Transcripts For CNBC Squawk Alley 20170418

Good tuesday morning. Welcome to squawk alley. Jon fortt has the morning off. Dow is down almost a hundred. Almost all of that is gold aman and j j. The president expected to sign an order today. Hell tour the factory in wisconsin. The order targets loopholes in rules requiring Government Agencies to buy american. The Administration Says there are too many waivers in those rules tucked inside the free trade. The move is praised as a smart step. Second part of the order deals with immigration directing Government Agencies to root out immigration fraud and the white house also wants to move away from using a lottery to help decide who gets an h1b visa. Tech ceos have pushed back on this issue. Bill gates, elon musk have been discussing this with Jared Kushner and the message to the president on h1b, mend it, dont end it. Back to you, carl. Well come back to you for more. Todays order will have ripple effects across the economy including some of the biggest tech firms in Silicon Valley. Paul holland, its always good to get your take on things. Good morning to you. Good morning, carl. Thank you. We sort of know where tech is coming on this issue in general. How much are they worried about this actually happening . Well, i think thats a great question. Certainly the concept behind limiting the h1b visas we think is a pretty bad idea overall. As you know, i worked on a film some years ago about Silicon Valley and we find ourselves where at times five of the ten most valuable companies in the world are originating out of that ecosystem. None of that would occur if it wasnt for the fact we could tap talent from all over the world, the best people. I think the notion that somehow, you know, were limiting american jobs for these highly trained engineers and highly trained technical people is a fallacy. We hear from some viewers who say i myself personally was forced to retrain my replacement in what clearly was not an America First policy. Do they not have a legitimate complaint . Those are different issues. Those are in situations where people are deciding to outsource entire activities to offshore producers. Thats a different concept. That doesnt have anything to do with the visa program. Its less about retraining people that are coming in and more the function of we cannot graduate enough highly trained engineers in this country or in canada or the uk or other places we draw from. Were creating and the tech ecosystem is developing hundreds of thousands, millions of jobs across the board worldwide and that engine will be really severely effective if we find ourselves in a place where we cant hire the best people. We just got the numbers on this for this year. Employers seeking visas, h1b, for 2018, 199,000 applications this year. That was down from 236,000 last year according to the u. S. Citizenship and immigration services. It was the first time in a long time that we saw that number drop. I know theres only 85,000 allowed to be admitted. Why do you think that number is falling . Is this already having an impact on the Tech Community . Are they preparing differently . Are they hiring more americans . Actually, i dont think its a function of that. I dont think that its its probably to some extent related to individual people deciding do i want to come into the country in this environment or would i rather take a job in another country where it may be more welcoming for me and my family . That could certainly be a factor. Its also probably cyclical issue. Its important to understand the core of this issue. New graduates coming out with engineers degrees that we need in the Silicon Valley, we are hiring all of them we can get. Negative employment rate for engineers in the Silicon Valley as we do in new york or boston or raleigh or any of the other tech centers around the country. This is less about not hiring americans per se. Its just simply we really want to have the best and brightest from around the world working in these companies. I think if you think about this logically, were blessed to have this phenomenon here in the united states. We are the country that welcomes the best and brightest from around the world and work here. Its part of what makes us the wealthiest country in the world. If we start to mess with that, then the consequences are unknown. I fear they will be quite negative. Well see what the fallout is over the coming months for sure. Lets turn to netflix. Weaker than expected subgrowth. Reid hastings weighing in on the quarter and the companys competition. Lets take a listen. At one level amazon is an Amazing Company doing so many different things. On the other hand, you know, theyre doing great programming and theyll continue to do that. Im not sure it will really affect us very much because the market is just so vast. Think about it when you watch a show from netflix and you get addicted to it, you stay up late at night. Were competing with sleep on the margin. Hastings adds that amazons decision to stream live sports not something netflix will attempt. You have worked with hastings before. Are you surprised by any of this . By their ability to continue to raise capital and spend it aggressively . They seem nonworry about amazon as a competitor or anything else. I dont think i know the Management Team quite well. Them not worrying about competitors is not the way i would describe it. They are quite paranoid. They Pay Attention to whats happening in the competitive environment and so forth. I think we have to understand netflix as a phenomenon. Fascinating to think about. My partner invested in 1999. Total number of subscribers was zero. Imagine sitting around the boardroom executive room back then thinking wont it be exciting when we have one million subscribers. That would be amazing. They blew through that. What would it be like when we have 10 million. Blew through that and yesterday 100 million. So i ask you this, what is more likely . Theyre going to go from 100 million to 200 million or that they found way to get from 1 million to 100 million in the first place . If you look at some of reeds other comments in the press, i think hes pointing in the right direction for the model here. Look at youtube. Look at some of these very, very large open video platforms that are available supporting over 1 billion people. Over time, thats the path that netflix and others will go down. I think whats happened with netflix is so fascinating because if you go back to the time i was a child, you could choose any channel you wanted as long as it was abc, cbs or nbc of course. Then you go 20 years later and you find that its, okay, the satellite stations, the Cable Companies are forcing the networks into this niche. They have a niche area. They are taking over distribution. Now here it is 20 years later, the leader far and away leader is netflix and they have really forced all of the other people into niches and theyre the one that is the broad platform. Ill give you a small antidote. I spent spring break with my family in a lovely Little Country of belize. I picked up the remote and hit the on button. You know what it is . Its netflix. I put it on. Thats what it is. New connected devices now are all coming with this stuff streaming on it. I still think ive said this to you guys many, many times before. I think were in very early days here because over time some day there will be a billion people on paid subscription content services. Its just inevitable. I thought you would say cnbc. A good presence. You guys are the best. Youre the best at the niche providers. The very best. So to put that 100 million subviscriberr number this conte hbo has millions worldwide. Which competitor do you think netflix is most worried about . I think again they are very respective of their competitive environment and Pay Attention to all of the people out there. Hbo is an amazing organization. Theyve done fantastic content and so forth. I think at the moment the only company that has probably the scale and the reach and the capital structure to compete with netflix in longer term would be amazon. Netflix has been fortunate. Theyve been more aggressive. They went after original content very heavy very early. Went international earlier and have gone heavy after that. I think theyre in a good competitive position. I think they think about it every single day. Its a very, very strong Management Team there. They are not taking anything for granted. Certainly get a lot of attention every quarter. Thanks so much. Good to talk to you. See you soon. Take care. Hall who wipaul holland join. A busy morning for banks. Goldman dragging the dow down. And then some reports that apple is working on a trio of new phones. Possible features and the expected timetable. Plus that big news from verizon when it comes to next Generation Cell service. Youll hear what ceos behind the plan had to say to david faber when squawk alley comes back. s th decow aat tith get rectv w fo 1 1hnpl unlim data when younew at ttith unlimid plus plan. Ased caca deputy cfo commenting on less than stellar numbers this morning. G10 Foreign Exchange volatility approached the lowest level in two years for the dolla dollar euro pair. Reduced volatility negatively affected client activity within a anoth another macro thick market, commodities. Joining us, eric and chris. Eric, what happened here with goldman down 4 . Was it all about trading and why the underperformance there . I think it was all about trading. The number came in a bit light relative to expectations. Expectations elevated a bit following strong prints from jpmorgan, citi and bank of america even earlier today. And the reason that management gave was largely about compressed volatility across several of their macro products. So what do you do with the stock now . Down almost 10 yeartodate. Still up more than 35 over the past 12 months. Were neutral on goldman here. Its a very well run company. I like it operationally very much. I think the biassed earning revisions is negative as today signals and in that context i think it will be difficult for this stock to move much higher. Whats your take on Goldman Sachs and what you can extrapolate from todays miss on trading and how that paints a picture for goldman Going Forward . I think eric makes good points. If you look into the numbers, they did well in equities and very well in Investment Management and investing and lending and took down compensation one full percentage point and increased dividend by 15 . I think the bottom line is that this is a high quality name and definitely well see stocks start to move up against once these numbers have been absorbed. We get these results on the same day goldman reversed its long dollar recommendation. Was that a culprit here . Potentially. I think one of the i think they were transparent as chris highlights that in terms of the trading weakness, a lot of it was in the macro products of course in fx and to a lesser extent in commodities. So i think youre seeing that play out across the complex a bit and not surprisingly also reflected in their own recommendations. On the trading front, some discussion about bank of americas results and whether or not that was the result of some stolen market share. What do you think . I think thats possible. I think goldman is suggesting their problems in commodities was rather than just navigating through difficult markets. Lets be quite honest. Bank of america put good results on the board. Provisions down sharply holding costs well. And obviously excited about the fact up 16 basis points and they held their cost of billing flat at 14 basis points which was implicit given what we saw in december and march. So on that note, wrap it up for us, eric. What do you do if you own an etf that covers the group as a whole which has underperformed this year but ran up high after the election based on where yields are and what policies we expect out of washington. So my perspective on this may be different than chris. Were pretty neutral across this space, which largely reflects the fact that following the big runup in the Group Following the election in november, we thought that expectations about policy whether it was rate policy or fiscal stimulus or regulatory policy had just gotten too constructive and weve been much more focused on single names where we think there are some earnings opportunity for positive revision rather than the space as a whole, which we think may be sideways until theres evidence of stronger macro conditions. Speaking of which, one last thing, chris. Core cpi, retail sales, industrial production, housing starts, at what point do we talk about whether or not a june hike is at risk . Well, i think thats a discussion thats taking place at the moment. And clearly the uncertainty that weve lived with for the last ten quarters. I think were going to have to continue to live with it. I do think at the moment people probably shifting their expectations to later in the year, which it is certainly going to be a tailwind for the banks but not as fast as people would like. Well leave it there. Thank you for joining us on the banks. When we come back this morning, verizon announcing a new partnership with corning to bring its next Generation Wireless Technology to life. Youll hear what the kraechceos to say about that deal. Big news overseas. Uk Prime Minister may calling for that snap election. The former leader of the uk cons e conservative party weighs in. Alriee you dn okwa. Dohing we lk a. Ato . ing totoat reer wwe wet sayi gori seyes nfi youawe thexfinitx1 voice r. Big news this morning. Lets get to david faber. No . Im going to guess that his audio is not good. 22 minutes past the hour. Fascinating discussion about 5g and sort of history from david about promises that steve jobs made to create a phone if they got that network going. I heard that. Im going to let david take the fiber discussion. Hes the expert on that. While we wait for him to get hooked up, lets count you down to the close in uk and across europe because today was a very busy morning and the first time europe traded after a long holiday weekend. Seema mody here at post nine. Good morning. A big day for europe. European markets coming back from easter break in the red as politics takes center stage. Theresa mays call for a snap election on june 8th sending the pound to its highs of the year against the dollar. The pounds climb is weighing on uk exporters and ftse down 2 . On track for its worst session since the referendum, brexit. Here is what uk chancellor said about the snap election just hours ago. Mr. Speak errer, the decisio made in National Interest to strength continue her hand as she goes into negotiation with the European Union to ensure that the uk can negotiate exit from European Union, execute that exit, and then transition to the new arrangements with a clear run before the next general election. William hague will be a guest later this hour. Meantime, stocks under pressure in france ahead of that countrys president ial election on sunday. This as left wing candidate has potential to put him in a runoff. A lot of uncertainty ahead of the vote. Bond market showing signs of worry. Look at the spread between france and germany at a onemonth high. Back to you. Thank you very much. Lets get back to david faber and big news out of verizon and corning. Hey, david. Earlier we had the chairman and ceo of verizon and counterpart at corning announcing a deal where ver iiz will buy a billion of fiber over the next four years from corning which is going to add to capacity down to North Carolina to meet the demands that verizon is putting on it. Why . Well, the advent of 5g, from architecture standpoint is the need to put more fiber into the ground. We view it as next Generation Network and that network is going to look very different than what weve built in the past. If you look at 2g and Third Generation and fourth generation of wireless, it was about capacity and fifth generation is about those things that were going to see a hundred times faster through but well lateen network and ten times the battery life weve seen in the past. That opens up a whole new set of applications for consumers and enterprise, but you cant do it if you dont have fiber deep into the network compared to what weve done in the past. That of course, he believes will open up a set of potential applications for consumers and most importantly perhaps for enterprises as well. Saying that it could be here as soon as 2018 in limited use and then growing from there but a lot of that will depend on how quickly they can put that fiber in the ground and how quickly they can negotiate infrastructure needs they have with various municipalities around the country. This led to speculation that verizon with a like to build a large Cable Company because cable does have some of that fiber in the ground already. The name thats come up most often is charter despite the fact that as ive reported charters Price Expectations and verizons ability to meet them dont meet anywhere near where they could reach a deal. Another concern is raised and that is namely the actual architecture that charter has in place. Take a listen. Shareholders expect us to look at every option but i would tell you right now we havent seen the architectural fit and we havent seen a willing seller and buyer that have a meeting of the minds. So it doesnt necessarily work . If you were to from a fiber perspective, whether a Fiber Company or Cable Company, you dont have architecture that were talking about today. Verizon will report earnings a couple days from now. Perhaps well get an update on how unlimited plan is going and what has been very significant competition of course in the Wireless Industry for a number of years now. The hope is 5g will give them that leg of growth that theyve been lacking for a number of years. Back to you. David, thank you. Still to come on squawk alley, were 90 minutes away from the Facebook Development conference. For more, well go there live to tell what you to expect. Apple may have three new iphones on tap that come sooner than you think. Details for you when squawk alley returns. Uis troduc te w ne go ananteaselle ama peopl bud blgettg pa. Tood nean g quickbooks. Ori hae, jea los vinean g quickbooks. Ori d, twis st. , icicnt offiant. Netwe fas jeatte. Ee good morning. Here is your cnbc news update this hour. Mccaster meeting with modi in new delhi discussing regional issues including shared interest in boosting defense and counterterrorism cooperation. Vice president mike pence ending his first day in tokyo with a visit to an ancient buddhist temple. Pence and his two daughters walked into the citys oldest temple. The temple is a popular tourist site attracting crowds from around the world. Subaru recalling cars because of a fuel problem making the engine stall without warning. The recall covers impreza model cars from the 2017 model year. No crashes or injuries reported. And Prince William is stepping up an Awareness Campaign on Mental Health through a video chat with u. S. Pop star lady gaga who has gone public with Mental Health struggles after she was sexually assaulted at the age of 19. Youre up to date. Thats the news update this hour. Back downtown to squawk alley. Just days after that horrific event in cleveland where a man posted a video of himself killing another on facebook, the annual conference being held. Mark zuckerberg will take the stage in just under 90 minutes. Reporter when Mark Zuckerberg speaks to the 4,000 developers who are here, the big question is what hell say about that video of a murder uploaded to facebook sunday and demand for stricter controls after yesterday facebook said its working to improve its review and blocking of inappropriate videos. Facebook will work to focus the conversation today on messenger. A year after launching bot we expect it to open for sharing songs and playing games. We can hear about futuristic products in the works. Virtual reality will be in focus here. There are eight different vr related sessions for developers. Everyone is getting ready for the big keynote. It kicks off in an hour and a half. Guys . Stay with us. Joining the conversation at post 9, distinguished fellow and author of a new book driver in the driverless car. How Technology Choices will create the future came out last week. Looks like an amazing read. Great to have you. Good to be on. How much does this cleveland episode color what it will be about . I think this is on their minds right now. I exchanged emails with sa sandburg about this and condemned facebook for not living up to their responsibility. They know they have a problem. Theyre trying their best to do something about it. Hes going to discuss it. Obviously people will give him a hard time because it has gone to the point that facebook has become more powerful than some governments are and this is increasing. They are controlling knowledge and controlling information that we get. And they have so much power now. So they have to figure out how to use it responsibly. Video was removed in a couple of hours. You got 1. 8 billion users. That not efficient . Should be done within 60 seconds. Why cant they build to weedo td this stuff. Lets spend billions on having people who monitor region by region and respond immediately. This is serious stuff. So far what weve seen from facebook is theyve taken steps to allow users to flag suspicious content or fake news or items like this. Is this going to push them to do more internally to more selfregulate besides allowing viewers to do so . Well, yes. Right now they use a combination of Artificial Intelligence and having users flag videos that are inappropriate and then the flagged videos are reviewed. In the comments that facebook made yesterday, it sounds like they understand that they really need to step up everything, both the use of Artificial Intelligence and human reviewers to make sure that if a video like this is posted its taken down instantly. Of course, it is very hard when you have 1. 8 billion users around the globe and they do have 24 7 teams monitoring videos that are flagged, but they definitely need to step that up. They understand that. Theyre not just dealing with safety of users who are watching these videos but also the question of advertisers who want to make sure that their ads are not placed anywhere near content like that. On the more positive side, i wonder what you expect on augmented reality, hardware, camera effects, all of the things they would love to talk about. The future isme augmented. Were going to be part of the action in the future. Thats how fast Virtual Reality are advancing and Mark Zuckerberg gets it. Hes trying to move forward and own that space. So, beyond technology do you expect him to address at all policy . So many of the policies being discussed including executive order today target h1b visas. I know zuckerberg stays clear of naming names and mentioning specifics but has views on these sorts of things. Facebook is very proimmigration. This event today is really about the 4,000 developers who are here. I think they will address the cleveland murder because they have to. Because thats the elephant in the room and that impacts everyone who is working on that facebook platform and how they adjust those controls for videos. I dont think theyre really going to weigh in on policy issues too much today because it may feel a little bit out of context in this developer format. Facebook made it clear they are pro immigration and would be fine with employees going to go protest at proimmigration rallies that are coming up. I think there are a few questions about where zuckerberg and fellow ceos lie on that issue. It was just sort of wondering in general. Its one that affects them. We talked to you about this a number of times. What would zuckerberg advise a President Trump on this immigration issue . Zuckerberg would tell donald trump that his companys future depends on immigration. Its a Global Company. Its not only having the talent, its also understanding the foreign markets. Were talking about filtering out fake news. If we dont understand what users are doing with information or what their culture is, how are we going to help them and build a global brand and build a Global Company . Its vital to Silicon Valley success to have immigrants. H1b as we talked earlier, it needs to be fixed. There are problems with the visa. Just like you, im optimistic that some good may come from it. Were both worried but it could be that they make some fixes which better the product. Thaes let lets hope so. Fingers crossed. Apple is testing revamped versions of its iphone lineup as soon as this fall according to a new bloomberg report also working on a new model with all screen front, curved glass, stainless steel frame and advanced camera technology. Supply constraints delaying that new model for two months as first reviews from samsungs new galaxy hit the wires about 30 minutes ago. People talk about a supercycle. The fall is going to be really interesting. If you want that new apple phone buy samsung right now because they have those features. Apple is playing catchup. I hope apple does deliver something Ground Breaking this time because they let us down three years in a row. What would that look like in your mind . At best right now they can have what samsung has. Why not have Virtual Reality based technology . Why not have projectors . Why not have virtual keyboards and futuristic stuff . Where is apple when we need it . We want more advances. Not more of the same. We dont want to play catchup. We want to leap forward. You think theyve been living on samsungs quality issues . Yeah. Samsung bought them a year because samsung 7, i had one of those, it was beautiful. Far better than iphone. I was ready to dump my iphone except it started blowing up. Do you want to weigh in on technology and what you hear around a new phone . Whats interesting is when we were First Talking about the new samsung 8, would they be able to overcome the reputational damage of the Samsung Galaxy note disaster. It seems like reviews of the samsung 8 are positive. So much new is about the camera and samsung is doing these interesting things with visual search. They are partnering with pinterest to drive that. And when apple launches its phone, it will have more high tech cameras in there but the question is how much headway samsung can make in the meantime. I think so much now is about the camera and about the software that supports the camera and well have to see if apples dual camera theyre working on will be really different. Julia, busy afternoon for you. Well be checking in with you. Congratulations again on the book. You promise youre going to read it . Im going read it and you have to come back and talk about. Carl will take just a weekend. Fast reader. I need to go to a beach. Still to come, uk Prime Minister theresa may making a surprising call for an early general election. The former leader of the Uk Conservative Party lord William Hague will be here to weigh in. First, rick santelli, what are you watching today . Well, im watching a really active short end options trade going on. You know what im thinking about . Weve had several rate increases by the fed but money markets dont seem to be keeping up. What we have here is the failure to correlate. We have the fixed income fund manager of the year by morning star of 2015, jerome schneider, going to talk to us after the break. And facebook in focus. The social Media Company holding its annual Developers Conference today. One top analyst is live at the event with what to presideexpec. All that and more coming up at the top of the hour. Back over to you, carl. Lets get to rick santelli. Hey, rick. Thanks, carl. Were discussing the fed and the short end and money markets. There is nobody better than jerome. Thanks for taking the time. All right. Lets start with surprise beginning actually. You think the future composition of the fed is an understudied fundamental. Tell me why. We need to think about reaction function of the fed. The fed moving toward progressive easing measures. Well unwind that. Its not a normal rate hike that were seeing. Were seeing one of reduction of quantitative easing. Second aspect is who is making these decisions. We have three fed vacancies right now and people who have thought about to be hawkish in terms of replacing those vacancies. We need to think about a fed promoting easing moving to one thats more balanced or slightly more hawkish than we were expected to. The discussion could change the slant. A month ago i had a stronger opinion on this. After listening to the president talk about weaker dollar and liking lower rates, im not sure how to think about this. Lets move to another topic. Great movie. Cool hand luke 1957. What we have here is a failure to communicate. What we have is failure to correlate. Three rate increases. Money markets arent keeping up. Thats a disadvantage for those who want to stay safe. We have to realize that the fed is clearly trying to reduce the quantitative easing and get back to normalization of fed Balance Sheet and will increase rates through the course of this year. Unfortunately for money market investors, that hasnt kept base. At the same time, money market funds are yielding less than 50 basis points net. What does this mean . It means that increase in Interest Rates doesnt necessarily correlate to more money in average investors pockets. We have to think about ways to simply adapt to the higher rate environment and think about ways to move out of that money Market Strategy but be defensive of Interest Rates. Recognize the fact that the two year at 1. 17 is relatively low and rallied over the past few trading sessions. Whats important here is recognizing the fed is still going to continue that normalization process. Theyre still going to increase Interest Rates. We have to be more adaptive in terms of how we think about embracing the higher rates. As savers we have to find ways of doing that by moving to actively managed strategies but steering clear or being more cautious of allocating to default mechanism of money market funds. Real quickly. Everything you talk about is higher rates and youre convinced of higher rates as are many. Rates have gone down. There are channels. Quickly maybe you can address those fast. We have to think about creating optionalty for investors. As an investor, we have to think about those risks which are geopolitical. At the same time, we need to really think about potential for increasing Interest Rates. Long story short, were going to see increase Interest Rates through the course of the year. Use these opportunities to reset shorts. Jerome, thank you. Carl, back to you. All right. Thank you very much, rick santelli. Dow is down 137. Close to session lows. 10year broken 2. 2 again. United continental wrapping up its conference call. Susan lee is just off of that call. Very interesting conference call. We heard from oscar munoz again apologizing for passenger incident last week. When asked where the blame should be put, heres his answer. The buck stops here. Im sure there was lots of conjecture about me personally. I think i met with the board and the board has met independently and weve had conversations and will be involved in the work that were doing Going Forward as well as they always have been. To your specific question, you know, again, it was a system failure across various areas. There was never a consideration for firing an employee. And he didnt elaborate in terms of compensation policies. He did say that we are making some changes and were looking right now to improve our systems and well make those announcements at the end of this month on april 30th. In terms of earnings, a very good quarter for united airlines. In fact, this quarter is also going to be great because they forecast the first net Revenue Growth when it comes to passenger revenue in two years. Again, thats being overshadowed by events last week and making an apology really right at the top of the conference call. The incident on flight 3411 has been a humbling learning experience for all of us here at united and for me in particular. In addition to apologizing to dr. Dao and all of the passengers aboard, i also want to apologize to all of our customers. You can and should expect more from us and as ceo i take full responsibility for making this right. Just one more interesting point that was made on the conference call, oscar munoz says hes heading to china. Hes already had conversations with the local chinese consulate to reassure core customers in the future and discuss with officials when he makes that trip to china very soon. Back to you. Susan, thanks. Susan lee back at hq. When we come back, more on the uk Prime Ministers call for those snap elections. Dow is down 139. Goldman closing in on a double digit decline for the year. 139. Goldman closing in on a double digit decline for the year. At g a better food system. Whstd pin for middlememe we work directly with fami farms tfor less than you pay quiatheto. Edie t 30 off at blueapn. Com cook njut you ve in, but whyou invest wh. The british Prime Minister calling for an early snap election. Wilfred has a special guest from london. Were joined by lord hague, the former leader of the conservative party, the house commons and foreign former secretary. The surprise decision coming from Prime Minister may. Is that because the polls suggest that its an opportunity too good for h her to miss in order for her to increase her power . Well, certainly, the conservative party is far ahead in opinion polls at the moment and has won some recent important bielections. I think the overriding reason for this is because there are some difficult negotiations coming up over the next two years for the uk. And they will be in a stronger position if there is a clear mandate, clear backing for may in parliament with more than just a small majority that she has today, so i think the key phrase main her statement was t country is coming together, but westminster, the British Parliament behind me, isnt coming together. That was the key factor in her make iing this decision, which house u of commons will vote on tomorrow. She is hoping to increase the majority. What is the chance this becomes a second day factor of the rerun . The conservative party, your part, Prime Minister mays party, representing brexit and other parties being able to represent and therefore, things being much closer than she expects . No election outcome can be guaranteed as everybody in the yoits knows Aunited States know think the mood of the country is not the same it was at the time of the referendum last june. So there are people like me on the remain side who wanted to remain in the European Union, but who said well, we did make a decision, even if we disagree with it last year and now, we have to make a success of it. Cant go around in circles all the time. I think there is a mood in the country of weve got a Prime Minister whos trying to deliver on this. Lets back her up. That will test that. There are always risks in any election, but if im right, that is the mood of most people in britain. Do you think the brexit negotiator ons the eu side will be worried by this decision . Well, i think they will respect it. The negotiating agenda of the uk, it remains the same, but it would stop those eu negotiators taking advantage of the narrow majority. We had a case in the last few months where theresa may offered to settle in advance of eu nationals living the uk and nationals living in europe and the eu wouldnt have that. They said were not settle iing that. Then the house of laws went and voted to guarantee the right of eu nationals in the uk any way. Now, that was a signal to the eu that if you hang tough with britain, parliament will try to override the British Government and i think one of the reasons for this election certainly in my view, is o make sure people in the eu understand that the government has a strong mandate and that they cant eu negotiators cant go behind their backs and try to get this parliament. They cant get from the government. Looking ahead to the French Election this weekend, lord hague, whatever the result, clearly, theres significant opinion on the ground in france for the antieuro candidates. With that in mind, is eu too slow to recognize the need to reform and change along with the brexit vote last year . I think the eu is foo slow. To reform and to change and ive written an article today about how the eu has made mistakes in handling turkey, for instance, and after closing the door on turkey, for more than a decade now, well, you cant be surprised if if turkey starts to go in a different direction and if more flexibility had been shown uk on the issue of migration, those that come into the country last year, then in all problem bability, we would have voted to stay in the eu, so i think the eu has to learn the lessons of that, unless it learns to become flexible and respect the concerns of people around europe, the eu is going to get swaweaker, not stronger. Its sarah in new york. Just wanted to get your thoughts on what this means in terms of a hard brexit or soft brexit. Does it increase the likelihood one way or the other . You know these terms hard and soft b can be very confusing. Not trying to dodge your question, but these terms often oversimplify whats happening here. It would success in this theresa may would give her more freedom of maneuver to face down tough negotiate fing from the eu side but also to overcome many rebellions in her party on this side of the english channel. So it increases that freedom of maneuver. I would say what shes looking for is a reasonable brexit, which is hard in the sense of we have to control our borders in this country. And not be subject to the european courts, but its a reasonable one i hope in terms of who can come and go between this country and the rest of the eu, freedom of trade between the uk and eu. She is seeking a bold and ambitious free trade agreement. Thats not so thank you very much for your time. Thank you. Its a pleasure. Thank you. Thank you for that. We have breaking news this morning. Pennsylvania state police say that steven stooechevens, the ad facebook killer is dead after shoot iing and killing after a police pursuit. This coming from a Pennsylvania State police. Theres a picture of him. Obviously, horrific episode that comes as facebook is hoesing developering conference in san jose, where ordinarily, the topic would be their new technology and products. We expect the company to address this and Mark Zuckerberg is expected to take the stage in just over 60 minutes. I go back to who was on with us and said he xhang xainged he mails with Cheryl Sandburg about this. It should not take hour, it should happen e immediately and how julia said, combine ai with viewer feedback. Dow losses are adding steam. Down 157. Back to headquarters and the half. Welcome to halftime report. Im melissa lee. Top trade this hour, the tale of two banks. One b and one big miss. We are looking at the numbers and what it mean ifs your money. With us for the hour, joe, stephany, john and pete and aaron brown. Head of global macro investments with ubs o conor. Goldman k, worst perform ng the dow right now. Wilfred frost is bakg