. Of course as part of any Conference Call with analysts involves a Media Company these days, leslie, the focus seems to be largely on digital even though youre a broadcast company and thats the bulk of your revenues. Right. And of course the emergence of these over the top platforms that are out there, the latest hulu starting to tell us about some of its plans in terms of a broader platform. Every ceo i speak to runs a big Media Company tells me well be included on it, we dont have to worry. You say the same. What gives you the confidence that the cbs channels will always be on whatever ott platform emerges . Well, weve said this before and we really believe it, we dont think any successful over the top operation can exist, any skinny bundle can exist, without cbs. We have the number one schedule, as i said in primetime. We have an extraordinary array of sports, the nfl, the ncaa tournament, latenight, 60 minutes, news, et cetera. Any bundle out there that expects to be successful with the public has to include cbs, so we feel like we are going to be included. And were going to be paid appropriately for our channels. So we feel like were in very good shape there as well. When you think about this emerging world that weve been talking about for a long time that finally seems to be here, perhaps still in itsin fan in f how do you see it playing out . Are things coming more quickly now in terms of proliferation were talking about and how its going to change your business . David, theres no question theres been more change over the last 18 months, two years than ive ever seen before in the media industry. The significant thing is that people are getting their content, and youve heard the cliche, theyre getting it where they want it, when they want it. The reason were so bullish about cbs and our future is we sell our content through the normal directvs and comcast and time warner as well as part of the skinny bundles. And after that we have over the top services where you can buy cbs product a la carte through cbs all access or showtime o. T. T. So there is so much change going on in how the content is distributed. At the end of the day though it still comes back to providing that great content, which is something that we do at showtime, at cbs, at the cw and its syndications. So as i said earlier, you have to have cbs. And well give it to you any way youd like it. Right. Of course when it came to cbs all access, your digital subscription service, you say ill give you two words and those two words are, star trek. Exactly. Why star trek . Why star trek . Well, the family jewels. There hasnt been an original star trek series in 11 years and our all Access Service right now offers stacking rights to everything on cbs and obviously the live feed of our shows. But what were starting right now is original programming. And what better show to launch that in january than star trek . So were really excited. We have Alex Kurtsman and brian fuller, two wellknown trekkis producing the show. The audience is craving it. Its going to be a good way to accelerate the success of cbs all access. Of course you talk about all the programming and the money spent on developing new shows and of course existing shows. You did Say Something on the call i want to come back to, i guarantee the money we spend on programming next year will be less than this year. Why st that going to be the case . Well, there are a few factors. Number one, Stephen Colbert costs less than david letterman. We have five primetime Football Games instead of eight. In addition generally speaking some of our more expensive shows may be coming off the air, replaced by newer shows which dont cost as much. We had an awful lot of original programming on last year and well continue to do that, but in looking at our budgets and what is likely to be on this fall, were looking at spending less money. You mentioned colbert, you know, there was some recent i think in the times story about you having met with him recently. Chris licht has gone over there to help out. Whats wrong with colbert . And what did you tell him and his hopes the time hes spent on the air where it perhaps hasnt met original expectations . Number one, theres nothing wrong with colbert, still number two to fallon, beating jimmy kimm kimmel. The shows been on the air seven months. Look at the history of latenight these are generational things. Were looking at Stephen Colbert for the next 20 years. We had a talent who ran cbs this morning and stephen needed a show runner and we put him in there and all is good. We couldnt be happier. The profitability of that show is higher than it was with david letterman. Theres nothing wrong with colbert and looking forward to many more years with him. You commit to it, but at the same time these things evolve. I assume you do think there are things that could be better . By the way there are things could be better with every single show in the cbs schedule. And may i add on other networks schedules i would say theres less wrong with our schedule than other peoples. Thats true. Theres always room for improvement even on your show, david. Occasionally, yes, it does happen. I allow a little possibility for that. You know, you mention also showtime of course. Our colleague i appeared in the premiere as you well know. I do. Setting the momentum for it, leslie, but youre doing 12 shows a year there at showtime. Correct. Do you see that staying where it is . Or would you like to increase the slate . Well, showtime has done a phenomenal job. We think the programming is like we call it murdereres row, we would like to do more original programming. As you know its offered over the top as well. So were looking down the future and what we can add and theyre doing a phenomenal job. I think their programming is as good as anything on Premium Television right now. Were really proud of it. Les, some viewers say you look pretty good at that anchor desk right now. Youre changing the way you package some news, changing weekends for instance. Right. Where do you see news fitting in . As you say youre spending less money. I assume that translates to news content as well. Yeah, when i sat down in this chair and i looked at the camera, i said scott pelley should be worried. I think i could take over his job. You know, one of the things weve been doing obviously is the formation of a Digital News Network called cbs n which is doing extraordinarily well and its on our 24hour online news service. And we decided to put it on on our weekend newscasts instead of the cbs evening news were doing cbsn. Obviously digital news is becoming more and more important. Whats especially appealing is the audience watching cbsn streaming news is 20 years younger than the average age of people who watch broadcast news. So its a great part of our future. And were glad its now being integrated greatly into cbs news and with cbs interactive. Youre a Controlling Shareholder with sumner redstone. There has been a good amount of coverage of controversy in terms of his competency. I wonder, leslie, to the extent that you watch that, you obviously recently became chairman when mr. Redstone stepped down, what if anything do you do to prepare for the day where either hes no long hes deemed incompetent and trust takes over or the day when hes no longer with us . David, with all due respect as you know theres litigation going on right now regarding this subject. So id rather not comment on that right now. All right. Well, we know at some point we know its going to be something important for us to comment on. Political spending i would think would be important this year, do you think a trump candidacy helps or hurts . He doesnt seem to spend a lot on ads. Well, he hasnt spent a lot up to now. I think in the general election he will spend a lot more. He will have to. In addition, with donald trump leading the ticket theres going to be a lot more attention on local races. So we think in the senatorial and congressional races there will be a lot more being spent. And we estimate that this will be the largest spend in the history of a president ial election news cycle. So were very excited about it. Were looking forward to it. Its going to be a very, very interesting campaign. As you know there are a lot of fireworks already. And fireworks generally mean a lot of money spent on television ads. And we like that. Yes, you do. And we expect there will be a lot more to come. Leslie moonves, appreciate you joining us, thank you. David, thank you. Chairman and ceo of cbs. Sarah. When we come back adidas out with results, north america itself up 20 , the stock up 50 in the last six months. The president of adidas north America Mark King will be joining us next. 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. 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Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Welcome back to squawk on the street. Stocks off their early lows. The only green sector so far in early trading this as treasury yields came off lows to trade mostly higher here so far. Among the names leading utility higher names like nrg energy, wec energy, nisource, excel, those green names among the leading sector up about 13 so far on a yeartodate basis, sarah, back to you. Dom, thank you very much. Another earnings mover adidas reporting record growth driven by double digit sales increases in training and football. The sports Brand Momentum picking up heavily in north america where revenues are up 31 . Also announcing plans today to sell off parts of its golf business. For more lets discuss now with first on cnbc mark king, president of adidas north america group. Good to see you. Good to see you, sarah. I know you cant discuss the sale of tailor made because youre not overseeing that per se, but you used to be in charge of that brand. What happened . This was once a crown jewel for adidas. Well, i think its still a great brand. And i think the decision to sell the brand and the company was just based on being able to focus more on the momentum that we have and the primary market for golf is north america. And right now we want to focus on all the momentum we have. As you started with q1 results for adidas brand north america is up 31 . So were really focused on whats going to drive the business the most. And were really excited about whats happening and where were going. Are you hoping to get back to the number two spot and take it from under armour in the u. S. . You fell behind, of course nike with the number one position in the u. S. Well, sarah, we think thats a forgone conclusion. Of course we think were going to go back to number two. No, we do absolutely. I think a couple years ago when i took over the north American Business for adidas we really looked at what we were doing and how we could do things differently. And weve been on this journey now for two years. And q1 results really points to the fact that our products are better, theyre resonating, weve signed a tremendous number of great athletes in north america, aaron rodgers, carlos kaerer ra, james hardin, these arent just athletes, these are the best athletes. Weve had this big campaign now in 15 and 16 telling our story why consumers really should be with us and buy our products. I think we have this unique ability to kind of fuse sport and culture through kanye west and pharrell. And were doing some things. And the brand has really become the cool sports brand in north america in a very, very short period of time. And were really excited about this momentum. Im glad you brought up kanye, thats where i was going to go. Just wondering how much of the resurgence in the u. S. Is kanye and his line which continues to adapt. Whats it like working with kanye west . Because he used to be with nike and there were reports that he wasnt that easy to deal with, which is why he left and came to you. Yeah, well, he and i hang out almost every weekend, so not really. Im kidding, sarah. Hes been wonderful for us. Hes been great to work with. He loves the relationship. And i would say this, the amount of revenue generated from his products are very small, however, the amount of interest that we get in kind of the cool factor that he brings to the brand and the rest of our products has made a big impact. But when you look at really whats moving the needle here in the u. S. , its products like ultraboost, which is probably the best running shoe ever launched with this new technology called boost. We launched a product just a few weeks ago, and sold out all the quantities we shipped in the marketplace in literally a couple of hours. So we have this brand halo effect thats really starting to effect all of our products. But i think its everything were doing from the investment in sport, really great new products, the look and feel of our products, our retail support. Dicks sporting goods, foot locker, finish line, academy, modelles all these customers giving us much more floor space. We added 670 branded spaces last year, and this year were going to add over 1,100 at retail. So the presentation of our products and brands is much more vibrant and alive, and lot of m are from a lot of different areas. Mark, you know better than they you have a new ceo back in germany who is going to start, and i think it is the beginning of august, but you are having conversations with him, and he is moving are from the fastmoving Consumer Products company hinkle, and we have introduced him on this show casper rothstead, and very success successful in selling those products in realtime to china, and when he says to me, mark king, what do you need from me for the most important market, and from germany, and what are you going to tell me, and what is the support that will reinvigorate the support that you have not been able the get so far . Well, david, it is a continuation of what we have done two years ago, and really, what we started two years ago is that we need to be north america centric, and understand the consu consumer better, and his or her preference on the design and technology. We need to have american football as part of the portfolio which we started two years ago and signed 5 nfl pl players in the last 12 months, so it is a continuation of the lenses that looks at the u. S. Consumer in what is relevant here in north america. Prior to that, it was more of the global look. So i think that the continuation of that, and the investment in the marketplace. This is a very competitive marketplace, as you all know, and we have to invest whether it is ath elites, campaign, point of sale, retail stores, employee, and the continuation of what we have started here in the past two years. Speaking of the investment, and wondering how much you are go ing to ramp up the marketing spend ahead of the rio olympics and the soccer championship this summer. Well, for us, the olympics is a big statement, and we have a big campaign to celebrate the athletes that we have and the game, and the european championships is the core of who we are, and in our dna, and we have a wonderful relationship with the mls and soccer here in the united states, and we will have it together, and exciting s summer around the olympics, the european championships, and also then into the fall into our football, and we are looking forward to the momentum that we have in our own football, baseball and basketball and the sports that we play here in america. Mark king, thank you for joining us today, to talk about the results from san diego. Mark king is the head of north america for adidas. Coming up on the program, more on the apple stock. I thought that it was breaking the eightday losing streak, but it is looking to be in eightday negative territory again, despite the details of the music service, and of course, tim cook with on the record for cnbc. Hows it going watson . Welcome to the bank. Hello tom mccabe. Executive from dbs bank. I am keeping busy assisting your relationship managers. How so . I can read over a thousand Research Reports every day, to help you keep abreast of market movements and to help your relationship managers give better advice. Thats great. Todays fast moving markets make it hard to keep up. But together we can stay one step ahead. We make a great team, watson. Check out shares of the under armour at the bottom of the s p 500, and class e shares trading at the alltime low, and they began trading in march of this year. The Company Announced last night the departure of the chief marketing officer as well as the chief digital officer coming after the departure of the longtime cse Brad Dickerson in february with and not great for the optics of underar pour, and raising questions of hiring and attra attracting the talent and rotating door, but it is growing double digits and can defying the skeptic, and the 30 sales growth for each of the past three years, and simon, locking up bryce harper for another 10 years report are cedly in mlbs biggest sponsorship deal in history. Now, over to jon fortt with what is coming up on squawk alley. Well, thank you, sarah. Apple music with some changes after the stock is under pressure after the losing streak yesterday, and we will talk about the cbs, and a late super bowl celebration for investors, and lets dig in for what les mo moonves told us, and we will have all of that and more coming up on squawk alley. Okay, so you launched your banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. The jobs report. Could the numbers force feds hands . Analysis from the best in the business on squawk box friday on cnbc. Good morningb, it is 8 00 a. M. In twitter head kwaquarter San Francisco and 8 00 a. M. On squawk street and squawk alley is live. Good wednesday morning and welcome to squawk alley. Kayla is out, and jon fortt and i will very busy with the founder and information trader melissa and isaac who is looking at the markets for us, and first up, guys a lot to talk about today, according to not desperate