Transcripts For CNBC Squawk Box 20150518 : comparemela.com

budged. dow futures down by 6 half a points below fair value. the s&p 500 closed another record high on friday. nasdaq down by 9.5. one economic data point of note, the national association of home builders will release its housing market index for may. that's due at 10:00 eastern time this morning. a little bit of news out of chicago, charlie evans, he says the feds should aim to boost inflation by keeping interest rates near zero until early next year. evans is a voting member of the fomc and argues inflation has been running too low for too long. >> we just had him on. >> yeah. >> yeah. exactly. that's not new, is it? they have got the dual mandate. >> right. we knew this was kind of where he was headed with things but people are looking at fed speak very closely right now to try to figure out. did you see the fed futures in september pushing that of 0, thinking it's less lick like dr -- likely. >> it could be negative in the first quarter. could be .5% for the first half. what happened to 3%? 3%? and it was just -- >> make it 2% look pretty good right now? >> right, we said 3% so many times we thought it was a given. >> we were counting on it. you think it's a fall -- >> that something else happens in 2016 that could change the whole equation finally, we'll see. we've been 2% for six, seven years now. >> let's tell you a couple of other things going on. switzerland central bank is monitoring the value of the franc. the value of the swiss currency soared in mid january, you'll remember, when the central bank abruptly abandoned a franc's or euro cap. the energy company cut capex this year due to the drop in oil prices. gasoline prices jumped 22 cents during the past three weeks. the will you understandberg lundberg puts it 93 cents lower than it was time year ago. you hear the big news there could be a change coming in new jersey about pumping your own gas. >> that's the best thing about new jersey. that's one of good things. >> i've gotten spoiled and used to having somebody -- >> your hands will always smell like gas. >> you do. there's no way to avoid it. >> for the rest of country, they don't even realize -- new jersey i think is the only state left where you don't pump your own gas. you are required to have every gas station is required to have people who come out and fill your tank for you. it spoils all of us but apparently there's a little bit of a change in sentiment. the governor is thinking about how he's going to take this all in, but the small retailers are the ones who are asking for the change. >> you mean christie? he's one we're going to talk to him this week on thursday. >> you know who else is coming thursday? >> who? >> rob burnett, the executive producer of "the david letterman show." >> what's he going to do? >> he's already doing other things. they think he's pretty busy. a big week of guests coming up. wee should tell you a group of luxury goods makers is suing alibaba in the united states. brands including gucci and ysl are arguing that they are making it hard to sell their products around the world. in a statement that alibaba says it will fight the complaint and continue to work with partnership in the brands to help them protect their intellectual property. apple is buying a start-up called coherent navigation. the terms are were not disclosed. no word on how they plan to use the technology. they have very cool technology. a regular gps, sometimes when you are in new york city it's not exactly telling you where it is this is almost like military grade gps. they work with boeing and some of the other guys. >> they know where to find the entrance. >> they can pinpoint it that much closer. google maps now has ways information on google maps. >> i used google maps over the weekend. >> i saw from ways -- >> they have the little ways. i've got it all now. on google you don't need the ways. it will just say ways is reporting that there's an accident here. on google maps they have sort of combine the two. >> i find that ways will switch your direction quicker than google. >> they don't drive. why are you looking at the gps. >> i need to be able to tell the driver which way to go. >> can i ask one or other thing, how many music awards are there? >> a lot. >> oh, my goodness. >> this feel like groundhogs day with taylor swift. >> everybody has got to win things to push the music, it's an industry. these awards are inflation they are so at this point they are so worthless. there is the american music awards around there the mtv video music awards scprks thrn then there's grammy. there's going to be almost a dozen award shows. >> this is not the first time -- >> and somebody kisses -- two women are going to kiss and they are trying to get a publicity this. kanye is going to say you don't deserve this award. somebody else. >> you could run one of these shows. >> i didn't know even know it was on. >> i watched the first one. >> he's right there. don draper he works there. that thing that's outside, his shadow open the back of that bench they put there. >> oh, okay. >> thank you melody. >> it's a cut-out. >> that's him. we'll show people what we're talking about. >> can we not talk about the billboard awards again? >> i have no idea in talking about them. we can talk about other headlines, u.s. airlines are expected to reach an all time high this year. that group estimating about 220 million passengers will fly on u.s. airlines from june through august. that's up about 4.5% from the same year earlier. >> very flew will fly sideways. >> which is where we're going to go with the next story. >> it was banking. i kept hearing about flying side warks. >> we should talk about kids on airlines. we'll get there in a moment. the hacking thing is more important. we have some potentially scary news for those planning to fly. the fbi is investigating a claim by a computer expert who says he hacked into the plane's entertainment system. the way i read the story was that he was able to control one of engines. if you think about if you are able to speed up one of engines sore slow one down you would move won direction or the other. >> bank a little. >> the idea that you would bank the entire bank. we don't know if he's saying this it was in the fbi report that was unsealed. >> is this the same report that we were hearing about -- >> same guy. >> this is the report that we heard about three weeks ago, a government agency saying that it was possible potentially to hack through it. >> this fellow had tweeted out actually he had tweeted out that he was going to do something like this and was picked up off of a plane, literally taken -- they took his computers, they took everything. he has a security -- i don't know if he's a white hat hacker or black hat hacker to show the weaknesses in the system. while people in the plane. >> that's crazy. >> nonetheless, he was arrested. >> tell me about the kids. >> you were in the front of the plane. >> i was in the front of the plane. mom and dad came in with the kid. >> how old? >> i don't know. under a year. >> you have kids. >> under a year. asked me if i could change my seat, which i did because i wanted them to be together. >> and away from you. >> right. let's get to the reality. >> and then -- >> did it cry the whole time? >> not the whole time you know. >> there was a baby crying on my plane yesterday and i was not in first class. >> i had noise canceling head phones and i could her them. >> you just outed yourself. andrew ross sorkin he was so nice. >> i sat there and did my work quietly. >> coming from where to where. >> east coast to west coast. >> it was a west coast east coast. >> flying out. >> mine was yesterday coming back. there was a baby flying in first class and i did think of you. there we have. thank you for the pictures. i will tell you the baby cried a lot. i thought maybe the people who paid to sit next to him are probably not happy about this. >> you had to see the seat on -- he wished you had been there. he had a lot to say about competition. he said there's 14 players in every market. he said -- but then how about, you know because you couldn't take the train down you saw the east coast prices? >> yeah yeah. >> the train by the way just started again this morning. >> we know that when the demands rises that costs go up xs unless you don't want to be able to get a ticket it's just -- i'm sorry -- >> how much prices go up? >> $1,000. >> for the shuttle. >> it was flights for that go up to $1,000. they didn't go up because those are some of the listed prices all the time. they have a way to make it looks like it's not that but yeah i thought that would have made you -- >> thanks. >> you can pick your poison but you can either fly sideways or take the amtrak. it doesn't seem like -- or stay at home. either one are better than driving. >> or you can drive ufer tesla though a little segue. >> three days off and you come back and it's like riding a bike, isn't it? >> riding a bike. consumer report, you may not want to drive your tesla. consumer reports coming out and saying its testers were locked out of a 27-day old top of the line tesla. the doors handles were locked and, and -- but they were very happy with it. >> i can get a heck of a car for $127,000. i'll tell you that much. >> have you driven one? >> my knees were like. that was five years ago. it was one of those little ones. two seater. i haven't driven -- >> it's a beautiful car. >> it is. let's take another check on the markets this morning. as we showed you, the futures have barely budged this morning. the markets are trying to figure out which direction to go after the s&p closed at another record high this friday. the dow is only 16 points shy of its record high. check it out right now, you are going to see the dow futures down below 14.5%. >> you'll see the dax is trading higher. it's up .4 percent. the greece it's down once again by 1.3%. a lot of questions about how greece can possibly pull things out and try to figure out how to pay off their next debt. >> you see the nikkei closed .8% and hang seng down .8 and shanghai down.5%. oil prices sitting $60 barrel for wti. taking a look at the bond market this morning you'll see the 10-year note is yielding 2.67%. that yield is under quite a bit of pressure. currency market the dollar is up across the board. >> that's a high. >> this is summer vacation. >> it's not going above that. it's not. it's a high. it's going back down. >> all those people who got stuck at 105. >> it's going back down there. there it goes 113 now. >> says your european traveler as he's waiting for that. no. >> back down. down i said. down yes, yes. that's right. no. no. >> higher again. >> the ten-year was like 235 for a while. >> yeah i know. it's back down. the yield is under pressure again. anybody who thinks we're getting out of this. if you look at yields on the ten-year, feds future market even at september, the market thinks it's less likely you'll see the rate hike in september. >> it's not a cake the bund is not a cake. >> it's not a bundt. >> this is different. >> where is the bund right now. >> we'll show you, it's back down to 65. >> is it bonds that are moving stocks? it's the bund that's been moving the bond market. >> it's been the cake that's moving everything. when it started sparking and got up to 75 and it looks like a one or so. >> you can see that's the global trade. money goes to the places it's going to make the most impact. when it looks like the global deflation war is over that's when we start worrying about it coming back here and our yield is going up and we know the fed loses cover and we lose control and our economy is zero for the first half. it's a conundrum. isis militants have been making a push to take over iraq but now a successful weekend raid by the u.s. that targeted the top leadership of isis. nbc news correspondent edward lawrence has the latest from washington. >> reporter: in the last 72 hours, the u.s.-led coalition has conducted 19 air strikes in the city of ramadi. that city still fell to isis. with that setback, there was a successful weekend operation by the u.s. against the top leadership of isis. ramadi has fallen into the hands of isis and residents are fleeing the city in fear amid attacks from the group. secretary of state john kerry says there weren't enough iraqi security forces in the city. >> there are targets of opportunity like ramadi where daesh has the ability to make impact. >> if you take out the money money, it can dent the organization's capability to do things. >> his wife was captured. u.s. forces say they helped manage hostages kept by isis. >> it is a one-two punch that we should do more of. >> i wish we had more emphasis on capturing and detaining and interrogation, than strikes. strikes are important. i congratulate those who carried it out. >> a dozen or so isis fighters were killed in that raid. there were no u.s. casualties. thank you very much. that news about ramadi in the news this morning. >> that potential, it was very exciting just reading it the way these special ops guys go in there, commandos. >> didn't lose a single -- >> no. and he was much more protected than they thought, and returned fire, and they killed 17 guys. >> it came to hand-to-hand combat. >> i was reading this thing. there's always going to be enough grist for hollywood eventually. >> until they tell us the story is not true. >> we'll see how that finally plays itself out. i thought he was your guy. didn't he win a pulitizer. is everything he says at this point is a lie? >> it was a bad joke. >> in every joke there's some truth, right. the producer told me he's a wing nut. >> is he? >> first quarter earning season may be wrapping up but they are still planning big names on the docket this week including walmart, home depot, lowe's and target here now for us on set, steen reese with the earnings angle mike thompson. you used to be at thompson but you were a fraud. it was spelled different. you knew that people would find out, eventually? you used to head thompson research, didn't think people would notice that mike? >> i wanted to start with you. i'll tell you why, europe seemed like a great trade but i looked at it if you didn't hedge it with currency it's been crappy. it's been 6% or something, right? >> right. we've been advising clients who have exposure. >> how much have you made if you had a hedge? >> if you had a hedge, it was 13.5 year-to-date. >> you are saying it should be bought because some of the other trends will be reasserted in other words, maybe the euro? >> definitely for us it's all about earnings growth this year and in europe we think they can grow 8 to 12 percent. we would be advising clients to take advantage of the pullback but remain hedged. >> that's the way to do it. in the u.s., mike i don't remember what your final number was, whether you were flat or down for the quarter, but once again, companies know how to manage expectations to always beat and they did it again, they got people down so low, that 3% 4% up was a big beat. >> march 1st we were negative 3% and we're just under 3% positive, that's the good news. it's better than was expected. the troubling part is now we're starting up looking at the next quarter and you are looking at negative 4% growth and in fact what's really troubling, i think is the revenue picture, which is already we're looking at negative 2% on the revenue side and then in third quarter doesn't look all that much better. >> is it a game? will analysts ever figure out -- i guess everybody is long minded, everybody wants expectations to be beaten. but sooner or later -- for me if i did the wrong thing, you know, 40 quart ners a row, if i always listen to the companies and lowered it so they could beat it i would eventually not lower it so much. why can't they figure out that the companies are selling their -- sort of massaging the numbers so they can beat? >> it's just the transparency or the lack thereof what they can do with the accounting and with globalization, it's made it more difficult. companies can do things with how they book revenues into different tax domiciles and things like that. that's really the last black hole of understanding these earnings. i thinks what's really remarkable and to your point, the beat rate is relatively high for this quarter. what they can't beat on is revenues. there's a lot of companies basically missed on what was expected. >> that's something we've seen. >> there's places like health care, consumer, even technology looked pretty good this quarter. >> how about the current quarter? are the comparisons as hard? >> well they are not horrible. they are not horrible. what you are really confronted with, i don't think it's a comp issue. i think the real issue is you have a global growth issue. there's very few companies or seconders that you are going to see a lot of growth. >> where are you right now? >> right now, for the next quarter we're just under 2%. >> up? >> down. >> down? >> down. >> you still have the drive from the energy of the secretary quarter and the u.s. dollar. i think the second half actually ends up the analysts being a bit too negative. two sectors are really interesting. if you are looking for the annual plays here i think earningwise, five of the companies with the largest growth rates are coming from the airlines all a function of oil. what's really interesting on the revenue growth side 70% of the companies that are going to have the best revenue growth are all going to be in health care. so health care and airlines. >> we love health care. a lot of m & a happening. i think it's still very exciting to be there going forward. >> you say buy europe but would you like europe more than the u.s.? >> i like europe more than the u.s. here on the pullback. i think may is a great time. i would use that to optimize your portfolio. thinking about only health care technology, financials for the expectation that rates will continue to move higher. you have to be more select of it here. >> as we get closer to the end of this quarter, i guess when would that be june? >> after june 30th. >> will that plus or down 2% change? >> it will come up. it will come up. but you know there are a little bit lower than where they should be. i think there's going to be a flat quarter. >> they will be flat and then 6%? >> i think at this time you are looking breaking even. >> you believe in them again. they are going to beat your stupid flat results. >> historically by 3%. >> for me go up 4% and you might be right once. >> it may depend on energy prices. >> it's unusual. >> a lot of things. the only thing that always hold true they are going to be too negative. >> now we're back to 114, oil prices have rebounded. >> this is why you never ran thompson. this is why you had the name but you had everything going for you. >> the level precision is still there. >> i still agree to come on. >> that's why i come back. you bring back memories. coming up when we return amtrak rumg full service between philadelphia and new york city. started 5:00 this morning and that's after last week's deadly derailment. we've got that story but first as we head to a break, here's a look back at this date in history. amtrak is resuming full service between philadelphia and will new york city today. in fact the first train left new york city about an hour ago. the first train leaving philadelphia headed back toward new york left just moments ago. these are the first trains that have departed since tuesday's deadly derailment that the full northeast corridor has always been operational since that time. ak track's president and ceo has said staff has been working around the clock to make repairs. the picture you are seeing is the train heading back to new york city. these are the very first pictures we're getting back from that first train. last week a train traveling more than 100 miles per hour derailed. it happened on tuesday night. it killed eight people and injured more than 200 others. the stories that have us buzzing this morning. including hedge fund wife bonuses. >> yep. "squawk box" will be right back. [ male announcer ] your love for trading never stops. so if you get a trade idea about, say organic food stocks schwab can help. with a trading specialist just a tap away. what's on your mind lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are. and start working on your next big idea. ♪ ♪ it's more than a network. it's how you stay connected. with centurylink as your trusted technology partner you get an industry leading broadband network and cloud and hosting services. centurylink. your link to what's next. the network that monitors her health. the secure cloud services that store her genetic data the servers and software on a mission to find the perfect match. and the mom who gets to hear her daughter's heart beat once again. we're helping organizations transform the way they work so they can transform the lives of the people they serve. ♪ ♪ ♪ ♪ welcome back. sitting in the chair being looking at some stories, have a little off beat. this one is off beat. i want to tell you about. did you read this story this weekend from the "new york times"? this is in the opinion pages from author of a book called primates of park avenue about wife bonuses. people get bonuses at the end of the year and then this is considered a wife bonus. if you are a rich powerful somebody according to this article, which i'm not sure -- >> i'm not sure i believe either. >> i believe it but i haven't heard about this in practice. they give a wife bonus based on a prenup or post nup and there's all sort of things that go on in the wife bonus. >> the metrics are very interesting. >> how the kids were doing in school, if you could keep the house budget. crazy lineups. . it's how well you manage the home budget. whether the kids got into a good school. that's a huge thing obviously in new york city and then apparently women who didn't get them joked about sexual performance metrics. the question i have is whether -- do you think this really happens? is this five people? >> i'm shocked that it's something that we haven't heard of if it actually exists. >> wife bonuses, you are looking at me like you don't even know what to say about the wife bonus. it's a book. >> is that assuming the husband controls the money? >> yeah. >> that's the implication? >> in my case i hope i get a bonus at times. >> you get an allowance. >> right. pretty much. that's how my house runs. >> i don't live here and i think we should play frank at the beginning. if we got to do a new york song -- >> a little sinatra. the royalty rate on the frank stuff is higher than the new york. the mother of lamaze elizabeth bing passed away on friday. she was 100 years. for the past 50 years, she started working on making women have a pleasant experience. they won know when the baby entered the world. they started talking about ways to relax your body and make sure you would be awake and aware when a child came into the world. which is a pretty special thing. >> did you get an epidural? >> i did. after 42 hours. >> yeah because they won't give it to the men. and who is really under the gun in the whole thing? there's nothing you can do. you are there. you are nervous. you are sweating. as many times as i asked for one. it was like, no no. okay, fine i'll just go through -- >> it's totally different than having anesthesia and being knocked out cold. >> it is. i remember it was a horrifying -- they have to -- they have a small area to go through and they kept having to put the needle in different places. >> they tell you don't move. if you move you may do something terrible to your spine. don't move but look out for the next contraction. >> i want to do something uplifting and positive. perfect pitch 2. >> did you see it? >> no. pitch perfect 2. this isn't about baseball. this isn't a kevin costner. >> it's a movie about women. >> i know. the first one was big. it made more in this -- in its opening day than it did in its entire -- it's a universal movie as well. fancy that. anyway, it made more in its first weekend than it did last time. >> it was a cult thing. >> hayley seinfeld was in it. she was really good in that. elizabeth banks, directorial debut and it beat mad max. i think it might be a good movie. did you see the pictures of sean penn standing there with char lees they are recent database charlize theron. it said the original star mel gibson aged out of the role and one too many outbursts. just the term aged out p, i saw that and said i'm going to ban that -- i'm sensitive to this thing. look it is a cool concept and the first one was pretty cool, but the post apocalypse. there aren't zombies. you know they say this is our future because an extra 0.1% co 2, that's what we're looking at about 2019. good for universal. >> steve jobs movie is coming up. there's a trailer out. also a universal picture, i believe. >> that's a universal one too. >> i think so. >> they bought it originally. >> it was originally sony and universal bought it took. biotech on the run. the sector has been red hot. we're going to talk to the ceo of one company that's up more than 70% this year alone. we'll be right back in a moment. it's part adrenaline and part adventure. it's part geek and part chic. it's part relaxation and part exhilaration. it's part sports car and part suv. and the best part? the 2015 gla. it's 100% mercedes-benz. monday morning takeover deal in the pharmaceutical industry. endo farls buying par farls from property equity tpg for 8 billion dollars. they took them private in 2012 for just under $2 billion. the biotech sector has been on a tear this year. up 18% this year so far. one focus company is up nearly 72% in the same period. it's cultivating a new approach to cancer treatment and it's set to begin phase three for its most promising compound. let's hear from their ceo. thank you for being here. these are all greek to me. you guys are having a scientific conversation before about pancreatic cancer and you how approach this differently. how do you do it? >> some patients with pancreatic cancer has a barrier our drug which is called peg-ph 20 breaks down that sugar and allows the cancer therapies to get access to work. >> the way you were approaching it, just tell me if i'm wrong, the traditional approach is an iv approach. this is more like -- you could actually take it like a shot. >> for pan creatic cancer it's into the vein. we want it to circulate in the body. we have another part of our drug which is called the enhance platform, when we combine our drugs with people like robbery and pfizer from there we take drugs iv infusion, it can be given subcue tanious injection. >> has it been approved? >> it's been approved in europe and one in the united states. >> how much of -- what percent of pancreatic cancer patients is this successful with? what percentage of those has this sugar that is preventing the treatment from getting in? >> we just reported results from our phase two study. in that study it looked like 52% of patients had high levels of this sugar and in those patients, the time for the patients to progress was about nine months. now, that -- when they received our drug for the patients who didn't receive our drug they progressed in about four months. it's exciting and encouraging data. >> it aclous chemoto work. >> yes. we allow chemoto get into the tumor cells where they need to work. >> how much does this cost? >> we haven't got a price yet. we are just entering our phase three studies. we'll begin in the beginning of 2016. in those studies, we will put in all of the efficacy data but also importantly outcomes instruments, those are ones where the pairs want to look at did you impact quality of life what else did you do? thens we'll price it once we have our full story for what value we can. >> how many other tumor cells have high concentrations of that? is it a glie coast protein? how many tumor cells exhibit that. >> we estimate 50% of pancreatic. >> any other? >> lung cancer it's about 30 to 40%, gastric, 30%. colon may be 20 to 30%. breast cancer is probably 50% overall. so we believe peg ph 20 has potential in multiple tumors. in pancreatic cancer we've started a study with lung cancer. we announced last week we're studying in non-squawm lung cancer too. >> what does it to to the sugar? >> it doesn't zo anything to the sugar but it does prevent the drug from being met analyzed so quickly. >> this is a pedestrian question, but when you are talking about nine months versus four months that sounds amazing, but what someone really wants to hear when they have pancreatic cancer now you can cure me? >> that's one of the cancers where we haven't seen a lot of progress. we from our phase two study are certainly encouraged. the study we're going to beginning next year we're looking at can we impact overall survival in patients with that sugar. it's present throughout your body. the elasticity from the skin is what is something. >> you are making the drug last longer. there's no side effects to what you might do to other cells. that's why it would be hard to impact the high-0-your onic thing. >> we think there's a temporary musful past with it. we'll evaluate it further in our phase three program. >> when we come back this morning, retail showdown could google be about to change the entire internet landscape with a simple buy button? 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at&t cafeteria. you mean the break room... at&t - the only wireless carrier to be a part of plenti a rewards program that lets you earn points at one place and use them at another. welcome back everybody. let's talk about technology news today marks three years since facebook went public. soared straight at just over $80. google could be ready eto shake up the ecommerce world. joining us right now is jeangene munster, thank you for being here this morning. let's talk about what google is doing. this came to a surprise to a lot of people. the google on mobile service searches will have a buy button. how does that work and what does it mean? >> basically taking friction out of the buying process. that's the key in ecommerce. make it easier for people to buy. that's what google wants to do. you think about amazon when you're buying on amazon that one click button is powerful. by google being in the first search results when you have the search results make it easier for people to use google for purchasing. i'lled a this, too people usually think of google as a search and discovery tool. this is going to slightly shift that equation for how people think about google when they're shopping for things online. >> it actually struck me a little bit as someone who uses google first for every search item i go to kind of irritated me e. because if you can buy the way to the top, i don't feel like i'll get the same searches as i had before. >> that's probably true. this ultimately will have about a 10% negative impact on amazon. if you put collectively together who google is trying to rally together for this. but, you're right, this probably isn't going to fundamentally change on how people think about amazon and that's one big key piece to it. >> so how do you handicap this? is it a good move for google or something that runs some risks? >> it's a good move for google. they have nothing to lose. no where to be found when it comes to true ecommerce. from a consumer standpoint as you look at the buying pool of what items people buy. it's probably 10% of those items will fall within that. it doesn't necessarily mean that all 10% of those are going to be purchased on google either. ultimately google has nothing to lose. a good thing for google. >> let's talk about facebook because it is three years since the company went part public and someone else mentioned it is mark zuckerberg's birthday today, too. what kind of message would you send out to him on this day? ? you told us and you did it. i think about the ipo and all the debacle around that and mobile. the beautiful thing, not only did they pull mobile off gracefully and quickly. but chapter one in a four chapter story. chapter one facebook proper can then instagram and what's happened. and the reality is still a lot more to come here. so, i think he's lined this up so well that you can understand why the market cap is approaching google's market cap. >> instagram at this point, nobody is modeling instagram. what could that policiy be? >> think of this as 15% to 20% of the business. they're not in the current street numbers. this could be 2017 before the montuization fully rams. essentially so much pricing leverage at their core business they are in no rush. i think that zuckerberg is going at his own pace. to answer your question this is significant lever and then other levers, too, they can pull in the future. >> gene you mention the price is going straight up. does it have a price target? >> we're at 80%. modest to the stock price. we'll revisit that as the initiatives roll out and get more in focus. >> gene thank you for joining us this morning. we'll take another look at the top stories of the morning and then a squawk master joins us with his view of the world. that's next. stay tuned, "squawk box" will be right back. can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ the answer is yes, it can. so, the question your customers are really asking is can your business deliver? automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class. at the very touchpoint of performance and innovation. will housing data push markets to new how. how blackrock is preparing for the trading week ahead. and we'll reveal the biggest mistakes you might make with your money. richard literally wrote the book on the psychology of decision making. he joins us for the hour. a man hacked into planes through in-flight entertainment systems and made a plane fly sideways by controlling the engine. 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. i'm joe kernena along with becky quick and andrew ross sorkin. down about 10. s&p up about 2.5%. and nasdaq down just under 10. we're going to 20 in august. >> i heard. >> big, big. >> big 20-year. >> we're doing it in august or september? >> i think the 20-year actually date is august. but too many people -- some of us aren't on target for the 20th anniversary. we'll do it in september. >> is that the quietest launch of all-time. >> it kind of was. we wanted it that way. >> you wanted it that way. >> i remember it like it was yesterday. the very first show. it was like old tech. >> in the meantime let's talk about some of our top stories. a group of luxury group makers include gucci arguing that the chinese company knowing made it possible for counterfeiters to sell their products throughout the world. luxury good makers are seeking damages in alleged violations of trademark and racketeering laws. alibaba will continue to work in partnerships. but this is what has been on the mind of a lot of u.s. companies and one thing jack has been worried about. also a monday morning takeover deal in the pharmaceutical industry. from tpg for a little over $8 billion. issue about 18 million shares and pay $5.6 million in cash. tpg making off well in this. just under $2 billion. also little scary aviation news this morning. this is what we were talking about before we started. the fbi investigating a claim from a computer security expert who hacked into a plane's in-flight entertainment system and made the plane, briefly flying the plane and made it fly sideways. man told the fbi it hacked into planes 15 to 20 times and discussed if it was possible. he was making one of the engines faster than the other. could you bank all the way sideways. >> not necessarily banking like this. >> i think you would hear from pilots and other people that this happened if it was the case. >> much more careful with the entertainment system. i didn't know the entertainment system was, did you know it was hooked to the engines? i start a movie and i can't watch this and then i'm constantly going back and rewinding. think twice about that. >> anyway he got pulled off a plane this fellow. >> through the entertainment system. when you read that didn't that sort of make you think -- >> the big issue is if the entertainment system which is hooked up to the internet which is somehow connected up into the cockpit. >> you don't even put your phone in airplane mode. you don't think anything will happen. >> no i do put it in but usually after the plane has taken off. >> i know you. >> it doesn't die the battery down. here's the thing on i don't fly privately, as you know. on private planes nobody turns their phones off and they're still in the air. >> that's what i'm talking about. do we know whether, really -- >> i don't know if it was. the stories in the '70s and '80s and people had cell phones and speakers weren't shielded and then people would hear the conversations over the speakers and they thought somehow it could get into the. anyway. steve liesman is here and he has a very special guest host that he has brought with him for the hour. steve, we're excited about this. >> i think at the end of this hour you may think a little differently on how markinates vest and how markets really work. i'm here with richard. his new book "misbehaving" is now in stores nationwide. richard, people call you the father of behavioral economics and i want you to give the field the elevator pitch in a sense. tell us what behavior economics brings to the table about how markets work or don't work rationally and how people invest and don't invest rationally. >> well you know you might wonder why we even need a term called economics. what other kind of economics could there be? and the answer to that question is if you remember anything from your economic classes is that economics is based on the assumption that everybody is super rational has no self-control problems and never has a hangover. saves exactly the right amount for retirement and then invest it perfectly. i don't know whether you ever met anybody like this. >> occasionally. but very few. >> very few. some of my most boring colleagues might fit into that category category. but the rest of the world is nothing like that. we're more like homer simpson than we are like spock from "star trek." we built up a world, a set of series that applies to fictional characters. we don't have an economic theory that applies to people and that's what i and many of my younger colleagues that have been working on this for the last 40 years have been trying to say, hey, you guys you're studying unicorns, why not study people. >> the book is a chronicle development of your thinking and the thinking in the field. we've talked a bit on this show about some of the other guys who have won noble prizes for this. i just want to give one simple example. explain the difference between $10 buying a radio and $10 buying a television and how that disrupts the whole concept of how we think about economics. >> yeah so, this is one of the earliest examples i had. i started out with this making a list of weird stuff people do. so the example steve gives is yeah, suppose you're going to buy a clock radio and it's $25 and you get to the store and they say, well actually the other branch of the store, they're having a sale. it's $10 off. would you drive 20 minutes to save 10 bucks on that $25 purchase? >> no. >> make it 50. so -- >> i'd drive. >> andrew would drive. but, really the example is it's five minutes away the other store. it's right down the block. >> now suppose you're eyeing a big screen tv for $2,500. >> would you drive? >> i would do it for 5 bucks, that's my problem. >> you guys are hopeless. so the point is that most people tv hosts aside, are more willing to drive save $10 in the context of a small purchase than a large one. we should be like andy and just say, it's the same. either i'm willing to spend ten minutes to save $10 or not. it shouldn't depend on the context. >> i'd do it for the big item. >> $10. >> not for $10. no. >> the way we think about it is proportionately. i don't think we want to dig too hard into this example, but the idea is inmired i ways we do things that are human and we do thinks that are predictably different than what eeconomists expect us to do. >> if my dad used to drive twice as far to save 2 cents a gallon. >> he's my guy. >> he really did. >> so, there's a time like they say, your parents when you're 18 or 19 and they seem so stupid and you realize at 30 how smart they are. i don't do exactly that but doesn't seem quite as crazy tame because it because it feels good. i thought it was me that thought it was stupid. i mean he didn't get any smarter, i just finally realized a lot of the stuff they told me was probably right the first time. >> so you should just be. if andrew really feels cheap, like he does a lot of the time. he should not try to not feel that way. you should not try to overcome a feel of cheapness. >> i embrace it. >> i keep my clinical practice to a minimum. but the real question is whether we can make better predictions about what people do. >> and make better policy right? that's really -- >> and make better policy. >> one of the interesting things is the way they have influenced policy and one of the ways is how we save in 401(k)s. and behavioral economics has absolutely changed the structure of a lot of 401(k)s. if you can explain that. >> it used to be 401(k)s are pretty new. mid-80s is when they came along. and when they first started out there were very few options. and they were very simple and then lots and lots of options started getting added. >> in terms of what you could invest the money in. >> yeah exactly. >> standard economic theory says, okay that's great. give them 100 funds and they'll choose better than if they had ten. and then behavioral economists like me started to get involved and ewe made three big changes to these plans. the first is automatic enrollment. so, it used to be to join the plan you got a big pile of papers to fill out. you don't fill them out, you're out. now, you switch. you have to fill out a big pile of papers to get out. nobody is going to be dissuaded from tens of thousands of dollars of real estate of retirement benefits because of a couple forms. but in the real world, they do. the second is what we call save more tomorrow. you say to people look you're only saving 3% now. would you agree to increase at 2% a year until you get up to some reasonable level? that works wonders. and the third is designing, well design default investments. if you automatically enroll people, automatically enroll them in something. if you let people invest for themselves, we have tons of data to say they do a really bad job. >> i will say that i personally benefitted from having a plan at the "wall street journal" where they automatically enrolled you at the 401(k). at the time i was 21 and too stupid have to have gone in and done that myself. it has saved me immensely to have an automatic retirement plan. >> that's the deep lesson from behavioral economics. if we grant that people are imperfect and that most 20 somethings the last thing on their mind is retirement. then let's just make it easy. the philosophy of my last book is let's try to des have strategies that will help people without requiring anybody to do anything. i think of it like equipping you with gps on your phone. we're not telling you where to go. but if you get lost, you're going to help get there. and governments now around the world are creating new units to take a behavioral sciences and apply them. >> for me the stock market and the way that it works, i always thought of it as purely behavioral economics. and i would think going all the way back jesse livermore, i mean madness of crowds contrarrian thinking. it's always is it new in economics but just not new in analyzing the stock market? >> you know it's it's old and then it became new. so if you look at economists in the '30s like benjamin graham or canes has a brilliant chapter in the theory that people have forgotten about. all they think about is deficit spending. read his chapter on the stock market, it's brilliant. then what happened in the '50s and '60s highly rational traders and ewe forwe forgot about everything we knew. and then, i think the tide started turning when research came in with embarrassing findings and then we had the ' 87 crash and the tech bubble and the real estate bubble and anyone who has been awake for the last 20 years has noticed that market prices don't always seem to be rational. >> what's interesting and we didn't get to it in this segment, but you read the book. people have their own irrationalities with how they invest and tend to avoid losses more than they do to get winners and that affects your returns and understanding how people work in general the weird ways that they work. >> you were a stock market for 11 years. every loser -- >> that's part of the whole theory. >> if you got 10%. no one went broke taking a profit! >> that thing went up like eight times in value and then the other one zero. >> it could save people money. >> i can't sell it now. >> i'm only down 20%. >> you know it's good for you and your clients you got out of that line of work. >> no kidding. actually, i figured some things out before i did. we do have much more from richard thaler still ahead. but ross weighs in on this week's housing and inflation data and the minutes from the latest fed meeting and find out where the economy is and what he thinks you should be doing in the economy right now. bill belichick draft strategy makes economic sense. if you have been frustrated by the car buying process. stick around. the new start up that wants to take the dealership out of the process. stick around "squawk box" will be right back. we live in a pick and choose world choose choose choose. but at bedtime? 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[bell chime] ting with xfinity from comcast you can manage your account anytime, anywhere on any device. just sign into my account to pay bills manage service appointments and find answers to your questions. you can even check your connection status on your phone. now it's easier than ever to manage your account. get started at xfinity.com/myaccount feds speak to keep the market busy this week. it will wrap up on friday when fed chair janet yellen speaks about the economy. joining us on set, global chief strategist at blackrock and thank you for being here. >> good morning. >> what do you think about this? a lot of concerns after the lousy economic numbers we got last week. you saw retail sales stink. what is going on? what's really happening? >> we came with high expectations. what is interesting if you look at the data to the extent in which it is disappointing. they're actually at the worst level since 2009. not because the economy is rolling over and i don't think we're in any real danger of a recession, but people had a very clear thesis this was going to be the year it broke out at 3, 3.5% growth. some of the longer term factors whether it's slow growth or weighing on the economy that it is just to expectations. >> deweo we shake this off? the dow within 16 points of a new high. are the markets overvalued here or not? >> markets are expensive. you think about a couple weeks ago that april payroll report making the market exactly what it wanted. $225,000. it was strong enough to remove any concerns about, are we going back to stall speed, but it was weak enough that the fed can take their time. that's exactly what the market wanted to see and that's why you rallied hard on the day. the danger is you are starting to get to the point where data is soft enough and earnings will also become weak and difficult to sustain these evaluations when eventually the fed will remove accommodation. >> eventually maybe further and further in the future though. at this point the fed funds future are less likely they go by september. >> it is getting pushed back. i think last week was a week because you said industrial spending production and everything was pointing the wrong way. we do think you'll get some stabilization and consumption will pick up a bit. going back to your other question, are we going back to 3.5% growth? probably not. we have an environment where productivity has rebounded and the more important point, a very big demographic. much slower growth in the workforce. the ability to get to 3.5% and stay there, that's a much more challenging thing to do than it was 30 years ago when the workforce was growing much faster than it was today. >> let's throw out this theory. people there saying that they think we could potentially be looking at high stock prices but they don't think we're in bubble territory yet. would you agree with that? >> i would agree with that. take a few simple examples. you look at the s&p 500 today. you're trading at 17.5% earnings. you get back to where you were at the peak in 2000. now 17.5% is above the average and you take into account, a low-inflation environment and a low-rate environment, that's probably in the right vicinity. a big stretch, but i don't think it's a bubble. >> i know you like the the integrated oil companies. >> we don't think oil prices go up enough from here. >> enough spare supply that can come online very quickly and you won't see it go back to 80 any time soon. you have a market where thinks are fully valued and expensive. a 40% discount to the broader market. the benefit, at least part of their operations from the windfall to the refining side. look at chevron's numbers a few weeks ago e. finally in a world where rates are still low and everyone is stretching to get yield. i would rather pay nine or ten times earnings than 17 or 18 times for a regulated utility, which is your other choice right now. >> we have richard thaler here and we have been talking about the irrationality of markets. part of me thinks there are ways to start the system. if you start getting everyone to beat the system then you're not going to have the same profitability and the same returns. is that true? >> here's the paradox. the fact that prices can get out of whack doesn't mean that it's easy to make money. and, you know the technology bubble and the real estate bubble are perfect proof of that. so there were lots of people you know my friend bob schiller was saying that prices were inflated in '96. that's when he gave the speech to greenspan that greenspan gave the irrational exuberance speech. he was right, but four years too early. in the same i thought for several years that we were in a real estate bubble in vegas and scottsdale and south florida. but, you know e, if you tried to short real estate, first of all, it's hard to do. and, second of all, if you're early, it's a lot like being wrong. so my take is prices can be very wrong but it doesn't mean that there's 1,000 bills lying on the street. >> if you consider what is going on now. you have the added complication that people are getting force under to trade that they might not otherwise take. if you think about large parts of the market. older people are thinking about how you generate income and an environment where the policy rate is stuck at zero. that's creating a lot of behavior which might not be totally irrational. a reflection of the fact that people are in an environment no one was prepared for. no one believed that rates would stay at zero for this long. >> ross thanks for coming in today. vladimir putin putting on a show this weekend. we'll show you the video when we return. 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[ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are. and start working on your next big idea. ♪ ♪ russia's president vladimir putin taking to the ice this weekend in a friendly hockey match held in sochi. conflicting reports to how many goals he scored. one news agency said six and another said eight. putin was playing along with other government officials, businessmen and athletes. and i don't know how you really -- >> i'm not sure why they just didn't call it a dozen. >> yeah. he usually wins 100% of the vote. who is the guy recently that kind of crossed him? anyway would you check him? i don't know if i would. >> nice shot mr. president. wow. >> standing ovation. he's getting a standing o. >> how do you do it? amazing. some other putin news this morning. a group from st. petersburg unveiling a statue of the russian president putin depicted as a roman emperor. as you might imagine. the local of the group says that the idea to erect the monument came after russia's takeover of the crimia peninsula. the theme came up because they wanted putin to be russia's leader for life. there you have it. >> just all. we have the "new york times" they have past or profit. which one is now? one of them is gone. what is the actual government? >> we have a russian here. steve liesman. they are both still there? >> not comparable to the great lady, though. >> right. >> probably. >> unbiassed. separating the hype from the value in the nfl draft picks our guest host will tell us why he tells the nfl team to take the high picks and trade down. take a look at u.s. equity futures. the technology changes the design evolves the engineering advances. but the passion to drive a mercedes-benz is something that is common... to every generation of enthusiast. the 2015 dream machines, from mercedes-benz. today's icons. tomorrow's legends. visit the dream machine event today for up to $3,500 towards purchase. it's more than the cloud. it's security - and flexibility. it's where great ideas and vital data are stored. with centurylink you get advanced technology solutions from a trusted it partner. including cloud and hosting services - all backed by an industry leading broadband network and people committed to helping you grow your business. you get a company that's more than just the sum of it's parts. centurylink. your link to what's next. excellent. researching a hunch, and making a decision. time for a change of menu. research and invest with e*trade's browser trading. e*trade. welcome back to "squawk box." among the stories that are front and center, amtrak has now resumed full service between philadelphia and new york city. this is the first time since tuesday's deadly derailment that the full northeast corridor has been operational. also this morning, china reclaiming its spot as the leading owner of u.s. debt. total foreign holdings, treasurysh securities rising about 2%. "pitch perfect 2" hitting the right notes bringing in $70 million in its debut. that's more than the original movie pulled in during its entire north american theatrical run. take a look at u.s. equity futures this morning. some red arrows. dow looks like it will open down and s&p off close to five points and nasdaq looking like it will open open up about 17 points down. all the nfl rookies reporting and the spring meeting starts today. guest host advise nfl teams on their strategies. teams with high draft picks should trade down and those with high picks are overvalued. we're joined now by patrick, the incoming director of the sports business program at washington university. also founder of sports impacts. first, richard thaler is going to explain why top draft picks are overovalued. richard, you look at the break down. a lot of guys i think a full third playing that weren't drafted at all. they're walk-ones, basically. that should tell you something, right? >> so, what the research shows is that teams do own something. the players picked at the top of the draft are better than the next ones and so forth and so on. but they act as if those first picks are sure things. so, if you look at the, you know teams can trade picks. and we see them often doing that. and if you look at the price that picks are worth, you can trade in principal the first pick for five picks in the second round. what says that value of the first pick is five times the second round picks. we studied this and what we found is those second-round picks, each of them are worth more than that first pick. >> they can be. patrick, i don't know if that's exactly like the oakland a'estrxa's or billy bean. there are ways to approach saying it's not just about the highest paid or buying what people think is the best deal. i don't know about horse racing. that might be i'd like tasee you do it with horses although they're not human, typically. >> the people betting on them are. >> i wonder if it works that way, too. some comparisons between this and what the oak oland aland a's did? >> there could be. i have to echo the sentiments being shared there. if you look at last year's nfl starters. they came for the first or second round, which we would expect. but 40% coming after the second round and 15% of them were undrafted. another comparison i'll make is if you look at the all-pros from the last three seasons in the nfl. majority coming from the first round and 48% were first-round picks. however, you got 20% of them came through the third round. a lot of value out there. just about finding it. >> you still want the first round pick to be. but if you can trade your first round picks, you should do it. if you can trade down and get second or third round and, you know sort of cash in the value at that point. hard to cash in the value by picking that one guy. >> there's no question. especially runningback. >> go ahead. >> i think what you've seen now is teams have half figured this out. so, a couple years ago the redskins made one of the dumbest trades in history. trading away a whole bunch of first round picks to move up four picks to get rg3. then he got hurt and, you know that's one of the things that happens when you trade away a whole bunch of picks for one. we know about diversification. one player could get hurt. and now that teams like the tampa bay and tennessee that had the first couple picks this year the rumors within the league are they were asking for that kind of price to get rid of that pick. >> richard, we'd relate this to everyday life. did somebody overpay for that pucaso painting the other day? when you go and you win that first auction for that first player by definition are you overpaying relative to the market? >> well we can't say for sure. but there is something called the winner's curse. years ago i wrote a book called "the winner's curse." what we know a lot of people bidding for something that is worth the same to everybody. the guy that wins the auction is the one that most likely overvalues the thing being sold. >> you are chronically into rationality here. people are not putting the right value on the first pick versess esss two, three, four and five. how does this go companies picking ceo. their first round is the ceo they pick. >> let me give you first a fact. if you look at all the players drafted and you compare players at the same position. so all the quarterbacks or all the tackles and you ranked them first to last the chance the guy picked earlier, one earlier is better than the one later. 52%. basically a coin flip. now, i would argue the nfl has way better data and way better ability to forecast who will be a good football player than companies do predicting who will be a good ceo. >> we were talking about off camera before versus comp for a football player or baseball player. come is the more perfect market? >> i would say certainly sports. >> certainly sports. >> because we ehave way more metrics. there's no -- >> do you think when you look at the metrics of a company, i mean, the question is whether you can attribute that. >> what are the attributes of a ceo and whether they're going to work. you take a great salesman and put them in charge of a company or a great journalist. the guys who are the wonderful journalists don't end up being great managers at all. sometimes. >> you can argue about -- >> speak for yourself. >> sometimes. >> whether lebron james was the best player in the league this year or one of the three best. nobody that is going to doubt that he is one of the greatest basketball players of all time. who knows who is a good ceo? >> that's the thing. you don't know if they're untested. see, this is where i think you got it wrong, andrew. you can identify guys that have proven that they're good ceos and you go and they've done it again and again and again. they just seem to be able to make decisions. and that's where, let's say you have a guy who you're pretty sure is able to take a $5 billion company to $20 billion, $30 billion, whatever it is. he seems to have that knack. i won't mention any names. but great ceos in the past and then to argue he's not worth 20 million or $30 million. when reese witherspoon gets $30 million for her next movie or a lefty with the breaking ball gets $30 million. to be able to run a company. there are people as yourself or maybe work at your paper that think no ceo is worth more than ten times the average worker. >> that's the question i was going to ask. >> it is possible you can be a star ceo. >> when you look in the sports world, for example, the highest paid player what is the ratio between the highest paid player on the team and the lowest paid player? >> it's like a fairness thing. >> not a fairness thing. what makes the team win? >> doesn't it all argue for performance base salary? your ceo and that's the problem, i think, with the nfl is that you pay with this big bonus and even with companies, you pay this big bonus at the start and you have no guaranteed performance. it just seems to me to argue and tell me if i'm wrong here. what you ought fabe doing. if you're going to throw lots of money at them make them earn it over time at intervals. >> the problem with performance pay, we can almost never measure performance. >> but in smortsports/. >> particularly true for ceos. >> let patrick weigh in here because patrick said you're right, in sports you win an mvp or a title. >> if you look at the marginal revenue product, the additional money that's generated when lebron went to cleveland. look what happened to the franchise value of the cleveland cavaliers when he left four years ago and now he's returned and the advertising rates that fox sports ohio is getting and the additional ticket sales. you can measure it. in other areas of life when it's companies or universities there are key metrics if you bring in key personnel, those metrics are go up or down in part because of the quality of those people. >> except that -- >> research also shows that we're not very good at distinguishing luck from skill. and what we see is that ceos get rewarded when they have good luck and then they don't get punished for bad luck. >> all of this is the same as picking 3 year olds in horse races, joe. >> yeah. >> if a ceo is it can be punished when they have bad luck. if they don't get a stock price up. for example, even though it's out of their control what happens. let's say that they take over an oil company when prices are going from $100 to $60. it's possible that guy is going to be gone or not hit bonus metrics. it works both ways right sph. >> every oil company executive looks like a genius when the price of oil doubles. >> no kidding. we hear about fall profits. >> why do we reward them for that when that's out of their control? >> talk to the share owners. >> the people in industry are benefiting from the general economy either going up or down which they have very little control over. if you're excelling on the court or on the ice or on the football or on the baseball field, you're going to get paid. >> however, you've also seen ceos who can accelerate when the company is under pressure. look at underarmor. >> airline ceos. >> i can bring up lots of different areas where you've seen one ceo. westinghouse and ge were basically the same company in 1990. same mix of assets. >> the question is whether you would be able to predict which is the good ceo before it happened rather than after. >> right. i think there can be. you can be good at being a ceo. and i'd say that's a higher skill than a good curveball. >> but harder to predict. harder to predict. but more people affected. shareholders. >> yeah. >> you got employees. you got the public. it's an important job and it's more important than you know dumb blonde 2. anyway, thank you to patrick and more from richard thaler still ahead. before we head to a break, some deal news this morning. ascena retail is buying ann inc. big premium. that stock closed on friday at 38.71. take a look, it's already up at 46.08. we'll talk more about that a little later this morning. >> does ascena own dress barn? >> i'm not familiar. when we come back this morning, changing the way you buy and sell cars. up next a profile of that start up that wants to take dealerships out of the equation. stick around, "squawk box" will be right back. [ male announcer ] at northrop grumman, we've always been at the forefront of advanced electronics. providing technology to get more detail... ♪ ♪ detect hidden threats... ♪ ♪ see the whole picture... ♪ ♪ process critical information and put it in the hands of our defenders. reaching constantly evolving threats before they reach us. that's the value of performance. northrop grumman. 40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back. welcome back everybody. if you've ever been flustrated by buying a car from a dealer you're not alone. phil lebeau talks about a start up that wants to change the way we buy cars. >> not just buying a car from a dealership but buying a used car from a friend or stranger whoever it might be a company starting up in california slowly expend expanding across the country. essentially this is taking used car sales online. we were there as miles johnson was getting his car delivered to him. bp does all the deals online and the prices are guaranteed. so, basically, the first time you see your used car is when it's delivered to you. >> it's definitely a little scary to make such a major investment without ever having sat in the car or driven it. but, i feel pretty comfortable with beepi's return policy. >> he sounded a little nervous, but ultimately pretty happy with it. miles johnson has ten days to research his car. he did not do that. if you have a car that's less than six years old, beepi will buy or sell it. we were at their facility. no history of crashes and they must be in good shape after they do 185-point inspection. this brings up the question i heard from people. wait a second what is the business plan here? they buy and sell used cars at the market rate. it tells them this is what the price is going to be in this market for this vehicle. they guarantee the sale within 30 days of you selling your vehicle to them. their profit margins are capped at 9%. as opposed to dealerships or others who will get 30 40 50% profit margins on the sale or purchase of a new vehicle or a used vehicle. and then they pick up and deliver the vehicles to those who are buying or selling them. >> in today's age where you buy everything on olin you can buy on amazon and, really i buy everything online. just didn't make sense to go to a physical lot to buy a car. we said something has to change. why can't we buy a car like we buy a pair of shoes on zappos. that's what beepi is all about. >> if you look at shares of carmax. i had a number of people say to me is it possible these guys could put the used car dealers out of business enin this country. keep in mind guys more than 40 million used vehicles are bought and sold here in the united states. plenty of market here for beepi to come in and say, you know what, let's take a little bit of that business. another start up out oin california with a similar business model. the interesting thing is whether or not this is what we've seen with shoes and zappos. will people be comfortable buying online without having a test drive. >> that's always something that has driven me crazy in the process of buying a car. i'm not sure i'm 100% there in terms of buying the whole car online without seeing it and sitting in it. maybe if you've done all the research and gone to the showroom and seen all these things, maybe it is a different proposition. >> true. all comes down to your comfort level. remember, becky, i remember when zappos started up. why would you buy a pair of shoes without trying it on? i understand a shoe is far less expensive than a vehicle, but it's along the same principle. coming up when we return the first look at the new steve jobs movie. with xfinity from comcast you can manage your account anytime, anywhere on any device. just sign into my account to pay bills manage service appointments and find answers to your questions. you can even check your connection status on your phone. now it's easier than ever to manage your account. get started at xfinity.com/myaccount clips from the trailer of the new movie "steve jobs." it made its debut during last night's series finale of "mad men." the film will be released in october. it is a universal film. >> that will be great. >> going to be very cool. looking forward to it. also, check this out. former presidential candidate mitt romney stepping into the boxing ring with evander holyfield on friday. the fight raised more than $1 million for the charity vision organization, which provides high surgeries and vision screening to poor people in countries. a mystery punch which floored holyfield in round two before romney -- >> you heard his jokes and his lines. he said i want this fight to be cleaner than hillary clinton's server. and he also said now that i've fought evander holyfield i'm ready to take on harry reid's gym equipment. >> all right. >> good lines. >> he looks, i was going to say, he looks awesome. 68 years old and he looks awesome. >> he does. >> what could have been. >> we want to thank richard for joining us this past hour. can we show the book? "misbehaving." thank you for being here. we didn't get to do it. but next time you come we'll do this wine. >> all right. we need a bottle though. >> to figure out how we do it. but how people behave. >> they drink it right? >> they do drink it. but there's economic principles behind whether you should drink it or not. >> are you saying? >> i check the alcohol content not the vintage year. is that the best way? exactly. i always come up with thunderbird. >> at least you get your monies worth. coming up a big week for retailers. several big box retailers set to report. we'll ask analyst physical cheaper gas prices will boost the retailer's final line. randall stephenson joins us to talk mergers and the new net newutrality rules. the technology changes the design evolves the engineering advances. but the passion to drive a mercedes-benz is something that is common... to every generation of enthusiast. the 2015 dream machines, from mercedes-benz. today's icons. tomorrow's legends. visit the dream machine event today for up to $3,500 towards purchase. [ male announcer ] your love for trading never stops. so open an account with schwab. and when a market move affects, say a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move wherever you are. and start working on your next big idea. ♪ ♪ there's some facts about seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right. and we take it very seriously. because we love them. and we know you love them too. big box retailers and the consumer. walmart, target and lowe's have lowered gas prices helped the bottom line or are shoppers holding back and waiting for a summer deal? we'll take a look straight ahead. a "squawk newsmaker" the new rules for the net. the latest on directv and the bundle. at&t randall stephenson will be our special guest. summer in new york means one thing. the hamptons. if you are rich you usually say this on friday. but new rules are creating helicopter hell for the rich. robert frank previews a big hearing today on the issue 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." >> wake up, everybody, if you haven't already. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kern kernen and andrew ross-sorkin. dow futures down by 5.5. the s&p closed at a record high again, on friday. dow within about 16 points from its close on friday from a record high of 2. let's tell you about some of the stories that investors will talk about today. buying ann inc. for $47 a share in cash and stock. see shares popping on that news. dress barn is one of the big brands that they own. also shares of chipmaker altera getting a boost this morning. talks have resumed on an intel purchase this morning. mcdonald's the latest rand join and glenview capital to take new positions. raised its stake in the fast food chain. you don't know if that's what they're currently doing or telling them to do something very different. >> remember dvrn. that's gone huh? >> i guess so. >> buying par pharmaceutical in a deal valued at more than $8 million. the acusition comes just two months after it dropped its effort to purchase pharmaceuticals in a bidding war. joining us rajiv de silva. one of the top five generics in the u.s. is that true? >> thanks for having me. that is absolutely true. but specifically in generics. this will position as a top generics player in the u.s. >> by the end of the first year it will start, or it will be a creed at purchase at closure? >> it will be in 2016 into the double digits in terms of percent. >> is this a deal that's betting on the pipeline at par or on existing products that par has already generating revenue from? >> par brings to us a great diverse portfolio of existing products which will immediately benefit from. but as well as a product pipeline which is arguably one of the best in the generics industry. >> rajiv, four years ago i think when pgb was much cheaper. has something changed or the whole valuation of these types of companies has increased but it's just hard to imagine that it quadrupled in value in four years, unless tpg those guys just got an incredible deal. >> well tpg had one of the best benefits team working for them. paul is a transformational leader in the generic space and he has truly etransformed the business since 2012. the business today is a fundamentally different one than the one tpg purchased in 2012. >> you almost subscribed some type of talent from $2 billion to $8 billion in just a couple of years. you really think the ceo made a difference, rajiv? >> enormous difference in this company and one of the most exciting parts of this transaction is that paul would be joining the management team. >> anyway rajiv, thank you. we appreciate your time and hope it works out for you. >> thanks for having me. >> you're welcome. a big week for the big box retailers. walmart, home depot, lowe's and target are some of the retail names that will be ereporting in the days ahead. walmart making news with free shipping trials taking direct aim at amazon. joining us is tigress financial and deutsche bank director. gentlemen, welcome to both of you. >> thanks for having us. >> guys let's talk about what has been happening with the consumer. very surprising that the money that they've been saving at the gas pump. they haven't pumped right back in to some of these retail names. consumer confidence is dropping and, ivan i just wonder what does this all mean? is this a one off bump or something seriously wrong here? >> are think we've had a gradual improvement in the economy and a gradual comeback of the consumer. it's been very slow and the economy has dragged along and rates are lower than people thought they would be. so far the consumer is paying with the gas savings. they are paying down debt. the one slight increase in the consumer spending area has been in casual dining which is usually the first part if you're saving a few dollars on a tank of gas, you'll go out for lunch or dinner and then you'll start to upgrade your home goods and housing and home improvement. so it will work its way through the economy. but i do believe gas will continue to stay low. >> you agree with that? i know we had weather issues earlier in the quarter, but april sales still stunk. what happened? >> you're right. quite lackluster and we are still optimistic on the consumer as we go through the year. you know just giving their improving labor environment and the wage increase conversation that's happening. but i also would add in addition to dollars moving to casual dining, i don't think we can underestimate how priorities have frankly changed from a spending standpoint. experience is quite high at the top of the list along with technology. anything disney related. you know anything from apple standpoint. just takes priority over buying clothes out of big box retailers at the mall. so, i think that is where some issues have lied in terms of thinking about the department store missing sales last week. >> having said that though you both like macy's correct? >> absolutely. >> but why? >> macy's is a one of a kind retailer with the top brand partners, you know in the mall. they are the go-to plays for the michael kors and the ralph lauren and a great private business label, as well. with the amount of free cash flow that macy's generate the real estate that they own, i think it's a very inexpensive stock at current levels. >> they've done a phenomenal job in merchandising and having a great product lineup and couponing and connecting with their customers through the macy's credit card. i think on all fronts they have done very well as a retailer. >> you just mentioned the real estate. most don't think of macy's as a real estate. going to remain namee nameless i'm thinking kmart. >> remain nameless. you think of this as a real estate play. most think of macy's as an operational play. some way they can create value from the real estate side of this? >> i think there are options on the table when we look at the blue print that players such as hudson bay and sears holding has just undergone over the past few months. and, so macy's given their portfolio certainly i think has a lot of valuable store and land that, in theory could be monetized. >> let's talk about some of the big discount retailers. walmart out with earnings tomorrow. you both are a little concerned about what you're seeing there. >> correct. walmart to us is a name unfortunately, with very few catalysts on the horizon. walmart, investors like walmart when it's a great capital return story. in the last story, no buyback and we also had a dividend increase of only 2%. in addition we do think sales have maybe slowed a little bit from the forth quarter pace and, obviously w the wage increase that they're having in store along with other big tech investments, unfortunately, just no earnings growth near term. >> although ivan you did point out that they have a relatively low bar to jump over for this earnings. >> yes. however, we're neutral on walmart. i mean the law of large numbers works against them and the improving economy works against them. as the economy gets better, their customers go up market. >> new ceo there. chance they could break through the bureaucracy and shake things up? >> i don't think it's a bureaucratic issue. it's their market and their size. >> you know, macy's last week missed. you guys you know why? i was just looking. port strike. >> are we through with the west coast -- >> 12% of their merchandise got stuck out there. this is the one i like the stronger dollar. >> because foreign shoppers. >> foreign tourists coming here didn't spend any money. >> that doesn't surprise me. big flapship stores. >> you guys saw it last week and weren't surprised by the weakness. >> the market was forgiving. the stock didn't have much of a selloff. >> that's what walmart has going for it as well. pretty low bar. low set of expectations as we move forward for some of the names that we're discussing. but walmart would fit into that camp, as well. >> tourists wouldn't be caught dead in walmart. that's for sure. >> guys thank you very much for coming in today. coming up winning over volvo. the automaker will build its first north american manufacturing plant there. we'll hear from the ceo of volvo car group next. later, the fbi detaining a man who said he hacked into a plane's entertainment and wi-fi. >> he's on it. >> well there's some skepticism apparently about the whole claim. we'll interview him a few months back and ihman will join us with more on that story, next. we'll be right back. line and part adventure. it's part geek and part chic. it's part relaxation and part exhilaration. it's part sports car and part suv. and the best part? the 2015 gla. it's 100% mercedes-benz. between georgia and south carolina. no i'm not talking about, that's the fist thing i thought of and people have to choose. or hilton head versus sea island. but this has tao do with volvo. will go to south carolina. came up the big winner. already the home for bmw and mercedes and announced in march it will build a new plant in charleston. why south carolina? why now? phil lebeau joins us. both right to work states are they not? do you know phil? >> that plays a role in this decision. let's bring in the ceo of volvo automobiles and he joins us from washington, d.c. where i think the main question a lot of people have why south carolina? not only in terms of why south carolina instead of georgia, but why instead of south carolina instead of going to mexico with the new plant? >> for us it was best alternative. there are various factors, logistics availability of skilled labor. we need a port close by. and i think, also very positive business orientation from that administration. so t was for us the best alternative. >> at the same time you know ethe industry so many plants have been added in mexico. and everybody says ultimately that that is a manufacturing base that could eclipse what we're seeing in the southeastern united states. was mexico even in the mix versus south carolina? >> absolutely. i think we looked into all alternatives. but it is also very important factor. i mean, we have been in the u.s. in 60 years. it's a market we really believe in and we have ambitious plan for this market. we need also industrial presence in the u.s. i think we want to make u.s. into a new market for us. >> you do want to make it a bigger market yet, at the same time you've struggled in recent years as a brand here in the united states. your sales were down 8% last year at a time when the rest of the market was up 8%. is it too crowded, so to speak, in that near premium market for volvo to cut out a bigger niche? >> it's of course, very crowded. that's competition. but i think volvo has a very clear premium identity and we are focused on safety environmental friendly engines and so sonon. also some exciting new products coming out. in four year's time basically, all of our cars will be renewed. that's also of course a very important factor for us growing in this market. >> hakan when they bought volvo from the ford motor company. a lot of people said watch this. let's see if they use this as an entry way with chinese-brand vehicles. is that possible or do you think the ownership is saying we're comfortable only with volvo being a manufacturing base and sales in the u.s.? >> i think we got a very stable owner and i think it has been very beneficial for the companies. i was more volvo today and we are more scandinavian than we were earlier. so it has been very beneficial and what we talk about now in the u.s. volvo plant and it will be built it make volvo vehicles only. >>erally real quick. when the first chinese vehicle come to the u.s.? >> it is coming on the ship right now and it's a special model. a longer wheel base with more leg room for the consumer here in the u.s. i think it's a very interesting addition and it's on the way into the show rooms as we are speaking. >> we will see it when it gets here. hakan samuelsson. the newest plant will be a volvo plant and it will be in south carolina. >> phil lebeau, thank you for that. when we return a question. did a hacker take control of an airline? the fbi saying he did, he did it 20 times. that story when we return. the rich and famous usually escape to the hamptons during the summer but new rules could restrict the choppers that have been hovering over east hampton airport. a key hearing today ahead of the summer rush. when "squawk box" returns in just a moment. financial noise financial noise financial noise ♪ if you're looking for a car that drives you... ...and takes the wheel right from your very hands... ...this isn't that car. the first and only car with direct adaptive steering. ♪ the 328 horsepower q50 from infiniti. 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. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. welcome back everybody. government officials are investigating whether a computer hacker was really able to take over a plane and cause it to bank sideways. he interviewed the man in question, chris roberts, several months ago on this very topic. good morning. >> good morning, becky. that's right. chris roberts is back in the news today after reports that he allegedly told the fbi that he took control of a flight to hack into its entertainment system that is available to paermss in the rear of the plane. he was able to manipulate the plane's engines by doing that. he has done a lot of research and he believes it is possible to hack into a plane's airplane control systems through the entertainment system. he's done a lot of research on that and he thinks that is something that could theoretically be done. this could be new, however, if he is claiming that he has actually done it. a month ago in san francisco i interviewed roberts and i asked him whether or not he thought it was possible for terrorists to bring down a plane. here's what he said. >> it would be tough. the hacks themselves are not easy to do. circumvent three different systems and it takes a long time to do the research. is it possible? yes. is it probable? tough to say to be perfectly honest. anybody with enough motivation and enough financing behind them would be able to do something. >> that is a little scary. >> that it is. be nice if they fixed it. >> now we talked to senior law enforcement officials about this this morning. here is the statement they gave us over e-mail this morning. saying there is no credible information to suggest an airplane's flight control system can be accessed or manipulated from its in-flight system. tampering with the system is illegal and any such attempts will be taken seriously by law enforcement. guys, last month when i did this story initially. i talked to united and they gave us a statement saying they do not believe it is possible to hack into their airplanes the way chris roberts is suggesting. nonetheless, they have banned him from flying on united saying his intent to do so is reason enough to keep him from their airline. he is able to fly, though on other airlines and he told us to get to that conference in san francisco, he took a southwest flight guys. >> i'm glad to hear that united banned him as somebody who flies united often. why is it taking this long to figure out if it's actual possible to hack into that system or not? >> what roberts is saying is it's extremely complicated to do that. you have to get into the entertainment system and then through that get into theaveiotic theaveiotics. phil lebeau has talked to the airlines and also to bowing, the manufacturer of many of the planes in question and boeing is adamant it is not possible although they won't say 100% because nobody ever says 100%. it's complicated and a lot of people just don't understand the stuff. >> the guy can't re-create it and say this is how i did it. >> he spent a long time with fbi and law enforcement. he was pulled off of a plane after tweeting about this. he was on a hopscotch flight across the country. he tweeted about it on one flight. when he arrived at his destination to catch his next flight, he was detained by law enforcement there after they saw his tweet and interviewed extensively about this. he said he has been cooperative and he's been trying to help alert the airlines to what he sees as a danger out there. i asked him if he, himself, was a danger to u.s. aviation and he said, no he's just trying to help. obviously, the fbi and the airlines are viewing this a little differently, though. >> it seems crazy this could be out there for weeks and they haven been able to determine whether or not it's possible. >> he said he has been working on this for years and he has been trying to alert the airlines for months and months now and hasn't gotten any feedback that is positive other than being banned from united. >> thank you. >> you bet. when we come back this morning, the rich and famous are fuming over new rules for helicopter services to the hamptons. a big hearing happening today that could affect your commute to the peach house. we'll have the details right after the break. later a squawk newsmaker joins us from the media conference. at&t chairman and ceo randall stephenson will be here. stick around. thank you for being a sailor, and my daddy. thank you mom, for protecting my future. thank you for being my hero and my dad. military families are thankful for many things. the legacy of usaa auto insurance could be one of them. our world-class service earned usaa the top spot in a study of the most recommended large companies in america. if you're current or former military or their family, see if you're eligible to get an auto insurance quote. welcome back to "squawk box." here's what's making headlines at this hour. we're going to get the latest reading on the home builder sentiment later this morning from the national association of homebuilders. the index expected to rise from 58 to 56. samsung holding its own against apple in the smartphone market. a survey says the retention rates are rising and that apple's stickiness apparently decreasing. and then google planning to roll out so-called buy buttons on search results pages in the next few weeks, according ta"wall street journal" trying to ramp its up presence as an online marketplace. graduation season is here and lots of commencement addresses and advice. in fact yesterday apple ceo tim cook shared his word of wisdom with the class of 2015. while he was there, he also cracked a few jokes. >> they asked me to make a standard announcement. you've heard this before about silencing your phones. so those of you with an iphone just place it in silent mode. if you don't have an iphone please pass it to the center aisle. apple has a world class recycling program. >> at the end of the speech cook took a picture of the graduates with his own iphone. the squawk platinum portfolio eis back. co-manager and partner of the yakman funds. he joins us with the names he is swapping in and the ones going out. good morning. how are you? what are you doing and why? >> we're taking oracle and we're swapping it out. we still like oracle a lot. the stocks held up fairly nicely this year and had a pretty good run and we're moving to cisco, which has been under pressure as we've had issues from its potential merger with u.s. foods. what we like to do is move into securities that are temporarily underperforming where we believe the long-term story is actually great. cisco is one of those that we think is a long-term bargain. >> what happened with oracle? >> nothing particularly. >> how much have you made on oracle? >> we were buying oracle about a year and a half ago in the mid-30s and in the low 30s after it cracked. we continue to like it a lot and this portfolio has been pretty flat for the year. >> cisco i just saw, did you see what they said. they're worrying about eggs. eggs at this point. anybody on a low-carb -- yeah cisco. not that cisco. >> different cisco. >> i've even heard that are they breaker eggs. they're up three times. the eggs sold in liquid forms to bakeries and things. they increased three times or 300% just over the last several weeks. >> for people on the atkins or whatever. eggs are key. eggs are every key. i eat a lot of eggs. a lot of eggs. >> how many eggs do you have a day? >> i try, i have one in the morning and then i might have an egg salad sandwich or maybe even have an omelet or something. >> cholesterol issue there or no? >> you have to monitor your cholesterol. that's more heredity than anything. is it a call on technology that you're making with oracle? >> we have microsoft and cisco, oracle. >> different cisco. >> different cisco. we have two ciscos now? >> wae have twoe have two ciscos and johnson & johnson. >> give you something to see. yeah, so it's interesting in terms of some of your other stocks that you decided not to sell. you decided oracle was, what else is in your platinum portfolio. >> procter & gamble and 21st century fox. shares have been under pressure. most of the best investments we made over time are in shares where the securities go under pressure temporarily, but they actually create even better bargains allowing us to increase our position. >> do you know where you rank in the platinum portfolio? do you know? >> i am guessing we have a lot of room to move up. >> do we publish standings or anything like that. do you know what you win? do you win any platinum? >> i am open to anything you have to offer. >> these are questions we started this platinum portfolio. you know. pp. anyway thanks. we'll be watching and update us on the egg and johnson & johnson situation, as well. >> you almost made me cry there. laughing crying. >> i don't think it's ever been done before. go ahead. >> you want taremind everybodyo remind everybody what is going on here? >> you can go online to cnbc pro. that's where you can find it. all our platinum portfolio managers in real time. also read their exclusive analysis. i'll do that. >> you should go online right now. during the next commercial break. thank you. >> thank you. today could be a key day in a hearing that could ground some choppers heading to the hamptons this summer. robert frank has the story from long island this morning and it is getting a lot of people crazy, robert. >> a lot of rich people crazy, andrew. not very summary here today, but normally this friday would mark the start of the summer season here in the hamptons and the beginning of helicopter madness when all those private choppers bring the rich and famous out to their beach homes. but this year a case being heard today behind me could ground many of those hamptons helicopters. now, these could be rules that include a curfew on noisy aircraft into east hampton between 8:00 p.m. and 9:00 a.m. as well as rules limiting each helicopter to only one takeoff and landing per week. per week. so that's a big imposition there. now, the limits would mostly affect the charter companies. last year just for perspective, more than 15,000 helicopters took off and landed at east hampton airport. we talked to charter companies like glade, they're not commenting and fighting these rules. but blade is looking into diverting some flights into other airports like montalk or west hampton or southampton and using sea planes instead of helicopters. some other charter companies have taken a different approach. gotham helicopters have just purchased a fleet of quiet bell helicopters that exempt them from the air restrictions and today are launching an app that allows you to book one of those helicopters just like uber over your cell phone. guys, back to you. >> is it strictly a noise issue or the helicopters themselves? these guys have no problem? they'll be able to land as many helicopters as they want? >> it's the noise. its arer the noise and it's east hampton. east hampton is the airport where they land. so there's talk about diverting them to montack which is a very easy airport in terms of allowing this but that's pretty far out there. the other airport, southampton is a very small helipad, not very practical. you have an hour or two hours of traffic tasito sit in. east hampton was the airport. one helicopter can land and take off once a week. a big imposition not just for the charter company, but he sometimes flies in and out six times a day with his helicopters. >> i thought there was a proposal on the table that would restrict the use of helicopters for services like blade and some of the other sort of charter companies. but that if you actually owned property in the area and you had a helicopter you'd be able to land. that's not the case? >> well there are, there are no private helicopters. there are no properties in the hamptons where you can land it on your own property. you have to land it at an airport. now, if you have your own helicopter, you can take off and land just once a week. so, if you're just coming out there for the weekend, landing on sunday it's fine. a lot of these guys when they have parties, especially, they fly in and out and shuttle their guests in all week. it's an imposition on the charter companies, yes. but also on the private individuals that came out maybe more than once a week. now ira has a ofleet of helicopters himself. he may be able tado multiple flights. if you have a lot of helicopters, then you could take a lot of flights. >> the west hamptons that's not going to do it robert. you know it. >> this is going to mess me up. >> what is that one road that everybody is on? >> 27. >> yeah. >> on 27. you're stuck on the one lane on the 27 all the way up. >> whoever built the hamptons that was brilliant. one lane. >> probably done that on purpose it keep people out. >> nobody goes there any more it's way too crowded. >> and these helicopter services -- >> go ahead. >> these helicopter services last year just exploded because the traffic got so bad and it was only $500 per seat to get from manhattan to the hamptons in 40 minutes. so that was a huge deal. thousands of helicopters, bhad did more than 700 flights in their first year of service last year and i think that's one of the straws that broke the camels back when the locals said enough is enough with this noise. >> i bet. you can see that. but who, who prevails? people on -- once they get out there, they are the locals. it's a hard one. people that actually live there versus people who live there on weekends. but people who have the money, they're not going to want to sit in that no other way to get there. but who wants talisten to those helicopters just constantly? they're loud. >> robert, thank you. when we come back this morning, jim cramer from the new york stock exchafg. we will find out what you need tabe watching on the week ahead on wall street. randall stepheson joins us ahead of the company's investment meeting. stick around, "squawk box" will be right back. financial noise financial noise financial noise it's more than the cloud. it's multi-layered security and flexibility. with centurylink you get advanced technology solutions. including cloud and hosting services - all from a trusted it partner. centurylink. your link to what's next. friday night, buddy. you are gonna need a wingman. and my cash back keeps the party going. but my airline miles take it worldwide. [ male announcer ] it shouldn't be this hard. with creditcards.com, it's easy to search hundreds of cards and apply online. creditcards.com. why do we do it? why do we spend every waking moment, thinking about people? why are we so committed to keeping you connected? why combine performance with a conscience? why innovate for a future without accidents? why do any of it? why do all of it? because if it matters to you it's everything to us. the xc60 crossover. from volvo. lease the well equiped volvo xc60 today. visit your local volvo showroom for details. welcome back to "squawk box" this morning. take a look at the futures right now. we had some red arrows before and it looks that way, still. looks like the dow will open up higher about five points higher and nasdaq over a point and that's better than where we started this morning. >> they're all down. >> what happened? >> they were all down. the implied open was down. the fair value was up on all of them. but bring them up again and you can see. >> let's switch that board around one more time. there we go. they're down. i see what happened here. >> they're all down. >> that's what i thought originally. let's also tell you about some stocks to watch this morning. las vegas sands down graded from neutral to buy. the casino operator faces tough challenges in the two largest gaming markets. and also yelp downgraded from neutral and the analyst argues a possible buyout already priced into shares and that the stock is fairly valued given the current out look. >> i need the sorkin board back. >> what was i looking at? >> we used to make a board -- >> now we made it. >> we stop using it because we thought people got the hang of it. but we eneed toneed to bring it back. jim cramer joins us right now. you had a big weekend. congratulations throwing out the first ball at the phillies game. a huge dream for you. >> it was. i got to meet mike schmidt and i talked to chase utley beforehand. unfortunately, i did get the ball and a strike. anybody could hit to .440 from how slowly i hit it. but it was the thrill of my life. just so much fun. phillies organization is great. >> i was on the west coast, but my brother was listening to the game. you're not going to believe it cramer is throwing out the first pitch. >> a little on the outside. oh yeah the fanatic was fantastic. such a great night. >> i watched from behind you the arc was huge. you threw that you knew it was a long way, right? >> well the guy before me. there was a guy who had an honorary pitch before me and 50 cent never made it tom brady bounced it. right before manager hail from the diamondbacks said listen, you're throwing a two seamer and i want it right over the plate or you will be booed by this crowd and you will have choked. that was great advice. >> got to get it to the plate. but you put a lot of arc on it. >> you're not allowed to throw from the mound, are you? >> you can't do it from the mound. three feet from the mound. they don't want you to mess up the mound. >> the pitcher gets on it and starts kicking it and messing it up. >> the phillies organization is great. chase utley a terrific guy and schmidt my idol. just the most special night. just a huge amount of fun. >> rose played third for a while. i would have to say rose was better overall than schmidt for a while. what do you think? >> i dent know. i think he is the best player. >> you know, it's weird when they're not on your team i liked him okay but he hurt us a lot. when a guy on another team hurts, you don't like him for somebody who is rooting for that team. >> 18 season hall of famer and i saw him right before i went in the elevator. mike schmidt, jim cramer. not bad. >> that's cool. >> way to go jim. we will see you in just a few minutes. we want to hear all about the market. when we return randall stephenson chairman and ceo of at&t will join us from the tech conference. comcast's decision to withdraw its bid from timewarner and what it could mean for at&t directv deal. back with more in a moment. what if there were only one kind of dog? then it would be easy to know everything about that one breed. but in fact, there are over three hundred breeds of dogs. because no one can be an expert in every one... an app powered by ibm watson will help vets tap specialized knowledge in the cloud for every breed... and whatever else walks, flies or slithers through the door. ibm watson is working to make medicine smarter every day. it's part adrenaline and part adventure. it's part geek and part chic. it's part relaxation and part exhilaration. it's part sports car and part suv. and the best part? the 2015 gla. it's 100% mercedes-benz. with xfinity from comcast you can manage your account anytime, anywhere on any device. just sign into my account to pay bills manage service appointments and find answers to your questions. you can even check your connection status on your phone. now it's easier than ever to manage your account. get started at xfinity.com/myaccount at&t said the company expects to close that big deal that $48.5 billion acquisition of directv by the end of the second quarter and kayla is at the jpmorgan tech conference in boston. she is joined by squawk newsmaker and at&t chairman and ceo randall stephenson. take it away. >> thanks so much joe. randall stephenson is a face very familiar to "squawk box" viewers. we're so glad to have you here this morning. >> thank you. >> today is the one-year anniversary of the announcement of the directv deal. i know you guys just recently extended the termination date for the deal. people expect it will get done but give us an update on the progress. >> we're in the same place. we think the deal gets done. conversations have been productive. what happened right now is there was a stay request for the title two rules that was filed last week by the industry and the judge put a pretty tight time horizon on the fcc to respond tathat. that will take a lot of their attention over the next week or two. i think that's due on friday. not going to be a lot done over the next week and anything other than title two. we feel like this thing will progress and we're on target to have it progress in the second quarter. >> sue over the net neutrality rules and there is a question whether that is a strategy you will have to abandon to get the deal done. is that something you are planning to address? >> we've been real clear from the beginning that title 2 was ii was not probably the best way to regulate this industry. this industry is changing fast and to take an industry like this moving this quickly and put it under rules formulated in the 1930s to regulate the black dial telephone didn't make a lot of sense to us. we made it clear we intended to challenge the rules. regardless of whether the courts modify the rules or revert this back to the fcc, we do think there is general willingness on the part of congress to pass legislation. that's probably a more sustainable path to get net neutrality, and don't forget there will be a new fcc probably 18 months, 20 months from now, and you're a 3-2 vote away from those rules changing. to us a more sustainable path is legislative path. >> in the meantime we're in a gray area where the industry is changing so much. big xoos are needing to do more deals we just saw comcast drop its bid for time warner cable after opposition. you're doing a big deal with directv. verizon just bought aol. how can you pursue these big deals with so much in washington unclear right now? >> we lack of clarity in the rules is always a big issue. that's the reason we did file the lawsuit. we need to bring clarity and see if we can bring a more sustainable path and clear rules. i will tell you, though you based on our reading of the title ii order. we're operating and investing under the scenario that these rules will probably be changed. we don't think this rulemaking is sustainable from a legal standpoint, but the courts will decide that. irrespective, the congress seems inclined to make a change here so we think the rules already modified into a format that will be conducive to investment in the long haul. >> joel kern let's bring you into the consideration. >> you're investing as if the rules don't stand up does that mean that you are not going to necessarily pare back cap ex in the build-out of broadband? that's one of the things you thought might be the result is that you and others would slow down on these big capital expenditures because you aren't guaranteed a return on your investment. if you think they're not going to hold up does, does that mean you're still investing? >> yeah joe, the exact comment i made was we're going to put a pause on our new broadband deployment plans until we see how these rules came out. we have seen how the rules came out. the title ii order. as we read those rules, we do believe they are subject to modification by the courts and, but even if they don't, i'll say it again, based on how the rules have been written and how we're reading the tone in congress we're fairly confident by one means or another that the rules will be modified. this doesn't seem to be a sustainable approach to regulating this industry. we've said we're going to invest around $18 billion this year. that will allow us to deploy a wireless broadband solution to 13 million homes across the u.s., and 2 million fiber to the home. we're going to stay on track with that. >> becky? >> just a quick follow-up. randall, when you say reading through this you find things you think will be modified by the courts, anything specifically you can point to? something you think clearly doesn't live up to expectations? >> well the thing that we have said was problematic all along was the process that was used to put these rules in place. and that it was done without a full data gathering, without a full review and so we think that by itself will probably be challenged by the courts. so just to go at this from a more rational rulemaking standpoint would be the one thing we could see remanded back, so there had to be a full gathering of data and a comprehensive approach but then once again, just thinking about regulating the internet end to end, as kayla pointed out a moment ago, an industry changing this fast that is this dynamic, i think from a legislative standpoint or from you a new administration standpoint, one would have to ask, is this really how we want to regulate this industry? keep in mind title ii was put in place with a 3-2 vote by the commission. title ii could be changed by a 3-2 vote from another commission. there's a lot of moving parts that we think it's unlikely the rules stay in place like they are in the long term. >> you talk about building out the wireless broadband infrastructure but in the last few months broadband has become a dirty word. that became a lightning rod of sorts in the comcast/time warner discussion. directv will have about a 17% share. how limited is your ability to grow that share. >> well the air where we have struggled the most was our tv product. if you want to game broadband share, you have to have a viable tv product. our tv product today is subscale, it's uh verse, a great product, about you it's limited in terms of scope and where we have built. we do directv, close that transaction, we go from a tv product that's losing money to a tv product that's profitable that happening day one. you have a much more robust offering, and we think we'll be successful in competing against the cable guys. >> hey randall, just want to do jump in with a different question on tv and on bundling, and your views on what this fight, this battle between verizon and disney/espn, the idea of tiering these video services. you're good to get into the tv your take on what's going on? >> it's an interesting time right? the interesting is changing fast. the over-the-top model is gaining momentum. you're see the netflix and hulus gaining momentum. it's changing not just the tv distributors and how we think about the business but it's actually affecting how the content developers are thinking about the business. what happens as premium content moves from traditional linear stream to over the top? the advertising models change and this unbundling of content, it causes a change in that you're seeing a lot of stress in the ecosystem and the environment. >> you did a deal with hulu last week? >> a year ago we did a deal with peter churning group to develop unique content for the wireless model. that was our beginning. hulu is just additive. >> randall stephen son, thank you so much thank you, kayla. we're back in a moment. boys? stop less. go more. the passat tdi clean diesel with up to 814 hwy miles per tank. just one reason volkswagen is the #1 selling diesel car brand in america. ♪ ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ ♪ she can print amazing things right from her computer. 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[ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are. and start working on your next big idea. ♪ ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. the dow just about 16 points away and a big week for retail earnings ahead from walmart to target to home depot. oil is higher though goldman lowers its

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