Transcripts For CNBC Squawk Box 20150415

Down. Musk wants to commercialize space flight and hopes reusable rockets will reduce costs. Well get you up to speed on the markets in terms of the futures. Of course things will change in a big way but the dow looks higher and its surprising because well explain why in a moment. 48 points higher now. Nasdaq up 48 points and s p 500 up over 5 points. Its official. This mornings big corporate buzz story, the eu is just now announcing the antitrust moves expected against google. These are just crossing the wires at this point. European regulators are likely to accuse the company. They could face massive fines of 6 billion. Something like 10 of its worldwide sales are liable to be fined doing this and theyll be forced to change the Business Model. The eu has been looking at google for about five years now. Whats interest as good the company only gets about 10 weeks to respond. Its a different rule of law over there. Lets tell you about other big stories were watching this morning. New numbers out of china overnight. This is what i thought would impact the futures in the opposite direction. The economy growing at the slowest pace since the financial crisis. Expanding 7 from the year ago. Thats in line with estimates. More from our colleagues in beijing in a couple of minutes and then our special news maker on set this morning. Former treasury secretary hank paulson is out with a new book all about china. Hell join nus 30 minutes. And the ecb meeting today policy makers there seen sticking with the qe program. Now this despite recent pick up in the economy. Well get a policy announcement around 7 45 eastern time and well hear from mario draghi. He does that at 8 30 eastern time and corporate earnings are in focus. A couple of names reporting before the bell. Well get bank of america, u. S. Bancorp and delta in this afternoon. You have to watch for numbers from netflix. There you have it. Certainly not my favorite media company. Do you have to ask yourself if its your favorite media company. My real favorite media company, comcast. Nothing gets by you. Are you going to be coming to my party tonight. Huh . Its april 15th. I know that. We have to celebrate. Bring your checkbook. We have a special postmaster that comes to the party so you can still get it right on the stamp. Right before midnight. Everybody puts the checks in. We all high five. Are you done with your taxes for real . Right after the show i have to send down to the wire. Yeah. This is like we got close. This is basically your july 4th. Your Independence Day. We do fireworks. Its a different kind of fireworks. But its a celebration. It is. Its a celebration. Because the money is always i can only hope that viewers appreciate the sarcasm here. Among our stocks to watch this morning its official nokia is buying alcatellucent in a deal. Will it really be nokia alcatellucent . It rolls off the tongue. 16. 6 billion. Remember earlier we said its a 40 billion deal. Thats not. 16. 6. Alcatellucent ceo talking to cnbc europe earlier this morning. Everything is there in order to make this transaction successful. One is bigger than the other in terms of market cap which is nokia so we need very transparent, easy governance in order to avoid the mistakes of the past. Im going to have to check on this deal. I want to go over there and get this firsthand its the least i can do in june at some point. The Companies Say the deal will be finalized. Thats a good idea. Dont you think . Shares of intel trading higher this morning. Current quarter revenue in line with consensus and intel also announcing plans to cut capital spending. Well talk to an analyst in a couple of minutes and then csx looks to be an early winner. The Railroad Company with better than expected earnings on increased freight volumes. Also announcing a Dividend Increase in a 2 billion stock buy back. Right after larry said dont do this stuff anymore. Right in his face. Everybody is doing it but hes going to come in here tomorrow and i think while the letter was meant to provoked hes more measured on it. With ge hes okay with the buy back program because he says look, youre getting rid of ge capital. A substantial reason to do it. For him it will be about balance and well see how he talks about it. In the meantime Economic News out of china, a big po cuss of the Global Markets this morning. Eunice joins us this morning to tell us more about it from beijing. Good morning eunice. Good morning, guys. Well chinas gdp came in at 7 for the First Quarter. This largely came in line with expectations but it is the slowest level of growth this country has seen since the depths of the Global Financial crisis. The focus was on the march data because instead of the pick up that everybody was expecting we saw a tapering and that suggests to many people here that the economy is decelerating and headed for even Slower Growth so the data was suggesting to many economists and raised many expectations among economists that the authorities are going to have to come in and take some action. Some combination of Interest Rate cuts or cuts to the rrr. The level of cash that bank versus to have on hand. The authorities, though didnt seem to be pushing the panic button just yet in the run up to the release of the data the chinese premiere actually came on state radio and spoke to the public and said that there was downward pressure on the economy but this is something that everybody has to get adjusted to and say that the country needed to prepare for even further economic challenges. Now the employment number came out today in 5. 1 and the interesting part was the commentary around it because the officials here said that the jobs market was stable and the government has been indicating for quite some time now that one of the key factors in determining how aggressive they are is going to be the jobs market. So the jobs market is holding up which suggests we dont see any massive stimulus. Instead going to continue on this path to try to tweak the economy and keep the engine going. Guys. All right. Thank you very much. Now back to intel earnings. Matching lower expectations but sales were hurt. Ceo stacy smith was on cnbc yesterday and talked about the growth in the weak pc environment. We saw a little bit of weakness in the desktop pc segment. What i think is interesting is you can really see the expansion of our end markets playing out in our results. We had a enough growth in the data center and internet of things in memory to keep the company flat and grow earnings year on year. Joining us to break down the quarter is technology analyst. And this is the one thing we noticed for awhile is this is going to open at 32. 5 today. It will be up probably a dollar or so and 32. 5 is a multiyear, not necessarily a high but much better levels than before pc started slowing down. In the face of what we thought was the demise of intel was greatly exaggerate sod they transitioned to something. What is it . The internet of things . Id say the first thing is they executed really well. They missed their numbers but Gross Margins came in better than expected. Theyre cutting capex and managing inventory as well. So they have done a great job in terps of terms of execution and they have a data center that has grown to 38 of sales. Its a big business and profitable business. What do you mean a data center . Equipment today at a centers. Theyre selling a High Performance processor into servers that go into data senors. Google and amazon. Google, facebook and amazon are buying these by the boat load to manage their internet traffic. So its a specific microprocessor that goes into that type of server . Well all of their processors are based on a specific architecture and then they scale that architecture based on the device its going into. So the processor that goes into a tablet is going to have a lot different horsepower than the server. And then the server theyve got roughly 100 market share and its a Good Business for them. It still has to do with how much it costs to make these really sophisticated things. They cut it up into individual microchips, right . And the yield makes a difference on how they do as far as execution, right . The yield determines the cost they incur to develop the chips. To develop them and not just to make them. As well as to make them. The big chunk of that is the manufacturing costs which comes back to yields. It used to be buy intel when margins are coming up. So margins, their normal business is what . Usually like 55 to 60. Its 55 to 65. You sell intel when margins are at the higher end of that range and buy them at the lower end. Today theyre right in the middle. Let me ask you this too, you said they have about 100 market share in particular areas for some of these high end things. Its roughly 98 . How did that happen. Its a great business like that how come nobody else is jumping to get into it . You moe, they really struggled and that has given intel some market share gains but there is more competition theyre trying to develop a low cost alternative to intels server offering and its early but they are getting some traction. Maybe the eu can throw intel into usually with Something Like 98cent market share. Attach a rider to the google complaint . That business is way too going for intel too. We have to cut them off at the knees dont we . Over in europe . Its possible. Theyre so successful. They need to be much more mediocre. Thats a hard question to answer. They still have a pc business that is 60 of sales. Just please, someone buy it so we can just keep our employees. Anyway, we appreciate it. Thank you. Thanks for having me. Coming up when we return could in Flight Entertainment systems be putting airlines at risk of a hacking attack. A new warning that could scare you. And then late you are our news maker of the morning, hank paulson is going to join us right here on the set. But first take a look at this day in history. This is brian. Every day, brian drives carefully to work. And every day brian drives carefully to work, there are rate suckers. Hes been paying more for Car Insurance because of their bad driving for so long, he doesnt even notice them anymore. But one day brian gets snapshot from progressive. Now brian has a rate based on his driving, not theirs. Get snapshot and see just how much your good driving could save you. The eu announcing antitrust moves against dpoogel. Google could face massive fines. More than 6 billion and could be forced to change its Business Model. The eu has been looking into google for five years now. Its charged specifically over the Comparison Shopping service and announced its looking into the android operating system to see if theyre using market power there to hinder rival systems. A frightening warning today. A new report says that airliners could be hacked in flight by passengers using a planes wireless Entertainment System to access flight controls. The Government Accountability office warns its one of several emerging Cyber Security weaknesses that the faa has to address. We heard a lot of things. This might be the most frightening aspect to date. I dont know how easy or difficult or complicated but this is one of the worst warnings in a long time. What could they do exactly . If you could access flight controls you could fly the plain plane. But you could override the auto pilot though . Im sure the pilots have ultimate control of the plane. The captain of the plane has to have the i dont think its like just all of a sudden wow, i cant do anything. The other pilot was able to lock the other pilot out of the room. If youre in there i dont know. I dont want to go through hypotheticals. I dont know enough about it but i could imagine the person in the cockpit has probably the ultimate i would hope the ultimate control. Thats true on a boeing because its mechanically controlled but on an airbus its called fly by wire so if the computer was controlled by somebody else we need that guy thats always on nbc. You know whats that guys name . He has a twitter account. I forget his name. He tweets out about it. If youre going to be on unfortunately youve been on a lot given the last 18 months or so with all the airline stuff. This is Internet Connectivity in the cabin should be considered a direct link between the aircraft and outside world which includes potential malicious actors. The threat will continue to evolve and is something at the forefront of our thinking. Even the guy flying the the plane needs instruments to know where he is. Right. Even if you did have control you still might. If you didnt have Internet Access it might be a problem. This is a real threat. Its what they talk about all the time. If you have a Nuclear Plant you dont want any access to the internet from the inside because that lets outciders possibly get in. What i dont know know is with all of these other services are those connected to the rest of the plane. I dont know. That would be the question. What you need to do is seal the cockpit so theres no way it has any access. And now the autonomous car. You dont want that theyre going to hack that and youre going to be like. But the flip side of all of this was two or three weeks ago when the awful tragedy happened when the german flight there was a conversation about whether you should be able to control the plane from the ground in case theres a malicious actor in the plane. Every solution presents a potential problem though. Yeah. Lets talk washington for a moment. Senate minority leader harry reid calling it quits. Announcing last month he will not seek reelection. John harwood got a chance to sit down with him. People make the obvious connection. Reid boxing washington. Has the fight changed. The fights are unfair. We have now 15 people in the country that basically control most of what goes on in politics. The last few days a bunch of people are saying reid he didnt have an exercise accident. He got beat up by the mob. It shows the credibility of limbaugh. Why in the world would i come up with a story that i got hurt in my own bathroom with my wife standing there. How could anyone say anything like that. I think a lot of people as i read, kind of dont like me as a person. I think thats unfortunate. Mitch mcconnell just sent out letters to states saying dont follow through with obamas plan. He comes from a coal state. I dont mean to be mean spirited but he is a slump of coal. I thought he did an outstanding job. Hes my man and loves baseball. Didnt he do pretty much what obama wanted. Well he was long before obama was there. I supported him before and after obama. Are you entirely comfortable with Hillary Clinton as the democratic nominee. Sure. Very, very much. I talked to her husband yesterday. Clinton, i love the way he ends his conversation with me and he was so sincere. How does he end his conversation with you. Harry, i love you. He says that every time. He says that every time. Will there be a democratic race and should there be one . Im not a big fan of primaries. I dont think theyre help. Especially when youre someone as noted as hilary. I love joe biden. Hes a wonderful human being. Would you advise him not to challenge her . Thats up to him. Hes been around a long time. He can make that decision on his own without my advice. How do you see the republican fight . Who is the republican nominee likely to be . You know i dont really care. I think theyre all losers. And of course the electoral question for the senate is do they hold that seat that harry reid is giving up in nevada . Harry reid says they will and the chances of democrats winning back the senate if 2016 are far better than 50 50. They probably do have a better chance of holding it now. I should have asked him about you joe. Yeah offered without comment. No thats all. I dont think he knows me. I dont know. He might be a squawk box watcher. Might be. Might be. Hope so. We want everyone to watch. We like viewers that like to watch. Joe i havent seen a politician leave you quite as speechless as harry reid seems to have done. He didnt leave me speechless. I offer that without comment. They have a better chance of holding the seat now that hes not running. Probably why he decided not to. You know im kidding but i just remember the senator that used to be a nevada senator. Do you remember him wait a second. That was in a movie. Oh that was godfather ii. He wasnt real or was he . No anyway. Thanks john. Two big events overseas. Will have an impact on the u. S. Markets today. Chinas Economic Growth numbers and ecbs decision on Interest Rates that comes later this morning. Steven is here and is the Senior Investment strategist with Wealth Management research. Thank you for coming today. Those numbers from china, theyre in line with expectations but disappointing none the less and some are suggesting they could be beefed up a little bit. What do you think . If you dig deeper you do see Industrial Production numbers also released weaker invest m numbers were weaker and the sequential growth is quite concerning and ultimately i think that its showing that the leadership in china is willing to have more shortterm pain. Theyre trying to cushion the decline but theyre not willing to boost the economy and thats what youre seeing in terms of the overall profile of growth. What does that mean for Global Growth . It does mean that you have more of this. You look at the shift with the u. S. And euro zone being the leaders. The pick up in growth and china and the plays being rather in a decelerating mode and its snag at least we as strategists are reflecting in terms of the markets we like. Meaning that you like the u. S. And euro zone better than asia. More generally. Which is better . The u. S. Market . The euro he zone and what are you focussing on . Equities . Bonds . We have a tilt toward equities globally in portfolios and in the First Quarter we shifted our emphasis which is our preferred market for a number of years in the euro zone. We still think theres upside but we think the euro zone is a better play. Its much earlier in the earnings cycle here. We havent seen the Inflection Point in earnings. This quarter will be it and theres a better fundamental story coming out of europe. Inflection point in terms of what . Earnings. Youre talking about euros. Right. So you think europe still has great things to come. Earnings were below 2008 levels. More pornly also youre starting to see the Banking Sector starting to lend more freely and thats going to be a big boost. For u. S. Investors how concerned do they need to be given the currency fluctuates we watched. I think it depends. If youre investing with a 3 to 6 month horizon it may be a good deal to hedge the currency exposure. If youre taking the perspective of a year and beyond it wont matter that much. Thank you for coming in. Thank you. Coming up our news maker of the morning. Former secretary treasurer is going to talk china, the economy, the eus move against google this morning and much more. We have a lot to talk to him about this morning. No topic off the table. Squawk box will be back in just a moment. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Yeah still getting it done billy. Theres hope for all of us. Yes. 65. Yeah. I love it but planes and vacations and Everything Else thats like he is going to be 67 and the kid is going to be 2. Thats going to be hard to but, you know whatever. Kind of cool. I would like you know i dont know if i can adding to the kernen family. I dont know if i could talk my wife into it at this point. Welcome back to squawk box. I know i cant talk my two kids into it. U. S. Equity futures are up nicely. Up 60 points or so. Yesterday wasnt bad once it got going. It was a little weaker. Some of the earnings helped. The financials today and that will add to the information we have on what is shaping up this earnings season. Our top story is the eu announcing antistrus movesannounce announcing antitrust moves against google. Its looking into the android operating system to see if the company is using its market power to hinder market systems. Easier access to their own applications and websites. Google just responded saying it strongly disagrees with the eu and will present its side of the case in the coming weeks but after five years investigating this the company has ten weeks to respond to these charges. We have joined now by a very special guest this morning. Here to sound the alarm on china, former secretary treasurer hank paulson. The chinese economy growing at the slowest pace since the financial crisis. Expanding 7 from the year ago in line with estimates and secretary paulson is the author of a new book. The book is called dealing with china. An insider unmasked the new economic superpower. You have been working on this book now for about two years. Too long. 3. 5 years and you were one of the great ones. One of the First American executives that spent an enormous amount of time in china. So given this Economic News and i want to get into the pook but what do you make of that news and how bad do you think it could be . Well andrew first of all im not surprised by the growth rate. The growth rate isnt really what i look at. Its i look at the source of the growth. China had great economic success as we all know. Second largest economy in the world. This is a country that has a growth model that is running out of steam and that they need a new model and theyre too reliant on exports and too reliant on municipal debt to fund infrastructure. Government investment in infrastructure and so what has happened is because they have a broken municipal finance system and im oversimilar ply identifying but mirrors when they need revenues they dont really have access to a lot of sources of revenue that they need. So they basically go take farmers land and then they he sell it. Get the real estate. Very much so. They take it. They sell it. They fund it with debt and they invest in the infrastructure and this municipal debt has been growing faster than the economy overall. Thats not sustainable. The government understands this. Theyre focused on it big time but rebooting the economy is easier said than done. So what i do is when i look at the growth i would much rather and i know they would much rather grow at a slower rate but have the right sources of growth. So the right sources are opening up markets and having the private sector do more. And so again, im looking at where that growth is coming from and as i look at it im not predicting a major problem any time soon but what im saying is that the longer they wait to address this the worse it we already argued about this yesterday as we always do. The more serious their problem will be. The two of us. Were like you see something in hanks book. I see what i want to see. I said yesterday that you with worrying and youre saying that peel that said that they discovered a better mouse trap they did not discover a better mouse trap. Im definitely saying that. We already argued on this. He says theyre kmuncommunists, theyre great. They had a set of policies that served them very well for a long time. Anyone that says they developed a better form of capitalism i think is wrong. They have monumental problems. Theyre working to address them. Theres a bigger risk in overestimating than underestimating. But i dont i dont go that far. They understand the problems or are addressing them and this is a country with 4 trillion of reserves. They have plenty of capacity at the government level. Joe who runs the central bank ahead of the minister of finance very very knowledgeable people. So as i look at it the key is the step back even further, every country known to man is going to have financial crisis from time to time as long as you have financial markets, banks, Government Policies so the key is when you have a problem and you have bad debts, how do you manage this to keep it from spilling over to the broader economy . And i think in china the key to that is dealing with the problem while its still manageable. I think theyre dealing with it. But i read into it in that eventually when the government tries to allocate capital using its own ideas of how to do it normally something comes home to roost. But heres the interesting fact. So reform had stalled for ten years in this country. So the new president inherits a growth model thats got to be changed. He lays out a vision and the vision is with the economy the markets need to be decisive. The markets need to allocate the resources and he is working to do that. To open up sectors to competition. Now he has the same even though a very very different political system their issues are still political because in china, the top guy cant just give an order and have things happen and the other point you made is if he doesnt manage the move to a freer society that allows for innovation and personal expression that could be hes trying to manage politically. If he doesnt manage that properly that could also mess up. Thats another puzzle for people in this country and in the west. Do you think there will ever be a time when china will be even remotely as open as the United States . Where they can go in without being a state owned enterprise . The key to having that happen is getting a bilateral investment negotiated and i talk about that a fair amount in the book because we have two different models. We have a system where the United States were open for investment. Theres certain restrictions. Foreign investment in the u. S. Where theres National Security issues but basically any company can come in and make an investment. They made a major concession in negotiating a bilateral investment treaty where they would say heres a negative list. This is the list prohibited from investment. Everything else is open and this is very porn because part of negotiating this will help the leaders of china who favor reform use this to open up but do you think the disposition will be that theres free markets and free speech whether youll see a company like facebook or google decide they can do business in china . All of these things are related. Let me talk about the interrelationship because its important to understand the thought process there because at the same time theyre working to free up the economy and have more flexibility the new leadership is taking a tighter position when it comes to ideology emphasizing the party, tightening up on political control. Toughening up on internet and the media. We look at it and say thats a paradox that makes no sense. The leadership looks at it and says that they see his party as a source of stability and he sees that as only organization of institution Strong Enough to force change. I look at it and i say thats ultimately not going to work because how do you innovate or take something as simple they want to have outstanding global companies. Its been nine years since i have run a company but you need access to information, you need to know whats going on all over the world. Its hard to do that if youre cutoff from information, but i will say this theres a fair amount of good innovation coming out of china. I have friends at the National Labs saying the quality of the patents willare Getting Better and better. They have a lot of smart people and theyre becoming the reason i wrote dealing with china is because i believe this is by far the most important bilateral relationship and its becoming more complicated and more difficult because china is now a formidable competitor in addition to a partner and we need to figure out how to manage the competition so it is healthy competition. We shouldnt shrink from competition while looking to get things done in an area where we have a common interest. Its hard to come up with a global issue that wont be easier to solve if were working with the chinese. Well talk more in a moment if youll stick with us. Well get into the details on that too. Well slip in a quick break right now but well have much more when we come back. Then in the next hour dont miss John Chambers. First as we head to a break right now check out the dollar this morning. We have been watching whats happening with the euro. You can see right now that it looks like the euro is still below 106 at 10595. Stick around, squawk box will be right back. Ideas come into this world ugly and messy. They are the natural born enemy of the way things are. Yes, ideas are scary and messy and fragile. But under the proper care, they become something beautiful. Coming up well have much more from former secretary hank paulson including what he thinks about whats going on in washington and wall street right now. Plus we want to know what story youre buzzing about today. A china slow down europe taking on google. People hacking into your next flight on an airline. Tweet it to us at squawk cnbc and use the keep squawking or post it on our Facebook Page which apparently we have one. Well read them all and then share the best of the bunch at 7 50 eastern. We are back with our special guest, hank paulson, former treasury secretary as well as a former chairman and ceo of Goldman Sachs. He is also chairman of the Paulson Institute. I love talking about china. I dont know how it finally turns out, hank. And i think just to summarize what your proposal was, we may like them we may hate them we may disagree ideologically, they are going to be a huge part of our life no matter what. It doesnt remind me of the new Obama Doctrine with iran. It kind of does because theyre going to be around too, we might as well engage i guess. Its not quite the same with china, but we need to engage and we need to be a partner with china no matter what we think of the place, right . Its in our its in our very strong interests that we have a constructive relationship, that we have areas where we have the shared interest and we get things done. There are you know if you you and i may be in a different view on Climate Change im not on the same view on environmentalism. Im on a different view whether co2 is the reason for warming. I look at that as one of the biggest Economic Risks in the world. Chinas environmental problems arent co2, right . They have got they are the biggest of emitters of co2. But its filthy disgusting air with particulate and sulphur dioxide and stuff that can really hurt not trace amounts of co2 in the atmosphere. Absolutely. And the Paulson Institute is working there with a program to work with the chinese to help address the problem of air quality and climate, but the reason i went to the environment first is if were going to deal with some of the very serious threats to our global ecosystem, the climate threat i dont see how we do this unless the u. S. And china cooperate. Global Economic Growth sustaining that, very important to both countries. Our economic problems become much more challenging if china has serious economic problems. Stability. So its very much in our interest to work with them and then we shouldnt shrink from competition. We have by far the strongest, biggest economy in the world. All those that say theyre worried about china, i turn to them and say, listen you should worry about one thing and thats our own political system reform. If we do the things we need to to restore our economy, were going to be the preeminent global power for a long time and if we cant, we wont. Do you want to talk china. I want to get this in because from my viewpoint, it seems to me that we have a worse relationship with china than when you were there because you were very good about going over and making sure that we were talking to them constantly constantly having them at the front of mind. It seems to me like we have a worse relationship what country do we not have a worse relationship with . Except iran. Is that your perspective too . My perspective is im proud that we set up this strategic economic dialogue. The Obama Administration has kept that thats evolved to the strategic and economic dialogue. I think thats a really good vehicle. I think the Obama Administration has done some very good things. I think this Climate Change deal was a very important deal. I think that the im very pleased that they will make a visit here. We are dealing with a new china. The relationship has become very complex. Theres a number of people in the u. S. That with chinas rise that are able to say maybe whats good for china isnt good for the u. S. Thats starting to break down. I think we need to be really quite strategic here. We need to maintain our own strength, be active but we need to i think, make an even bigger effort because its more and more challenging to get important things done. Let me ask you this quickly, because youre on a finance question. Weve had zerp for six years and are trying to get out of this now. There are two camps. One thinks that if you artificially keep rates low, and youve basically set prices that theres going to be a misallocation of capital and maybe weve moved people out on the risk curve and theres too much imbalance. But others have pointed out that rates are low everywhere so maybe were not orchestrating low rates. Maybe they deserve to be down here anyway. Can we use that as a tease . When you come back after this break, well get your answer how about that. Good. Weve got hank paulson right here, secretary hank paulson. Hes staying with us. Hes got a new book. Its called dealing with china. Plus well talk about the eu much more on squawk box ahead. I care deeply about the gulf. I grew up in louisiana. I went to school here. Ive been with bp ever since. Today, i lead a team that sets our Global Safety standards. After the spill we made two commitments. To help the gulf recover and become a safer company. Weve worked hard to honor both. Bp has spent nearly 28 billion dollars so far to help the gulf economy and environment. And five years of Research Shows that the gulf is coming back faster than predicted. Weve toughened Safety Standards too. Including enhanced training. And 24 7 on shore monitoring of our wells drilling in the gulf. And everyone has the power to stop a job at any time if they consider it unsafe. What happened here five years ago changed us. Im proud of the progress weve made both in the gulf and inside bp. Earnings alert. Bank of america set to report. Well talk banks with former treasury secretary hank paulson. Kiss sociscos ceo brings his message to the white house on taxes, regulation and the future of the tech sector. Plus hacking at 30,000 feet. Flights could be vulnerable to cyber attack. That story coming up as the second hour of squawk box begins right now. Live from the beating heart of business new york city this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. We are digging through the numbers but on these headlines, it looks like it came in at 27 cents versus the 29 cents that the street had been expecting. Thats not that horrific. Thats not much of a miss. Its a miss but not a huge miss. 21. 5 on the revenue is online. Net chargeoffs 1. 19 billion. The stock at this point is just down a little bit down 14 or 15 cents. Now there are some charges that are coming in. One of them is retirement eligible incentive costs of a billion dollars. Thats six cents a share. Three cents a share for market related Net Interest Income adjustments. I dont know if those are numbers that still have to come off the 27. Just looking at some of the headlines popping right now. In fact right now its not down anymore, its actually up up six cents. So tangible net book value is right around where the stock is trading 14. 79. First quarter and deposit balances, a record 1. 15 trillion. Brian moynihan saying we see continued encouraging signs with Consumer Spending increasing and utilization of credit by our commercial customers rising. This should bode well for the near Term Economic outlook. We will dig in more to these numbers throughout the morning. In the meantime we have some other quick stories to tell you about. The eu announceing antitrust moves over google. Also looking into googles android operating system to see if the company is using its market power to hinder rival systems. Google has very good products, and i think that is important. Because dominance as such is not a problem. Not in general and not under eu law. However however, dominant companies have a responsibility not to abuse their powerful market position. And google could face massive fines, more than 6 billion. It could also be forced to change its Business Model as a result of all of this. Also new numbers out of china overnight. The economy growing at its slowest pace since the financial crisis. Also telecom news nokia buying alcatel lucent. It values the French Company at 16. 6. Also the ecb will release the latest Rate Decision at 7 45 eastern time. Well bring you that decision as soon as it hits the wires and a News Conference at 8 30 eastern time. Then u. S. Equity futures. Dow looks like it will open higher nasdaq up 17. 5 points hire. Again, our special guest is hank paulson, the former treasury secretary as well as the former chairman and ceo of Goldman Sachs. And the author. And the author of a new book called dealing with china. Hank, joe asked you a question before we went to break. Joe, do you want to rephrase it . Maybe i can ask it a different way because youd make a hell of a fed chief for a republican president too, i think. Are you putting him up for that right now on the set . I tell you, an english major . Look at your career though. But if you so take it from that perspective. Would you have handled things differently if you had been sitting where either bernanke or yell in yellin are sitting right now . I have great confidence in them. The u. S. Economy has essentially been growing since the last quarter of 2009 delevering you know i think this has been Monetary Policy that has worked the way it was supposed to have worked. But i think the question that you asked is really the key question now, because how much more can we get out of Monetary Policy if all you had to do to solve all economic problems was to keep Interest Rates at a very low level, zero people would have done that a very long time ago. There obviously are some big distortional effects, i think, and ive always thought when you solve a big, ugly problem. Youre never going to have a perfect, elegant solution. There are going to be some were going to have some volatility. Theres again, its very distortional and benefits all of us who have big positions in securities. It hurts those on fixed income. Those borrowers. So i look at this i think its a very interesting challenge because theres no sign of inflation. I personally believe that growth is going to be stuck around this 2 level. And with Interest Rates low around the world. And, you know raising rates puts more upward pressure on the dollar. I think its an interesting dilemma. The people that worry, hank are people that say just the point you made. It would be great to stay at zero forever, except maybe Something Like 2007 2008 comes along. Some people attribute part of that to the easy policies and stoto inflating the bubble before that. Even green span said no evidence the fed had anything to do with inflating that bubble. If youre not inflating the bubble why not stay at zero forever . I think weve got to get back to a world where assets trade based on real economics. And so theres no doubt we need to get there. And its a little bit like people are addicted to these to these lower rates. So the question i think were all discussing is when and how. And when i look at the economic numbers and look at the dollar i bet who knows, but the fed takes a longer time. But i i tend to be someone that says you know id like to go sooner rather than later. You know i have more of a concern about asset bubbles. You know youre trading off growth versus stability in the Financial System. Maybe im suffering a bit from recency. But i think its very hard to know when you have these allocations which assets are mispriced as people reach for yield. We know what this does to emerging market securities. So i just think there are secondary, tertiary effects. So i think weve got a lot of use out of this policy. Its served us well. But i would like you know if i were voting id vote for the transition to take place sooner rather than later. But fortunately im not and weve got someone whos very very good doing it. I have a lot of confidence in her. But you think the dollar has to be on their minds as they sit around the table talking about this . How could it not be . How could it not be . Because when you look at whats happening to currency everywhere people for years pounded on the chinese for currency but they have been real heroes in terms of how their currency has held up here. And the dollar thats ive always been for a strong dollar. And i didnt just say the words, i really believe it is in the United States interest. But when you get these kinds of moves this quickly, im sure glad im not trying to run a Global Company right now. Or i wonder if you were still treasury secretary, i wonder if you would at this point not be just giving the pat answer to a strong dollar. Or i wonder if youd be working behind the scenes to ease up on some of our Multi National treasury secretary, thats something i dont have to worry about. Will the treasury secretary ever work to weaken the dollar and not tell anyone . I just dont think they should. I just dont think they should. Even now. Our you know what makes the United States a great economy is we believe in markets. We have a market determined dollar. Thats why its a global reserve currency. Even during the height of the financial crisis everyone wanted dollars because they knew they could sell at any time. And so i just believe in a marketdriven dollar. But i would just simply say when youre looking at you sometimes things move very very quickly. When you look at the kinds of moves weve seen its not anything i you know i cant remember, at least in my business lifetime seeing things like this. Where do you think we are just in the Economic Cycle . And do you think were headed for some not necessarily a crash or crisis of the sort that you had to deal with but how do you look at sort of where we are . Well i look at us as were sort of a good news bad news story. The good news is were a bright spot in the global economy, were growing, were creating jobs real estate prices are rising but i dont think were enough. And this income disparity is a really serious problem. And i think were not going to grow at the level we need or begin to solve this unless we get some important things done. Like what . And these are so i could just tick them off. We need to restore the competitiveness of the u. S. Economy. We need a Corporate Income tax system that lets our companies be competitive with those around the world. We need a federal income tax system that lets us raise the revenues we need and create jobs. We need to be i think, very active on the trade front. Im all for trade agreements. I want to see the tpp and others done. The way i look at it is you know, if we we need trade policies so that the American Workers and companies can have greater access to the 96 of the population that lives outside of the United States. So i just dont get it for all those people that oppose trade. We need an immigration system so the very best and brightest foreign students we dont send them back home after they get a degree. We need to deal with our entitlements issues. These are important, important issues. And the only way they can be solved is democrats and republicans working together compromising, so again, i dont have much use for ideologues or people on either extreme. I just think that the issues we have are not Economic Issues theyre political issues. Having said that when you look at the potential candidates for 2016 who do you think will Work Across Party Lines . I am a republican becky, and and i think the republicans have a number of excellent candidates. I personally favor jeb bush because hes experienced, hes i think, done a good job in florida and i view him as someone who is able to work across. I think hes got the economic answers we need and i think hell Work Across Party Lines and i like his positions on immigration. I like that hes authentic. And so when you know he hasnt flipped on you know a number of issues. Would you vote with the party if its not somebody whos as centrist as jeb bush if it turns out to be a rand paul or ted cruz . Let me say this im going to vote for who i believe is the best candidate and the best leader for the United States of america. So i am not im a republican but im not partisan. And if i thought the best candidate was a democrat id vote for a democrat. Theres just not any of them around on that side that would be the best candidate. I see some excellent republican candidates. It would take a lot for you to cross over there. Dont be so nice. Listen, im not a listen, we have to go but i want to ask you about wall street. What do you make of whats happened to wall street the various regulations, the way its changed, your old Firm Goldman Sachs . Well ill have to step back a bit. I would say i i am the more i travel outside the United States, the prouder i am of our Financial System in the United States. And when you look at the european banks, they didnt recap recapitalize their banks, look where they are. Venture capital, private equity the banks, all of the Financial Institutions in the u. S. I think weve got the broadest deepest, best Financial System in the world. But you like the configuration, the transformation of a firm like Goldman Sachs that doesnt do a lot of things that it did five or six years ago . Is that a good thing, a bad thing . I will tell you one of the things that concerns me the most is whats happening to Market Making because i think that many people dont understand the incredibly Important Role banks and Investment Banks and institutions play in helping people manage risks and providing liquidity to the markets. Im also very concerned because i look at finance as being a noble industry. A lot of this book tells tells the story of the power of finance and Financial Institutions to play a role in opening up economies, generating reform, et cetera. So i look forward to the day when banks arent being scapegoated for all the problems in the world and were problems many of which start with bad Government Policies. How long does your successor stay around . I have no idea but hes sure doing a good job, isnt he . Secretary paulson, we want to thank you very much for being here with us today. We really appreciate it. Congratulations on the new book. Thank you. Thank you all. The book again is called dealing with china. We hope to see you again soon. Good thank you. You did a lot of public service. If jeb were to ask if he were elected, are you available . Im done. Unequivocally . Hes done with the interview is what hes saying. All right. Were going to leave it at that. It will give us hope that maybe youre not done. Our lineup of news makers continues. Cisco ceo John Chambers will join us next. Hes in washington to talk taxes, trade and technology with lawmakers and administration officials. Plus more details on the bank of america numbers. And well get the ecbs latest Rate Decision. Please dont leave us yet. A Bipartisan Group of Technology Ceos and top executives are in washington today to meet with political leaders. Its a oneday summit on ongoing policy concerns affecting the industry. Tech net was cofounded by John Chambers and he joins us now to discuss everything from tax and trade reform to Cyber Security. Weve got to come back to this now i get it. Thats why youre on the big squawk box this morning, john. Its great to have you on so early in the day. Its a pleasure to be back with you again. Its good to have you. Now, the main thing you want to get across from us at this point and then well talk about some other issues but we need to be the Global Leader in digitization is whats on your plate today. Is that the crux of things . It really is andrew. In many ways what youre seeing is the Information Age during the 90s that drove the american economy, over 20 million jobs created, 16 18 real growth in gdp is about to repeat with the digital age. Every country, every city every company, every home every car, everything you wear will become digital. It will get connected together. So from a country perspective, it will determine your gdp growth, your job creation your health care systems. Every company will become a technology company. It doesnt matter if its a walmart or ge or your Parent Company comcast. The speed of this disruption will be brutal. Probably 40 of Global Enterprises wont exist ten years from now. And even within the high tech sector, something weve talked about before probably half the Major Players in high tech wont exist in a meaningful way in ten years. So it offers tremendous opportunities but also challenges in terms of disruption. Actually its joe. Andrew is here at well. Hey, joe. Im the guy that has the yips, you know and the problems with the threefoot putts. You remember me i think. Joe, we had a great game down at pebble beach. It was fun. Andrew is even worse than i am. I am worse. So you think that that took a long time and was hard to watch. John, europe is better isnt it just in general . That mattered to cisco in the past. Is it do you see some improvement over there in your view given the qe . I mean we were worried about them for a while, greece and everything, but things are definitely substantially better in your view . Well every comment i make today doesnt refer to our current quarter. Right. So talking past and the future, weve been optimistic about europe for about four quarters. We saw our business turn up in europe literally four to five quarters ago from negative growth to Single Digits to last years growth of 7 . We saw Southern Europe change and grew over 20 last quarter. So im an optimist in terms of europe. Theyre doing something different, back to the original comments about digitalization. They are looking at gdp growth of 1 to 3 . Cisco is partnering the way they have never partnered with a french state. We have Digital Cities to smart grids to Cyber Security to training of 200,000 people in france on the internet of everything. Investment Capital Investment if you will for startups. One of the hottest countries in the world for startups is interestingly enough france. Youre seeing chancellor merkel do the same thing in germany. Youre seeing cameron in the u. K. With his innovation engine and being great for business to locate. Youre going to see a digital europe coming at us in this next year and our country probably needs to catch up. And thats part of the reason were in washington. It used to be it was a safety net when government moves slow. In todays world if we dont move dramatically faster on everything from taxation to trade policy to intellectual Property Protection to immigration, were going to fall behind. Same thing is owe curing in asia. If i was betting on a single country, id bet on india. Theyre going to digitize the whole country, a great place for business. This is one that i think american policy leaders on all sides have to move faster. John optimists say that Corporate Tax reform isnt dead. I dont know whether it is or not, but i do see a different a different individual announcing hes he or she is running for president in 2016 so some day there will bowe a Different Administration in washington. Youve made some comments in the past that i thought were really honest and really frank. If youre going to build a plant and its going to be better or more economically viable to do it with a foreign tax rate youre just mandated almost to do that at this point. And when we start hearing comments like that from you, to me it says we need to do something to make this the place where Companies Want to operate and build facilities. Do you have an answer for how we should do it . What would be perfect for u. S. Business in terms of getting our tax rate comparable with the rest of the world . Well i think, first of all, to your point, whether its the democratic lead candidate or the republican lead candidate you all talked about, both of them will create a new tax system and i think create an environment that gives American Business the capability to create jobs in this country. I agree with your concept that probably an overall tax movement in the next 18 months is unlikely. However, i do think that the International Tax laws will have to be changed in this next 18 months. You see the needs for an Infrastructure Fund in the u. S. To rebuild our highway system. You see oecd and countries like china and u. K. And ireland suddenly beginning to say were going to tax your intellectual property in europe or in asia if your own country doesnt move in a constructive way to deal with this. Actually im cautiously optimistic that we might be able to do something on International Tax reform and that goes back to that accepts of urgency. In our industry five to ten of the Top Companies in the industry will be irrelevant in five years. And speed is suddenly so much of the essence. So we cant wait 18 or 24 or 36 months to address this tax issue on International Tax laws we need to move now. John i wanted to get your thoughts on one of the big headlines of the morning, a company i imagine will still be around in the next five years and that is google and the European Commission in europe going after them for antitrust concerns. Your thoughts on that and your thoughts specifically on the eu regulations versus the u. S. I think what you see in europe is an understanding that if high tech is going to be led by Many American companies, lets use cisco as an example, that you have to create a winwin environment. And so when we go into europe as an example at cisco, we partner with the french government, we train literally 2 Million Students on network academies, we work with deutsche and orange in terms of how do we win together and work very closely with the regulators to say how do you create a winwin in terms of working with the key businesses in europe. And i think thats very important, that high tech has to be very careful as we go into an environment, it isnt just about disruption, its about how does everybody win together. Google is a very wellrun company you think google has missed this . You always have to be aware about how do you build trust and relations in a winwin as you go around the world. The same thing is true in asia. How well we do in china will be on how well our two president s work together. Intel results earlier today, the areas intel is growing in which are servers, and by the way our server business grew over 20 last quarter and were starting to become one of the top players in the data center and the 19 billion profit opportunity for high tech that will drive this next decade and determine the future of companies and countries. I think educating regulators on what that means and building a trust relationship is key, whether youre talking about europe or talking about asia. And our usdr is doing a good job in terms of reaching out both ways. Weve got to go. All right. Thanks john. Lets get john back here. I have 100 things to talk to him about. In studio would be great. John, good to see you. That would be great. Thank you guys. Becky, andrew joe, thank you. Good to see you. Hope to see you soon. When we come back this morning, were going to take a look at bank of americas quarterly numbers. Well dig through the report with an analyst, but the stock down by about 14 cents. Stick around, squawk box will be right now. Time for todays aflac trivia question. How many times can you fold a bill back and forth before it tears . The answer when cnbc squawk box continues. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] if youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. The answer to todays aflac trivia question. How many times can you fold a bill back and forth before it tears . The answer, 4,000 times. Welcome back to squawk box, everyone. In our headlines this morning, the eu filing antitrust charges against google. Regulators are alleging that the company abused its dominant position, but google says it disagrees and will respond to the charges in the coming weeks. Also the number of consumers applying for a mortgage falling 2. 3 just in the last week. Refinancings made up 58 of total applications. And a new study finds that one in six nfl players goes bankrupt within 12 years of retirement. That report by the nber finds little difference based on career length or on earnings. And bank of america posting Quarterly Results just moments ago. Earnings 27 cents per share, two cents below estimates. Lets get more on those numbers. Joining us now is david hilder. Trying to figure out here it looked like a miss but for some reason the stock is up. Explain it david. Ill try. Id say the operating number was more like 32 cents a share. That 27 cents reported was net of three cents a share of accounting charges on debt largely because Interest Rates have remained so low for so long. And also two cents a share of litigation charges, both after tax numbers. David, i want to correct myself. Initially the stock bounced, but actually is now down. If youre looking at the screen youll see that its down but i just wanted to correct what i was saying. Go ahead, david. Thats fine. Again, i think the operating number is more like 32 cents. Obviously whenever a company prints something slightly below the consensus estimate theres usually a negative reaction. Id say the quarter overall was good, but not great. Obviously jpmorgan set a pretty high bar yesterday showing Investment Banking fees up 22 year over year and core trading revenue up 20 year over year. Today bank of americas Investment Banking fees were down 4 year over year and their total equity and debt market revenue was down about 5 year over year. Still very large numbers. Investment banking fees of a billion and a half and total trading revenues of 3. 9 billion. But not quite as good on a yearoveryear basis as jm morgan. If you could get numbers from jpmorgan jpmorgan, wells, who would you give a dollar to . In terms of investing yeah. Put them all against each other, who has the best shot . We had an analyst yesterday that said bank of america had the greatest chance of upside because they thought that wells fargo was already priced in. Yeah. I would say that on a oneyear time frame, id put it in bank of america. I think it is a great franchise. Theyre bringing down expenses. And its probably the least expensively valued the cheapest stock of the ones you named. Okay. David, we appreciate your perspective this morning. Happy to do it. Thanks. Thank you for helping us out. Coming up it is always my favorite day, april 15th tax day. Its like Independence Day. Like Independence Day for Bernie Sanders and myself. We have a special report this morning, a little bit of sarcasm. Americas biggest earners at the New York Times is it a holiday . We still publish the paper. Theres a bounce in everybodys step . We have balloons hats streamers. Everybody is smiling. The whole thing on the way in. Oh my goodness gracious. We hold hands. And then someone brings up carried interest and everyone gets mad and puts them in a bad mood. Welcome back to squawk box everybody. We have been watching the futures and they have been in the green all day. The dow and the s p up four out of the last five sessions the nasdaq was down slightly yesterday but this morning it looks like things are off to a good start for the bulls with dow futures up 58 points s p up close to 7 points and the nasdaq up by 18. The tax bill for the countrys top earners is going up. The 1 are expected to pay nearly half of the federal income taxes they earned this tax season thats up 40 from 2012. Add in state and local and obamacare and Everything Else. Robert frank joins us now with more. And also some people that might write in and just say youre slime, you dont pay your fair share. When you see a number that is a pretty big number. It is a big number. Lets show you just how big. Yeah, they earn the most but they are also taxed the most. The top 1 of american earners are expected to pay 46 of the nations federal income taxes this tax year. Thats up from 43 last year according to the nonpartisan tax policy center. The bottom 60 of americans will pay less than 3 of federal income taxes. The top heavy nature of our tax revenue is partly a function of the income gap. The top 1 earn 19 of the nations total income in 2012. That compares with 16 in 2004 and 13 in 1994 so thats going up. But its also a function of our progressive tax code. The 1 still pay a higher tax rate than the rest of america. It sounds basic, but you often hear that challenged. According to the cbo, the 1 paid an average tax rate of 29 compared to the average tax rate of 11 for what we would call the middle class or the middle quintile. The Income Tax Revenues are more dependent than ever on the 1 for revenue and the oecd average is 24 of total revenue is coming from income tax. In the u. S. Its 37 . Bottom line here the government is more reliant than ever on the largest, and heres the key, the most volatile incomes in our economy. Because when we look at the 1 those incomes are directly linked to the stock market. So a lot of this is whats coming from Capital Gains taxes. Correct. The higher you go in the income the greater the share from Capital Gains. Which is why you end up with a 29 average instead of 37 or 39 . Exactly. But adding all that in they still pay, and this sounds so basic, but its challenged so much. The 1 still pay at that 29 rate a much higher rate than any other income group because most of us dont even know what our actual rate is when you add in the deductions. In the top 10 pay 70 or 80 . The top 20 pay 84 . But there are many people that argue we need to be more progressive. There will always be those. Yes, there will. They obviously dont look at these numbers. Im not looking at you. But they dont like numbers and facts, no. Anyway, thank you to robert frank. Coming up the ecb set to announce its latest Rate Decision. Well bring it to you as soon as it hits the wires and well tell you what to expect from Mario Draghis News Conference. So far, youre horrible at this, flo. Yeah, no talent for drawing, flo. House car oh, raise the roof no one . Remember when we used to raise the roof, diane . Oh, quiet, richard im trying to make sense of flos terrible drawing. Ill draw the pants off that thing. Oh, oh, hats on hamburgers dancing drivein Movie Theater home and auto. Lamp squares. Stupid, dumb. Lines. [ alarm rings ] no home and auto bundle from progressive. Saves you money. Yay, game night, so much fun. Excellent looking below the surface, researching a hunch. And making a decision you are type e. Time for a change of menu. Research and invest from any website. With e trades browser trading. E trade. Opportunity is everywhere. Help northern china reduce its reliance on coal fire heating plants and prevent 60 million tons of co2 emissions . When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. Welcome back to squawk box. We are looking for the ecbs latest rate announcement. In the meantime lets bring in boris oh it is out, unchanged and thats not a huge surprise. But we are looking at the euro below 106 to the dollar and that is kind of stunning to still see the declines and not know if weve reached any sort of plateau . Yeah. 105 technically has been the support level. We bounced off of that yesterday, really hard off the growth of retail sales. Now everyone will be watching to see what draghi has to say. I dont think hell change his tactics too much. But a lot of people are talking about its becoming a tug of war between the ecb and fed. The fed doesnt want to see the euro depreciate too much because it could import inflation here too quickly. You know it was really funny because we did have hank paulson paulson, the former treasury secretary here earlier. Traditionally the fed has stayed out of making comments about the dollar and had treasury has stayed out of making comments about Interest Rates. But lately everybody seems to agree, including hank paulson, they have to be thinking about the dollar every time theyre sitting around that table. They do. We talked about velocity. They dont want to see this drop like a stone very quickly towards parity. Were not that far off. Five six cents. Right. And the problem that five six cents sometimes used to take a month and a half. It could take a week in these very volatile markets and thats what they dont want to see. I think the fed, when it comes to what they want to do the most intelligent thing i heard was in the green room from somebody who said the best scenario for them to do is to just raise rates once and then communicate completely unambiguously theyre not going to do anything for at least six to nine months forward and that will probably reset the Market Expectations and not have this frenzied dollar rally. I have heard about pulling a bandaid off very slow sleely but that is the slowest. Youre talking a quarter point . Yeah a quarter point. Why . Ultimately we dont need a rate hike. The economy is not overheating in any way, shape or form. Whats necessary is to lift themselves off this zero balance philosophically. They want to establish their credentials as a theyre for real. That theyre for real and after that theyll stop. I think that may temper some of this volatility that were seeing because the market is really playing on this whole idea that dollar flows, dollar flows and were trying to push everything lower. Paulson also said he would like to see them raise rates sooner rather than later if he got to vote on this entire situation. Yes. But when you look at the dollar like that that is something you cannot get off. It is an intelligent compromise. Europe has got to do better. Yes. Its not our problem. If we need to raise, we need to raise. They need to do better and keep up. It becomes our problem if the but it becomes our problem if the dollar shoots higher. It hurts our economy. If their economy improves because of qe our dollar wont shoot higher. You go up a quarter in june and then see. I dont think you should i mean theyll go up a quarter in june and then step back. But theyll have to go theyll have to go in a pretty see kwent shal way. You talk about in europe thats whats going on thats where were at. The thing that worries me about europe is something we stopped talking about, which is greece. It seems like everybody has given up on them. Thats a good sign pause they can leave. They may leave. Thats fine. But politically this now creates this whole question mark amongst the italian voters and french voters. Thats where im a little concerned. Its better if they leave than if they give them great deals everybody is going to ask for. It seems like economically its better for them to leave. The question is how is it going to play out politically in the European Election season. I think it could be best for greece. They could devalue and then everybody would go there and it would be half price and it would be a huge influx. Thats the way you do things. We should go. Wait until they leave. Go over to cover the exit. Remember we used to do it from miami. You should go straight there. Would you eat octopus . I love greek food. Best food in the world. You dont even have to fry it. I like it raw. Its like sushi but its crunchy. Tastes like chicken. Thank you, guys. Coming up were going to talk about octopus and great food and feta cheese. We ask you to tweet us the stories that youre buzzing about. Up next well tell you about the topics you want to hear about in our segment we call keep squawking. Weve got very cool stories just ahead. When a moment spontaneously turns romantic why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Why pause the moment . Ask your doctor about cialis for daily use. For a free 30tablet trial go to cialis. Com i dont know this i dont know this guy, but earlier we asked you to send us the stories that have you buzzing. Now its time for us to share the response. I dont know greg romo but he tweets encouraging us that we should read a New York Times article on the California Drought. Bravo. And the New York Times says the drought in california is not caused by Global Warming, which would make it the only adverse weather event in the last five years that wasnt caused by Global Warming. He said anyone making that point and i had sent some people a mother jones article saying even mother jones is saying that the California Drought is not Climate Change. Even though jerry brown says this is the new normal its going to be like this forever, there are things called megadroughts which you can look at tree rings to see when they occurred. A mega drought is defined as something that lasts two decades or longer. Even the one that we have in california right now, few people say its really in the grip of a mega drought, but they have gone back and actually looked at some ancient droughts. There have been some that there was one back in the ninth century that lasted 200 years. There was another that began in the 13th century that lasted for a century and a half. Im not going to get into the Global Warming issue. I thought it was a combo of the drought plus the fact that literally i think over the last 30 years in california, the number of people who live there who obviously now consume were just talking about the drought. But now they have 38 Million People living in a state and farming. And other things politically correct things that were well intentioned that have led to some of the problems out there too. But how long has it been five years . Whatever its been out there, it seems like an eternity but all of these things when you realize the earth is four billion years old, there have been periods that last thousands of years. Look at our life spans. Youre looking at more than 80 to 90 years. Jay lang saying lets talk about the ceo of gravity payments. He cut his salary hes going to make 70,000 per year. Thats minimum wage at his country. So hes going to give everybody at his firm, 70,000. Hes got about 70 employees. Hes going to take his salary which is about a Million Dollars and its going to come down to 70,000. He says they make about 2. 2 million in profit. Hes going to take some of that profit, put it towards his employees and he said he thinks this will make his company grow even more. Did you see the reason he did it . He read an article about happiness and he said the happiest people are those who make 70,000 a year. Thats why he wanted to go ahead. What i think is going to happen is the number of job applications to gravity payments is going to skyrocket. The happiest are people that make at least 70 . No 70,000. So you make more than 70 youre less happy . 70 is supposedly look i was in butan and there are people making probably 1,000 a year. He owns the company . Its a private company, obviously. Hes probably doing okay. Hes probably doing okay. Well see what happens. Were going to hear from gravity payments ceo dan price. Hes going to be on the show talking about this in the next hour. Coming up also chinas economy growing at its slowest pace since the financial crisis. A survey of chinese businesses shows an underlying credit crunch. Its a little bit what we talked about with hank paulson earlier. Well get that from the president of the China Beige Book International when squawk box returns in just a moment. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. I care deeply about the gulf. I grew up in louisiana. I went to school here. Ive been with bp ever since. Today, i lead a team that sets our Global Safety standards. After the spill we made two commitments. To help the gulf recover and become a safer company. Weve worked hard to honor both. Bp has spent nearly 28 billion dollars so far to help the gulf economy and environment. And five years of Research Shows that the gulf is coming back faster than predicted. Weve toughened Safety Standards too. Including enhanced training. And 24 7 on shore monitoring of our wells drilling in the gulf. And everyone has the power to stop a job at any time if they consider it unsafe. What happened here five years ago changed us. Im proud of the progress weve made both in the gulf and inside bp. When a rewards card is designed to sync with your life it gets talked about. So you can live the way you live, and enjoy all the rewards. Chase sapphire preferred. So you can. Death of the pc market. Intel missing on revenues thanks to a slowdown in sales. So can the Company Reinvent itself to float on the cloud . Well talk results and the future of the chip giant. Plus how worried are American Companies about a cooldown in china . Growth there slowing to a pace not seen since the financial crisis. What it means for u. S. Companies doing business there and whether investors should be concerned. And happening now, the ecbs decision on Interest Rates. Now the market wants to wait to hear from mario draghi. His comments are just ahead as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york this is squawk box. This is our new orchestra. The most annoying music ever. Its euro techno music. Were talking ecb. Move your head like that. Good, good. Germany is the leading economy and thats where german techno music. Were going to run with this. I want the animal orchestra back. Welcome back to squawk box, everybody. This is cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. We are less than 90 minutes away from the opening bill in wall street. Check it out, in germany its up by 0. 4 of a percent. This is all moves after the ecb left rates unchanged. Probably not a huge surprise but well wait to hear what mario draghi has to stay. You can see our futures picked up ground. The dow futures are indicated higher about 72 points above fair value. S p futures up boy 8 and the nasdaq up by 20. The eu files antitrust charges against google. They say they abused their dominant position. How long do they have . Ten weeks to respond after they built up an investigation that took over five years. It could cost as much as 6 billion in fines. Well see what ends up happening. Bank of americas earnings falling short of estimates. Take a look at shares at this point. They were in the red. Marginally down. Were going to get more from kate kelly, who is just off a call with that company in a couple of minutes. Also new numbers out of china overnight. The economy growing at its slowest pace since the financial crisis. First quarter gdp expanded 7 from the yoreear ago period early earl and that was in line with estimates. Spacex sending an unmanned rocket to the International Space station. It is carrying 4,000 pounds of food, equipment and that espresso machine. Its taking it all to the astronauts who live there. The delivery should arrive by friday, but after the launch focus turned to what has become the tougher part for spacex that attempt to try and land the booster rocket on an ocean platform floating a few hundred miles off floridas coast. Spacex founder posted this vine. The rocket landed fine but then it tipped after touching down. Here it comes. Landing so close looks good but then not right there. Not good. It also hopes that reusable rockets will reduce costs. Thats why they have been doing this. This is three times now that they have attempted to bring this rocket down and three times they have lost it. In sticking with the space theme, lets tell you about another story. A little girl wanted to send a mess annual to her dad on the space station. I saw this. I tweeted it yesterday. A message to space ad campaign. The company used 11 cars and the dry lake in nevada to create a two square mile steph loves you message. Stephs dad was able to see it. I dont know what car company it was. I never heard of that one. The space station taking pictures of the message. Its one of the largest tire tracking image created as determined by the Guinness World records. Line us and then. Hyundai. Hyundai, hyundai. It depends where youre from. Also benefitting with more than mars. Yeah mars. More than 8 million views of the project on youtube. I told you when i was in hong kong i was its hyundai. With the asia team. Bernie joseph . They told me a different way to say it. Im just putting it out there. I may be losing points. Whats your excuse on all the other ones . You cant blame poor bernie. Few stocks on the move. Delta Airlines Reported a quarterly profit of 45 cents a share, one cent above estimates. Revenue essentially in line. Delta said this was the best march quarter in its history. Keep going. Despite some headwinds from the stronger dollar. Thats not nice. And frances alcatellucent will be bought. The Companies Expect the deal to close in the first half of next year. Lets get you updated on bank of america. Its been making some comments about the quarter. We heard the Earnings Report earlier and it looks like the stock right now is trading just slightly lower, somewhere around 15. 4 15. 74. Kate kelly has more. I just got off a phone call with the ceo. You know they had a miss on both the top and bottom line. On the top line really slight 2cent miss and they attribute that to retirement costs and persistent low rates, particularly in that First Quarter. But those are the numbers and they are a slight miss. Some signs of positive and negative momentum. I think investors are a little disappointed when the Global Markets net income was down. Legacy assets unit reports a loss of, you know in the neighborhood of 250 million. Much less of a loss than a year ago when it was 5 billion or so, but nevertheless a loss. And then on the Positive Side you see deposits are up to a record 1. 15 trillion at the moment. Mortgage activity was up about 50 , thats production of new loans, that is improving revenue in that area. Credit loss provisions declining somewhat, net chargeoffs also lower. Credit card issuance up year over year. So some positive economic signs from my perception. I asked thompson about that and he said were not where wed like to do. Wed like to see a higher Interest Rate environment to benefit the business but he said one bright spot is companys use of revolving credit as a sign of economic faith, a willingness to rely on credit to make deals or get into new lines of business or what have you guys. So interest commentary from b of a, especially given that they touch on nearly half of american households. I think theyre always an interesting indicator of the economy. Kate has been following all of this. Shell let us know if other things happen as well. We should talk about choppy trading in asia as reports show china grew as its slowest pace since the financial crisis. It expanded 7 . Hank paulson spoke to us earlier in the show about u. S. China relations. I think we need to be really quite strategic here. We need to maintain our own strength, be strong militarily economically diplomatically be active, but we need to i think, make an even bigger effort because its more and more challenging to get important things done. Joining us right now is john rutledge. He is the chief investment strategist and a cnbc contributor. Here on set with us is leland miller. He just wrote an oped about new investment woes facing china. I guess youre not surprised by these numbers . Weve been seeing this for a year. You look on the on yore data and on quarter Data Investment spending has collapsed. Its hit every region hit every one of our sectors and every type firm. So people look at the gdp number as a bellwether you cant see anything. But investment spending is collapsing. So the idea theres going to be a bounceback in chinas growth is almost impossible. When we spoke with hank paulson, he said they know they have to get to the good earnings versus the bad earnings and some of the bad investments like that. Well, it is good because its chinese firms acting like rational economic actors. Theyre seeing the Economic Uncertainty and deciding not to double down on business spending which they have done in the past. So this is what china needs. It needs some Economic Analysis injected into business spending. But people assume that consumption will simply take up the space and the slack thats made by default on investment. Thats not happening at all in the numbers. John what do you think is happening . Well you know we worry about chinas lowest growth rate since a long time but since the financial crisis i believe. But china is growing two and a half times the rate the u. S. Is growing, five times europe and seven times japan. Thats still pretty good. And if you multiply that times the biggest economy in the world, thats a lot of new a lot of new business. I agree with leland that theres huge changes under way in china right now. Probably the most important ones are the political corruption efforts that are going on. Reducing corruption, air and water quality, those are the kind of things that will make a big difference long term in china. Infrastructure spending wrong way to grow but its how they got through the financial crisis. And so i think its going to continue to decline, but it will continue to decline in a gradual way. Did you just call them the largest did you just call them the largest economy in the world . I thought they were second largest. If you measure them in purchasing power numbers, they would be slightly larger than the u. S. Right now. Thats not thats not a real way to do it though john i dont think. Well wouldnt you want to measure by no. How much stuff they produce . Its used by people to you know that have a some type of ax to grind. No, i dont think if you buy a Starbucks Coffee for 22 cents in china that its the same as marking it up and its 4 here. Its not the same thing. It doesnt make the economy as big. We clearly disagree. Thats okay. Thats okay. You were starting to say the good things. What are the good things you see there, john . Well there are some good things going on in terms of the investments that are happening now along the silk road countries. China is trying to get some money out. And there are some worrisome things too. The biggest game in town right now is of course who raises Interest Rates how fast. And capital flows are very important for china and for their neighbors. One of the ways you see capital flows in china is the money thats moving out of shanghai into hong kong. Another way you see it is by soft export numbers. There are capital controls still in china, so if youre a chinese entrepreneur and you want to get money out, you send a boatload of stuff to your friend in australia and you charge him for half a boatload and he puts the rest in the bank account for you or buys you a ranch. You can likewise overinvoice imports. When you see soft exports, firming imports and weak gdp numbers and falling Foreign Exchange reserves and weakening rmb, all of that says that the capital inflows that push the emerging markets up in the last ten years are now sucking back out. And when the u. S. Begins to raise rates, thats going to accelerate. Leland why so how much bigger is the u. S. Economy . 30, 40 bigger . Something like that. And how long before genuinely that china passes us . You could be talking ten years or 20 years. But the important thing is if the economy is changing if they keep growing the way they have been growing, which is through debt fuel growth they may never pass us . They may never pass us. However, one of the points that hank paulson made this morning, leland is that its very important for us whether the biggest, second biggest, third biggest, theyre a massive presence and its very important that we have a strong relationship with them. Would you agree with that . Absolutely. We need to understand that were going to have to work in conjunction with them on International Issues and our relationship with china and with asia is going to be the single most important relationship going forward. So we have to have a very clear eyed view of whats going on in china. But the problem rizis people look at the numbers and people fear a weak china or a strong china. John one thing hank paulson has said is that this is a different china. The balance of power has shifted somewhat and we need to treat them differently. Would you agree with that . It is different. The biggest change in the last couple of years is that the center of political influence has shifted from some of the new technocrats to the shanghai gang in china. Thats whats driven a lot of these political reforms that are happening. Thats why shanghai has been favored in some of the policy changes since then too. China is getting more commercial. But of course its getting bigger at the same time. They want to exert their own influence in the world and chinau. S. Communication is actually not very good recently as witnessed by the new Investment Bank that created such a flap when they started it. John thank you very much for joining us. Leland, thank you for coming in. My pleasure. When we come back coming up shares of intel rising despite revenues missing. The company expecting that the pc market will remain flat and reiterating its warning of slowing pc demand. Can the company take advantage in the rise in Cloud Computing . Well discuss it next. Later, some wild weather in las vegas making for some tough landings near the strip. That video and more just ahead on squawk box. The eclass has 11 intelligent driverassist systems. It recognizes pedestrians and alerts you. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2015 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Welcome back. Take a look at the futures right now. See how things are setting up for the morning. The dow looks like it will open up higher nasdaq up about 19 points and the s p 500 up close to 8 points. Intel matching profit expectations, but fell short on revenue. The Company Warning yet again of slowing pc demand. Josh lipton joins us now from out in that area where you ought to have a better feel for things i think, my friend. Look at that view. Is that the new studio . Are you in the new studio there . Its an impressive view for sure. The stocks up josh. We just sold it like it was a big miss but the stock is up a full dollar right now, so something was better than people thought, right . Well you know intel enjoying a nice pop here in the premarket, joe but of course its been a very tough year for intel because of that weaker than expected pc market. Thats tough news for intel. Controls the market for pc chips. That does account for about 60 of its sales. We did have the companys cfo on cnbc, he gave us the outlook for pcs as he sees it for the rest of 2015. Take a listen. For 2015 is that the pc market will be down in the midSingle Digits. As i think about the longer term for the pc market were planning for it to be more flat than a growth market. When we look at the other elements of our business though we still think we can grow the company. So not great news there on the pc market but what intel is focused on and what has intel excited is that Data Center Business, which accounts for about 20 of its revenue. That business is growing strongly. You saw q1 revenue of 3. 7 billion. It was up nearly 20 year over year. And thats winning over some new friends on the street. We saw rbcs doug freeman, he just took intel to outperform raised his price target to 40. Friedmans point being that bearish pc sentiment is priced in and investors should concentrate on that Data Center Business as a key driver going forward. Guys back to you. Okay. Josh, thank you very much. Again, josh lipton. When we return folks flying in and out of the strip yesterday were in for a wild ride. We have that video next. And then the ecbs decision on Interest Rates has been made. We are monitoring Mario Draghis comments. As soon as he starts talking, well be monitoring all of that. That News Conference is expected to start shortly. In the meantime, check out the european markets at this hour. France seeing the biggest gain its up by threequarters of a percent. Germany up by half a percent which is where we got this music. Music music. Ftse is up. Dow futures up 64 points s p futures up almost 8 and the nasdaq up 18. Stick around, well be right back. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Grind virtually any kind of food waste into an unending source of electrical power for a city . When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Welcome back everybody. A frightening warning from a federal Watchdog Agency today. A new report says that airlines could be hacked inflight by passengers using a wireless Entertainment System to access flight controls. The Government Accountability office warns that the danger is one of several emerging Cyber Security weaknesses that the faa has to address. Check this out, high winds whipping across Las Vegas Area shutting down vegas hot spots and delaying flights in and out of the strip. Wind gusts up to 49 Miles Per Hour were reported at the International Airport where many pilots struggled to land their airplanes in the cross winds. Some choosing to avoid the runway altogether. Dust and falling trees made it difficult to spend time outside. Thats kind of incredible. Coming up mario draghi his comments on europes economy, plus more techno music. Hell be speaking shortly and youll be happy for the techno music. Later are Companies Catering through buybacks and dividends . Well hear from wilbur ross in just a bit. As we take a break, take a look at u. S. Equity futures. The lightest or nothing. The smartest or nothing. The quietest or nothing. The sleekest. Sexiest. Baddest. Safest,. Tightest,. Quickest,. Harshest. Or nothing. At mercedesbenz we do things one way or we dont do them at all. The 2015 cclass. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. Welcome back to squawk box everybody. Lets take a look at some of the stocks in the news. Gopro was updated to overweight from neutral at Piper Jaffrey which means the widespread adaption of gopro cameras has helped. Also staples was upgraded to a buy from a hold at bb t. Thats based on benefits from the companys pending purchase of rival office depot. And Chipotle Mexican Grill got an outperform that was coming from new coverage at could youen cowen and company. They found an increasing desire for freshness and chipotle will benefit from that trend. And mrs. Clinton in there, the first place she decided to go in was a chipotle. The News Conference by mario draghi is about to get under way in europe. A short while ago the ecb decided to keep its rates unchanged, which was widely expected. Gina sanchez joins us now with more on europes markets and Bond Buying Program. She is chief executive officer of Chantico Global and a cnbc contributor. Earlier, we were sort of tongue in cheek, gina saying we have things we need to do over here in the United States in terms of readjusting Interest Rates and we need europe to start getting on board. Every time we raise rates, we cant afford to have the dollar get any stronger so we need europe to get moving over there, because it cant be all us. Is that starting to happen . Are you seeing something sort of in a nacent form that Shows Improvement . Well, theres certainly kbrouchlt improvement in the european economy. Were starting to see some evidence of improvement. Were also seeing some improvement in terms of the deflationary situation that is really starting to finally get some stability and some grounding, so were starting to see that. In fact theres been enough improvement that there are concerns within the market that draghi could in fact announce an early taper to the program that he Just Launched last month to the Bond Buying Program. Were not expecting that and i think the markets would take that pretty poorly if that were to be the case and so were widely expecting that hes going to reassure the markets that there is enough concern around greece, et cetera political concerns that will keep the Bond Buying Program intact for now. But youre absolutely right, with divergent policies in europe versus the United States the dollar is going to continue to strengthen and strengthen. That is good for the european economy and that has been hurting u. S. Earnings. It would be nice if we could get synchronized sooner rather than later. So youve actually heard talk about a taper. We have tantrums over here when they do early tapers. I dont know what would happen over there. But where theres hope you know, where theres life theres hope. It would just be better if we could eventually get where were moving in a coordinated way. Then there wouldnt be such a big differential. People are talking about 90 cents now. That would crush exports here. It absolutely would. I mean interestingly, this is going to probably come back to haunt the european economy as well because at some point the euro will have to strengthen. You know the situation in europe is right now very its very its certainly very aided by the fact that the, you know policy is very loose in europe and its very supportive and thats one of the reasons why were seeing some rallying continued rallying in the European Equity markets. Also bond markets are just incredibly tight in europe as well. At some point thats going to have to unwind but for right now that continues to be a trend and i think its going to be a trend in place for a little while. So europe even with now embarking on all the needed structural reforms, just based on where the currency is right now, we can expect much better economic figures over the next year, i guess. Absolutely. We are already seeing better economic figures. We are seeing support in a number of places Industrial Production. Were also seeing as i mentioned, continued improvement in the deflationary front. So all of that is very very good for europe and very much needed. I mean we needed to see sort of a bottom really start to trace out here and thats whats happening. Now, europe is by far not out of the woods, it still has issues to grapple with particularly around greece, so all of this you know it all comes with a big caveat. So im not entirely certain that the coordinated policy that youre sort of calling for is really going to be in the picture for a while. I think were going to see divergent policy at least until, you know the middle if not late 2016, and i think that has to be the case. Well we definitely want it to last through the summer for people going to europe obviously. I dont want anything that quick. No, no not that i would base my decision on my own situation. Do you think greece at this point is do you handicap it in terms of 5050, is it 8020 that it stays . Its almost like its been kind of quiet there. We dont talk about it as much which makes me think that i dont know that the market doesnt care that much and maybe eventually they decide to part ways. Look, i think right now the greek situation a big part of it has already been ring fenced and so the damage that it can cause has been contained over the last many years in terms of how lending has been happening to greece how the Banking Systems have been dealing with that debt. Its not to say that there wouldnt be some damage. There definitely would be. And there would be spillover certainly to the rest of the periphery, but greek debt on its own really cannot cause the damage that it was set to cause in 2010 so i think thats one of the reasons why everything is very quiet. At the end of the day the data that came out today would suggest that grosseece is in desperate need for financing not only to pay basic coupons but also to pay its own financing needs and thats a very bad situation. And so theres no question that greece is in dire straits, that it could potentially part ways but the effect of that probably is going to be very limited in real terms. Yes. Okay. I dont know in life i just remember if i ever decided i was going to leave a job or something or once i thought about it well maybe i could leave, it always ended it sort of goes to the terminal if people have decided its okay if greece leaves it just seems like sooner or later they will. It just seems like it heads that way, it flows downhill. Anyway, well see and its something to watch. Gina thank you. Thank you. Appreciate it. When we return well talk about boibacks and dividends, oh, my. Are companies being too shareholder friendly . Is that even possible . Well ask wilbur ross after the graek. Larry fink coming out pretty aggressively on it. New york state is reinventing how we do business by leading the way on tax cuts. We cut the rates on personal income taxes. We enacted the lowest Corporate Tax rate since 1968. We eliminated the income tax on manufacturers altogether. With startupny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. All to grow our economy and create jobs. See how new york can give your business the opportunity to grow at ny. Gov business all right, welcome back everybody. Take a look, this is mario draghi who has just started speaking. We are monitoring his statements at this point. The only thing weve seen so far is that hes saying that the governing council is going to concentrate on trends on cpi, consumer inflation, so well continue to see what he has to say and bring you updates as we hear more. Also we should tell you about a couple of stocks to watch, including pnc. The banks earnings and revenue topping estimates, but the key metric of Net Interest Margin did decline. That stock is down by less than 1 . The next one. This is a dow component. Nike upgraded to overweight from neutral. Good job, joe. This is coming from Piper Jaffrey. The firm says it is causing the casualization of fashion is here to stay and nike will benefit from that trend. That stock is up by about 67 cents. Larry fink urging ceos to stop worrying about shortterm pressures. They are being too shareholder friendly with buybacks and dividends. Wilbur ross joins us now. Hes on the set with us. Look at this shot. What is going on here . This looks like protesters who must have just come after mario draghi. Again, hes been speaking oh they stopped it. They stopped the press conference as a result of that but mario draghi who was speaking, it looked like security guards were getting involved in that. Well show you this picture again. This is whats been happening with the ecb, mario draghi speaking. It looks like the press conference might be over. Theyre shutting down. Im not sure who that protester was. Clearly a protester came who ran up and tried to go after mario draghi. Didnt look like they had much success and it did look like security guards jumped right on him. Shall we do top three reasons for the protest . Whats your guess . I wouldnt even know where to start. Could be greece could be lets get Steve Liesman on. Greece . Are we sure it was a protester . That didnt look very safe and that guy was running at him. It almost looked like a woman. It was a woman, i think. Steve, what do you know . I was watching the conference here on remote and drawingghi makes this face as he sees the woman coming and the woman leaps up on the desk and surrounded it looked like by security guards and she shouted a few things. It was perhaps in german im not really sure and she was wearing some kind of a tshirt there that had some writing on it. And then. It looked like an anarchy shirt or something. I noticed the black with white writing on it. Maybe we can rerack that. He is sitting down right now. Hes got a smile on his face. He is sitting back down. He is sitting right back down as we speak. All right. Im trying to see from the wires here if they picked up anything. Lets see what he says. Well lets continue where i stopped. I think yeah well let me start. Let me start with the positive tone. The implementation of asset programs is proceeding smoothly with volumes with the announced fig real quickly, he is moving on. It looks like hes pretty unflappable. For those of you who missed it lets go back and show you once again. This was just moments ago, mario draghi has been speaking at the press conference there and was interrupted midsentence when this happened. Shes dumping confetti on him. It looks like end the ecb dictatorship is what shes saying. Would this be somebody we didnt see end ecb dictatorship. As usually the paparazzi are very helpful. Can you just move a little so i can get a shot of that. Wow, thats bizarre, his reaction. Can you imagine if somebody jumped up on the desk there . Theres her face. Do you recognize her from any of the occupy wall street . Do you see how she spelled dictatorship on her shirt . When she jumps up shes wearing a coat and then you see the tshirt. Does she take it off . That was security using it to secure her arms. She spelled dictatorship dick. I pointed that out twice. Maybe thats how you smell it in germany. Steve, are you there . Yeah i was just wondering, i was listening to draghi but i think that raises questions about security. How a person with an end ecb dictatorship gets into the conference and what credentials she may have had. Probably the question may be wondered by some people here what the Federal Reserve rules are. Im pretty sure if andrew showed up with an end fed dictatorship tshirt, he would not be getting into the press conference there. Steve, we lost your audio. I think the audience might have your audio. In the meantime steve will continue to monitor developments with Mario Draghis press conference and see what else he has to say. Does make it a little more interesting than it normally is. We also have wilbur here and we do want to get his thoughts on this buyback dividend debate. What did you make of the letter . It was the larry fink letter to bring it home. Theres too much Political Correctness in the whole economy and now it has spread to the investment world. You cant say anything negative about anyone anymore and i think thats a little bit silly. Theres been about a trillion dollars this latest 12 months in stock buybacks and dividends. Whats wrong with that . I think the point that hes making is that those buybacks and dividends are going back to shareholders as opposed to being used for r d purposes or acquisitions or other longer term ideas. He raises this idea about changing the tax structure of the Capital Gains structure from being a yearlong hold period to three years and maybe as far as ten years saying maybe there should be no tax. Does that make sense to you . Lets take those one by one. Not all cash is needed by all corporations at all times for r d or for cap ex. In fact cap ex hasnt been that strong so i think whats needed is for boards to make reasonable decisions, thats all. If the boards had any sense, the only time they would agree with the activists would be if there was something right about the activists ideas. Usually the activist owns 5 of the stock, sometimes less so it isnt that hef athey have a new dominant shareholder that they must listen to. I think what it does is it brings their attention to questions that they should have focused better on capital structure, cost of capital, how much leverage is appropriate, what kind of Dividend Payment is appropriate and maybe there hasnt been enough attention paid to that. What do you make of the tax idea . I think its absurd. Its absurd because . Absurd. First of all, the big financiers of the hedge funds are entities that dont pay tax anyway its the big state pension funds, its the large foundations and endo youmentu en endowments so putting that in would have but it would change the dynamic for people like yourself. Well, were longterm holders anyway, so its very rare that were out of something inside of a year having nothing to do with the tax. Would you say there has been definitely a shift. You pointed out that cap ex has been going down. You can point to the demand picture for that but you can also say that maybe were trapped i dont know if i blame the activists for this but were trapped in some sort of cycle where theres not the demands and people dont stand which is why were stuck at 2 growth. Would you say thats fair . I think the average ceo would much rather build a new plant than pay a dividend. So its not that theres an inherent bias on the part of management. What do you think larry is doing then . Who knows with larry. Its usually about something that would benefit look id like to see longer term but black rock inherently they hold their shares for 10 20 years. Listen. Its a different business. The way that boards and ceos decide to do things there was a time when exxon, there was pressure on exxon. Look, youve got to spend your money on going solar and renewable things because youre in the hydro carbon business. Then there was theres certain people henry blaujtodgett says you need to force companies to raise wages. No matter what they need to raise wages for everybody. Thats what they need to do to be good citizens. Its almost like the nanny state is coming. Now every time a company doesnt do something you think it should do . The ceo and the board is elected and appointed to decide what to do with those. Hes defending the ceo and the board to give them time to make the decisions. Hes saying its not the boards fault. Activists activists are part of you know, theres no law against an activist birds are going to floi and fish are going to swim. Is that what happens . Yeah, and activists are going to activate. The real problem is that boards dont mostly hire ceos. Ceos mainly pick their boards. That may be the problem. Youve got to start with that. Thatscrony capitalism. Ive been suggesting that they change the Insider Trading rules so the Institutional Community could designate people who would be just professional directors, not to pass on any information to the institution but not have any kind of attribution rules applied to it so that you could have people directly accountable to the main holders, which are the big institutions. Something like 70 of most stocks are owned by the big institutions anyway. What do you think of glass lewis and iss . Theyre the ones who actually set the decisions on a lot of these things. Theres been some pushback from Elaine Nguyen who didnt get the backing. I recently had a little go around with them as well. Theyre complaining of sitting on too many boards and, therefore, you shouldnt bow sitting be sitting on more than four boards. Well the reality is my business is sitting on a board because theyre usually portfolio companies. So i think they dont necessarily have the best understanding situation by situation. I think they tend to be a little formulaic. Whats the magic of four boards versus five . Right. Particularly if thats what youre doing as part of your work, following your companies. Between Howard Schultz theres a lot of preachy ceos around today. I think its what you said. Yeah. As far as god almighty. Preaching. Preachy, self righteous. You really think they know best versus just letting things sort of settle . Also the shareholders are the owners. Right. And hes a shareholder. But in this instance larry fink is arguably the most shareholder in the world with 4 trillion. This guy is it. Im trying to figure out let me connect the dots. Ill try to figure out the theres an angle here somewhere. Well probably play some video from wilbur calling it absurd. We ran out of time with you because of the situation with the protest. Please come back its great seeing you. Ill try not to bring a protester with me. We appreciate that. When we come back this morning, a rough start to Mario Draghis News Conference. Take a look at what happened just moments ago. He was speaking withhen this protester jumped on the desk littered him with confetti and was shouting stop the ecb economy. Plus jim cramer from the New York Stock Exchange will talk europe, bank of america and much more. Also google shares down in the premarket after the eeu announced theyre making anti trust moves against the country. Its charging google over the Comparison Shopping service and looking into android operating system to see if the accompanycompany is using its shopping systems. The real question that needs to be asked is what is it that we can do that is impactful . What the cloud enables is computing to empower cancer researchers. It used to take two weeks to sequence and analyze a genome; with the microsoft cloud we can analyze 100 per day. Whatever i can do to help compute a cure for cancer, thats what id like to do. Welcome barks. Mario holding his News Conference as we speak. Been an interesting one. Steve has been monitoring his comments. I think theres three stories this morning. The first is he wasnt up to the protester. I think the second story is after this disruption theres about a minute or two break and he comes right back on with every hair in its Perfect Place and really starts to talk about Monetary Policy. I think the third story is what hes saying. Two messages here from the markets of draghi. Theres been positive effects already and they show up with Credit Conditions and the second important thing here i want to give back to somebody is you had an analyst before he spoke talk about some concern in the market. There could be an earlier taper. He must have said two or three times. Hes leaning against that concern out in the market. There could be an early taper to the ecbs quantitative using guides. I guess we got to go quickly. So someone will figure out where she is from and what she was thinking. You think she was from the place where austerity didnt go down well with the ecb . What do you think the rational is . Someone will figure that out and read about it. Its unclear. If youre the left in europe and that incompanies a whole lot of things different than the United States. Im not sure what you have to complain about when it comes to the ecb. They have leaned against austerity unless you want to talk about what they have done with. They will done an awful lot of lending to greece. Sometimes its authority in general. Could be. Anarchist and stuff. The autobomber. I thought she spoke in german. It sounded like a german accent but it was in english which is probably what you would want to do. One of the nihilist from that scene. Lets get down thanks. Lets get down to the New York Stock Exchange. Jim cramer. Is it safe jim . No ones going to pounce on your desk right now. Did you see that . I would love some confetti. Ive got to tell you. They fear growth over there. They fear this program working. Im not kidding. I think the germans are like wow, this program is working lets end it. Bizarre. Entail, why is it higher . Jim, i guess the people had been more negative than they needed to be. I think entail went down big because they said things are slowing and then they say things are slowing on the Conference Call and suddenly people get involved and three different times people ask about what the acquisition is going to be. They have one Business Internet related. Its on fire. You see this one business is on fire. You know the other one is bad. You keep waiting on the on fire business to wait on the one thats bad. All right. Thank you. See you. Well see you soon jim. Well see you soon. Well be spending some time together. You talked about confetti. Confetti and rice maybe. All right. A program for you tomorrow on squawk box another line up. Black stones cofounder and ceo. Plus jack and susie welch all here with us tomorrow at 6 00 a. M. Eastern time. Make sure you tune in. Well be right back. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Anyone have occasional constipation diarrhea, gas, bloating . Yes one Phillips Colon Health probiotic cap each day helps defend against these occasional digestive issues. With 3 types of good bacteria. Live the regular life. Phillips i care deeply about the gulf. I grew up in louisiana. I went to school here. Ive been with bp ever since. Today, i lead a team that sets our Global Safety standards. After the spill we made two commitments. To help the gulf recover and become a safer company. Weve worked hard to honor both. Bp has spent nearly 28 billion dollars so far to help the gulf economy and environment. And five years of Research Shows that the gulf is coming back faster than predicted. Weve toughened Safety Standards too. Including enhanced training. And 24 7 on shore monitoring of our wells drilling in the gulf. And everyone has the power to stop a job at any time if they consider it unsafe. What happened here five years ago changed us. Im proud of the progress weve made both in the gulf and inside bp. When the moments spontaneous, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Angies list. The accompany raising guidance and announcing the cofounder leaving the job. That does it for us today. Now its time for squawk on the street. Good wednesday morning. Happy tax day. Welcome to squawk on the street. Results out from delta and more. Groggy leaves rates unchanged and is attacked. Oil up for the fifth straight session and back in the green for 2015 and the ten year just below 191. A protester disrupting