Transcripts For CNBC Squawk On The Street 20170410

The economy and the outlook for the trump agenda. Wells fargo takes punitive action against the former ceo and another top action for their central role in the fake account fiasco. They announced millions in new salary claw backs. And a video surfaces showing an airline forcibly removing a doctor from an overbooked flight. First up though, big week for the markets. Wednesday well get data including march import prices. Thursday, jobless claims. Markets closed on friday but theres still Economic Data including retail sales, cpi and consumer sentiment. Earnings seasonen gets under way. Citi and wells, well get that before the opening bell. There will be a lot of questions, jim, about margins, rates, this trend were seeing in some c i loans and earnings themselves. Look, last year at this time, there were concerns that perhaps with no rate hikes who knows what they can do and then they got hit by the fact that they have bad oil and gas loans. Now the stocks ran up in anticipation of three rate hikes. People are saying, listen, its game one for a lot of rate hikes. I dont know if theyre data dependent, so they seem to be in the midst of theyre kind of a in a nomansland. I spent a lot of time looking at the charts and doing homework on the quarters and what could happen. And i just feel like that theyre just not set up, not set up right. So when you said last week earnings are coming in high, youre talking exfinancials . Yes. If we had a strong employment number on friday and didnt have to say, you know what, we can overlook that number, a strong employment number and you would have felt any good on any weakness to buy the stocks. Without a strong employment number, i dont know, what do we have . We have to have more strong data soon or else it will hang in there. What does that mean quarterback. Maybe retail sales pickup would matter. I know thats hard to believe. Amazon, a Research Piece out today, 60 of everyone now knows what prime is. Versus 51 last year at this time. I dont look i cant be as optimistic as i want because i wanted a strong employment number and i didnt get it. I cant say forget that number. Well, some people want to forget the number. Just looking at the three month total average, 178. Just really not that far off the 187 we had i think it was last year. So this may be a one off. Im worried about the march numbers, i dont think they were that good. An important part of the economy. I dont know if its because of the washington morass, i saw the word balmy, everyone is talking about that word. It will be so balmy in the next few days, and the natural gas can spike because you need the air conditioning. Need the ac . That would be early ac and the natural gas system is not set up for that. Well know when we speak to enbrich. Last bastion of weather is natural gas. Its the entire swing vote. So i just say, listen, banks are the ones jpmorgan can report a great quarter. I think the most important one is wells. Because we have a note today talking about how maybe its finally in the stock that wells has problems from piper. Sell to hold. I know wells doing a lot of research, his piece on the dotcom was very good. Wells fargo sounds horrible. Sounds horrible, but finally the news flow has caught up with the stock. Well get to it. We do want to get to the wells story. Its a big one. The Company Announcing its taking further action against the executive. The board unveiled the results of an impending independent investigation, saying it will claw back an additional 28 million from stumpf, the former ceo and 47 million from Community Banking chief Carrie Tolstedt. Stephen sanger will join us on squawk alley at 11 00 a. M. Stun stumpf said he created a environment that these abuses started. This is one of those that you kind of you take it catches your breath because what basically stumpf saying hey listen, were not criticizing this woman. Shes putting up the numbers. You know . The numbers. The numbers trump all. And this is what you thought bad bankers did. You know . Bad bankers look at the numbers im going to look the other way how they make them. And thats its pretty damning. Sanger is a serious guy. This is important. Sanger was from general mills. I dont care about the way he took general mills. General mills he made it sugary. That was the famous guy who said listen were going for taste and money. That was a mistake. It was on the wrong side of history. Yes. Sugar is not in. Right. Sugar is out. As for this, you know, they talk about the fact that the organization was too decentralized in structure and culture to for them to sort of have the control functions they needed to. Now, that apparently has been changed or is in the process of being changed under mr. Sloan. It is amazing that sloan who was very much a part of the operation seems somehow to be above it as if he was an outsider. He was no outsider. But thats okay. Theyre cleaning house. Just it seems that the buck stops with mr. Sloan. Unclear that it really impacted their business in a meaningful way though, did it . Can we look down through the numbers im going to say, yes it did, because what otherwise otherwise, lets say you worked at jpmorgan or citi, they would say that it gives them a higher price to earnings multiple. Everyone else was jealous about what wells got per customer. Stumpf said it was a small group of people who played the game and gamed it but that was also bad. Hes basically saying, listen, its so few that are gaming it we can kind of leave it. And not zero based integrity where if you have one guy, but it was like, hey, listen, its 1 . Big company. They had hard metrics on people who were doing this and as you said, 1 to them was apparently not a problem. Yeah. It was kind of like, you know, kind of accident forgiveness there. There should be no this is a bank. This is look, i think that the claw backs make a ton of sense. I think that clearly, it was 2012 that they were put on notice. And it accelerated from 2012. So its interesting the board is sort of saying we can only act on what we were made aware of by management and we were not told enough to be really able to act, right . Only learned about the 5,300 employees in september of 2016. Even hi to they were engaged on even though they were engaged on the issue, the reports didnt accurately convey the scope of the problem and that is of course one of the keys when dealing with a board that for the most part, most Board Members are only good as the information that is incoming. Right. While they have the right as a board member to talk to anybody they want to in a company and ask a question of anybody, not have to worry about management really, thats your right as a board member, few Board Members truly do that. No, but it was interesting. Sloan was from another portion of the bank, so therefore he was okay. This bank is beaking to look like a beginning to look like a rogue consumer operation. The Largest Consumer operation in the country. You know, going back to what you said, it always comes back to that there was not a lot of money involved. No. And thats what made everyone feel a little more comfortable at the top. Like, look, this is maybe 25 cents they added on friday and took it away on monday. Then they opened that account, they got the bonus. They gamed the system, because the system was batched once a week. Which is apparently what was going on. Its not like theyre trying to get billions out of the customers. They were just trying to get bonuses for their people and it was stoppable. Thats what i think really you could have stopped it. You could have put out a memo saying anybody who did x number were going to investigate that seems too high. Because some people opening way too many accounts versus what you physically you need to do if there was a real human involved. As opposed to kind of a dummy that you opened up accounts for. Yes. There were certain banks, certain banks also apparently certain banks and regions that did a lot more of it. So there was a run that you have could have had that they didnt share with the board i guess. Look at the board. The board was very involved with Community Reinvestment around very much involved in kind of the higher good about what wells was doing in terms of where they were lending. No one denies that by the way. Wells was a lender in a lot of areas that no one else would lend. So a board that is about trying to have equality in loaning, totally accomplish their goal. That was something wells was really great at. They lent where other guys didnt want to lend. Thats very positive. Right. Thats kind of what the board was about. Look where theyre from. Look at their backgrounds. Its all about trying to be equal opportunity lending which is a great thing. Trying to give them a bone. Okay. Gave them a bone. Well get more on thursday along with thesy city and jp. Uniteds pr problem. United forcibly removed a passenger from an overbooked flight. And vanguards jack bogle, well get his take on the current investment climate. And the market is up 9 of 29 sessions. More squawk on the street from post 9 in a second. Think again. 9 in a se . This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. 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A spokesperson confirmed it, saying flight 3411 from chicago to louisville was overbooked. After our team looked for volunteers, one refused to leave voluntarily and Law Enforcement was asked to come to the gate. We apologize for the overbook situation. Further details on the removed customer should be directed to authorities. The man reboarded the plane after being taken off. A medical crew came on board to treat him for injuries sustained during his removal from the aircraft. The flight was delayed about two hours but it comes on the heels, guys, of other pr episodes for the airline. Some of which involved confrontations with passengers. Yeah, then delta because people dont understand that delta hub, there were storms in delta, but nowhere really else in the country. Huge number of delta flights were cancelled. And it just keeps i dont fully understand this. In other words, voluntarily, but he didnt volunteer . What . That doesnt make sense. Well, the film does not film makes it look involuntary he had a seat and a ticket. They overbook flights regularly. So they were forcing him to leave the seat that he had. Which he refused to do voluntarily. They need tasers, what do they need . This was unbelievable. Ridiculous. The airlines should realize everything is being filmed at all times. Everything you do is being filmed. There isnt anything any of us does that isnt filmed at any given moment. Particularly on an airplane. Well hear, im sure this will come out with an apology. Well the leggings things was i think not as significant as driving a doctor you know, kind of pulling pulling a doctor through the aisle like that. For what reason . Ill advised way to get the doctor off. What if he was a lawyer . Doesnt really matter. Maybe he was an engineer. A code writer. Doctor. I mean, irrelevant to the stock. Its going to open down. Yeah. Well, i dont know, the group has been doggy. We have deltas earnings on wednesday that matters more. Deltas 8 is owned by Warren Buffett. Warren buffett is not going to sell because he saw some video. No. No. But still below their 50 transports are the diciest element. I feel the rails have held in there. Obviously we have this deal for the Trucking Companies which is remarkable. Schneider goes public, then we had a new Trucking Company and then back to a couple. And a great deal for xto. Making reference to the its significant. This is consolidation continues. You know, in an industry well, you had schneider come public last week. Good company. Competitor of them. Theyre getting together. Well keep our eyes on the knight and swift. A merger of equals. Knight in some ways even though as far as smaller from a revenue basis, jim, the Management Team and board comprise their side of things. The stocks are reacting positively to the deal. They should. All consolidation not a 6 billion deal or anywhere near that if you look at the press release. Thats the combined market value and debt included. So the combined enterprise value is 6. Closer to whatever the market cap of knight is right now. But its going up. By the way on the united story well talk to former chairman and ceo of continental, Gordon Bethune later on in the 10 00 hour, to discuss not only airlines in general but how they should respond to situations like united is facing today. When we come back well get cramers mad dash and count down to the opening bell. We have to get to the big bullish calls on both amazon and tesla. More squawk on the street in a moment. Alpha seems more elusive today. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. 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Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. All right. About ten minutes before we get to the opening bell here to start the week off. A nice spring day here in new york. You want to go this morning in a mad dash with a company we rarely talk about. Under the radar. I debated talking about tesla. I havent talked about it in 35 minutes but amazon, its been an hour. Amazon, Piper Jaffray comes up with the very interesting they do a lot of surveys. And their surveys shows that 60 of respondents indicated their family had a prime subscription. Why is that important . Because it was only 50 a year ago. This all has to do with the mall. Now, amazon was down for a couple of days. You can see that because of the brick and mortar rally. Steve roth whos kind of a brilliant guy, talking about the only real estate that only works for retail is in manhattan where you have a limited number and theyre all theres very little vacancy. And the prices keep going up. But this is another sign of what happened over the last year. If you had that many people taking prime in their survey, you can imagine what the country was like. And anybody goes from 50 to 60 is someone who wont go to the mall. So reits read the letter, about how retails death is not overexaggerated. Prime is the selfreinforcing mechanism. Once you begin to use it and shipping is free not to mention amazon music or the amazon the entertainment service. I know. Which is becoming more and more robust all the time. Jim, its dominant. They wont tell us how many members they have. No. Why would they share that . Hence you have to rely on the surveys. Piper does a lot of surveys. Younger people, the millennials, david, are drawn to prime. Thats the millennials sitting at home having a dominos pizza, although dominos the Research Firm said the numbers arent that good. Others have said that before, never worked out. Theyre having beer at home. Drinking constellation, modelo up 60 and theyre playing video games. Playing call of duty, black ops and electronic osprey. Still playing grand theft auto at the level you cant believe. I know. The power of prime is amazing. Only a few years ago when we did that documentary and we had somebody talking to us who had built the logistics system at amazon, one day it will be same day. I scoffed and laughed and of course theyre here now. When you can order something in the morning and have it be there at night thats very powerful. Have you ever checked off a subscription and not realized it . I have a stack of a p 8 00 coffee this high, i cant get it to stop. It keeps coming. I dont know how to stop it. I mean, dont check subscription because it wont stop. Its just i mean, its like wow. Dont check subscription for amazon. Okay. Watch louis ck on netflix. Watch that. That was the best of the best. On my to do list, yes. Youre related to him, right . Well, you know, when hes thinner. Yeah. All right. We have the opening bell for a monday morning. About six or so minutes away. Stay with us, more squawk on the street. Reet. Dramatically increasing print security with enterprise printers by hp. Which is great, unless youre a corporate spy. Unsecured printing makes your network vulnerable. Enterprise printers by hp help prevent costly Security Breaches that can compromise your network and reputation. So im stuck spying the Old Fashioned way. Hey. Im not spying. Secure printing by hp. I. T. Orchestration by cdw. Tbut with lightning fast shifts instant. And dynamic tracktuned suspension, what the road demands, the gs delivers. Experience High Performance through high technology, in the lexus gs 350 and gs turbo. Experience amazing. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in 3 1 2 minutes. A bing week even though its holiday shortened. Bank earnings kicked off earnings season and yellen speaks tonight at 4 00. Taking twitter questions by the way. We have a u. S. Navy warship, uss carl vinson on its way to the korean peninsula. Equipped with guided missiles. Are we going to forgot that syria ever happened here . I dont think so, because tillerson will talk tough with russia. Will he talk as tough as reagan, tear down the wall, no. But hes more in sync with the tough line than everyone else in the administration. And i think that thats where sparks could fly. I dont think thats necessarily a cordial, hey, its great to have you at maralago because theres no maralago there. Theres no what . Theres no maralago, its just kind of russia. I see. And i think that tillerson seems uniquely trying to say, look, whatever you thought, maybe i did get a medal of putin from putin, but this is not right. The rhetoric was very tough this weekend. So the idea that of the nations of syria iran and russia not flying with anybody. No. Well keep our eye on that in the Geopolitical Impact on the markets. You covered amazon which will not have an all time high at the open but tesla will at 310. Oh, my, talk about piper, piper, piper. This is an upgrading to overweight. All i can say is theyre its one its very clear you think it can go either way. Rickety Balance Sheet. Penchant for raising, but they think the model 3 will come through. A lot of people this weekend when i spoke out and about, well, there wasnt anyone who felt this stock was valued correctly. I mean, everyone is still using that ford analogy and i just think the ford analogy holds no water. Because the street is viewing tesla as being a cult stock or a stock thats not an auto stock. But a tech stock. And that a tech stock could easily have this level of valuation, not in auto. They do say we sympathize with the bears. Theyre arguably rational their arguably rational arguments wont matter. How many times have we heard that . When info space is worth 1 trillion and you better get on to case because you dont see it. Thats because youre limited, myopic. Those who see tesla going to 400 are visionaries. They like musk. Musk being its a concept. A concept. A concept. Yeah. Got to believe in the concept. And it does remind me and i think this may be why people also feel more comfort of amazon to a certain extent. Right. Charismatic or certainly a well regarded ceo, founder. Right. But how about cash flow . They went for cash flow. They went for cash flow at amazon long term though, they he managed from early days to be thought of differently than walmart. Well, the fact is valued differently. You know, cass is say our friend doug kass that the piper report goes into his archives of stupidity. Archives of stupidity . Not the matrix blue pill red pill . What was that some sort of Warren Buffett like analysis . I mean, please. Lets get the opening bell. S p at the bottom of your screen. At the big board its Canadian Energy Delivery Company enbridge. Well talk to the ceo in a few moments. At the nasdaq its discovery and Animal Planet kicking off their final season of river monsters. How many years did my kids was that something we could watch together. I want i tried to watch game of thrones with my daughter. That was a mistake. Ill advised. That could put lead to some uncomfortable moments. Yeah, maybe switch us over to the meerkats . Did that the new season started of game of thrones . Yeah. When it first came out and i didnt realize it was more risque. Okay. Just risque may be too light a word for what it was initially like. Yeah. We are going to get some industrials leading at the getgo. Caterpillar, transocean, somewhere in the top 20 list, jim. Look, when youre thinking of chesapeake you have to be thinking about incredibly warm weather and the heat the air conditioning is on. Because thats that was hurt by the mild winter. Really hurt by it. As have been the auto parts. Oreillys, the autozones. While the roads what i be crumbling may be crumbling, they were not crumbling from snow so keep that in mind. I want to mention this at t deal for a company that neither jim or i had ever heard of. Straight path is the name of the company. The reason why by the way its because they i think they were one of these companies that was formed that bought a bunch of stock. Oh, look, its howard jonas, oh, man. Remember him . Itt howard a visionary . Hes still around, wow. But look at the premium. Yeah. There you get it. 95. 63 for a stock trading in the 30s. But interestingly straight path, they own a lot of spectrum, they have ramifications for large owners of spectrum such as dish or sprint. Remember which owned a lot of spectrum. In this case were talking about both the 28 gigahertz band, and the 39 gigahertz band. The company was given 12 months to sell the spectrum, why . Because they werent building it out. Remember when you buy spectrum from the government at one of the auctions you have a certain amount of time, five years to Start Building it out. In fact, dish is going to be facing some of those deadlines in the not too distant future. On some of its spectrum. In this case they sell it. And they get a big number which certainly does nicely for them and for those who own a lot of spectrum. But on a per pop basis, at least im looking at a quick note that indicates at t also didnt get that bad of a deal. But spectrum in general and carriers willingness to pay up for local quality spectrum certainly benefits those who own it. 168 licenses does that matter . They claim the entire country is covered. It might. But not great, spectrum. A company with no revenues to speak of. No, nothing. They own the spectrum, they bought it i assume from the auction. They had 12 months to get rid of it. Or start to face fines from the fcc for not building it out. So they sold it. Why was it not part of the conversation . I dont know. Good old howard jonas, oh, man. Visionary. Well, garcia wasnt part of the conversation. Congratulations to sergio, yeah. What a great victory for him. Well great moment for golf. Speaking of sports, under armour i know you saw the cautious note out of piper. Oh, that was did you see there wasnt a Single Person of any means who wanted to buy the stock . Did you see the social trash talking of currys new shoe . A pt cruiser for your feet they called it. Boy, the scrutiny of this group has gotten insane. When they do these polls and they find whole demographic doesnt want to buy under armour and then last week we felt that under armour was ready because it was overdone on the sale side and agee das was pulling back and im watching the masters and what is he wearing . Adidas, it hasnt mattered. Adidas isnt going away. Despite what these analysts have been saying. I didnt think it was. No. I thought you were with me on that. No. I bought myself a pair of the very comfortable pumas recently. Remember when tiger was made they kind of slip on, slip off. Theyre nice. Really . They have really advanced in sneaker technology. You should try slippers. Theyre incredible. I dont want to wear them around yet. Im going to wait a few more years. The Upper West Side. I do walk around in my robe outside. And how about canada goose you walk outside with your robe . No im joking. Because there are places that people go yeah. Im joking. Like joe curran and making jokes about the Upper West Side . No. You have some friends there. Not that youd ever live there. I cant wait because its civilized and smart. American National History there. Lets look at the knight swift deal. The stocks are doing well. Thats the way you want it to look once you come up with a fairly complex merger of equals to american two of the larger Trucking Companies in the country. Wow. Look at that. Knight up almost 17 and swift getting a bump. Swift shareholders own 54 of the company. It will have 5 billion in annual revenues. If youre a swift share owner you get 0. 7 of new coe. And talking about 23,000 tractors. 77,000 trailers and 28,000 employees, jim. Well, tell you, swift was at 16 times earnings. That was times 26 times earnings, this is going to cause an immediate reevaluation of schneider which went public last week. Thursday i think. Yeah. Schneider is worth a lot more. We looked at schneider on friday. Very high quality. But this is it had been it was in the middle of where the price to earnings multiple and suddenly schneider becomes a lot more attractive. Schneider is a good company. Sndr for those looking at it. Last week, a week before, there were reports that tesla had passed gm by market cap as the biggest or most valuable u. S. Automaker. There was some dispute over the share count but it looks like today they may have done it. Dow jones running with that headline. The best that we can tell, theyre both around 51 billion. I mean, this is going to cause the discussion again. I keep saying that forget it. This is a cult stock that people who think they one of the 400,000 rumored people to be part of the m3 i did. I gave up. I gave up. I was not going to wait any longer. I was in the lottery to get the new car. A model 3 . Yeah. I decided it was just hopeless. I wouldnt get one. My daughter very interested in the environment. Kind of felt this was a good buy. Cheaper that how about a prius . Theyre nice for the environment, arent they . She didnt she didnt want a prius. Ford focus . She didnt want a ford focus. Lets not go where she went. But she paid for it. Well, then she can get anything she wants. Shes paying for it. A big part of the piper call is just the idea that the company doesnt play by industry norms on Dealer Networks. That was right. On radar. On cash burn. On equity raise. They dont pay a price for that would crucify another company. I thought the rickety Balance Sheet and penchant for raising equity, these were so negative. Thats why i say the cash burn, they talk about the company burns through cash at a rate that better established companies would likely be crucified for. Crucified. I usually leave that to the William Jennings bryant 1896 speech. Own a pot of teslas, purpose down the cities and theyll grow back. Burn down the farms. That was a great speech. It was . Yeah. Elliott is very active activist. Bhp. Bhp billiton is who they come after this morning again. We talk about elliott. Both in those sort of mid Cap Technology companies that they like to traffic in sometimes where they get involved and push them toward the sale. Oftentimes ending up in the hands of private equity. They go after the huge things, samsung, big fights there. And now bhp, they wanted to unify the dual listing structure and separately list the petroleum business. We have been talking for six months this is going nowhere. They dont have a path. And the australians are not going to let this happen. So this is just what . So they get involved in things where theres a clear path, where they have the opportunity to get board seats and then other times they seat to get involved in fights that are tougher. Windmill to be kind. Yeah. Yes. Well, i looked at this and it would be good to separate. Bhp paid too much for oil and you want the pure you want the pure china play. By the way, tesla with the dont forget, tesla opening a huge plant in china. Very valuable, 100 owned. Tesla, they cant keep those in stock, remember when the bear case china didnt want them . Au contraire. I love when you speak french. Thank you. Gets me every time. Dows up 42. Lets get to bob pisani. Good morning. Happy monday. Transports are leading because of that trucking deal but overall, lets call it sort of the reflation trade is back a little bit. Take a look at the sectors right now. Energys up. Oil has made a complete turn around. 52 to 46, back to 52 again. Nice moves up in the industrials and tech all leading here. Defensive names utilities, Consumer Staples lagging. Gold is lagging again. The reflation trade is back on a little bit. Look at the Energy Stocks. Every day they had come back. A lot are at two month highs now. You have hess and you get the small moves every day and suddenly you have nice moves and again total uturn for bomost o the big names. We need them to contribute to the overall earnings package because were expecting big gains this quarter and the next one. Where are we right now . Were in a purgatory. I heard this over the weekend were stuck 1 to 2 below the old record. That haves the day after the president spoke to congress here. The risks are out there. There are three big risks. One is growth and the risk of growth being below expectations. The second is the fed changing the pace of rate hikes. We saw concern on that last week. And the third risk thats out there is the risk of the trump agenda slowing down. Didnt help on friday, gary cohn was saying that mnuchins august forecast about tax reform getting done by them may not happen. That was widely discussed on friday afternoon. I think that is the big risk out there the trump agenda not moving as fast as possible. The earnings, financials, 15 . But i would also note Overall Technology numbers are supposed to be very, very high. This is concentrated on some of the biggest names including apple but thats a big risk for out there. Thats not a typo out there. 600 . I know that sounds absurd. Energy stocks have been in negative territory for years. Of course theyre contributors big contributors this quarter if we can keep the oil price up inthe Second Quarter towards 60. A lot is riding on the Energy Stocks right now in the contribution to earnings. In terms of where we are right now, year to date, well, we have had some unusual gainers that are out there. I know nobody expects coal to do much but the coal etf has been very strong. Home construction has been great. Lennar and others have held up well. Social media stocks have been doing great. Twitter is doing all right. Google, 10 cents doing okay overall. Some of the gold miners are up notably. We noted the emerging market stocks have done well on top of that. There are sectors doing very well overall and holding up. You heard the guys talking about the trucking deal. I wont belabor swift and knight. But i think its some important points about the Trucking Industry because it may be in need of consolidation. Theres a lot of problems in the industry overall. We have talked a lot about driver shortages thats been out there for a while. With the sluggish demand in general. We have seen some weak used equipment market. Put up the full screen and see what the problems are. Then the overall issue of the fragmented market out there. The ten largest carriers are less than 10 of the market. Even swift which is supposedly the biggest one out there has a very, very small overall market share. By the way, swifts primary customers are in the retail space. A little side story about the retailers consolidating, going on and impacting them as well. Retail theyre in big and food and beverage. I think its very important theyre a huge hauler for walmart. Walmart is about 12 of their revenues and of course we know what theyre doing to their suppliers. Right now the dow is up 52 points. Carl, back to you. Thank you very much. Lets get to the bond pits as well. Rick santelli, good morning. Good morning, carl. Well, as the sun moved towards the u. S. , rates started to slip into the sunrise as you see on this intraday chart of 10s. Looks like well give 240 a pass but its eased back as you see. Lets look at several charts. I like to pick mid november. You can clearly see patterns especially on the fixed income side. As you look at our ten year its really hard not to see that we are holding for now the bottom of the range. And if you look towards European Countries especially france, you could see that the pattern especially of some of the southern economies seems to be on the firm side. Boons very similar to the u. S. Of course we want to watch that 20 basis points below the market. Italy on the strong side. That really does represent something to Pay Attention to as they hover their ten year around 2. 25. Consider the spread between italys basically at the widest in three years. That gives us an insight into the credit issues of investors. If we look at the uk, thats where the pattern breaks down. This important of course. The post article 50 negotiations, how tough it will be, how will it fare for the economy . And at least for you we know their central bank is willing to give more slack to the rope. But you could clearly see that the drift to the uk ten year hovering around 110 basis points has more of a pattern to lower rates. We want to isolate that and Pay Attention. Dollar index had firmed a lot. A lot at the expense of the euro currency. Back to you. All right. Well talk to you in a bit. When we come back, prospects for Pipeline Companies and where the regulation fits in. Enbridges ceo will join us. The s p and the nasdaq have the best gains of the month. Were back after a break. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Shares of enbridge, north americas largest Pipeline Company gained 9 in the last year. Joining us fresh after ringing the opening bell is enbridge ceo and frequent guest on mad money, al monaco. Al, i thought of all the Different Things that were in your very lengthy presentation because youre totally Transparent Company was something about trump. You expect a more balanced tone for energy and Infrastructure Development. What will that mean for the 48 billion with the projects that you see happening very quickly for your company . Thanks for having us here, jim. For sure, i think theres been a more positive tone i would say over the last few months around energy and energy development. I think it all relates to the fact that were seeing energy in a more positive light. Something that can drive growth and prosperity in north america. I think in this in this country and in this continent, we have a tremendous competitive advantage with the resources that we have. So for us, having that more positive tone i think will make it simpler and at the same time were still focused very strongly on safety and being sustainable in the way we approach Infrastructure Development on this continent. I think people may not realize in the hoopla about keystone that you took advantage of the you said you have got the pipeline that everybody wants already. You know, thats a great point, jim. If you go back in history, i guess three or four years ago now, we actually connected the gulf coast already in a pretty efficient way. Right from canada all the way through to the gulf coast. So we think we have a good conduit. Low cost, efficient conduit to get the best market we believe for canadian crude. You made a bold statement that very that no other pipeline 10 to 12 annual dividend you expect through 2024 . Right. How can you be sure you can do that . Well, look, we didnt do that lightly. When we looked at the numbers over the next few years, its really the capital program. Some 21 billion through 2019. Right. Then a huge inventory. Somewhere in the area of 37 billion in other projects that could be brought forward. That gives us confidence in making that statement around dividend growth. One thing that i thought was interesting in terms of the reservations people may have, i dont know if you caught the natural fuel gas got rejected by the department of conservation from new york state. Do you think that this the states are going to play the role that the federal government used to play in order to block some of these deals . Actually, thats a great point, jim. I think it really emphasizes the need for us to make sure that were focused on what we do best which is safety, reliability, environmental protection. The states have a big role in the United States to play in terms of managing the development of infrastructure. So we spend a lot of time and focus a lot of energy and effort on making sure were doing the right things at the state level, particularly when it comes to talking to communities and telling them about the merits of our project. You know, a big thing in our Business Today is making sure were advocating for energy. And the things that it can do well for our economy. Jobs, tax creation and so forth. So i think its all part of the equation, jim. I think that can you give we have talked many times about this, but if you want to get unskilled workers pretty good wages even during the 30s what we discovered with us the number one creator of jobs was the pipeline business. Can you explain why it produces so many jobs . Well, look, this is a very capital intensive business. And it may sound easy to build a pipeline but it takes a lot of people. Right from engineering to welding to people on the ground constructing the pipeline. I think it takes a lot of people and a lot of energy and a lot of coordination. So i think for sure it takes a lot of skilled labor. These are good paying jobs for americans. I think thats a real big benefit of the capital that were putting to work over the next several years. And hows the supply of labor right now . How tight is that getting . Supply of labor is pretty good. It really depends on what region youre talking about. But generally speaking, people want to work. And i think the skills that theyre bringing to our projects are important. So i think were in pretty good shape from the supply point of view. Explain to people how what you replace in a lot of cases is the rail and its a lot more dangerous way to ship oil. I think thats right. Theres no question theres not much disagreement at all that pipelines are the safest way to move crude oil and natural gas. So although we dont make a big fuss about saying another form of transportation is unsafe, i think for sure pipelines are the safest form of transportation. Well, i want to thank you so much for coming on and this is a great merger. S i know a lot of people i know a lot of people watch our show love income and youve got the steadiest Income Growth of any in the Master Limited partnerships. Al monaco, president and ceo of the new enbridge. Thanks, jim, were excited about it. When we come back, well get stock trading with jim and the dow is up 51 points to start the week. Week. What powers the Digital World. Communication. Thats why a cutting Edge University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. So yourhow nice. A party . Ill be right there. And the butchery begins. What am i gonna wear . This party is super fancy. Lets go. Im ready. Are you my uber . [ horn honks ] hold on. Dont wait for watchathon week to return. [ doorbell rings ] whos that . Show me netflix. Sign up for netflix on x1 today and keep watching all year long. Time for cramer and stop trading. Everyone wants to write off all retail, thats wrong. Were going to name the companies that are survivors and particularly one will be a big surprise. Its got a good yield too. I cant wait to reveal it. Cant wait either. Thank you. Thats on mad tonight . Yeah. We worked for the last ten days on this, because we have a surprise that no one is i thissing about. Honestly. Even the best. Jim, see you tonight at 6 00 p. M. Eastern time. When we come back, well talk to Gordon Bethune about the big story and of course talk to jack bogle. The dow is up 45. Think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov gave us the power to turn this enemy into an ally . Microsoft and its partners are using smart traps to capture mosquitoes and sequence their dna to fight disease. There are over 100 million pieces of dna in every sample. With the microsoft cloud, we can analyze the data faster than ever before. If we can detect new viruses before they spread, we may someday prevent outbreaks before they begin. Itbut one i think with quesa simple answer. We have this need to peek over our neighbors fence. And once we do, we see wonder waiting. Every step you take, narrows the influence of narrow minds. Bridges continents and brings this world one step closer. So, the question you asked me. What is the key . Its you. Everything in one place, so you can travel the world better. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build 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 . Why invest in average . Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Good monday morning. Welcome back to squawk on the street im Carl Quintanilla with sara eisen and david faber. The markets are up 57 points to start the morning. The best gain of the month so far for the s p and the nasdaq as we have a lot going on. Yellen tonight, earnings season begins as well. Our road map starts with the u. S. Markets shrugging off the gee joe political ten schenns s as geopolitical tensions. And jack bogle will weigh in on the earnings, trump and the economic recovery. United airlines pr nightmare. A video shows the airline forcibly removing a passenger from an overbooked flight. Is this just the latest sign of a systemic problem for the industry . The new auto king, tesla, passing General Motors to become the most valuable u. S. Automaker. Dow has not had backtoback gains in exactly one month. This week the markets await cues from the Big Bank Earnings and many moving parts remain around the tax agenda and new geopolitical risks. Joining us is jack bogle vanguards former ceo and founder. Jack, good to have you with us as always. Thanks, carl, always good to be with you. Got a lot of pots boiling today. We mentioned earnings, policy. Geopolitics. What strikes you as the most important thing to watch right now . I think the important thing to watch is this big gap that we are seeing right now in operating earnings in the future compared to reported earnings in the past like Gaap Earnings and if you look at the Gaap Earnings look at whats being done, the pe is 26. If you look at the future earnings which we dont have in the bag yet, and only operating earnings without the bad stuff in them, the pe drops down to 16. Is it 26 or is it 16 . Or is it something in between . But my own feeling is the market is pretty fully valued here. I dont think in a risky highly risky way. I wouldnt worry about that if youre investing for the rest of your lifetime. Is that a shorter way of you saying that you think stocks are expensive . I think stocks are expensive. Now, when you compare them with bonds, they look a lot less expensive. Because the future returns on bonds, if you look at say the yield as being a good proxy for that, are only going to be 3 . Give or take. Maybe 2. 5 . So stocks have a they will certainly do better than bonds but if they dont do a lot better youre looking at the future of 4 no, maam thminal Something Like that. Some are puzzled by the bid to bonds, this little pop on friday. And people put that in contrast with what happened with equities. Why are people overreluctant to say that long goodbye . Well, thats a really good question. I dont think anybody really knows but they have cash to put away. These corporations in particular. And cash to raise and theres a good market, very strong time for raising capital in the bond market at the low yields. But theyre historically low, but again, like everything else, carl, it gets complicated. Because if youre talking nominal yields of say 2. 5 , and 1 1. 5 inflation youre talking about real yield of 1. When you go back to the 6 or the 7 yields the inflation rate was probably 4. So the gap is much smaller than it looks like if you take into account lower inflation than anybody expects to have ahead. I think thats right, by the way. I think we will have lower inflation at the next say five or ten years. I wanted to get your take, jack, on washington, the impact on markets and the economy. In the past you have told us youre concerned about the long term impact of the trump policies for society. Has there been any change in your view specifically on tax reform and infrastructure and deregulation and what that might do in terms of giving a jolt to the economy in the near term . Well, you know, theyre all mixed up together. Its kind of interesting because when the socalled obamacare did not get repealed, a large tax on higher income earnings remained. Theres no tax cut there. There would have been a huge tax cut if the if the law had been repealed. So one thing links to another and they talk about border taxes, import taxes. And so its a great big mirage as to where well come out on the taxes. I think its difficult to get the tax program through unless it gives some help to the people that really need help in our country. And, you know, i describe myself as im so conservative that im liberal. I love this country, but i want to make sure it stays the way it is and i think we have a societal obligation to try and do our best to take care of those who arent as favored as we in the financial business or other businesses that are doing quite well. We have heard that from other big investors as well. Do you think this market would take a big fall though if congress couldnt deliver the tax reform that President Trump has been promising, especially the Corporate Tax cuts . Well, i cant associate any given event like the failure to get a tax cut through to a market decline. I think markets kind of move on momentum. Markets dont forget this. Markets are basically the result of traders, not long Term Investors. All that trading that goes on every day. And so for the long Term Investor i think its best to ignore the noise of the traders. Jack, id love to ask you about the Broader Market and particularly dynamics related to the market as the father of index investing, i know youre pleased to watch how much money has come into passively managed indexes or etfs. Do we get to the point that they become the market . I get this question a lot, and i try to answer it, which is what happens to active management . Does it make it easier or harder to actively manage in the market that most of the money is actually indexed or going into etfs . Well, let me say a couple of things. In the last maybe eight years about a trillion one has flowed into into index funds. And a trillion two has flowed out of actively managed funds. Thats a 2. 3 trillion change in investors preferences. That is staggering. Theres never been anything like it in the history of the markets. That said, i think the influence of indexing in the market is way overrated because all were doing is indexers. We dont trade those stocks in the funds. All were doing is indexers is spending the days cash flow investing the days cash flow in the by and large large cap stocks in the market. So indexing purchases and sales mostly purchases are a very small part of total market trading. Now, that said, theres Something Else going on in the market. You didnt ask about it, but i think its quite significant. That is the brokers in the country have been pretty much bailed out by index funds. And that would be exchanges traded funds and these etfs unlike the traditional funds that i started all those years ago i guess 43 years ago now, these etfs are traded and their dollar value of the trading is Something Like 45 of all the trading that goes on every day in the securities market. 40 or 45 . Its a whole new way of investing and speculating on the short term. That Trading Volume is enormous. The etfs turn i think the number is 3,000 a year. The spyders Standard Poors largest etf is the largest traded most widely traded stock in the world every single day in terms of dollar value. A lot of speculation. A lot of banks trading with each other. Theyre probably half the volume in etfs. And the only thing i know about that, carl, is when you trade lets say etfs or the spyder, mo most sides do not win. Am i doing okay here . A little bit. That helps. Active management, will it still have a role in the marketplace . Oh, sure, it will. Theres some good actively active managers out there. They dont beat the market by very much. Sometimes they even fall short and theyre basically a little lower cost. Thats key to their survival and success. But i think a lot of firms will fall by the way, because they dont have anything extra to offer. And something i havent read much about, david, or seen much written about is that if you start taking greater risks to beat the market, youll find the money comes into the fund when youre doing very well. And goes out of the fund when youre doing very ill. So staying close to the market or being an index fund it doesnt have those great departures from the norm. Its very costly to investors and theyre not going to like it. They dont like it. I hear from them every day and theyre a happy crowd, believe me. Our investors here at vanguard. One last thing, jack. We have syria, the syria strike last week. A lot of discussion over the weekend about what u. S. Policy is and will be, removing some presence to the korean peninsula. We dont normally turn to you on stuff like this, but how do you expect the markets to process geopolitics now that were in this . First, the north korean problem is up many more serious is much more serious from the market standpoint to how the market would react than the syrian problem. I dont think well get to Nuclear Weapons in syria. I certainly hope not. But in korea, north korea, they have Missile Launch sites all over the country. Theres quite a number of them. Sure, a lot of the missiles fail. But at some point, theyre going to push us too far and an aggressive Administration May well decide they have no option but to take them out. I think the market would react very badly to that, even though it was something that might be in the national interest. But the geopolitical stuff is a little off my plate. I watch it very carefully,but i dont have an awful lot to add to it but to observe the risk that we have real dynamite going on here. Which is greater in north korea than it is in syria. Jack, good to check in with you. We appreciate your time, you know that, as always. See you soon. Okay, good to be with you all. Jack bogle. Big news this morning, teslas market cap surpassing gm. This after it passed ford last week. Our phil lebeau has more. Quite a milestone. Yes, sara. We expected this to happen given the trajectory of the tesla stock and as you look at shares of tesla versus General Motors over the last year its not hard to see what happened here. Teslas market gap now valued at a little over 51 billion. Gms just slightly below that. Keep this in mind. In 2016, tesla sold 76,000 roughly 76,000 vehicles worldwide. How many did General Motors sell worldwide . 9. 9 million. Tell yotion where people are right now in terms of how theyre looking at the auto stocks. Tesla remember we had the new price target that was thrown out there today, guys. What 368. It just shows you theres anticipation on wall street that this is a company and a stock that will continue moving higher. And now you have tesla as the most valuable u. S. Automaker. I think its something that the people in detroit are going to look at and say this makes no sense at all, but the market is what the market is. All right. Were watching that. The shares of tesla today. Phil, the other big story on your beat today is obviously united. The big pr blow from sunday night. The passenger forcibly removed from that overbooked flight. At what point do we need to Start Talking about the booking models overbooking algorithms and whether they need to change . If you look at the d. O. T. Data as we look at this customer being forcibly removed from the united flight here in chicago over the weekend, the d. O. T. Data clearly shows that there are fewer denied boardings than there were last year than ever before. So the industry is improving when it comes to this. Really, we dont hear about this happening very often. But whats changed, carl, you know in the past you used to know of a coworker or a friend who got bumped off a flight. I hate this airline. I got bumped off a flight. Now everybody has a cell phone. All it takes is one passenger saying, no, int do like the way youre treating me or for the airline to forcibly remove somebody and you have a pr nightmare. The Company Issued a Statement Last night. It has not issued a new Statement Today so were unclear what theyre going to say given the pr backlash. Flight 3411 from chicago to louisville was overbooked. After our team looked for volunteers one customer refused to leave the aircraft voluntarily and Law Enforcement was asked to come on board. And we apologize for the overbooked situation. Further details on the removed customer should be directed to the authorities. Take a look at shares of united which, you know, theyre not really doing anything in response to this today. But whats interesting is the Airline Quality ratings are out today. This is one of the benchmarks for the industry. This is not going and asking people at the airport, hey, who do you like to fly . But those rankings put united on number eight out of 12. The next stock, alaska, it is number one. Ahead of delta and ahead of Virgin America in terms of quality of Airline Service and oh, by the way, on a day when we see this video, carl, of this guy being dragged off the plane, 2016 is the best year ever for Airline Service. Thats according to the authors of the Airline Quality why was he being dragged off the plane . Why was he on the plane, and why are they being so physical with him . This is crazy. Sara, you know how this works. No, i dont. Tell us how it work, phil. I dont think everybody is fully aware. So the way this works is if they have an oversold flight, they will ask people to leave. In this case, there were united crew members that needed to be shuttled on this flight. So this person had boarded. They said, look, we need four more people to get off this flight. Now, you can make an argument, you shouldnt have boarded the flight first if youre going to ask people to then leave. Yeah. We need four more people to leave. They ultimately have control. The airlines do, in terms of who is on a flight. So just because you have a ticket while in theory you will be on that flight, but they can say, we need your seat. They say they randomly drew four names of of people who had to leave. This customer said, look, i have to be back in louisville, i have to go to work tomorrow and im not getting off the flight. Then the situation look, the flight has to leave. Well bring in Airport Security to remove you. It seems like they could have factored that in before. Its very odd. Do they give him like a free flight the next time . Do they still offer those things . Still well, look, david, they were offering up to 800 and nobody took it. I have seen this, david, im sure you have seen this. People are saying i have to be on this flight. I dont care if youre offering me a thousand dollars, i have to be on this flight. Thats the case with this guy here. Phil lebeau. Well have more on that story. Former continental chief Gordon Bethune will join us. What to expect from secretary of state Rex Tillersons meeting in moscow this week and plus, wells fargo board slamming the former ceo and former Community Bank unit head. We have the details on that. And weve got an interview you dont want to miss. Wells fargo chairman Stephen Sanger will be joining us in a cnbc exclusive. Thats coming up on squawk alley. Say carl, we have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Head. Head. So youre having a party . How nice. Ill be right there. And the butchery begins. What am i gonna wear . This party is super fancy. Lets go. Im ready. Are you my uber . [ horn honks ] hold on. Dont wait for watchathon week to return. [ doorbell rings ] whos that . Show me netflix. Sign up for netflix on x1 today and keep watching all year long. Today judge neil gorsuch will take his place as the Newest Supreme Court justice being sworn in an hour from now. This as geopolitical tensions rise and taxes and trade are still in the policy spotlight. Our Kayla Tausche has more on what we can expect from washington today and from the week ahead. Reporter good morning. A top priority for the Trump White House has come to fruition as judge neil gorsuch becoming Justice Gorsuch with a private swearingin ceremony led by chief Justice John Roberts a bit earlier this morning. Restoring the benchs conservative leanings, filling a 14 month vacancy created by the death of Justice Antonin Scalia last year. Now it is on to the next congressional battle for the white house which is pursuing a stopgap budget and getting it passed by april 28th to avert a government shutdown. Republicans have been balking over funding that the president would like to include to fund a border wall and well see if they can reach a compromise by the end of the month. That deadline falls just before the 100day marker for the Trump Administration. Today President Trump will meet with budget director Mick Mulvaney to chart a path forward because there are only four days between congress returning from recess and that april 28th funding deadline. On the trade front, some concessions by china have been made, relaxing rules on foreign Financial Investments and imports of u. S. Beef following that president ial summit in florida last week. And reports are that the president is readying a new executive order investigating product dumping by various countries. The Trump Administration is looking at a nascent Foreign Policy as the air strikes in syria threw a wrench in the long running civil war there. Secretary of state tillerson meeting with g7 leaders in italy today and russias foreign minister on wednesday. Now, russia and iran have sharply rebuked the u. S. Over those syrian air strikes that happened last week. And we will see what happens when secretary tillerson meets with his russia counterpart later in the week. Its interesting though, guys, because both secretary tillerson and u. N. Ambassador haley have both said that ending isis, stopping isis, is the top priority for the administration. A broad but they seem to be disagreeing on if assad should remain in power. So we elle wait for an well wait for an official line on that from the administration. Thank you. Well pick up on that question. For more on syria and President Trumps evolving Foreign Policy moves we are joined by former ambassador william corurtney, s what do we need to know as the g7 meeting kicks off of foreign leaders Foreign Ministers including secretary of state tillerson ahead of his important visit in moscow on wednesday . The g7 meeting is important because the g7 ministers are going to fortify the position of secretary of state tillerson as he goes to moscow. Secretary tillerson in moscow tomorrow, wednesday, he will press the russians to go back to assad and have assad reveal the remaining secret chemical weapons that he has. In 2013, after a sarin attack that the assad regime carried out, first president putin said it was Utter Nonsense that assad had done that, but within two weeks he had forced assad to declare a lot of chemical weapons and its clear that assad lied to russia, the United States and kept some secret weapons. So tillerson will want to get russia to clamp down on assad about the secret weapons. David, you guys advise that the advise the Eurasia Group hedge funds and what are you telling them about the market risk . We saw a slightly defensive trade on friday when the news broke. The risk premium in oil seemed to go up. Whats the risk from here . Yeah, we dont think that the risk premium on oil is going to stay very high. I mean, the fact of the matter is that there are very little likelihood this spreads beyond syria into the actual producing countries. I think that president putin is really upset with assad now because assads use of chemical weapons last week spoiled the context for the visit by secretary of state tillerson to moscow. Its now going to be putin on the defensive. I still think that there are prospects for a deal here and i do believe that the administrations top priority will remain i. S. The question is, you know, what happens here after raqqah . How invested will the United States be in actually trying to have an actual political transition in syria . It looked like the Trump Administration was steering away from that. I think theyre going to get pulled into that battle. But i dont think that theres a lot of market risk right now around this. Although we are talking about russia. I think one of the big questions, ambassador courtney, is does this make a trump putin cooperation more or less likely, what happened in syria on friday. Well, what happened in 2013 was it actually made cooperation more likely because russia and the United States carried out what was really an unprecedented effort to remove and destroy syrian chemical weapons. Its still unclear what will happen but once one should not pay too much attention to the bluster coming out of the kremlin. In fact, the kremlin does is embarrassed by the use of chemical weapons this time by assad. For the kremlin the longer term goal is to stabilize syria so that russia can have military bases in syria and be a great power in the middle east. But russia cant stabilize syria by itself. They know it needs the United States and the International Community to do that so russia has to deal with the United States at some point. The Financial Times has an oped today, titled trumps show of global leadership. How do you read into that . Does it have other implications including domestic ones . I think this was a perfect opportunity for the administration to really distance itself from obama and the obama legacy to reassure allies especially in the middle east that theres a new cop in town. I think were heading to something thats going to look like sort of a george w. Trump administration. I mean, trump subjeisnt going change his style, but if you look at particularly the generals that hes surrounded himself with, their world views are most consistent with the approach that was undertaken by president bush 43. Whether this has positive domestic repercussions will really depend on will the administration be able to take advantage of it . I think trump will definitely get a popularity bump from this. But he doesnt appear to have any really Strong Strategies moving forward to leverage this. Particularly on taxes or some of the other priorities that the Administration Administration has articulated. Gentlemen, thank you for weighing in today on the week ahead. David gordon and ambassador william courtney. Thank you. As we go to break, take a look at stocks. This is now the best day of the month for the s p, the nasdaq and now the dow. Which will be true as long as the dow is up more than 39 points. Back in a minute. Ck in a minute. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Wells fargo releasing the sales practices probe this morning. Wilford frost has been digging through the report and he joins us now. How damaging is it . Well, lets go through the details, a review by the board into the sales practice scandal has deemed it necessary to get back 25 million of pay from john stumpf after he agreed to forego 40 million when he resigned in 2016. Cork to data from equilar, the total pay was 286 million. So hes handed back around 24 of that amount. Stumpf was made aware of the systemic nature of the sales practices from 2012 but he was first aware of specific cases as early as 2002. Yet, he didnt initiate any followup investigation or inquiry until 2015. Moving on, one of the main issues levelled his way was his inability to criticize Carrie Tolstedt who he once praised as being the best banker in america. The review singles out tolstedt for far more criticism than anyone else. Tolstedt resisted change to the Community Bank sales model even when confronted with evidence that it led to low quality sales and improper sales programs. Instead, she reinforced the High Pressure sales culture. Thus tolstedt has been terminated retroactivity for cause and giving up 47 million of pay, having already forgone 19 million in september of last year. Tolstedts total pay over the last six years was 109 million so shes given back 61 of that. This makes the claw backs the biggest in history. Current Ceo Tim Sloan has been given a relative pass. His direct involvement with the sales practice issue was limited until he became president and ceo in november 2015. Sloan has said in the last hour that we accept the boards finding as a critical part of our journey to rebuild trust. The report is less critical of the board than executives. Suggesting that at times Board Members believed they were misinformed by various presentations they received. All this comes as stark contrasts from Institutional Shareholder Services that recommended shareholders vote against reelection of 12 of 15 wells Board Members at the upcoming annual general meeting. Including charge steve sanger who oversaw the report. Sang her join sanger will join us in the next half an hour or so. Sara . You mentioned sort of this idea that employees were put under pressure by management. Were there examples in the report . There was one example of what was called a monthly motivator report and the report says that some lived and died by the results of that. Also retail scorecards that were brought in by tolstedt generated significant sales pressure and the particular type of practice that the review kept the most criticism was for the jump into january sales campaign. This was something that was there to try and kick off sales with a bang at the start of the year and the report said of that, it was a quote, breeding ground for bad behavior. So lots of nuanced examples of the specific behavior that was putting pressure on employees to act improperly. All right. Thank you very much for that. See you soon. Wilfred frost will join us in half an hour. Lets get over to contess is brewer and get an update. We are looking at a minute of silence in sweden for the victims of fridays attack in stockholm. Four people were killed when the hijacked truck plowed into the department store. Its believed the suspect was denied permanent asylum from uzbekistan. Dylann roof is expected to plead guilty to state charges in the 2015 shooting massacre at a Historic Black Church in south carolina. Hes been convicted of 33 federal crimes in the case and sentenced to death. His plea will spare survivors a second round of court testimony. Neil gorsuch becomes the 113ths justice of the u. S. Supreme court today. President trump will attend a swearingin ceremony. Thats in less than an hour. Three russian astronauts back on earth. They left the International Space station a bit early after 173 days in space. They touched down in kazakhstan a few hours ago. Thats our cnbc news update. Back to you, sara. Contessa, thank you. When we come back, former continental ceo Gordon Bethune will join us as united gets hit by another scandal. A lot of outrage, but the stock is up a percent. P a percent. The power of 100 of the worlds top companies. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Social media backlash this morning against United Airlines after this video surfaces showing a passenger on a flight from chicago to louisville being forcibly removed before takeoff at ohare. Take a listen. No [ screaming ] oh, my god the man was able to get back on the plane, but this incident sparked outrage on twitter. Hash tags like dont fly twitter are out there. And children were crying on the plane. Gordon bethune, he joins us. What a story. As best you could guess where do you think the system broke down here . Well, carl, thanks. It was an oversell obviously. And somebody had to be removed from the flight. Im sorry first of all, the men and women of united are truly professional. So this immature reaction obviously is it disturbs us all. But there are millions of people every day on airplanes and this does this involuntary denied boarding does occurred. Usually handled with more maturity, i think. A lot of people looking now through uniteds denied booking policy which talks about denying boarding. Doesnt say much about taking someone off of an aircraft. So is it your guess that once they got to 800 as a volunteer offer, didnt get any takers, they were stuck because they had already boarded too many people . I think that may be true, carl. They have, you know, lists so certainly youre frequent flyers, of course the first class passengers and the cost of the ticket has to do with who gets involuntarily bumped off the flight. Theres usually Space Available so its not an issue. But this person was the most eligible to be denied boarding by their priorities and he did not want to cooperate. Based on what he paid, right . Probably based on what he paid and maybe just have been a mistake they put him on too soon. But certainly, you know, itser have emotional its a very emotional scene. Doesnt have to have that kind of immature reaction when youre asked to leave the plane. You should handle it in a different way. Yeah. Immature. I mean, they man handled him. A good thing he wasnt wearing leggings. So in this world, gordon, of social media, where everybody has it, everybody has a phone and everybody has video on their cell phone, why cant these airlines be more cognizant of the fact that they are squarely in the Customer Service business . Well, i think they are, sara. These were Security Officers removing him from the plane because obviously the staff had asked him to voluntarily leave and he refused. They have no recourse to get security to enforce their rules and regulations and the man obviously didnt want to go. Like a child that didnt want to leave. But i think they are cognizant. They tried to do a professional job. Theyre very professional people, but not everybody on the plane is professional. They can create a scene if they want to and they did. Yeah. Gordon, listen, we looked at the stock price. Its not having an impact at all. In fact, its having a good day in the market. That is united continental. But if youre in the ceo seat right now, we know the gentleman who is, do you change anything in policy . That statement that we got earlier really seemed particularly lacking in any care for the passenger. I mean, what do you do right now if youre the ceo as you had been of course of this airline. Its been a while, to change anything or how do you respond to what is a growing pr blunder . Well, theres probably not a nicer man than oscar munoz, so hes a really human fellow. Im sure he has deep concerns about this. And im sure there will be a lot of discussions within the company of how do we handle this in the future. But its not from a lack of concern of the passengers. I mean, united has done a really good job of optimizing that experience and making a better product available. So you can be sure it will be a lot of discussions and theyll try to see how to handle it. But the facts are, there are too many people for the seats and somebody has to leave. You talk about maximizing and the reason theres overbookings is to increase the revenue. The d. O. T. Bookings showed that its coming down. Thats true. Thats why this doesnt represent the millions of people who fly every day. Once you know, carl, an airplane leaves that seat is gone if its not filled. So they try to anticipate the number of no shows and the booking parameters historically. And theyre handicapping just how many people are going to show up. But they need to fill those seats to get the money as they can. One last thing. If youre running united today, and youre crafting the statement that will ostensibly well get later on today, what do you say . Well, im sure theyll say that they apologize for the incident, they apologize to the passengers who had to endure it. Certainly to the person who was removed from the plane and had to go forcibly. Im sure there will be some reconciliation. But you can bet that theyre going to make some effort to show that they do care about passengers because they do. And help their employees work in a professional way. Gordon, thanks for coming to the camera. Everybody is talking about it. Good to see you. Thank you. Nice to see you. Mondelez is looking for a successor. Thats according to the much buzzed about piece in the wall street journal that said the snack maker has hired an executive search firm and the board is discussing candidates that could replace her. Its not shocking as rosenfeld is 64yearolds old and has been at the helm for a decade. As the company it wills me we have the robust success Succession Plan in place. We know that kraft heinz are in search of a new deal and mondelez is seen as a top contender. But ceo Irene Rosenfeld isnt on board with this idea. As she told me a little bit over a month ago. Listen. Theres a lot of speculation out there and we cant spend a lot of our time thinking about it. If you step back a second though, when i split the company i did it because these were two very different portfolios. And they actually have shown themselves quite capable of creating great value for their respective shareholders as separate companies. Our company has created over 60 billion of market cap as a result of focusing on snacks. Were going to continue that focus. So, whats going on here . Is this investors or Board Members pushing for a sale by pressuring management potentially in a wall street journal article . Either way, this is a tough growth environment. Mondelez no exception. It faces the macroeconomic challenges and currency pressures. With all of that, mondelez has outperformed some of the other food stock, but many wonder whats next and many investors including bill ackman, nelson peltz on the board of mondelez may be pushing this company to a deal or a sale. Now that the current management not exactly on board. Yeah. That has to be theres no retirement age at mondelez from what i understand. What i can tell you is this, sara. When it comes to the speculation at this point about 3g or kraft heinz, theres nothing going on with mondelez. Now, that doesnt mean there wont be at some point. Going on at other companies . Its not clear to me that there are. We know that kraft heinz is looking at swoons after the failed attempt to acquire unilever. Dont this have dont they have to do a deal . They do have to and the model is to buy and buy big and generate the efficiencies. Mondelez as you say comes into that target area oftentimes. I can tell you right now nothings happening there. Theres nothing going on. I wonder how much of that is the current ceo, Irene Rosenfeld. She split the stock for a reason. They have both done okay. To be continued for sure. I dont see this as anything imminent, a big management change. No. You think its a plant of a story to generate pressure is what youre saying. Yeah. Its overblown. As we head to break a check on tesla surpassing gms market cap to become the most valuable automaker. Imagine that. Squawk on the street back after this. After this. I cant wait for her to have that College Experience that i had. The clses, the friends, the dependence. And since we planned for it, that student debt is the oneexs when you have the right financial advisor, life can be brilliant. Ameriprise the you want to know where stocks are going, keep your eye on the obscure asian index. Well tell you why it matters on trading nation. Com. Markets adding to gains. Dow up 80. Li lets get to rick santelli. Id like to welcome charles biedermann, thanks for taking the time. Heltha three topics, no wait. First, you have been bullish on stocks, but for very contrarian reasons. Tell us about it. Well, our proprietary demand in excess turned the most bullish late last week than since before the trump election. Remember when the Health Care Bill went down in flames, individuals stopped pouring huge amounts of money into the market and have been taking money out. That and other flow based indices that we track have all turned very bullish lately. And so for the near term, were pretty bullish based upon flows. It is a lot of contrary. So it isnt because you love what you see and youre betting a bunch. Lets switch to corporate activity. You like to look at a ratio. So you consider things like corporate bye bauy buy backs, takeovers, new offerings. Pair that up for me. Were seeing a real slump in newly announced buybacks, newly announced cash takeovers of already Public Companies and weve seen a tremendous increase in insider selling. We havent seen the expected pickup or what we expected to see in new offerings and new share sales there companies. So if it wasnt for that, corporate selling would overwhelm corporate buying because corporate buying is down. Our key ratio last year was like four times corporate buying to corporate selling. And now its half of that, two times. And its the lowest ratio of corporate selling to corporate buying in several years, which is not a good trend which says to us that Corporate America is not that optimistic Going Forward without some legislative changes. Now lets clean this up and bring it home, charles. We have a fed arguably in various forms removing accommodation whether Balance Sheet or from a rate hike perspective. But despite that, and despite the notion that growth is iffy at best on a macro view from the past to the forward few quarter, bond etfs are still getting a lot of money. Finish it off. People are flow dependent and remember monday is fungible. If the Central Banks of japan and the ecb are printing huge amounts of money, that goes wherever money goes and its going a lot in to u. S. Bonds. So even though the fed might be raising, as long ass Central Banks of europe and japan are printing money, ten year treasuries are probably not going anywhere. Gotcha. And that is reflected in the consolidation pattern. Thank you for gegt u fyou forg early in hawaii. Back to david faber. Thank you mr. Santelli. Over now to jon fortt. Well, wells fargo climbing back executive salaries in the wake of the scandal. Well talk to the chairman. And also tesla now the most valuable u. S. Automaker and is google underpaying women . Well look into it. All that and more coming up on squawk alley. 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Experience High Performance through high technology, in the lexus gs 350 and gs turbo. Experience amazing. Squawk on the street, energy the leading sector, this following solid gains in oil climbing toward its highest level in just over a month. Exploration production numbers among the best performers and that does it for squawk on street. Back downtown for squawk alley. Good morning. It is 8 00 a. M. At tesla headquarters. 11 00 a. M. On walling street and squawk alley is live