Transcripts For CNBC Squawk On The Street 20170504

Now the lowest since november. Our road map begins with the atand the gop on the verge the president and the gop on the verge of a much needed win. Plus apple making the 1 billion bet on manufacturing, launching a new fund to invest in u. S. Jobs. We elle a well tell you what tim cook told jim. Its a big morning on the hill as the house is slated to vote on the Health Reform bill. It would give the president the biggest legislative victory to date. Some gop congressmen have shifted from no to yes after an amendment was added to help cover preexisting conditions. Theyre calling it the upton amendment, jim. The question is, whats the future for the bill, if it does pass the house and the senate and if that happens, does the reflation trade is the path cleared once again . I think it is. I think this would be rather remarkable if they get it through. Just to get it to the senate so they can Start Talking about economics. Because yesterday, the fed issued a statement that was incredibly hawkish basically saying whatever weakness you see is transitory. If youve got this through and we return to the animal spirits we had in the first three months post the election then you could have a transformation. Right now the domestic and almost every single case is the drag. And that drag started when repeal and replace failed. I think its a big deal. I would love to see this done. All right, senator corker says he does not expect it to pass the senate in its current form. When the initial version failed to pass, you were kind of happy not to have to go through months of the senate wrangling over health care, but youre willing now . I think that yeah. Look, everything was just such a downer after they failed. Just to get it out of look, if you can just get this out of the house, then i think you Start Talking seriously but the house is still going back to border tax. The house may not have agreement. But when you sit down and talk with tim cook the absurdity of our current tax rates its so palpable. You have to believe that there will be some sort of unanimity between the president and congress. Well watch the procedures all morning long on the hill, on the house side. Keep you up to date on that. You mentioned tim cook, jim. What an interview last night as the president pushes for his push for job growth, tim cook telling jim that apple will start this 1 billion fund to promote advanced manufacturing jobs in the u. S. Cook breaking the news to jim in an exclusive last night on mad money. Were creating an advanced manufacturing fund, were initially putting 1 billion in the fund. This i did not know. Were announcing it today, so youre first person im telling. And well, not the first person because we have talked to a company that were going to invest in. Okay. Already. But this is 1 billion of apples 256 billion putting it in 1 billion of our u. S. Money which we have to borrow to get. Thats a whole other optic, but were proud to do it. By doing that, we can be the ripple in the pond. Going to make that first announcement later in the month. But to your point, youve got a quarter trillion of cash, but to do it here in this cash you have to money. Look, the absurdity of it was palpable. Throughout the interview there was a wry notion from cook about what the government does not to help. But you know what . I asked whether this is kind of a quid pro quo. You go out there and you answer the president s Campaign Promise that apple has to start doing more, what can the president do for you . He said, listen, worldwide we have to create more jobs. He didnt there was no real moment where he talked about trump. I have to be candid about that. But i think that this is a kind of thing, you notice its high end manufacturing. Hes not trying to bring back these jobs that are never going to come back which is assembly. These are the kind of jobs we can do because we have a good workfor workforce. I thought it was meaningful. Because were doing our part. You said we werent, here it is. 1 billion. Immediately people said why only a billion . What is everybody else doing . Nobody was doing anything until cook, i thought it was mean,f meaningf meaningful. And you have to borrow, and you did talk about the tax reform a bit later in the conversation if i remember correctly, jim, in reading it last night. Right. But also goes to where we are right now. And the need for true Corporate Tax reform, whether or not were going to get it the territorial system, 239 billion overseas for apple, but hardly any cash here. Therefore, they end up having to borrow to a certain extend to fund Something Like that. Kind of points to the absurdity of the current subjeystem. Well see what we ends up with this. The house being cleared because of the passage of the earlier vote. I know well get to facebook, they had a 10 tax rate. What are you know . What do we keep talking about 35 here . 10 , i think they took some credits so it might have been at 19 if you take it all in apparently. But thats still well below 35 the last time i checked. Right. Right. 19 is the effective rate of the corporate world. But we look at a lot of the retailers who are really struggling. A lot of the restaurants, theyre struggling. Theyre the ones that would be the big beneficiaries. So disney is down. Talk about cord cutting. And disney is a huge taxpayer and that would be meaning. For them. People are now take your interview and try to string it out a bit. Is this about components or new categories . I know 9 to 5 mac has a big think piece, your thoughts on that . Look, its great to do think piece. He was very opaque about it. But i have to believe a lot is involving Artificial Intelligence. Is lot of it is about vr. One of the thing look, everybody wants to leapfrog past the form factory that we have. One of the things that you have to do is you have to get people to manufacture things that take advantage of the new technologies that really arent in place yet. So i think thats going to matter. I think look maybe the next watch. Maybe its the phone after the 8. But i think its meaningful. Theyre not going look, this is a company thats chatter they dont throw around 1 billion here or there. I think its meaningful because they want to leapfrog whoever else is doing anything. Theyre very competitive. People forget that. People think theyre resting on their laurels. Thats not the case. I think the billion dollars is not idle. Yeah. You did try to get him to talk some pipeline. You even invoked your daughter on the timing of the phone. No dice. At least not yet. Desperate. I mean, desperate. When you invoke the daughter, listen, i want to get it for the holidays youre the bottom of the barrel. How do i do it . Total failure. Total failure. I dont know who else to invoke though. Maybe other peoples kids. But i played it, i tried it, i failed. All right, not for lack of trying, jim. Its a great interview. Well be talking about it all this morning. As david mentioned theres facebook to look at too. Better than expected results. Mobile accounting for 85 of total ad revenue up from 82. The social Network Continues to expect the ad growth rates to come down meaningfully over the year. Its whether or not the ad load has hit a wall. They have said for the last couple quarters. Its finney i looked back funny i looked back on the november quarter and they said it will top out in 17 on the ad load so thats not unexpected for the company at this point. A company by the buy during the quarter generated 3. Billion n in 3. 3 billion in cash flow. The level of profitability is astounding. 41 margins. They did spend capex at 1. 3 billion. Net income is 3. 3 billion. And its a far cry from apple but not an insignificant sum of money. Jim, what is your overall take away in terms of the quarter itself and particularly the guidance which again does seem to have the stock down a bit this morning. At least as we look 20 minutes before the open. I mean, this was a time when i felt that when they say meaningful, meaningful decline it was picked up by the analysts. Yet, everyone did raise their price target. When you do 6. 7 billion in mobile up, 58 its almost impossible to tamp expectations its so bold. In order to say meaningful, in order to say that spending is ramping what youre really saying is it really possible that we can continue this rate given the size of the company . I think theyre being smart saying this. There are people who bought this stock, somehow they thought they might have dropped that language. I mean, i think thats silly. This company is totally consistent. This Company Moves in the last two quarters between the Conference Calls, not after. Those who were buying it for some sort of blowout, take a look at the last two times they did the exact same thing as you mentioned. The stock will go down, there will be insider selling. The brokers will chatter, hey, theyre dumping, you have a three day rule, seven days later you can start buying. This is three days that there are a lot of selling, then we kind of you know, we level off. But people took it very seriously, david. Kind of saying, yes, we know this is going to happen. They took it seriously this time, but they still raised the price targets. Total expenses are up 40 . Theyre up to 18,800. Im shocked. You look at the market cap and divide that by the number of employees you get a big number. Or any other metric that you want to use. Adding 3,000 more next year. 1,700 employees in the First Quarter and another 3,000. You know, we talked yesterday guys in terms of our continuing advanced intelligence, zuckerberg was asked about, well, why not use ai . He said, listen, the tools will get better, but there are certain things that ai can do in terms of understanding text and whats in a photo or a video. That will get better over time, but that will take a period of years to reach the quality we want. Hence, they still need real people. With all of the human curators they wont catch anything youd want to have off the platform. I thought it was interesting, eric schmidt in an interview talking about ai and the dislocation of jobs says i may job eliminate im a job elimination denier. He thinks theres an aggregate net game of employment with robots even though every robot will take six jobs away. Thats an increasingly fiery debate. Its a matter of dislocation over time. Will the jobs be replaced immediately or will it take 30 years . I mean, i dont know the context in which mr. Schmidt made the comments but there are many who believe the dislocation will be enormous. Then eventually the jobs will be recovered and there will be growth again. But you go through some periods like the one we seem to be headed into and its not clear youll be immediately replacing the jobs. Well, i think that the replacement i had the ceo of expedia on this week, can you give me an example of Artificial Intelligence. He said, right now you can tell siri any one of the devices to do something. Cancel the trip, call the agent and stop it. But what Artificial Intelligence cant do, heres what i want you to do. Cancel the trip to bermuda and book it to Cabo San Lucas and say i want the best price. Tim cook said thats within reach and i think thats great. Because thats Artificial Intelligence bargaining for you, making it happen, we dont have it yet but thats the frontier are working on. You notice we talk about this ten minutes into the show every day . Pretty much. There are some things that we talk about and i wonder about the importance but i dont on this. This is what we should be talking about. So lets keep it going. David, david, we could be talking about whether kelloggs sold a lot of corn flakes. You want to revert to that im game. We can talk about that later and talk about that kraft heinz quarter. And what they said on the call. We have to go over viacom earnings. We have a bunch of things to hit. I could use a faber report. Arconic, give you one on that. One of your favorites. Im the only person whos not been invited to the board. I want that board invite. What is that . Short shrift. We elle a get to well get to tesla down on the wider than expected loss and elon musk looking to clear up the confusion on the different model letters. We have to get to square. Pretty good week for jack dorsey. The oil is lowest in five months and productivity was pretty pumped. Squawk on the street continues in a moment. I like russo. His on off splits are the best here. Yeah, but his offensive win shares didnt even break 4. Come on, check out that stopandpop what do you think . My tradeoff analytics indicate no one creates more space on offense. This allows him to nail a jumper from a densely populated urban area. What youre trying to say is from way downtown . I am still learning. I can see that. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade for years, centurylink has been promising fast internet to Small Businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Teslas down a bit in the premarket. The electric carmaker posted a wider than expected loss, but revenues above consensus on the record deliveries of the x and the s. Last night, elon musk claimed that customers are a little confused when it comes to the 3. We had seen some impact of more or less orders people being confused about model 3 being the upgrade to model s. And we took action to correct that about a month ago. But that message has not filtered down to all of our customers. Jim, we pointed out yesterday its officially the most painful short of the year and down 1 . People are making jokes. Congratulations to the shorts. Well, look, i think that this is a quarter i went over the Conference Call three times. The only way to really understand it, you must be on mind altering drugs. Because you just cant take this thing in a straight value. This is a psychedelic Conference Call. Sag aned did says maybe theres not enough demand, or excess supply, no. Because theyre giving high great loaners to anybody when you bring it in for service. This man has an answer for everything. He talks about how he would have called it the model e so it would not be confused but no, ford sued him and he had to drop it. And he talked about when its going to be 700 billion and he said it was not an issue. It was alice in wonderland on the call. The analysts play along, its incredible. Then the bomb for the shorts at the end was hey, china, stay tuned to tend of the year. This guy is having too good of a time on his Conference Call. One of the analysts said, hey, listen, how about an apple combination, he said i dont know. My favorite was when can you make a million cars in 2020 . Yeah. Maybe more. Maybe more. I mean, this guy is incredible. These analysts dont know what to do. They are literally being toyed with and theyre supposed to be professionals. This is a nightmare for them. Nightmare for anyone tony sag aneedy, you are right to try, but you failed. Well, are the investors who continue to lap up the debt and equity offerings being rigorous because it puts them in the position where they can keep going and thats got to be if key here. His ability to sell yeah, 10,000 cars a week. Plenty of debt and equity. Thats the way it goes. Thats the beauty of the capital markets. I can tell kind of you know, where you believe it. Where you it may. By the way, did you know about the e3 thing . I didnt know. Until i read about it. The confusion, no. It was supposed to be sex and then sexy and thats why they got the y. All the different models. No, that was so you have to infer that its sexy. Its so revelatory. This is one of those i mean, he says, listen, well make 1 million cars in china. This man this man basically has he toys with them. And thats why i say look, maybe you have to get tuned up before youre in one of the Conference Calls. I mean, maybe you have to have like three gnts when youre asking questions because the answers are so hey, man, what are you thinking . I mean, i had more serious conditions with bar san miguel. Youre mad at him what does he think you are again, musk . Not an oldie an apparition . Whats the word . Im kind of a hologram. No. Im not a real person. Yeah. Youre a simulation. Simulation. Yeah. Youre a simulation. 50 chance. But brian from intel, he thought it was only a 70 chance i was a simulation. Lets take that off the table right now. Ill take the under on the 20. Jim, with well get to your mad dash and count down to the opening bell. More squawk on the street in a moment. Ready or not, here i come. Ek. anyone can dream. Making it a reality is the hard part. Northrop grumman command and control systems always let you see the complete picture. 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Talked about the idea of this is a company that no with unwants no one wants to sell to anymore. They said thats perception, not reality. But david, it was jarring. It was jarring because you do think that if they cant do a hostile, who the heck will want to go with them . As she said, literally, would you ever want anyone to undo whatever good you had done . David, i thought it was a stark moment on a very grim Conference Call. Yeah, thats interesting, jim, because as i have reported many times, the idea of them being able to successfully pull off a hostile, you can completely dispatch with that. Yet, the stock does have i would argue and many investors have told me an implicit takeover premium in it for their ability to do deals. So if that really were to come out, you might see further downside given what was not a good quarter. Also, jim, i would point to the fact that they continue to point to consumer broadly, not just food as the potential area of acquisition on the call. They said related to the unilever transaction, we believe in the m a framework. Again, if you go back in terms of consumer terms, brands with small market share, similar operation, so they think at the end of the day, theyre very similar and thats why you see so Many Companies operating brands from consumers. Sometimes food. Sometimes personal care. Sometimes health care. Theyre leaving the door open to different possibilities because they need to. I think they have to. They have to go to someone whos giving up. They have to have someone who says i cant take the walmart amazon pressure. I dont know who that is. The ceos who are left, they sure dont want to go to this meat cleaver. Opening bell, guys. S p on the bottom of your screen. At the big board its antero midstream, celebrating the ipo today. Over at the nasdaq, umpqua holdings, oregon based community bank. Jim, big part of your conversation with tim cook of course involved the iphone and we continue to see the antagonistic back and forth between them and qualcomm. Amid reports that qualcomm will ask u. S. Trade agencies to what . Limit imports of the iphone thats assembled in asia . Yeah. I dont think that this is something that would have an immediate impact. I know to invoke tony saganidi again from bernstein, i think he was concerned about this. I think qualcomm has to complete the deal. There have been some approvals, i think thats going to happen. In the end i think theres a settlement here. This is everybody trying to figure out what is the best rate that apple can get . Qualcomm stock has been up during this period. Betting that somehow theyll get an injunction. Thats far afield. I dont think its going to happen. Certainly talk about big moves as cook said thats what courts are for. Its funny, when we see qualcomm i think of nxpi, one of the few pieces of good news you can argue for the Company Given all the litigation going on. Nxpi had a good quarter and thats emboldening people, theres not a lot of downside there. If this were to trade on its own, given the success that the company is having, is some argue it would trade above the 110 that qualcomm is contracted to buy it at all, all cash. But it requires a shareholder vote. Well, absolutely, david. I think what happened, this was done at a street level for qualcomm. Its the other plays in that, whether its skyworks, whether it be broadcom. Delay are the other internet of they are the other internet. I thought the company was worth 120 on the walk away, but theres no way that qualcomm can afford this to happen, because nxp gives you the call. And one of the things is the Autonomous Car and how many chips are needed. Nxp has the highest amount of chips in a car of any of these various semiconductors. In the autonomous side. Jim, once again disney is the lag guard on the dow. This is down another percent and a half. Take you to levels we last saw in february. Cord cutting. There are concerns. I think its overall the week. Cord cutting. Down 810,000 for the quarter. The mppds not taking up the slack. I dont know, if you have a different take, jim. But that certainly seems to be hurting a lot of the content companies. I think people are taking what tim cook said at his word. He said this is accelerating rapidly. We even talked about the iphone 7 plus which is in short supply. Being the cord cutter. No, i mean, cook is basically saying this thing, the way that we look at tv is over. Now of course he has a dog in the hunt. You can say he talks about this in the book up. When he dropped, i thought this is really accelerating. That was right on the moffett na nathanson tale. He said you cant be in that current business. It wont look anything like it, but the time frame is really shortened. David, this is the here and now. Yeah. By the way, you saw there that was beautiful, by the way, where you were with cook. Well have hulu on. Well have the ceo on. Mike hopkins. Of course theyre the latest entrants to the mpdds not really a skinny bundle for them. Guys, i want to look at viacom because the quarter was not bad. In fact, generally a good quarter. The call is going on right now. Theres mike hopkins coming up with us around 10 20 today. Give me a look at viacom. Down over 8 . Now the calls going on. Again, the numbers overall not bad. They outperformed certainly paramounts tv licensing fees were better than expected. Operating income was better than many analysts had anticipated. Revenue was up 8 . But on the call hes talking about cord cutting and he said were seeing some softness too. Now, i want to wait and see a lot more of whats being said here that is pressuring the stock but that may be part of it. You know, there are some execution differences going on in terms of the distributors. Remember, the losses were mostly from dish, directv. Not as much from comcast or charter although charter did have some as well. But bakish the new ceo is talking about this very concern and apparently getting people more worried. Well have more for you as we move along. Advertising just down 1 . Domestic down 4. But overall, not a bad quarter at all for viacom and yet the stock is down maybe ill come back people are looking at earnings down 60 year on year. That may be. Disneys now going not just the worst dow stock of the day, but of the month. Early as it is. Down 5 for the month to date. Jim, paying attention to the ten year yield, getting back to 2. 36. Thatll take you back at least three weeks. Well, look, one of the things that happened i think there was a misconception, i bumped into Steve Liesman out here and we talked about how the statement from the fed says, look, dont worry about the First Quarter. We are going to be accelerating. That was kind of an anomaly. I have seen it from some companies, obviously the international companies. Not seeing it from the domestics, but i really want to go back to matthew boss call that february was the trough for bricks and mortar retailer. The consumer is doing better. Housing has levelled off and autos is the weak part. But i get it. They can come up with a thesis if tomorrows number is strong. Boy, they better be banking on that because they need that to keep their credibility frankly. Speaking of some retail, square, 8 cents loss is about half of the expected loss. They raised their guide, payment up by a third. Been a good week for dorsey when you put square and twitter together. I bumped into sara, shes the cfo and the spokesperson i loved the square quarter. They are really starting to ramp with merchants. They have this great business where they look at the cash flow at the register so they can give you short term credit. This was their breakout quarter. They are now part of the vast scheme of payment processors that are doing well. Lets include paypal. Lets include visa. The mastercard quarter was magnificent. Square is real. Its a real company. Yeah. Very interesting quarter, jim as you say, important one for the company. Hes still running both companies. I dont know, can that just continue forever . You know, at some point does he say, well, look what ive got going here. I mean, some point maybe the market cap of square may eclipse twitter. Its not that far away now. I own this i own this restaurant. Tomorrow is cinco de mayo. We use all the products in square. They have a caviar product that you have to let people look, you have to deliver food. Grubhub had a great call. One of the things that Square Square is smack in the middle of everybody who trying to deal with this notion of hey, the customer doesnt want to stay at the place. They want to take it out. In the meantime, the customer as a Small Business person, you want that low rate that they give you with the swipe of a card. This is also for people who are in business, the smaller businesses, that tim cook talked about, square is the de facto register. They have it going. I think dorsey should stay with this and give nodo give anthony nodo the twitter stock. Really quick, jim on oil, below 47. Got libya back on line. Got rig counts up for 15 weeks in a row. Nobody is paying attention to opec comments on cuts. Is this where you start to get interested or what . Yes, exactly. Every single day oil has done the same thing. It started up and then started going down. This is a break of the pattern. It got slaughtered at the opening. I think this is the level i have said between 45 and 47 is where its interesting. Im not going to going back on that because a lot of the Oil Companies in this country can turn off the spigot here knowing it will go back to 50 if they do. Were the swing producer. I like some of the oils here. Now, a lot of everybody should know these stocks are getting slaughtered again and again. Theyre going back to the levels when we saw that oil was going in the 30s. I dont think oil goes to the 30s. Couple of quick things to mention before we get to bob, sprint shares were down 15 yesterday im sure you saw that after the Conference Call. The company was a little surprised at that. They had masa come out and talk about the magic box and gha it will do in term and what it will will do in terms in sending the more robust signals. They saw that as an opportunity to inform broadly speaking a group of potential buyers for the company and say, hey, look what weve got. They thought it actually would be seized on by investors in a positive way, but instead the take away was we didnt hear anything that will happen and in fact we heard a little bit that indicates you never got a greenlight on antitrust. Why anyone would believe they had one from the one meeting in trump towers, but the gullibility of some Hedge Fund Managers surprises me. But i did want to share that. They went into the call with the idea of introducing magic box would be seen as a positive by potential acquirers. Marcelo claure say theyre fully engaging in a wide array of possibilities over these next few weeks, jim. That stock only up 7 cents. That was a big market cap loss for them yesterday. Oh, yeah. Look, tmobile turned out on to the star of the show. Sprint took everybody down. I understand youre absolutely right, they have a lot of enthusiasm. But it was too much magic box. We dont want to see the magic box. We want to see them taking a lot of share from at t and from verizon. We didnt get that, david. Thats been the way you move your stock up. Is to take share and keep it. All right. Guys, dow is basically flat. Paris remains up by more than a percent. Lets get to bob pisani on the floor. Good morning, carl, happy thursday, everyone. Very tight trading range. This is the story all week for the last couple of weeks, but europe, carl is right. Europe is breaking out. Not just france here. We have had a good day in germany. Germany is poised to close at another historic high today. We had very good European Services im, they were at a six year high. That set a record high. The euro is at a 1. 09 right now. Thats the highest level of the year. Lets not quibble too much. So the markets are all up there. European earnings have been good. I have been emphasizing all week we dont bring up the european stocks but their numbers along with the u. S. Counterparts are coming in well. Adidas, bmw, siemens had good earnings overall. So the story in europe is somewhat similar to the story in the United States. We have improving data and improving earnings in europe and generally lower geopolitical risks in the elections. The big story here is that the banks are moving again. Banks are now up 2 this week. Consumer discretion on the flat side. Industrials up a little bit. And there you see energy. Thats the big problem. You heard carl talking about oil below 37. They have to cut the estimates for the big names here. The overall story, the u. S. Is improving earnings. We have movement on taxes and health care and we have the productivity numbers that showed improvement. So the narrative is q2 is better. The market is in a hopeful mood. Is there anything that can mess this whole narrative up . The stocks are all clear. There are three things right now. First is china where we are seeing slower spending. We are seeing some impact on commodities already. The second is north korea. Its the potential back swan out there and then the oil dropping. A big issue, this could be the fly in the ointment for the big earnings reports we are getting. Its affecting this oil story. Some of the ipos, were expecting a big Fracking Company tomorrow. This is liberty oil field. They will probably go public tomorrow but they had to cut the terms of the deal rather dramatically from 22 million at 16 to 19. Now theyre 20 to 12 to 14. That tells you the market is getting nervous about whether or not oil is sustainable given the sagging oil prices. We have an mlp. And Terra Resources they are in the middle here. Theyre yield plays largely. This is going all fine. Still waiting for indications. Finally we talked about the five f. A. N. G. Sftocks out there. The five stocks are 50 of the nasdaq 100. 2. 7 billion at the market cap of the nasdaq 100. 5. 4 billion. That is an amazing number. A lot of people argue if the market can keep going up youll see some diversification of the faang stocks into the rest of the market. That has not happened yet but keep an eye on that. Carl, back to you. Ill take it bob, bob pisani on the floor. We want to arconic. Theres some news this morning on this very heated battle between of course arconic and the 13. 2 shareholder Elliott Management which is trying to seat four new directors on the board. We do now know when the annual meeting will be. So we have a sense here as to how many weeks they have left to fight. About three i guess or so. May 25th is when they have set the annual meeting for. Thats the date at which shareholders will make a decision in terms of or by them the proxies will be in in terms of what they see for the future of this board. The other news this morning though is that arconic you have to remember last week, telling us they tried to get a settlement with elliott. Offering them two seats. Willing to put qualified people on the board. Sort of a total refresh would have taken place. But elliott didnt want to play ball. Well, they move ahead this morning and tell us they have nominated two new directors. Former boeing airplanes president and ceo james alba and air force retired general janet c. Wolfenbarger. Both of whom are going to be nominated to take seats on therd bo of on the board of directors. That will mean nine of 13 directors have been seated in the last few months. That makes it one of the freshest boards out there in the s p 500. It has 12 independents, three of whom who have been nominated remember. Elliott won a proxy contest a while back or it wasnt a contest. They were able to seat three Board Members previously. Arconic does go on and talks about how nasty its all been. Of course the knows the most unexpected part of this entire battle was the sudden resignation firing of long time ceo klaus kleinfeld, who created arconic, after he sent this bizarre letter to paul singer, the founder of elliott. They published known falsehoods to damage reputations, they have unleashed private investigators on us. And all sorts of ways they have been called dozens of people. They have had cartoons that have depicted our executives as criminals and bank robbers. Now, i didnt see this in the published materials that were available broadly from elliott but they claim these were more specifically targeted. Heres one comic that i think we have that they take issue with at arconic. Taking, you know, out all of sides of his mouth, i guess. Is what they said at elliott. But hes gone now. You know, i dont know, jim. These things are pretty nasty. You have to be ready for it. Clearly, mr. Kleinfeld reacted badly and that cost him his job. Yeah. Sometimes the pressure gets to anybody if they really go after you. But you have got to that was an illadvised letter. Would you regard these two new Board Members as the hail mary pass by management to stay more entren entrenched . Because is this a sign that maybe they were going to lose, that the votes are going the other way . Going toward elliott and against arconic current management . I think so, jim. You know, listen you do . I dont believe we have heard from the proxy Advisory Firms yet, whose influence is more significant than in the past. But given how large passive investors are on how important a role they play in the proxy contests, but given everything that arconic is doing they saw themselves in the vulnerable position. At least we know when it will end. May 25th. It will end. I will end right there. And send it over to the bond pits and Rick Santelli from chicago. Hey, david, how are you doing today . I love to be the Sherlock Holmes of the markets. Its what i have been doing for almost 40 years. Why do markets move . Well, sometimes the why is two fold. First you have to look at the logistics and see how traders positions are packed in. Then you have to look at fundamentals. And try to marry the two together. Lets consider this. We had what i considered a headline number that wasnt too spectacular for the first look at the First Quarter productivity, up 0. 6 . But if you look at the last quarter, 1. 68 and the one before that was pretty up as well, i mean, you can create jobs but if the jobs dont translate into why you monitor them kind of all is lost. That combined with the fact that everybody was tightly packed looking for us to break and stay under the 230 range and everything was explosive. Lets look at the one week of twos. Its popped. Todays the first day after twoday fed meeting. March 16th was the first day after a two day fed meeting. If we look at the year to date of twos, it looks like its changing the overall week. One week of tens and year to date of 30s. Tens could be at the best close since the 10th of april. 30 since the 7th of april. It isnt only us. Were all the hip. Look at first of boons. Boons are at the highest yields since march 27th. One week of the dollar index. It popped through its range. It had the logistics. But the year to date chart shows its throttling and slipping as we speak. Carl, jim, david, back to you. Thank you, rick. Rick santelli. Still to come this morning the cloud wars are in focus. Stay tuned for an exclusive with oracles mark hurd. The dow has settled into the red here. Disney the big laggard. Back in a moment. You totanobodys hurt, new car. But there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do . Drive threequarters of a car . Now if you had Liberty Mutual new car replacement™, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. With Liberty Mutual new car replacement™, well replace the full value of your car. Liberty stands with you™. Liberty mutual insurance. The major indiss in the red, but banks are bucking the trend. Finding some narrow gains. The ten year finds its way to 2. 62. Well get to stop trading with jim after a break. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Jim, whats on mad money tonight . Okay, we have intel which you know is moving very aggressively on Autonomous Cars. We have to find out how that quarter was. Worst quarter of the perhaps the whole season, twilio. Jeff lawson coming on to explain i hope why uber has decided to move away from them. That was the 17 client in q4. Remember, guys, we started the hour talking about ai and the disruption of jobs. Mark cuban was listening and tweeted to us, if you want to know the impact of Neural Networks, create an index of total domestic employment across spx companies. I guess we know where mark starts. And Neural Networks are important when it comes to ai. Computing power and data, but thats not what were talking about when we talk about the true advances in ai. We talk about being able to think. That means creating Neural Networks and i think we know exactly where he stands. Yeah. Jim, see you back here tomorrow. Well go to shark tank and get 1 million. Tomorrow, yeah, ill be back. Take the red eye. See this suit, you may see it again, but a new shirt. It will be a big day with jobs and yellen speak. See you at 6 00 p. M. , mad money. Keep an eye on capitol hill. Looking for a vote on health care, about 1 15. Thats according to representative collins who said we have the votes. Back in a minute. 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 . Im a rain maker, i make it rain. How much did you lose . 50 billion. Madoff. Good thursday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, david faber at the new york stock exchange. Take act look at the markets. We settled into the red. The dow is down 30 points led by some media stocks. We are keeping an eye not just on commodities under pressure, but capitol hill as well where were expecting a Health Care Vote around 1 00 p. M. Eastern. Yes, our road map for the hour begins with that. Dday for obamacare. House republicans say they have the votes to pass their American Health care act bill. Well take you live to capitol hill as the voting gets under way. Shares of facebook are slumping this morning. Theyre warning of slowing ad growth for the rest of the year. Well dig through the numbers. Plus adidas outpacing nike in the u. S. And in china. Shares of the company hitting a record high. You will hear from the ceo this hour. First up, some Economic Data crossing the tape. Lets get to Rick Santelli. Thank you, carl. Remember the word transportation. Factory orders for march were up 0. 2 and last month we gained 0. 2. But the 0. 2 stands as the weakest since november when it was minus 2. 3 of last year. But a lot of transportation strength because extransportation the number falls to minus 0. 3. And now 0. 9, well, lets put it this way, the first two months of the year were over 2 . You get the picture there. But it was still better than expected. It follows up 0. 7, but when you pull out transportation the number goes to goose egg, to zero. And nondefense orders capital goods error, exaircraft a proxy for Capital Spending finally we get some strength there. Up 0. 5 isnt bad. Over double the last look at up 0. 2. If you look at the shipments versus the orders that was also up 0. 5, following the up revised 0. 4. So transportation might have resulted in a false read, but some of the internals look okay. Carl, back to you. All right, rick, thank you very much. Rick santelli. Lets get back to the big story, Kevin Mccarthy calling for a vote on the Health Care Bill right now. We have a busy morning ahead of us. Good morning. Carl, that vote is expected to come this afternoon. Though i caution you its already been pushed back at least once. But House Republicans said this morning that they are confident theyll get it through this time. I would have prefer to have but other than that well get it passed. Do you think it will pass . Well get this bill passed. How are you feeling . Great. Happy today. Getting the votes . Yes. Now according to the breakdown from nbc news, there is 16 republicans who are still opposed to the bill. But republicans can afford to lose 22. So right now, it does look like they have those votes. President trump also weighed in on this issue this morning. He tweeted, death spiral and he li linked to the story on cnbc that showed that aetna is pulling out of the virginia market because of heavy financial losses. Now the compromise that has been negotiated between conservative and moderate republicans would allow states to opt out of providing Certain Health care benefits but would also add money to a federal fund that would protect those with preexisting conditions and allow them to better afford coverage. Guys, well follow this story all day. Thank you very much. Well be coming back to you, i guarantee it. Hospital stocks sinking a little bit today as we await the historic gop vote. For more we are joined by jeff meekens and good morning to you both. Chris pethokoukis, you think this gets done in the house . No question. They need 217 instead of 216 so in the next election they will not only have passed it by two votes but one votes. That way they cant say you were the deciding vote that cut all this funding for medicaid patients. Thats how it works, okay. Jim, do we need to Start Talking about in that case its chances in the senate . Corker skeptical on msnbc this morning. Yeah, listen, there was a long way to go. I dont think its possible to overestimate what a rocky road this has in front of it. Theres a lot of senators who havent paying super close attention to the bill since its been evolving and theres a long way to go. Because theres no senate bill. This is really a vote to keep the conversation going. And get it out of the house. Chris, you framed this as a must do for republicans for their party. But isnt it equally politically risky to pass this thing, cram it through without knowing how much it costs or how many people get or lose inshufrnss insurance . Yeah, their big focus is on bringing the Health Insurance costs down. Theres a risk for them either way. They either alienate that are base. For six years they were making a promise theyd repeal and replace the Affordable Care act. If they fail on that promise then their base has no reason to show up in 2018. Or they can pass something controversial Like Health Care reform. Maybe the public isnt super on board with it. But then get to things that are going to be more popular like tax reform. Like infrastructure that they can really deliver for individuals across the country. Yeah. Sort of rings alongside what ann coulter wrote yesterday. If they cant get this done, theres no reason to vote for a republican ever again. Does it clear a path to things that are i dont know. Ostensibly easier than this . As a corollary, does the market follow its way along that path . Whats easier than this . Tax reform looks just as hard but you make a good point that this is the admission ticket to focusing more on the other things. Particularly tax reform. If this thing ends up passing, it does clear up a little bit of room for tax reform, which obviously issing go is going to be a bit of a budget buster, to keep this going. For this to collapse, again, would make me worry more about the rest of the agenda. So incrementally this helps the republicans move forward to some things theyd rather be talking about, particularly taxes. Chris, how much risk is involved to saras point about no bill text, no cbo score . I assume were going to get a score eventually. If that comes in dark and gloomy what happens to those who voted yes . The people who voted yes will be hit regardless of what the cbo score they have. The cbo score said 24 million fewer people would have fewer Insurance Coverage base on what projections say otherwise would have ten years from now. Not based on how many have it today, but how many have it within ten years. Its a problematic vote for anyone who votes in favor of this. No question about it. The bigger belief they have is that not doing something hurts them more than any negative impact from this vote. And the other risk here, jimmy, ax owes has called this the new third rail, which is coverage for preexisting conditions. Based on what we know all the compromises that went into the final vote to get there, whats the verdict on how thats going to play out . The verdict is thats not going to fly in the senate. You can do what republicans want to do which is really fund these you know, the new sort of separate high risk pools, but its money. Those can work. I know theyre skeptical and the reason is because they dont think there isnt enough money. There isnt enough money. There needs to be multiples higher than what republicans are prepared to spend right now at least in the house. But if Senate Republicans want to come up with more money for that, for the subsidies, something can pass. Again, the big problem here is do republicans view this as a spending reduction bill or a coverage a coverage bill . If its a coverage bill theyre going have to spend more money than what theyre currently prepared to do. One last thing, chris. As you point out this has been a six or seven year journey for republicans and it seems like the tide finally got turned by this one amendment providing 8 billion over five years. Does that is that surprising to you . I mean, that amendment they had to give something to the more moderate members after the Freedom Caucus got a big concession in the bill. So that was more about positioning internal in the conference. The 8 billion i completely agree. The amount of money theyre putting in the high risk pool is nowhere near enough. But any type of legislation like this always looks like its dead before it passes. This bill will have nine lives in the senate. And once those insurance rates for 2018 come out and you have 40 of the counties with only one insurer, you know, 3 to 5 with zero insurers, i think that creates a crisis for the senate to do something and we can see action before the july 4th recess. Certainly been the president s message. Well see what happens this afternoon. Chris, jim, thanks very much. Thanks. See you soon. Our other top story, facebook reporting another solid First Quarter. The social media giant beating on both the top and bottom lines. Shares however are dipping more than 1 this morning. As the Company Warns again about slowing ad growth for the rest of the year. Joining us is morris mark, president at mark Asset Management and the senior Media Entertainment analyst Julia Boorstin. Set us up with the highlights from the call, the message that facebook is trying to project here from Sheryl Sandberg. Thats right, i spoke to Sheryl Sandberg after the numbers crossed. We talked about what was really driving the results. Facebook beat on the top and the bottom line. Reported better than expected growth. 2 million monthly active users and sandberg said this is about advertisers making the shift to mobile and facebook and instagram is where mobile users are right now. Theyre benefitting from the trends. And she said that they see a lot of opportunity to keep growing instagram, but then also down the line to start making money from messenger. Thats also something that Mark Zuckerberg talked about on the Earnings Call last night. Now, i think the reason why the stock went down really comes down to the same concerns that analysts have had for the past couple of quarters. Facebook has made it very clear they have not been able to continue to grow the ad rates so theyll see it slowing in the second half of if year. Theyre investing in the growth, hiring more employees, et cetera. Julia, thanks. The stock has run up about 15 in the last three months. Had a banner year overall. Do you share those concerns as a growth investor . It was a typical facebook Conference Call and mostly positive respects. Great numbers, fabulous strategy in terms of Building User time. Fabulous strategy in terms of attracting advertisers and conservative guidance from the cfo. I think you have to give them credit for what theyre accomplishing. The fact theyre making friends. You keep adding friends. 1. 9 billion active users. Which doesnt include instagram in terms of the growth rate and the usage rate. I think we see its a superb investment. I know its got a big cap, but these are companies that operate through the world. Outside of china, facebook is just growing. And if you took a look at the numbers that they reported on the more granular basis, it was faster growth in advertising revenue outside of the world than in the north america and north america growth was better than 45 . So i think its a solid quarter and a really, really interesting company. Part of something much broader. So if youre buying around here, is it more of a bet on the growth of the existing business or is it a bet on these long term initiatives that they admit are going to weigh on operating margin . I think youre getting the long term initiatives for nothing. Sheryl put it really well last night, she crystallized i think the importance of this to everybody. Your phone. Right. We are shifting out of the advertisers view from i have to have tv advertising, that i have to be on mobile. Thats where people spend their time. Thats where the younger members of my family spend almost all of their time. They dont even know what regular television is. Yeah. Speaking of that, what 85 of ads are ad revenue is already mobile there. So they have made that transition almost completely at this point at facebook. Working on the brands. And at the same time, theyre working on locals. Is there a vehicle for a local business to get targeted advertising right in front of viewers eyes. I think this goes beyond facebook. It goes to alphabet which is going. Which is google. And it goes to apple. Apple is the producer of the best product and theyre not asleep. So i think it goes to a lot of people. While weve got you here though, somebody who has been around the media sector for a long time, this also goes to the larger issue of cord cutting. Of your ability to get what you want on your phone to a certain extent if facebook really wants to go that way. Viacom is down today. All the content companies have been hit because cord cutting is picking up. Viacom shares have come back dramatically. They were down almost 9 because bakish said something in the call about cord cutting as well. I think you have cord cutting, cord shaving and now cord nevers. Its a process i think its going to accelerate. I dont think its going to happen overnight. But i think its going to accelerate and there is also a byproduct. One of the byproducts is you have all of these how would you say it, networks on broadband. I think theyre going to be very useful. They will cost relatively less money. Give you some or less choice, but in a world where you have other choices theyll be easier to use. So some teams wont make the cut, some teams will make the cut and id rather be the team that makes the cut. Thank you, morris mark. Thanks to Julia Boorstin out west as well. When we come back this morning a lot to get to. As we see dows down 19. We await tomorrows job number and the Health Care Vote on the bill at 1 15 eastern. Well talk to byron wien in a moment. And hulus mike hopkins is with us as they announce a new Live Streaming business. Dont go away. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. For years, centurylink has been promising fast internet to Small Businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. Markets awaiting some key data this morning. The house began to vote on health care reform. Tomorrow we get the jobs number which could hold the key to the rate hike in june if it comes. All that while earnings roll in. France preparing for the president ial election son sunday. Joining to unpack the market impact, byron wien. Good to have you. Good morning. Good to see you, carl. Of the things i just listed, half a dozen big dynamics in the market right now. What is your biggest one, top of mind . Well, i want trump to get his pro Growth Program implemented. So the first barrier is the Health Care Program and i hope it has provisions that cover those with preexisting conditions. The second is the tax plan. And i hope its as close to revenue neutral as possible. If he gets his pro Growth Program through and it includes the tax plan dismantling regulation and spending money on infrastructure, then i think the economy can grow at 3 or close to it rather than 2 . That would be a big change. Now, you have said at the beginning of the year that you did expect trumps management of his agenda to how should i put this, solidify, pick up steam in the middle of the year . We create all the artificial deadlines on a hundred days, but would you say its relatively on track . No, i dont think its on track. I think its behind where it should be. But on the other hand, i did say at the beginning of the year that trump would ameliorate his more extreme positions. That he would pull back from some of those. And he has definitely done that. So i think his thinking is headed in the right direction. It just hasnt been brought to bear on the economy yet. Yeah, you also i think predicted the ten year yield would hit 4 . Were a long ways from there. We have gone the other way, byron. What do you think is holding down yields and do you have to bring that forecast down for 2017 . No. Look, i never get them all right. Thats one i have gotten wrong. And what i think i underestimated was all of the liquidity thats been put out there. In 2008, the major Central Banks around the world had 3 trillion on their balance sheet. They have 13 trillion today. That 10 trillion is looking for a place to park. Its parked itself in british gild, german bunds and its held the rates low. I underestimated the power of that liquidity. What about Economic Growth in the u. S. Would rebound, may still rebound from a weak First Quarter and that was what everyone was so hopeful to bring yields up. That and some of the implementation of the pro growth policies. If we do get this Health Care Vote today, doesnt that make it more likely that we can get to better Economic Growth, higher yields, higher inflation . What you and many others were expecting this year. Well, i hope so. But the Health Care Bill isnt perfect. So i dont know i guess it will pass the house. I dont know how much trouble its going to have in the senate. But you have to get the Health Care Bill passed before you can attack the Tax Reform Program. And the Tax Reform Program is critical to restoring Economic Growth at a higher level than 2 . Byron, to saras point about the macro, so many examples of a slowing consumer in the past couple of weeks. Gasoline demandz yesterday. We talked auto sales to death, consumption flat for a few months here. Can this all be seasonal . Are you looking for a big snap back in q2 . I am. First quarter traditionally is low. I think well see an improvement in the second quarter. I dont know how much. It will definitely be in the twos. Im hoping well head toward three by the end of the year. Then finally, this tech rally which is obviously the nasdaq shouldering equities, even software shouldering that index. How long can that last . Does that worry or you do not mind right now . Im always worried, carl. I think what were seeing now is a high degree of interest in companies with open ended earnings. Morris mark talked about whats going on at facebook and its true at google and a handful of other companies. People Want Companies with long term growth outlooks that are favorable. And a handful of tech stocks including Software Companies have those characteristics. Byron, good to get your take on a busy week. Were nowhere near done. Ahead of that jobs number tomorrow. Thanks. Good to see you. Byron wien. The white house is responding to apples big jobs announcement. The billion dollar investment announcement that tim cook made with jim cramer. Eamon javers has that. Yeah. A reaction to the cnbcs announcement said that the president has provided the confidence needed to foster such investments as apple is. Melissa ing is making. Clearly, the white house is embracing the 1 billion to invest in a manufacturing fund, but the white house didnt request apple to do that. One thing that i dont have an answer on is whether anyone here at the white house knew about this decision by apple before it was announced last night to jim cramer. It would be good politics for apple to send a heads up to the white house if they were doing Something Like this. Its always good when youre a company and youre making an announcement that the white house is going to like, to tip them off to it in advance. Well do more reporting and find out if that happened yesterday. But obviously this being looked at through a trump era political lens. This is something that apple would be doing to get in step with the current Political Climate of bringing back manufacturing jobs to the United States, guys. Yeah. I think that President Trump can claim it as a victory, eamon. Thank you. Absolutely. See if he tweets about it. Eamon javers at the white house. Hulu announces a new Live Streaming service. Mike hopkins is joining us next. Plus shares of adidas hitting an alltime high after earnings. Hear from the ceo on whats driving the growth. Stay with us. The dow is down 12 points. Horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . 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The former president barack obama throwing himself into the french president ial election which will take place on sunday. He endorsed centrist candidate Emmanuel Macron Whose Campaign released the video on twitter. I know that you face many challenges and i want all of my friends in france to know how much im rooting for your success. Because of how important this election is, i also want you to know that i am supporting Emmanuel Macron to lead you forward. En marche. On the other side of the world a sand storm has enveloped a huge area of central and northern china. The sand storm is expected to linger into tomorrow and tens of millions of people have been told to wear masks when they are venturing outside. Im not sure why youd want to go outside in that. And Buckingham Palace announcing that Prince Philip will stop carrying out public engagements beginning this fall. His last engagement was on wednesday at a renovated cricket club. Thats the news update this hour. Back downtown to you guys. David . Okay, ill take it, thank you, sue. Hulu jumping into the Live Tv Streaming Service or space with the launch of hulu with live tv. The Service Costs 39. 99 a month. You get 50 channels including abc, nbc, cbs, fox. Mike hopkins is the ceo of hulu. This of course has been in the works for some time. Unveiled yesterday. What differentiates it from what has become quickly sort of a crowded space between the likes of sony and directv now and googles offering and sling which was first out . Sure, thanks for having me. We did launch our new Live Tv Service and the entire new experience for customers and i think that the two things that are really going to differentiate us is one, this experience. Which is cinematic, personalized and elegant. But also if fact the fact that you can get our extremely large catalog of on demand titles. We have 3,500 tv and film titles that comes along with the 50 or more broadcast and cable networks. We think that package is unique and something we can only provide. Are you still committed to the stand alone service or does this transform overall hulu as it moves forward . We are committed to the s subscription on demand space, its the lifeblood of our company. Were excited to enter this. You said its not a skinny bundle, youre offering a lot. But at 40 bucks can you make any money . Yeah, we can. When you look at the entire package when you have the subscription on demand which is a fixed cost business by and large, package it with the variable costs over the top pay tv business and then infuse it with a really powerful advertising platform i think when you put that together i think we have something pretty powerful economically as well. When i add up the cost of the networks alone and you get to a big number right there, its almost the number youre charging. Does it come from advertising . Where does the additional revenue come from to make this profitable . We have a very big powerful and enhanced cloud dvr you can update to. You have Premium Networks and then the underlying hulu with all of the Advertising Opportunities there. I think when you put that together well be in a great spot. Why didnt you give us an updated subscriber account yesterday . A number of investors and people who follow are surprised because you have done that in the past. Theyre wondering if subscribers are down . Subscribers are double digits, but they arent the way to measure us when half of our revenue is advertising. What our advertisers want to hear is how many viewers do you have, how many people are going to see our advertisements . Thats a really healthy number. Were up to 47 million unique viewers. 33 of them get advertising. And so were really in a good spot. Where does exclusive content how much of the equation is that coming . Hbo is taking some stuff off of amazon later. How much will go to the platform because they cant get the show anywhere else . Thats what its all about. Were investing heavily in original programming. Thats what people are coming for, theyre coming for content you can only get in that particular location. Thats why we did the hand maids tale and announced five new originals yesterday. We have a lot more coming on top of that. People are obsessed with the the hand maids. Everybody is buzzing about the new report that showed pay tv subscribers fell 762,000 in first three months of the year according to moffett nathanson. Those numbers are ugly for some of the big tv networks. How fast is the cord cutting happening in your eyes . We dont know exactly. I think thats a hard number to put your finger on. We know the vast number of our subscribers have a paid tv service. But as we look down five or ten years down the road, we think that as peoples tastes change, as people want these different experiences, we need to be there to capture them as theyre coming out. I think we can actually get people who opted out of the system back in through a system like hulu thats the question i had. The numbers that sara referred to it wasnt nearly made up by people cutting the cord and then going with the service like yours. There seemed to be plenty of people who were simply cutting the cord and theyre done. Theyre not paying the 40 bucks. Well, our hope is not just with hulu and live tv, but the emerging over the top platform that has all of the channels will be a place that when you look down the road as a industry we can bring people back into pay tv. I think it will work. From the economic proposition, you know, i have had this actually occur where i thought, okay, new cable sub or a new home, what do i put in . Do i go with just broadband and one of the new offerings . But the Cable Operators offer a skinny bundle economically at a similar price point when you add in broadband. Are you at a price point thats competitive when they come with skinny bundles that make the cost equal or a little bit lower with broadband and a service like yours . I do. When you look at the entire package, i think the average cable bill today is 100 when you exclude broadband. If we start off with 40 for our live service plus our on demand offering i think when you start to add up the numbers i think it will come in favorably. I dont think thats the only reason people want a service like this. When you look at the experience, in fact, im they wouldnt let me bring the phone over here, but im recording this on my phone and i can watch it on any device. We have the enhanced cloud functionality thats unique in the marketplace. Even with the traditional provid providers, i think that will drive people to the hulu flat tv. How hard was it to pull together . Was it more of a push and a pull than it would have been ordinarily . Not really. This is something since the beginning of hulu we have been around for about a decade. We have been doing subscriptions for five or six years now. This is the number one requested thing that customers have asked of us, bring me live sports and live news so were answering that call to our customers. Our ownership is very supportive of this effort. I think our success is their success as well. Finally we mentioned the new content offerings, but i wonder when you go into the marketplace and competing against netflix and amazon, theyre global now. Does that hurt you in getting the audience not the audience but getting the producers of this conteptsdz to say okay, well go with you . In some cases it helps us. When you look at the space, creators and producers of tv oftentimes want to have more control of their international distribution. So the fact that were just the United States today actually is a benefit more times than its not. But i wouldnt be surprised if were sitting here in a couple of years and we have launched into additional territories as well. Well follow this closely that figures prominently into so many Different Things in terms of the producers of the content. Mike hopkins, thank you, ceo of hulu. When we come back, adidas hitting an all time high after a big earnings beat today. Youll hear from the ceo, next. Adidas shares hitting a record high after a beat on the top and the bottom line. The german sportswear maker confirming the outlook saying it expects sales to rise by as much as 13 . Earlier this morning i sat down with adidas group ceo Kasper Rorsted and i asked him whats driving the growth and the outperformance considering the Sluggish Performance by under armour and nike. We have built a strong pipeline with a very clear where well take the brains. As you can see, adidas business in u. S. Grew 36 . In china 31 . So in the two biggest sports markets in the world were by far outgrowing the market. I think we have right now the right balance between our sporting products where running is growing 27 . Women are growing 25 and then the originals business which is very strong. So its a mixture of many things that are coming together right now and really outpacing the market. I think we are taking the market share in all the markets were in right now. I wanted to dive deeper into that especially in the u. S. That 30 growth number. Nike is still clearly the category leader when it comes to sneakers in the country. How much market share though are you taking from the giant . So if you look as i says, we grow 30 in the u. S. And we grew 36 with the adidas. The actual number i dont know. The numbers arent out yet. I think its good to eat humble pie. Were happy with the progress. We still have a long way to go. We think we can get a much bigger position of the u. S. Market. Nikes got the big athletes in the Sneaker Market. Lebron, kobe, jordan. I know you have made an aggressive push with harden and others. How much more aggressive are you going to be when its comes to sponsorship . Well, we grew 30 last year and the year before, right now were growing 30 and our aim is to have a 5 billion business by 2020. Well add more athletes, but i want to say that the west relationship we have is hard hitting. Step by step, but we have to continue to grow the business and really the athletes and the celebrities into our business model. Yeah, you know im interested in the easy line. What kind of plans do you have for it . Are you planning to take it more mainstream or are you going to continue this exclusive release . No, we think the creativity is exceptional so well keep it rare. It brings a lot of goods on the brand and its equally attractive. I have been out in the last five weeks in three continents and every continent you see the young consumer or even, you know, guys my age that want to have these products. So well keep it rare, but make it accessible for small select number of people who will stand outside our store in line. We talk about the growth right now, in some of your retro styles like sam smith and the superstars. What other styles are you looking to take out of the vault and start promoting . If you look, sam smith and superstar is only one part of our original business. 50 of the original business is coming from new franchises so we are taking our equipment, so were taking the models from the 70s and 80s and 90s using new technologies. Mmd is a great example of that. From the late 80s and 90s. Its not just the iconics that you spoke about but the new ones. We have 50 of the original business from new franchises. Can sneakers ever be manufactured in this country, in the u. S. . Of course we can. Were in the process of opening a plant in atlanta, georgia. But you have to be realistic. The size of the global Sneaker Market is probably 1. 4 billion. The size of a plant is 1 billion so the vast number of the sneakers will be imported from asia. You have a smaller set that you can customize sneakers to consumers but not is covering the entire market unless you pay two or three times of the price today. Weve talked about that before. Finally, i have to ask you about that marketing mishap. The email congratulating Boston Marathon runners for having survived. How did that happen and whats been the fallout . First of all, we deeply apologized for this mistake and were very, very sorry. Which we immediately said. If you live in the community that everything happens realtime, you have people engaged that you empower to make the right decisions in the realtime environment like on television. Sometimes mishaps happens and as unfortunate as they are, we have to live with those. Were deeply sorry about the mishap but thats the consequence of living in a realtime environment. We hope that things like this did not happen. We apologized and we hope also that the consumer will forgive us for that mistake for which were sorry about. Caspar rorsted took over in october and remember that story i did a few weeks ago about the next project being adidas and having to turn it around, going back to some retro styles to the 80s and 90s . 13 growth in adidas, this was a dog for a lot of years. They have picked up on the retro chic and reebok is starting to yield results. Anybody who was around for the heyday and the young kids too. They like to think they can rock it again. Yes. When we come back, boeing is responding to the president s talk of increasing military spending. Our Morgan Brennan is inside one of the production facilities. Morgan, good morning. Good morning. Not only am i inside the production facility, im inside the cockpit of an ea growler. This is one of the planes in the f18 line. Well talk about the fighter jets, the future of the f18 project when we get back. Whats the best way to make money just ahead of the jobs report . Our traders will weigh in on tradingnation. Cnbc. Com. More squawk on the street coming right up. Taking a look at shares of tesla the automaker nearly doubling the quarterly revenue from a year ago. But it posted a bigger loss per share than analysts had expected. The stock is down almost 6 this morning. Morning. Hard to tell if thats on some of the delivery, some of the confusion around the new models. Now lets send it out to john with a look at whats coming up. We have oracles ceo going to join us from headquarters in silicon valley. Its the morning after facebook earnings. Strong numbers with the guidance has some people spooked. Tim cook talked to jim cramer. We will dive into what he said. That and more coming up on quack alley. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. A used car, want to direct our viewers attention to shares of General Mills and kraft heinz, both of which are up on a news wire report from a source im not familiar with called mt news wires. What i want to tell you is, its not true. There is no truth to the rumor that 3g and or kraft heinz is involved and has agreed to a deal to be acquired. General mills announcing a ceo change yesterday. Again, i can tell you theres no truth to this report. Not clear as to the nature of it or to the source itself. In fact, you and i were going to discuss kraft heinzs quarter which was not good. The stocks moving so much on this story from an unknown news wire. There they go back down after he refused it. Kraft heinz came out with a negative organic sales growth. Its leading to questions about 3g managing big food companies. Yes, we know they can do the Financial Engineering and get the margins up. Thats why wall street so enamored. They were asked about it on the call. They continue to indicate interest. Broadly speaking in consumer names, Even Health Care and food. But again, as we have outlined many times, a difficult road for them given the failure in their unilever bid. More as we go along. We did want to bring that to you. Lets head to Morgan Brennan. You are always in an interesting place. Take it away. Thanks. Certainly never a dull moment. Im inside the cockpit. This plane is going up for its first test flight tomorrow. Both planes, the growler and the super hornet, are made here if st. Louis. Boeing is ready to make more. More are needed. Earlier this year, the navy disclosed that on any given day, two out of every three of its f18 fighter planes are offline and awaiting repairs. Why . They have been flown hard in a post 9 11 word with classic hornets exceeding flight hours by 30 . Couple that with maintenance backlogs caused by budget cuts, theres an inventory shortfall. When President Trump talks about rebuilding the military, its replacing Weapons Systems like f18. Boeing and the navy have been hashing out how to address this for several years now. To address super hornet capacity, we have three lions of action. New airlines, super life modification, where we take the existing flight from 6,000 to 9,000 hours and traditional sustainment. Theres a Service Modification program. But also, the Company Expects that the navy will buy more than 100 planes through 2022, including 14 Super Hornets that are in the 2017 budget going through congress now. Morgan, thank you very much. Showing us and not just telling us. Dow is down 41. Can i get some help. Watch his head. Im so happy. Whatever they went through, they went through together. Welcome guys. Life well planned. See what a Raymond James Financial Advisor can do for you. Why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. Welcome back. Markets right now drifting a little bit to the down side. Despite the modest losses, the major averages on pace for a Third Straight week of gains. Crude oil below 37, trading at fivemonth low. Fuelled by smaller than expected drop in oil inventory. Energy the worst performing. Most of the stocks leading the decline. That does it for this hour of squawk on the street. Balk downtown to the start of squawk alley. Its 8 00 a. M. At facebook headquarters in california. Its 11 00 on wall street. Squawk alley is live