The yen soaring on the news. Does that excite you . With kelly here. Kelly can yes she loves currency stuff. Its crazy. Talking about 108 . Just the move. Look at that chart. I dont have a lot of insight. But i think it is remarkable that it can get whip sawed like that. Everybody piles in thinking it can only get weaker and then here we go. Live by the sword, die by the sword. Anyone putting their foot on the accelerate anywhere around the world is usually a boost and i thought really . This causes us to go down . Well the turnaround for japan. It was interesting when they did the negative rates thing in the first place. And everyones trying to do the same thing. But it was that moment they went negative you actually started to see things go the other way and it hasnt stopped since. When they go negative. Politicians do that a lot. They promise to not do that. I have to say two things. Can i compliment you this morning on two things . The tie and the haircut. Thank you. And dye job how does that look . Very nice. You do think i dye, dont you . Do you see that . They cutoff the gray. Looks great. Just putting it out there. Thank you. In the meantime, japan at the moment, japanese stocks dropping 3. 6 and in a News Conference the bank of japans governor says hes not thinking about applying negative rates to lending facilities. As to why they decided against action, kuroda says more time was needed to monitor the effeceffect s. So honestly, they are not negative enough . They want is that whats missing . They wanted him to go more negative . You could argue it was the asset purchase program. Some people are expecting that to triple and it didnt. Thats big we dont want to do a 4 loss here any time soon. That adds up after a while. You can only do that 25 times. And then you are at zero. Then you are at zero. Or close to it. In the meantime given all of the activity overnight. Dow looks it would open up higher. Nasdaq looks to open higher about 5 points and the s p 500 looking to open up higher about 13. 5 points. The action in toko follows the teds. The first glance at q1, gdp expected to slow to a rate of. 7 . Also due this morning, weekly jobless claims. And today is the busiest day yet of earnings season. With all of these firms reporting on your screen, well bring you all of the results from the tech giant after the bell. So far about 3 4 of S P Companies have beat expectations. Did you say. 7 for gdp . Yeah. We may revisit that number later in the show today. Do you think a couple of times . Well just in response to les say someone is taking a victory lap. Yes. About his legacy. Yes, yes. And about saving the world were gonna have that conversation. Seven years later. Yes. Zero Interest Rates. Yes. Try spinning that. Ill spin it for you. Remember, life is relative. Its a global world. But the counterfactual. That says wed be much worse off if he hadnt done those things. You can apply that same thing to where wed be if we hadnt shot ourself in the foot with obamacare and [ inaudible ]. Thats what ive im riveted. I looked at the guest list and i was so excited just to get up this morning. You were. Shares of facebook spiking this morning. A rough ipo. Down to 19 because it didnt have a mobile strategy and now it us warn about the mobile strategies. You can never trust those warnings in ipo. They have to put them in there. They go public. They didnt have a mobile first strategy. And frankly i think the Public Market disciplined them. And they turned around and did it. And blew it out of the park. And analyst to come in and talk today. If we could just get him . Hes here. Look hes here. Facebook spiking this morning after blowing by estimates on both top and bottom lines with earnings topping consensus by 15 cents a share. Monthly active users at 1. 65 billion beating out streets expectations and here is Ceo Mark Zuckerberg on the conference call. Now more than 3 million businesses are using our Advertising Products every month. Weve expanded measurement capabilities so more businesses can see the results they get from us. Weve made it easier for Small Businesses to do the same tools and formats our larger advertisers use. And as sure as i was that apple might not forever be the i thought the same thing about facebook and i guess i have no idea because i cant believe people are still sitting in their house looking at other peoples pictures and vacations and that they are making money mobile. Thats even more pathetic. If you are out in the real world on your little screen looking at someone elses vacation, anthony. People are doing it. The tech giant reporting ad revenue. How do you advertise. Who buys something based on who what they see on facebook . I think marketers are finding it to be very effective. Who are you . Andrew needs to intro you. Hes here so often and our audience knows. Hes a legend here on squawk. I dont detect any sarcasm. No. No. Hes a legend not. Introduction needed. Go to it. They grew ad revenue. The number is 63 . And they are expected it to decelerate because of the scale and it is not. And people are talking should we advertise on cable tv or on facebook . And increasingly Larger Enterprises and smaller are saying facebook gives me the reach. I trust it. There is third party measurement. They have measures to verify the ads and the ads are quite effective when you look at conversion and click through rate. Raised on this company . Definitely raised it. Its close to 5 bucks. 30 times 5, our target price is 155. And its free cash machine. And we have them going to roughly 12 billion in free cash flow. What do you make of the re by the other. The other thing impressive o about the quarter is we just saw a deceleration in the u. S. For google and twitter. So now the set up for facebook and all the intraquarter checks will people say uber stop spending those are wrong. In the and you think facebook is stealing their business. Taking share from all sorts of media platforms. Whether its other underperforming online ad formats. Instagram has become the new twitter. Contributed gout almost seems like the new periscope. There are a lot of ways where i can identify facebook is looking to take twitters use case and really take control. And i think the theme is so many ways to monetize and, you know, now they are opening up instagram messenger. So Facebook Messenger did 900 million users will start to monetize in the Second Quarter. And whatsapp. Before we went on the show i said who clicks on these ad. And they all said weve been clicking on the ads lately. Just chitchatting. He said yes. They are more taylortailored an relevant. Someones figured out. I get great ads and the rx bars i eat all the time. I now which is unsettling. To some degree. This move from twitter to instagram is not that new. I remember a couple of years ago. Im going name drop here but petra. I was doing some charity stuff for her. Bill clinton was at that thing for her. Happy hearts and she do no twitter anymore. People have migrate over the years. And next is snapchat. Facebook gives overall engagement metrics and the way they do is how many daily active users as the ratio of monthlies. And thats highest ever reading. 66 . They dont break it out by cohort. So you dont know what its looking like for younger people. And i would suspect its better for older demographics on a relative basis. Because snapchat is killing it as far as we can tell. Why snapchat and not whatsapp . I didnt want an answer. I just wanted them to play that for you. The share structure. Mark zuckerberg being able to keep control of the company while be able to sell shares. Is it a good idea . I dont think it is anything new. You knew it was a founder led control when you buy facebook. So very similar to alphabet structure now. And the key is yeah hes the best ceo in the space. And, you know, yeah hes maybe tightening his grip on the company allows him to sell shares without diluting his voting control. But he has put limits on how much he would sell in any given year. So basically i dont think it is any change to the shareholder. And it why isnt it dilutive . As the minority shareholder you really didnt have any say . The companys decisions anyway. So even if you owned one share of stock, clearly zuckerberg owned the majority share of the stakes. And the other thing he can do is use it for acquisitions. And on the call he talked down the need to do any acquisition strategically but that is not another thing. Whats the like of going to disney. Youre gonna ask me that . I just kid. I wouldnt rule it it. Shes incredibly well regarded and respected. And by the time leaves his post in i think it is that much further into the future where disney needs put under the microscope by you, you know, with marissa or meg meg. I just dont recommend it. I think shes a really great executive. I really really do. Because she leans in. Across the board. You hear at disney the reason that tom stags was not going to be the next in line here or the air apparent was because of the creative side. So some rumors is that ike pe l pearlmutter. So what you hear from people is that they want somebody on the creative side. And cheryl is really more of a technology and the digital person as opposed to the movie and tv content person. So trying to square that away. Since were speculating do you have a name . I do think it is very possible that he extends his contract for a year, buys them a little more time. I think basically he wanted to be sort of, you know, the heir apparent. And they basically want to cast a wider net. Yv i dont have a name im going to throw it. I want to know that he really stand this guy so he could stay longer. That is the shakespearean disney historical that is what i think happened. You hurt the number two guy so the number one guy can sell bingo. I dont think thats what happened. But you are a very serious young man. Whenever we. You should embrace that whatsapp thing. Just maintain your sobriety and dont get dragged into the muck. And. First of all i try and stay sober in the morning. I just try. And [inaudible]. Then at some point. Viewers arent always. They may be brand new. So there is no downside to being repetitive. We do a three hour show. And we hear by 8 00. Weve had these great discussions at 6 00 about the discussion of the day. And we need to repeat those at 8 00. And the same goes for you. So you act surprised whenever we do whatsapp . And dont be surprised some people are not sober at this hour. And all depends on the markets and whats going on in asia i guess. Asia is bad today. And our futures are down. Not good. Our futures the u. S. Futures. Our futures the. As a tv analyst hes very concerned. I think you do. No i think you do . Its [ laughter ] limited. Limited upside. Thank you so much. Valiant pharmaceuticals cleaning house. Making some sweeping changes to its board. This after outgoing Ceo Michael Pearson and activist bill ackman get grilled on capitol hill. Quite an intense series of questions last night to mike pearson and bill ackman and the former cfo there. We are hearing about potential changes to the board. The wall street journal reporting five directors potentially stepping down. Four reading up to take their place. This comes as mike pearson on his way out. Joe papa due to take over at valiant. Bill ackman said several times hes expected to start as early as monday and also foreshadowing some changes. Listen to what he told the committee. So a lot is going the change. A new ceo starting probably monday. A lot of the board is going to turn over. A new board for the most part. Were going to have a number of the new directors have a tremendous amount of pharmaceutical industry experience. And pricing will be top of mind. Ackman really trying to emphasize that these acquiring of old products and drastically raising prices is a small part of the Business Model and they should really focus on the rest of the business. But he was pledging over and over to take a look at prices of the drugs and to look at lowering them. We should see potentially some news on that in the coming weeks kelly. Your point is an interesting one though. Ackman is a vocal force for company. Hes been in about a year. There are others who have been in much much locker. At this point hes got to be saying, god, who needs this . Hes now saying my interest now is just keeping the company out of bankruptcy is it . This is a huge position and next thing you know hes in front of congress. Bob corker yesterday . Giving him the business. My goodness. At one point he says you hedge funds you are always trying to lobby do what else are you lobbying for . He says i cant really think about anything else. He said what about herbalife . Did he really keep a straight face . What about fanny and freddy . And is that line stopping shells . And one of the ones doing the grilling was hedge funds hogs need to be tied or Something Like that. Missing piece was they are acquiring them especially niche drug asks they immedia drugs and they immediately go up like a thousand percent. Market selloff from japan this morning. And the read on the gdp report and how slow the economy is moving along so far in 2016. And a programming note. Tomorrow becky quick will be in omaha for the berkshire Shareholder Meeting and join was some of the shareholders of. And monday. Keep watching squawk box on cnbc. First in business worldwide. Im in the mood the rhythm is right move to the music we can roll all night yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. I stopped in time. Welcome back to squawk box. You are a good typist. How many words. I did. We had to learn in school too. But now you got the iphone you dont need to type. Right. What i said was totally obvious. That aches lets check on the markets this morning. The futures are reacting to weakness in europe which was caused by weakness in japan. And i try to remember these things. Were near the highs but were in this descending pattern of lower lows or lower highs. Can if you fail to go a little higher you are not in a reverse head and shoulder you are kind of in this band. And here we are we have not done well. And suddenly some renewed fears are coming around. A strong yen again is coming back. Start of the year. All the data starting to get worse. And then got better. And now can it get any better than this . And the cramer said the most important segment to look for with earnings was tech. And one good tech, facebook. And Everything Else has been literally disasters. Across the board. The japan nikkei down almost 4 . The results of some of these meetings, the fed, the boj and you mention the tech space joe. Paypal and facebook are moving higher this morning but others are not fairing as well. Joining us chief economist at ihs. And chairman and ceo of aureus asset management. What do you make of it when we see some of these big bell weather Tech Companies stumbling the way they have and what kind of implications does that hold . I think everybodys been waiting for tech earnings because we started with financial earnings that are decent. Then you saw manufacturing numbers like cat for example, microsoft, google, apple were bad. Yesterday facebook was very good. We didnt think the first draqu going very strong. Theres been weakness the last few months. If you think about the next half of the year. Starting in june on, if you have a weaker dollar, energy pricers are obviously higher and stable gdp with some consumer spending. You could start to see gdp numbers looking better. So i think more about the second half of the year than this quarter. And you hope they get better. Sounds like were only going to get about 7 10 of growth. Is there any brightening on the horizon. There is. We are gdp trackers. Were a little above the consensus. Five of last six years, First Quarter was terrible, followed by much stronger growth in the second, third and sometimes Fourth Quarters. We think Second Quarter will go up to around 2. 5 percent this year as last year and the year before. So the gdp numbers are a little squirrelish shall we say. In the sense that i dont really trust them that much. They dont have the seasonals right. Weve always gotten a weak First Quarter. I would largely ignore it. The Fourth Quarter was never as weak in the previous years where you were followed by a weak Fourth Quarter. And we started i think the atlanta fed started like two seven or almost 3 . And now were down to 77 10. Looks more than seasonal this time. There are more underlying issues than just the seasonality. My point was we have had five out of six years like this. The other problem is the oil rou rout in terms of cap ex had continued through First Quarter. It should ease and by the Third Quarter i think the drag will go away. If you look at whats happened with the Energy Sector theres been total devastation. People start to come back to work. The community, states that are effected by Energy Pricing will start to do better and we live in a consumer economy. And the we have consumers going back to work, which millions and millions more people are working. Consumer spending is really what we want to see. That is whats going drive the economy higher. Maybe the bank of japan just did the fed a favor here. Because it maybe helps keep that dollar from restrengthening. If you believe the fed is going to raise rates in june and we think also again in december, that trend will reverse itself a little. There is probably not a lot of upside on the dollar but were not beginning a long dollar slide. To come back to the oil price question. It is also helping prospects over seas in terms of Oil Producers and emerging markets. Not only oil price has gone up but currency has gone up as well. Pressure is off emerging markets and that is good news. Thanks. Coming up. Much more on the big selloff this morning and were expecting ford to roll out results at the top of the dollar. And if you text and drive and you know who you are, the textalyzer is looking for you. That story is coming up next. And a special report coming from shiny on the electric car. This sth the future for the electric car . Live in shenzhen china with a look at the growth of the ev in this country. Wildcaught alaskan salmon. From icy ocean waters. To your kitchen counter. Pure. Pristine. Each one its own delicious arctic prize. When you cook with incredible ingredients. You make incredible meals. Fresh ingredients. Stepbysteprecipes. Delivered to your door. Get your first two meals free blueapron. Com cook. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card welcome back to squawk box. Lets check out the futures in this country. You can see down 10 points. Not a great start to the morning. Lets see whether what happened, but it spread from europe. Where it had spread from japan after a central bank somewhere actually didnt just go full force. Were still in this environment where, you know, were living in a central bank controlled world and thats what a little disconcerting and none of these economies seem to be able to stand on their own. With chinas largest city facing major problems with pollution t Chinese Government has doubled down on its pledge to push demand for electric vehicles. Live in shenzhen with more. I guess its good evening, phil. Its evening here in shenzhen and were on the Assembly Line of the largest manufacture of electric vehicles here in china. When you look at sales here in china compared to the u. S. , i know we focus so much on the u. S. , you really should focus on whats happening here in china. Almost 200,000 vehicles sold last year. 180,000 well above the total in the United States. Here the big focus is the growth of these vehicles. 2015 sales, 62,000 vehicles. They expect to double that at least in 2016. The goal is perhaps even triple the total sales here and expand production in part because it is electric vehicles, and they have met with a lot of enthusiasm here in china. We can see that more and more people already accept the new technology and the new style of the new Energy Vehicle bring to them. So whats driving it here . Two things, as far as consumers are concerned. One, incentives. On some vehicles you may get 15, 20,000, a direct rebate to buy one. You can also get your vehicle licensed quicker. If you dont have a electric vehicle you are waiting in an auction or a lottery in some larger cities. So many people in so many large cities living in large apartment complexes. Is there going to be enough infrastructure to recharge the vehicle vehicle . That is a concern for people who watch the market closely. Chinese consumers generally live in large apartment complexes. Not in stand alone homes where they can more easily have a charging solution. So one of the conundrums for the potential buyer is where do you charge it. And for some people that means running a cord of at least a hundred feet. We found one person who plugged in in the alley way across from their Apartment Building and ran a cord up three flights into their Apartment Building. And that was because they were parked close. Infrastructure is the key here in china. That is the big push going on right now. I dont understand if it is better in china for environment for people to be using coalfired ultimately electric cars versus gasoline engines. That is the argument that you hear from people when you talk about pushing electric vehicle sales and china comes up. Ive heard this from other people while ive been here. They said well if the electric is coming from a coalfired plant it is not good for the environment. That is a question the broader Chinese Government has to answer over time. The other believe the answer not only to environmental questions but also to the congestion issues, they think that the answer is clearly that will get figured out over time. You have to Start Building up the demand for electric vehicles. I cant imagine trying to walk around over there with all of those cords. Sounds like a nightmare. Everybody is going to have a cast on their body somewhere. They have to get one cord and maybe branch it off to all the apartments. I dont know. Joe, you are not believe this video. Were putting it up on cnbc. Com. It was at least a hundred feet. And people just drive across it in the alley way. That was one example we found. We found ore people with charging stations in the garage underneath their Apartment Building, just like you would see in the United States or anywhere else. But that is a big issue they are going to have to tackle here eventually. Either you are lying about being in china. Or there is some weird thing where we get a four second delay when you are in chicago and zero second delay when you are in china. I want you to send me some type of proposal on why that happens because i dont understand. Do you . Its the technology. The modern technology we now have at cnbc. Com. Its not scaleable. Its not in the cloud. Anyway. I got to call someone at [inaudible] they will give me some bs answer. Turning now to ted cruz. Pulling out the hail carly, if you want. Pulling out Carly Fiorina as his running mate. Cruz made the introduction on wednesday. He needs the win indiana next week to keep his hopes alive. And trump wasting no time mocking him. Saying quote, cruz cant win, whats he doing picking president s. He went 0 for 5 on tuesday. And the news cycle was all trump. So its very obvious. Isnt it obvious kind of an attempt at garnering. I still think it is an interesting move. And shes a fire brand. Hes got no path in terms of delegation why pick a Vice President when you have no chance why not . I still dont understand the money flow t 500,000 that went from his super pac to her super pac about a year ago . Makes no sense. If you are trying to follow the money. Whether does that mean . If this is a contested convention and they ask either me or you can we disagree now that the other person were the Vice President for the person . Lets get our picks out of the way. You be mine, ill be yours. Not bad. And then you have the middle. The case. You know. Coming up, from china to iran, inc. Unprecedented access inside the country and including a look at the multi billion dollar art collection. Thats next mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Xerox personalized employee portals help Companies Make benefits simple and accessible. From anywhere. Hula dancing . Cliff jumping Human Resources can work better. With xerox. Which allergy . Eees. Bees . Eese. Trees . Eese. Xerox helps hospitals use Electronic Health records so doctors provide more personalized care. Cheese . Cheese patient care can work better. With xerox. Thats it. Time for the squawk planner. A ton of Quarterly Results pouring in today. Were going to get the latest numbers from four at the top of the hour at 7 00 a. M. And a first on cnbc interview with mark fields and later today all that and more. 8 30 a. M. The first read on the First Quarter gdp and that is your squawk planner. In the meantime some of the greatest pieces of modern art works are sitting in the basement of the Iranian Museum of contemporary art and Michelle Caruso cabrera is there. The asset class we always associate with iran is a commodity, oil. But they also have another one hidden away as you reference. The museum on contemporary art here. Very typical. Go inside and lots of pieces of art by modern contemporary iranian artists and then go down the spiral reminiscent of the go guggenheim in new york and get to locked door and behind that is one of the greatest collections of art all in one place. Unbelievable. Picasso, eight by warhol and other awesome people. And line filled with beautiful pieces of art. Worth at minimum billions. One piece a pollack is estimated to be worth 400 million. Why are they sitting in this basement . They were collected in the 70s by the monarch at the time. And then the revolution happened in 1979. Very violent. They had to escape the country. All of those paintings were left behind and that is where they sat for decades now. There is no known clog catalog of them at this point. They do display one at a time upstairs. But again, there is a lot of talk about why all of these piece of art arent on display or what would they do with them or if they needed the money over the years why werent they sold on the International Market . There is talk they might go too a museum in germany next year. We wait to see the ongoing. One of these pieces is actually kind of owned by steve coen. There was a transfer back in 1994. The iranians gave up one of those pieces to give a very famous iranian book. So they did a barter exchange. That piece was bought by a man who had it many years and then bought by steve cohen who still owns that. So thats the only piece we know thats left that collection in the basement. Who knew . Thats amazing. Thank you. Well speak to you again about that and that is is did you have any idea . No. And its almost a endorsement of western culture if they display those pieces. So it is an odd situation to be in having inherited them the way they did. Id like just one of any of those, wouldnt you . You could get a screen print of it. Yeah, my chances arent good. Coming up. What does the future hold for obamacare . The st. Louis healthcare based Insurance Firm gives us his read on the industry, next. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive from virtually anywhere. To warn of danger its been smashed and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. And dragged through the mud. The 2016 gle. Its where brains meet brawn. Lease the gle350 for 599 a month at your local mercedesbenz dealer. In earnings news, obamacare giving a helping hand to Health Insurer centine. Posting results beating expectations on an adjusted basis. The numbers benefiting from key medical costs that fell. Its hard to figure out whether they go up or down and what causes it. Also completing an acquisition recently of rival Health Insurer healthnet. Here with more details on that and the state of the Health Industry is michael nydorf. Nice to see you. Good morning. What was the name of the company in 96 . Coordinated care. 40,000 lives. What did you have in revenue back then . About 40 million. And now, after acquisitions, and thats when you became ceo, right . Yes. After acquisitions its now 2016. Thats exactly 20 years. Correct. How many lives . Close to 12 million. 11. 5 million lives and 40 billion. So what was the first number in revenue . What did you say . 40 million. Its a multiple. 40 million. Now 40 billion. Its all easy to figure out. Im not sure of the decimal point but thats much better. Much higher. Were doing better, yeah. We need to talk, just so viewers understand. We saw obamacare expand medicaid in a large way. It was somewhat controversial. One of the reasons john kasich had trouble with the core of the Republican Party is because he brought in medicare at ohio when i dont think the legislature necessarily wanted it. What do you actually do with medicaid. We are big in ohio. We work closely with them. We get a premium per member from the state. We then take all the medical risk. The state gets it from the federal government. They get anywhere depending from 80 to 100 . On the expansion they get 100 . For now. For now. Then they give it to you. Why does there need to be a middleman . Were doing managed care. Improving quality. Its not fee for service. No. Were really providing Higher Quality care, ensuring Higher Quality care. Based on outcomes and the whole fee for Service Model needed to go away. We have a program called healthy rewards. An expectant mother if she keeps a prenatal visit we put 60 on a debit card that she can use for hygiene items. We reduced in the state of georgia the premature birth rate by 400 basis points. Thats huge. You take the innate inefficiency of a Government Program and put privatesector constraints on how its doled out and save everybody money in the process and get better and theyre Getting Better quality care. Were measured through methods that demonstrate youre totally different than United Health care which is exiting some of the exchanges because theyre losing so much money. I have a lot of respect for them. They have a different population. Theyre at the high end. Were dealing with the medicaid people. We call it churn. People who drop out of medicaid because they lose eligibility, they go into our expansion product, into our exchange product. I want to talk to you in a second, michael, about what finally happens and whether there is a looming problem at the state level. Whats happening, sorkin . Abbott buying st. Jude. 25 billion. The details are crossing the tape as we speak. Is it going to divest itself of medical they did. There was a long conversation. There were reports in 2015 when abbott there were reports that abbott was looking to buy st. Jude. Denied over and over again. Abbott shares here. The shares you probably want to look at right now are st. Jude. 85. Stj is the symbol, right . A hefty deal. It is a hefty deal. Youre looking at wow the stock there. So whats and the overall price is what . Looks like an alltime high that its being bought at, right . Unless its down from previous years. Look, there is a previous figure of 25 billion from the last year, to give some context here. Let me give you the stock how it breaks down. St. Jude shareholders will be receiving 46. 75 in cash in addition. 8708 shares of abbott common stock. In total that represents 85 a share at an abbott stock price of 43. 93. We just showed you what it was, total transaction value 25 billion. Abbott says that this is expected to be accretive to the combined company after the closing with 21 cents of accretion in 2017. They say 29 cents in 2018. As a result of this, they expect pretax synergies of 500 million by 2020. Okay. We are talking about artificial heart valves, tissue valves. Pacemakers. Michael, i was going to ask you what are the chances that how long do the states have the 80 to 100 another couple years. They have 90 . You are saying that because you have made it so Cost Effective that it wont be an issue. Even when federal funding goes away theyll be glad to do it . I think theyll be glad. You know, there is a responsibility. It is something that people are entitled to. Better than emergency room visits. We cut emergency room visits out. We get primary care people are getting the kind of care you and i get. You could have expanded this without screwing the market the way obamacare did. Obamacare had only three rate bans, which made it difficult. Earnings on ford, ceo on ford and more on this deal. Why do so many businesses rely on the Us Postal Service . Because when they ship with us, their business becomes our business. Thats why we make more ecommerce deliveries to homes than anyone else in the country. Here, there, everywhere. United states Postal Service priority you a Global Market selloff. The bank of joapan shocking the world overnight, deciding to hold policy steady. The yen spiking, japanese stocks plunging and u. S. Futures heading south. Inside the numbers straight ahead. Breaking news now. Ford earnings set to hit the tape. The ceo joins us for an interview. His outlook for the industry and how hes reshaping the company for the future. Minutes away. Plus, the obama economy. As the president prepares to leave office, a look at what he is leaving behind from the financial crisis to where the economy stands today. 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 am joe kernen along with Andrew Ross Sorkin. Becky is on her way to omaha for it will be a great weekend. Berkshire hathaways annual meeting. Shell join us live tomorrow with does it sound like dirty . It does. You need to enunciate. The n. Durable goods sounds like durable goods. Shell join us live tomorrow. Special interviews all morning long. Monday a special show with we the guys we had to settle on were buffett, gates and charlie munger. Who wasnt available, andrew . Who would not be available. I was going to say obama. Yeah. Hes available before you can get those guys. I dont think we could get like the kardashian sisters, probably. We can work on that. You would actually like to. I would love to interview them. We did interview them. You did . Yeah. We interviewed kim when she was opening some popup location in union square. You were somewhere breathing the same air as her . I wasnt. Courtney regan was. Ill just touch courtney. Not really. In the headlines, a megadeal announced moments ago abbott labs buying st. Jude for 25 billion in cash and stock. 85 a share. Abbott expects the deal to add 21 Cents Per Share to its earnings in 2017. 29 cents in 2018. Shares of st. Jude medical up 29 . Abbott labs down almost 5 , by the way. World markets under pressure this morning after the bank of japan decided to stand pat and not provide additional stimulus as had been widely expected. The effect of that particularly pronounced in the yen and across currency markets. The yen soaring. Its at 1. 08 on the dollar chalking up the biggest oneday gain in about five years. Gdp picture is not that pretty in the u. S. Economists looking for annual growth rate of. 7 . Half of what we saw in the Fourth Quarter of last year. Ford mots. Fill phil lebeau joins us with the numbers. 68 Cents Per Share. Analysts expecting 48 Cents Per Share. Revenue a tad light at 38. 2 billion. Automotive revenue. When you look at the record First Quarter for ford, trucks and suvs particularly in north america thats whats driving the results. North american profit margins, get this, 12. 9 . Overall automotive margins, 9. 8 . North america driving the engine for ford. 3. 1 billion in the First Quarter. Europe profitable. Half a half billion dollars in profit. Asiapacific doubled its profit, 220 million. South america remains challenging but ford beating the street with 68 Cents Per Share. 28 cents better than expected. Mark fields, president and ceo of Ford Motor Company joins us with more. Great to have you on right after the numbers are released. Mr. Fields. And amazing quarter that weve seen from ford. Weve seen years of outperformance from ford. I dont want to bring up the stock price. Im trying to figure out i know the market anticipates things in advance but remember, remember recovered to 13 or 15 like five years ago after the financial crisis. Its been doing everything right. Greatlooking cars. Matthew mcconaughey. So many great things. I cant understand, with a 4 yield, what people are scared of in terms of buying a 13 stock with a 4 yield. What have you got to do . I think we have to continue to deliver great results. You saw this quarter, off to a great start to the year. It keeps us on track for another outstanding year. Its a alltime record quarter after a record year. We grew our topline, our bottom line, tremendous performance across the portfolio of our business. Were reaffirming our guidance. Were going to keep focusing on those things and hopefully at some point is the market will recognize us for that. But well keep focusing on the fundamentals of the business. I know the automakers in the u. S. Have never commanded like normal multiples. Its almost as if investors or soothe sayers or pundits are always looking for some disaster thats looming that we dont know about. I guess parts of the auto industry, not ford, in the past, as far as history goes, theyve rewarded people who were cautious about them. And i just wonder one of these days, like the airline industry, it will become clear that maybe there is not a looming disaster and that these things are cheap. Is that your view . Well, when we look at the markets around the world, here in the u. S. , for example, the macroeconomic fundamentals point to a very healthy market and a very healthy industry that we have right now that we could see for the next couple of years barring any kind of fiscal or policy shock. So, again, were just going to stay focused on the fundamentals of bringing out great product, building our brand, and making our business as efficient as possible. And making this transition from being an auto company to an auto and mobility company, which we think offers more Growth Opportunities in front of us. You have to think of how to sell around the world too, mark. Europe is important. China and elsewhere. You also have to figure, do we go back to the big suvs . Are we going to have gas here forever, or do we spend a lot of money on, you know, development of eco friendly electric vehicles and much smaller cars with better cafe stands and much lower profit margins. You have to make all kinds of decisions about that as well, i guess. And there is uncertainty there. Well, from our standpoint were certain about our strategy. Our strategy is really about providing customers the power of choice. Were heavily investing in electrification. Number one seller in plugin hybrids here in the u. S. Investing another 4. 5 billion over the next four years. So that by the end of the decade 40 of our nameplates around the world will be electrified. Well introduce four new suvs in new segments into the marketplace in the next several years. Were seeing the shift from cars to suvs not only here in the United States but around the world. I think were well positioned given our lineup. Those are the types of things that drove our record performance this quarter. Mark, andrew sorkin. We had make jackson on from autonation recently. One of the worries he spoke about was what happens to the price of used vehicles, especially because there are so many leases that are about to come up and what that means for the business and also for new car sales. What do you think about that . When you look at used car prices, it follows a seasonality. It usually comes up at this point in time of the year. It hasnt come up to the extent that the market nor we expected. Keep in mind when you look at used car pricing there is not a lot of used car buyers who are also, lets say, looking at new cars. Its something that we have to keep in mind going forward. Our approach as a business, when you look at the used car market, its not so much a demand issue. Its just as you mentioned, some more vehicles coming back off lease. Were going to manage our business, i think, very carefully to make sure that we continue to grow it. Were looking at all of the metrics, any risk to growth. But i think were well positioned when you look at our business, the products that we have in the marketplace and that were launching soon. I think were managing the vehicles coming off lease responsibly. He also mentioned you worry about the u. S. Automakers going back to the well with the incentives and zero percent. And its really hard to match up production and keep everybody employed and all the shifts going when you are going youre going into a slowdown. Do we know how to do it now . You have any algorithms where that will never happen again, mark . Well, our approach over the last number of years and our philosophy has not changed, to match production to demand. When we see sales months where we overachieve well produce more. When were below, well produce less. When you look at incentive levels, they are up in the industry. More so on the car side as customers have shifted from cars to suvs. The key thing to look at is average transaction prices. In the First Quarter they continue to go up in the industry. Our average transaction price, the price that consumers pay for the vehicles, is up more than double the rest of the industry. I think that comes down to understanding the customer, what they value, and well continue that approach going forward. You started it, too, Matthew Mcconaughey doing it. Now Ryan Reynolds is doing a bunch of commercials. Ryan reynolds might be better looking than you. Kelly, do you have a nope. Im staying quiet. Its way too early in the morning for that. We love Matthew Mcconaughey. He is doing a great job. Its great for lincoln. Mark fields, good quarter. Thank you. I like that he put his contact lenses in in that commercial. Cool shoes. Love him. Another big earnings story to tell you about, facebook. Lets get to that one. Earnings and revenue beating the street. Helped by a surge in mobile ad sales. Shares up sharply on the news. 1. 7 billion monthly users talking about a near 10 rally in a stock thats up 48 on the year. Here is Ceo Mark Zuckerberg on a conference call. Now, more than 3 millions businesses are using our Advertising Products. Weve expanded measurement capabilities so more businesses can see results they get from ads. Weve made it easier for small and Large Business to use the same tools our larger advertisers use. They propose to create a new class of nonvoting shares given to shareholders as a onetime dividend. That lets him sell part of his stake without giving up active control and remain in leadership while he increases his charitable endeavors. Coming up president obamas second term nearing an end, and our very own Andrew Ross Sorkin had a chance to spend some time with the commander in chief to look back at the u. S. Economy, from the Great Recession to where we are today. More on that story and his legacy next. Shares of conoco phillips. The Worlds Largest Energy Producer reporting a loss. Keep an eye on those and other earnings. Squawk box will be right back. Welcome back to squawk box. Checking on futures right now which have been dragged lower by what happened with the bank of japan overnight not delivering what investors were looking for. The yen strengthened considerably. Nasdaq interestingly buoyed by the facebook better than expected results down 2. 5 points. Viacom reporting quarterly profit of 76 cents a share. Revenue topped forecasts. Well keep an eye on those shares as well. President obamas time in office is winding down. Nine months or so left in his presidency. He is starting to reflect on how he has handled the american economy. Nearly eight years removed from the financial crisis. I had a chance to spend time with the president recently as he toured a factory in florida. Plus we talked in the oval office and spent time on air force one. We tackled a lot of topics. Jobs, deficit. Income inequality. The lingering feelings of voters who still feel left behind thats driving so much of this current campaign. We addressed his frosty relationship with wall street and the business community. The story appears this weekend. Joining us now to talk about barack obama and the economic rekwor recovery is harvard professor ken rogoff. I thought we should talk to you to try to put his legacy in perspective. To the extent that we can look at other financial crises. You are the man of the hour to do that. How do you look at him . Sfloo we i think the u. S. Recovery from the financial crisis looks decent compared to other past systemic financial crises around the world since the great depression. Yeah, we wish we had a roaring economy the whole time. But when he took Office Things were dire. It could have been a lot worse. He doesnt seem to get a lot of credit for that. We really could have had another great depression. It could have been a lot worse, and he helped pull our way out. George bush did also at the end of his term. He did things that he couldnt believe he was doing, you know, big stimulus, bailing out the banks and everything. But it worked. Of course, though, having said that, thats the rosy version of it. So many people in this country seem so angry about where the economy is today. Poll after poll suggesting people are not happy. They would tell you the economy is not good enough and gdp, which is one of the measures of where the economy is, on a relative basis to where its been historically is at i dont want to say an alltime low but a low. Well, sort of after the initial push, he wasnt really able to get that much done. There was gridlock in washington. The lowhanging fruit was to do a lot of infrastructure investment. Interest rates were low. Lord knows there are many places we need it, and he just wasnt able to push that through. There are other things that could have been done in education, et cetera. I think, andrew, that a problem was the legacy of pushing through obamacare just left such a hostile environment in the republican congress. He wasnt able to deal with them anymore. Thats a tradeoff he made. I asked to get in just to ask a question, ken, but you just said it. And i guess the world is very especially this country, very fractured right now on the two sides. We know how far apart the sides are and more. This legacy will be no different. There are going to be people that, you know, that point to the 5 Unemployment Rate and how we are relative to the rest of the world and view that favorably and there are going to be other people, believe me, that think that focusing on obamacare that first year was and the amount of Political Capital that was spent, the way it was done, with the nebraska purchase, with not a single republican vote, a sixth of the economy sort of taken under government auspices when you should have been focusing on the economy the entire time, thats going to be the legacy that many people remember. And the infrastructure there was a trillion dollars of stimulus that could have been earmarked i heard they were going to be spent on shovelready projects. I think they filled like three potholes when all was said and done. What happened to the infrastructure on the trillion dollars . Do we need another trillion . It took a long time filling the potholes in boston, ill tell you that. Definitely needed more. I think we did need to do something about health care, and i certainly think obamacare, you know, is still a work in progress. I dont know how it will turn out. Was that the time to do it, though . I heard biden say we had a thousand, 800 atomic bombs go off. If there were all these financial and economic bombs going off, why was the first year and a half solely based on ramming that through through reconciliation . That was the only bomb that they were i mean, thats certainly a big issue. But if you look back on things now, he was bailing out wall street, and thats the thing he did, you know, in terms of inequality. I thought bush and paulson and bernanke did that. I didnt see the auto industry, a lot had to do with paulson, bush and bernanke. A lot of stuff happened after bush left office. For example, when they did the Bank Stress Tests in may of obamas first term. That was a real turning point in the financial crisis, how to actually apply tarp. There was still quite a continuation. He doubled down on what the stimulus was. He did a lot. But again, if you look back at the complaints today about wall street versus inequality, the Obamacare Decision doesnt look quite as crazy. It was a tough decision to try to make. Doing all of this for wall street, i have to balance it. I dont think it was an easy choice. I think history will look reasonably on his legacy. Two points to make. Obama was the original supporter of tarp when the republicans, including mccain, were originally against tarp. Point of fact. People forget that. I want to ask you about this, however, though. This is the last line of the story. This comes from obama. He says, if we cant puncture some of the mythology around austerity, politics or tax cuts or the mythology thats been built up around the reagan revolution where somehow people genuinely think he slashed government and the deficit and that the recovery was because of all the massive tax cuts as opposed to an Interest Rate shift, were doomed to keep on making more mistakes. Is he right . Is that what took place during that period given that youve studied so many of these crises over time . I think the reagan revolution was a positive thing. I take issue with the bush tax cuts. I think clearly with hindsight it would have been better if he simplified the system. It exacerbated the inequality instead of lessened it. I think the reagan revolution came at a different time when government had become overweaning, and i think it helped to energize the economy. I would give jimmy carter more credit than he gets for deregulating trucking and the airline industry. Certainly as time goes forward, if we keep moving in the same direction with technology advancing, globalization advancing thats the most hellacious statement. He really said that. Yes. Maybe the real answer to all our problems is redistribution and not economic growth. Well, no. Thats a good idea. He was being stymied because one of the things was we reduced Government Spending during this period in a major way at the same time that reagan was actually increasing spending on the defense end. I want you to read the whole story. And then well have lunch. I dont know if i can. I feel like im back at family dinner. The little purple pill. What is that . Thank you, ken, rogoff. The one thing i cant stand seeing people do when im driving is texting. And i text them to stop. One state considering legislation to test your phone for activity. I saw that guy texting in front of me time for todays aflac trivia question. In what year was the first mobile phone call made . The answer when cnbc squawk box continues. And Major Medical . Major medical boyyy, yeah berr, der berrp. I help pay the doctor, aint that enough for you . Theres things Major Medical doesnt do. Aflac pays cash so we dont have to fret. Something families should get like a safety net even helps pay deductibles, so cover your back, with. Aaaaaaaaflac learn about one day pay at aflac. Com rap the answer to todays aflac trivia question. In what year was the first mobile phone call made . The answer, 1973. Coming up, apple analysts are all over the place when it comes to their price targets and outlooks. Brian blair joins us with his outlook for the struggling tech giant. Im kidding. Its not struggling. Look at new price targets for analysts after the big quarter miss. They have changed quite a bit. As we head to break. U. S. Equity futures. Dow pointed to open lower 150 points. Be right back. What are you doing right now . Making a cake ayla reminds me of like a master chef and emiana reminds me of like a monster chef. Uh oh. I dont see cake, i just see mess. Its like awful. It feels like i am not actually cleaning it up whats that make mommy do . doorbell whats that . Swiffer wetjet. So much stuff coming up. This is amazing woah. Wow. Now i feel more like making a mess is part of growing up. Stop cleaning. Start swiffering. The first stock index musiwas createdoughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Welcome back. Among the stories front and center this morning, abbott labs buying st. Jude medical in a 25 billion cash and stock deal. Its worth a total of 85 a share. You can see st. Jude medical rallying to just shy of the mark of 27 while abbott is down nearly 5 . Abbott says it will add significantly to earnings starting next year. Buying a privately held company for 2 billion in cash and stock. Were an hour away from two key economic reports. First quarter gdp expected to come in with an annual growth rate of. 7 . Weekly jobs expected to rise likely. Near last weeks 42. 5year low. Joe. A megadeal announced moments ago. Abbott labs buying st. Jude medical for 25 billion in cash and stock or about 85 a share. Dame lione is analyst at btig. I see now, neither one medical devices but this Company Abbott is really transformed itself at this point. This adds on to the guidant acquisition. Is that the way to look at this . To some degree. Abbott has been wanting to shore up the medical devices business for some time. That was one piece of it. The analysts and investors alike have been telling this company to do something for quite some time. They have been as i said, when the news first came out they were denying that they would ever look at this company. The Financial Times was reporting this a year ago. Its been going on for so long. They said they werent interested. Dane is abbott finished . This is the future for abbott labs . I think it is. So as you pointed out they have been under pressure to execute on deals for well over the past 12 to 18 months. And now theyve really taken the bull by the horns and executed on two major deals. Their transformational to diagnostic segment. Now their vascular segment. So in the press release it is worth noting that they expected to execute financing on the leer deal as well which has been in doubt since ceo myles whites comments on the call a few weeks ago. On the st. Jude deal, it looks a little less accretive in the first 12 months than what we had calculated back in august when the rumors first surfaced. So it looks about 8 to 9 accretive to the 2017 eps numbers. Still good but a little bit below the 20 number that we you thought in the first 12 months. Obviously theyre using a little stock here. So that dampens it a bit. The synergy number still looks good. Okay. Ab vy. Do we look at abbott labs as a drug developing Pharmaceutical Company anymore . Or we have a whole new view now of abbott . We need to think about it differently . I think you do. The vascular business has been under pressure and its been a sore point for investors for a while now. Expected organically to be down this year as some of the stent assets have disappeared. Theyve been wanting them to fix. The st. Jude acquisition does just that. Were positive on this. It diversefies some of the focus on the emerging markets therapeutics business, which is a great business for them but obviously emerging markets have been under pressure as well. What do you think about the backtrack . Why a year ago deny and deny and go through with a deal now . Deals take a long time to get done. You dont know who else was bidding and whether the first price offered was the price accepted. At the outset. Now it looks pretty friendly. Well find out more at 8 00 a. M. On the call. To get there takes a lot of work. There could be complicating factors. Dane, very good. Thank you for the quick work. And for giving us your analysis this morning. Thanks. All right. The thrill may be gone for apple. Shares of the tech giant down 25 in the last year. If only someone would have, you know, seen this, pointed it out. Done anything to warn. At least a dozen analysts slashing their price targets now, after the Company Reported iphone sales slumped for the first time ever. Our next guest recently lowered his own price target. Brian blair bravely coming on the show. Principal and cofounder at grays peak capital. Were trying to find analysts to still come on here because ive hammered so many in the past on this. I know theyre supposed to use the everything they can find out about the company and make some type of determination, but when they cant even see a slight forest because the tree is right here it drives me crazy that the 200 price target is still out there. A lot of analysts are actually still positive. They may have lowered the price targets. Whats with those guys . Theyre a little myopic. A little blind. I think are lot of them are afraid to put a sell on the stock. Professionals that get paid a lot of money because they supposedly know more than the rest of us and any type of commonsense person could look at that and throw all the analysts away. Theyre useless. The company even said march would be weak. The difference is that june is also bad and september is also bad. You should have known it would have been weak a year ago. I think youre being too tough. The indicators were on this show. It had to be priced in. Joe has been right all along an apple. Thats all you need to know. The public has been in this company. Not just the analysts. I am not being sarcastic. With apple hes been right. We were there back in november because the success sales started to decline. That was the first sign that the shine was coming off this thing. As an analyst, you can say 56 billion in sales per quarter. It rolls off my tongue very easily. Thats not just something thats guaranteed in an annuity. And they use all these stupid multiples. They say its trading at seven or eight times earnings excash. As if the earnings are cast in you know, theyre guaranteed quarter after quarter from here on out. I think they had such a long run of growth, so many years of growth. And the iphone has exceeded expectations for so long that a lot of people were blind to the idea that things could change. Now the Market Dynamics have changed. It critical thing here is china dropped off a cliff for them. It was down 26 . They had been growing in china. Tim cook was on cnbc last year talking about how great china was. Turns out things are not great in china anymore. The reason is because there are about five companies that make great smartphones in china. Theyre doing Great Hardware and theyre growing share in china and theyre growing it right now at the expense of samsung and at the expense of apple. Most people havent heard of huawei or opa. Weve talked about that. Making Great Hardware and grabbing a decent piece of the share. Its not like the greatest Tech Companies in the past. Weve seen it happen again and again. Someone else comes along when there is no barrier to entry. Smarter and faster. Thats why the iphone 7 this fall will be critical. Are we on our way to 115 or 60 . It will depend on whether or not the build for the 7 are strong. It looks like apple can actually you say the build for the 7 is strong. The big question about the 7 it will be demand when it comes out in the december quarter. But the builds will at least tell us whether apple is optimistic about their own product. Right now theyve been cutting builds. Theyre lowering inventory. The 6s has been a problem. The question remember, when they built the 6, all of a sudden it was a game changer in terms of size. Because it was bigger. That was a major shift, right . Right. People who were on a 4 felt they had to upgrade. You had to upgrade no matter what. There was that feeling. Thats right. Get to the 7. Assuming they dont change the screen size. When the gossip sites i hang out on it doesnt seem like theyre changing. So you say, ill keep me phone for another two years . Thats the big question. Until we see it, we dont know. Nobody has seen the phone yet. We talk to people all over the place. I dont think anybody has seen this outside of a small group at apple. So we dont know what theyre going to do. Thats their opportunity is to change your mind to change my mind what was your highest price target . I never thought it could go over 130. That was the high. Nailed it exactly. Really, if i look in the records it will say your highest was 130 . Yes. People yesterday were saying my highest was 110 and if i look back at the records who is going to check . A lot of these guys look out for one year. Everybody was at 170, 180 and 200 which implied a 1. 4 trillion market cap. That was his big point about the capital return. It was not just the analyst community. 110 on the way down. Was i right about oil. You were right. Right about a boring market . Its facebook. Facebook is now the new darling. Everybody loves it. What about now . Im going to be right about facebook because everyone is going to stop using it too. No. I i am not the over under on that im not sure. Theyre not going to stop using that or instagram or messenger. You with your iwatch. Whats going on there . I think its important to understand where theyre going with it. I do wear it from time to time. Its a fitness track. No warming in eight years. Coming up, a look at some of the antiamerican sentiment in iran despite the lifting of sanctions. Well get a live report. Our chief International Correspondent is in tie ruehran. Well talk geopolitics and the race for the white house with bill richardson. Squawk returns in a moment. Despite the recent agreement between the u. S. And iran over Irans Nuclear program, there is still antiamerican sentiment on display in the capital city. Michelle carusocabrera is live in tehran this morning with more on all of that. Good morning. Reporter specifically the art thats on display throughout the city, andrew. Lets show you the first example. There is a large poster hanging by a large, busy thoroughfare. Youll see that on the right is obama. On the lefthand side is someone called shem, he is an enemy of the iranian people because he killed the most revered figure in shia islam which is the islam thats followed here in iran. So the message of this poster is dont trust obama because he is just like shem. To the next one. A painting thats been up for many years, decades, in fact. It says down with the usa its an american flag. Where the stars would be there are skulls and the red stripes are bombs falling. It says down with the usa. It says well never be friends with the United States not for one moment. The bureau chief tells me that every time it fades the Tehran Beautification Bureau touches it up. That went up in the wake of the hostage crisis which happened during the Islamic Revolution of 1979, went into 1980. An incredibly painful time in american history. Bringing me to the next piece of video. What does that u. S. Embassy that was raided by those students back then, what does it look like today. Still not being used by the americans. Of course not. Take a look at the wide shot. On the lefthand side and on the righthand side, two bronze statues. On the left is a soldier who was one of the hostages during that crisis. He has his arms up in the form of surrender. On the right is the statue of liberty. In her stomach is a jail cell with a dove inside. On the exterior walls of the embassy seen from the street there is a lot of antiamerican art as well. Down with the usa. The statue of liberty with the face of a skull. I want to say this is the government, right. The people here are so incredibly friendly. Weve had people whisper to us and tell us, we love americans and we love america and the American People. This is very much the government thats puts these up. Remember, this is an autocracy. Whats on the walls is decided by the government. Similar theme from i remember a rick steves iran stegment. People were saying to him their views were different. Thank you, michelle. President ial candidate donald trump took aim at iran during his big Foreign Policy speech. Lets go beyond the borders with our next guest. Former new mexico governor bill richardson. Good morning. Thank you for joining us. Thank you. The images in iran have been there for decades but they continue to be touched up. Well, thats right. The impression was that after the Iran Nuclear Deal with the u. S. That things would get better. But irans behavior is not changing internally. There is enormous pressure by the revolutionary guard that is against the nuclear agreement. There is this antiu. S. Sentiment. Recently americans who were damaged in an accident can sue iran. And this is into irans assets. The troops that iran has in syria are probably going to increase, working against us. So there is still this tension. I still think the nuclear deal was good, but anyone that expects a betterment of relations in the short run, its not going to happen. Its also interesting because there was that kind of awkward visit president obama made to saudi arabia in the same time. What do you make of the way that those politics are shifting across the region . Well, you know, the saudis, the United Arab Emirates and the gulf producing states have always been our anchor along with israel in the middle east. They saw the iran deal as shifting a little bit in terms of where america wanted to go. And so there is this tension in the region that still exists. But i think the saudis and the United States are going to continue that relationship, on energy we have four military bases there, its going to continue but its been framed. Theyre doubting our commitment to the region. Yeah. Can we talk politics . I could sense you had that you wanted it. Just, you know, hes here. I want to talk about it. I want to understand what you think is happening. When is bernie going to get out of this thing . Hes going to stay till the convention. I think he has run a good race. Hes raised the issues that he considers important. I think he realizes that, you know, he cant win, but at the same time, he wants to be a player in the party. He wants to influence the platform, the future direction of the party. And if hes going to do that, i think he has to start moving in the direction of supporting the nominee. You think ted will get out . No. Same thing. No, hes not going to get out. You dont think its the same thing on both sides . He named a Vice President despite losing yesterday. I know. I know. Look, the country itself, what do you think . Center left . Center right . What is the country . You know, joe, you and i have known each other a long time. The country is center. Right. Anybody that moves to the center, thats where the electorate will be in the general election. Then why is someone that pushes hillary far to the left, why is that a good thing . You said it was a good thing overall. I think its a bad thing that she was pushed so far to the left. She is going to have to the rap on her is that she that she may be changes or moves one way or another. I guess people say thats just the primary season, i guess, if maybe she moves bad. I think its bad that she sounds like she is way out on the left with Bernie Sanders now. I think whats going to help her is her experience as secretary of state, commander in chief for working families. Is she that far left on Economic Issues . Does she really believes dont let anyone tell you the private sector creates jobs . She is pro centrist, pro business. Shell be somebody that i think the American People will see as mod dra moderate. The country moves to the center in a general election. Both parties have been pushed to extremes. I think youll be the centrist candidate and i think Hillary Clinton will be that centrist. There is something happening. You saw the 17 guys on the republican some of those guys have resumes and are really amazing guys. All fell by the wayside. On the left youve got a socialist from vermont that beats all the republicans in i mean, this is a weird a weird environment that were in right now. The big issue is income inequality, the need for jobs, the need for Small Business to prosper. Economic opportunity. But its partly, i think, a reaction to the last seven years too in terms of government. We seem almost to want to go left, right, as were walking as a country. If that is the momentum behind trump or behind the gop here, if they dont win and it is a hillary in the oval office were talking about the longest stretch of the same party being in power since when . Well, its were cyclical. We go eight years one party, eight years the other. This would break the trend that i guess i was assuming she gets what has happened with the Republican Party is its moved farther to the right than the democrats have to the left. How can you say that with Bernie Sanders . Come on its almost as if i remember nixon spawned jimmy carter for sure, the outsider. And then i think bush spawned obama and obama spawned trump. Thats my view of all this, bill. There is anger out there. There is populism. Antielitism. Thats whats dominating right now. Yeah. The electorate. Its against the parties, against wall street, against big institutions, government. Institutions. The view that my wages are not going up. Everybody elses, the wall street, you know, squawk box talking about all this prosperity. What about me . Thats and i dont think thats related to obama. I dont think thats related to the existing government. Its the sentiment out there that has fueled mainly donald trump. Do you remember when you said something about we need to drill more oil in new mexico. I thought you were crazy. New mexico is a huge oil producer. You were right about that. I think were four or five. Yeah. Right now were suffering because of of the downturn of the whole oil patch. Governor bill richardson, thank you. Governor of new mexico. Texting and driving is never a safe thing. Now new York Lawmakers are proposing legislation the guy in front of me was texting to let officers use the digital equivalent of a breathalyzer test. Pretty funny. Not funny but interesting. The roadside test called the text alyzer can check for recent activity. Failure to hand over the phone for the check could lead to suspension of your license similar to the consequences of refusing a breathalyzer. What if you were at a really long light, one of those lights are they pulling you over . I dont understand. Yeah. If they pull you over and you were texting but what if you were at a red light. They check the phone to see when the last text was sent . You cant even look at a text at a red light . This is why you need to get a a driver like you . Thats one way to do it but a car that has apple in it, right, the apple phone and all that. Handsfree. Siri. They can talk to you. Weve got to run. When we return sir Martin Sorrell joins us and hell talk advertising, Global Economy and more. His company, wpp reporting this earlier this morning. A preview of amazons earnings, theyre out after the bell. A look at what wall street is expecting. Squawk returns in a moment. Trugreen presents the yardleys. Sfx leaf blower dad sorry. Spring is on. Start your trugreen lawn plan today. Trugreen. Live life outside. Under pressure. The b. O. J. Taking Global Markets by storm with a shocking policy decision overnight. The yen spiking. Stocks dropping around the world. Breaking Economic News up next. U. S. Growth. Q 1 gdp 30 minutes away. Breaking deal news. Abbott buying st. Jude medical for 25 billion. Details straight ahead. Happening now, investors are liking facebook, the social networks latest results beating the street. The numbers, Market Reaction and news on how Ceo Mark Zuckerberg plans to keep control of the company. The final hour of squawk box begins right now. Im on top of the world, hey live from the most powerful city in the world. New york. This is squawk box. Welcome back to squawk box right here on cnbc, first in business worldwide. Im Andrew Ross Sorkin along with joe kernen. Kelly evans is hanging out with us this morning. Becky is on assignment on her way to omaha. Shell join us live from the Berkshire Hathaway Shareholder Meeting tomorrow morning. 90 minutes away from the opening bell on wall street. Futures. If things opened right now they would open down in a big way for the dow. Down 143 points s p off 12. 5 points. Todays big market story, the japanese yen, so happy to have you here. This is your topic. The bank of Japan Holding its Monetary Policy steady and cutting its inflation forecast. Most b. O. J. Watchers had been expecting more stimulus including our own kelly evans. No. I am just saying nobody knows whats going on here. Truly, thats all you can say about the yen this year is that as soon as the bank of japan went negative the yen went from being pretty weak, roared back up to 1. 08. If you had called this one, man makes no sense. How do you explain it now . I dont know how you can. Its a case we made that Monetary Policy actually matters. Credit easing could have helped in japan maybe. I know thats not an argument youll love. They needed to ease more . Credit easing. Not negative rates. People need to get married, have kids and spend money but no one does that. Thats part o the arrows. Have children. Should we introduce yes. Do you want to do a proper introducti introduction . Were not ready yet. Lets do headlines. Well do the headlines. Listen up. Sir martin. I will. Among todays top corporate stories. Mixed quarter for ford. Earnings handily beating estimates. Revenue slightly short. It was on like 32 billion and it was off by basically in line. Automaker reported record operating profit margin. Ceo mark fields joined us first on cnbc last hour. You saw this quarter, were off to a great start to the year. Keeps us on track for another outstanding year. Its a record alltime record quarter after a record year. We grew our top line. We grew our bottom line. Our tremendous performance across the portfolio of our business. And were reaffirming our guidance to have a year that is as good as if not better than the record year we had last year . M a news. Sanofi making a bid to buy u. S. Biotech. Offering 52 a share. Big deal of the morning. Abbott buying st. Jude medical for about 85 a share in cash and stock. 25 billion in total. Abbott expects that the deal will actually be accretive to 21 cents a share to its earnings next year in 2017. 29 cents in 2018. Want to quickly mention Priceline Group ceo darren houston resigning. For personal reasons . Is it . What does that mean . Stock halted. Shatner too old to step into the ceo role . Shatner looks great. 13. 55 is the price of the shares. The first s p company to be over a thousand bucks. On a threeyear basis its doubled. Its been on a tear. This has made a lot of investors happy. Now the ceo stepping down. Well bring you more news as we get it. Its a strange announcement. It doesnt say anything. Just says resigned following health . Nope. Here is gets more complicated. Are you ready . Mr. Houston resigned following an investigation overseen by independent members of the board of directors of the facts and circumstances surrounding a personal relationship that mr. Huston had with an employee of the company who was not under his direct supervision. An investigation determined he had acted contrary to the companys code of conduct and engaged in activities inconsistent with the boards expectations for executive conduct for which he acknowledged and expressed regret. I told you there was more to this. Look at him. He just gets all he loves this kind of stuff. The minute you saw that, you really got more interested in it. Because, you know, some of the first headlines didnt explain what was happening here. You dont just leave for personal reasons. This is the personal reason. You want details now. Age and you brought it up. I think you would want to know what happened. The lead independent director saying i am satisfied with the boards thorough review of the issue. The company is well positioned to continue executing its strategy for growth. So there. Thats the thats the news. For some time it was the best performer in the market since the financial crisis. This is really the marquee, the banner name in the last several years. Is he married . Give me a moment, and i will get all of the details. Otherwise two single people in a company, would that necessarily raise the same concerns . Two single people in a company . We would have a problem at cnbc. I should say, my apologies. It did say personal conduct in the headline. I thought it said personal reasons because i looked at it really quickly. The problem is you are a ceo as well. Okay. Shares of facebook are rising right now. To the social network posting its better than expected results last night. Shares up in fact better than 10 this morning, maybe helping the nasdaq out perform some of the others. Julia boorstin joining us now. Take us through some of the highlights, julia. Just to give you a sense of how much facebook beat. Earnings per share 10 better than the highest estimate of over 40 wall street analysts. Ceo Mark Zuckerberg attributed the upside surprise to growing user engagement. Impact from instagram ads and the companys investment in measurement and targeting for advertisers of all sizes. Soo Sheryl Sandberg pointing to the growing power and value of video on facebook as well. People are sharing and creating nearly three times more video on facebook than they were a year ago. As of february, the time people spend watching videos on instagram increased by more than 40 over the preceding six months. This presents a big opportunity for marketers. On the call Mark Zuckerberg explained a new proposal to create a class of nonvoting shares and do a three for one stock split to enable him to maintain control of the company while selling shares to support his philanthropic efforts. Saying his control of the company so far has enabled it to resist short term pressures and allowed it to make bold moves for the long term. He cited, for example, his purchase of instagram and oculus. It will be interesting to see what other bold moves he has ahead. Well check advertising in a moment. Joe, since he wanted to know. He is married and apparently has children. Okay. Just you asked. I did. Its out there. People want to know these things. Its because i asked. You asked and i looked. Who are you to deny me the i know. You could have said you dont know. I went to look. He talks about being married at some point. So there. Um, lets talk about advertising. How about that . Good. Wpp is out with its latest quarterly numbers, seeing Revenue Growth of 10. 5 in the latest quarter. Helped by strong business. Thats huge. It is. Bravo. Both in the u. S. And europe. Joining us right now wpps ceo. Nobody else is growing revenues. Good morning. Good morning. Whats that about . What do you think you actually did . How did this happen . North america, uk, digital and Media Planning buying. Thats that probably sums it up. Thats the geographic and the functional. Thats where we saw the strength. Take facebook, you know, facebook was up 58 in q1. I got the analysis on facebook this morning, and our people, we were up 68 in the First Quarter. We invested our media book was 73 billion last year. 1 billion in facebook. 4 billion in google. This year if facebook continues at the same rate, be 1. 7 billion. How do you see the rest of the year. Probably a little bit stronger in the second half because we have easier comparatives in asiapacific. And the olympics. That helps. Brazil. There are issues in brazil, you may be aware of that. But i think, in terms of time, on tv, online, and the general atmosphere around it, the olympics will be very good. Visually theyll be stunning with Rio De Janeiro as a backdrop. The european football championships not that youre particularly interested in soccer, andrew. Its becoming more important. Kelly is. Its the Fastest Growing thing part of a comcast. Nbc Sports Network carries a lot sunday morning. I think the u. S. Will get the world cup at some point in time. Had the womens world cup in canada. That was extremely well done, by one of your competitors. But i think well have a world cup here. We may have an l. A. Olympics in 24. World cup and olympics within two years of one another, which is quite possible. You dont see any slowdown in spending . Well, it depends on where you are talking about. The brics with the exception of india. Weve seen brazil and russia slow and china slow. The next 11, which includes iran, interestingly, all up strongly. Colombia. Indonesia. Turkey, south africa. Strong. What about our economy here in north america . Strong. Strong but some are a bit worried its a bit patchy. Weve gained market share consider consider considerab considerably. Weve won some media assignments. We were talking about the difference of going traditional cable tv advertising versus facebook as an ad platform. Could be better targeted and certainly knows more about you. Sheryl talked about the data just in her clip there. Thats critically important. Facebook sharing its data with us because we have invested to build a better media mousetrap. We measure media around the world. We took the investment. We want to build a better mousetrap. Now, facebook has tremendous firstparty data as does google. Google has been a little bit friendlier, to put it that way, in sharing the data. Facebook will have to do the same. Building these wall gardens are not good for our clients. Same applies to an amazon and apple. If we can get this perverse party data more distributed across our client base, then i think you will see because what facebook stressed in the last year or so, which is really important, is the outcomes. Sheryl, theyre all talking about you have to measure the outcomes, meaning you have to measure r. O. I. Which means you need good, impartial data. You wouldnt give your media plan to a media owner. I would argue facebook and google are basically media owners. Monetizing inventory. You have to have good data. Since you are a great barometer of especially where the digital players will be. Everybody is very upset about twitter and the future of twitter. We were heavy i have been on the show before and i said to you that we were up heavily on twitter. I checked the numbers for the First Quarter. Were also strong with twitter in the First Quarter. So i found those numbers that came out a little bit puzzling because we probably increased our share. I think twitter is a very effective pr medium as weve discussed before. I thought it was interesting the video data sheryl referred to, increase in video. Googles video time is fewer video views but longer. Theyre much more searchdriven. Whereas facebook is many more views but shorter because its socially driven. Two very different media. Did you go to the Queens Birthday Party . Nope. I didnt get an invitation to that. I cant believe that. I am sorry. 30 years. Wpp, you know what it stands for . Wire and plastic products. This is his baby. Thats why you are a sir. I know where youre going with that. It was sort of the brexit is where im going. You say yay or stay in. What are the chances now . Latest poll says 38 staying in, 34 for going out. Youre betting on hillary too. I say stay in and hillary. Thats my double. Stay in in brexit and hillary. I take you to dinner or you take me to adeles next concert. Fair enough. Two more questions. The journalism question. Go ahead. I dont know how you spend 70 million pounds. I keep it invested in the company. But thats youre making a lot of money. Every article, every investor. Isnt it deferred comp . I reinvest. I paid the tax and reinvested kept the balance in stock. That was one of my points to defend him. He is not just some ceo that they picked that goes into an established company. Not a johnny come lately. We started with one million pounds, wire basket manufacturer. Now 20 billion pounds, 30 billion. Its not like they pick a ceo and they give him 300 million for being a ceo. I am at will, by the way, joe. I can be fired instantly. I can go instantly. Do you have a noncompete . No noncompete. Is it easier in the United States . You catch more flak over there . Dont you . You might as well move here. I think on balance you are probably right. But its coming here as well. People like andrew will make sure it comes here. He asked the journalistic question. Feudalism over there. Good to hear. Im going to spend my weekend he asked you if you were invited to see the queen. I heard youre going to see the king. Going to see the king. Absolutely. I will see you in omaha this weekend. Ive never been before. Im an omaha virgin. It will be something. Looking forward to it. Coming up i want to try to invest it more wisely. Sparks flying in congress. Pearson and bill ackman taking questions. Senator Susan Collins led the quizzing and shell join us. Good. How was your commute . Yours . Good. Xerox real time analytics make transit systems run more smoothly. And morning chitchat. Less interesting. Transportation can work better. With xerox. Thank you for calling. Well be with you shortly. Yeah right. Xerox Predictive Analytics help companies provide a better and faster customer experience. Hello mr. Kent. Can i rebook your flight . Im here Customer Care can work better. With xerox. Wait im here mr. Kent . Valeant pharmaceuticals cleaning house, making sweeping changes to its board after outgoing Ceo Michael Pearson and activist investor bill ackman grilled on capitol hill. Accused of gouging patients and hiking prices to award investors. Weve made mistakes. In particular, valeant was too aggressive, and i, as its leader, was also too aggressive. In increasing the prices of some of our drugs in our large portfolio of products. In hindsight i regret pursuing transactions where the central premise was based on an increase in price. Joining us now with more on the valeant hearing and drug prices chair of the aging committee, senator Susan Collins from maine. Senator, its great to see you. And welcome. Thank you. I wish it was an absolutely free market because that would make no sense if there were competing drugs for what valeant had. Thats what thats how the marketplace takes care of itself. And i know you know full well we dont want to curb innovation at companies that are truly trying to do the right thing and recoup their investment on maybe diseases that are not that prevalent. Thats a quagmire trying to get this regulatory system correct. I am sure you know that. What have you learned in the last couple of days . First let me address your comments about it being a free market. We give special privileges to pharmaceutical companies to reward them for that investment, that we want them to undertake to produce new drugs, lifesaving medications. Thats why we give them exclusive rights under our patent laws for a number of years. But thats not what happened here. In each of the four cases that we examined, valeant had absolutely nothing to do with the r d that developed these drugs. Instead, it identified monopoly drugs for which there were no good generic competitors, bought those drugs, and then raised the prices by some cases as much as 4,000 . So it wasnt as if they had spent money on the research and development. It wasnt as if their manufacturing costs had soared. They had remained the same. It was simply that they saw an opportunity with a captive audience and patients that needed these drugs to jack the prices through the roof. Mmhmm. Yeah. There are bad actors for sure. Unfortunately, you need to separate the bad actors from the companies that dont operate that way. But, even the Major Pharmaceuticals have been known to spend a lot of money on extended release versions, to extend patent protection and, you know, what money that could have gone into r d goes into marketing or developing these metoo. Its a quagmire. You cant paint a broad brush of the whole industry, but then again, its not just valeant and whats the other one . Turing. The one offs. I hate to say it. Politicians demagogue it and say its the entire pharmaceutical industry but then again nobody is completely guilt free. None of us have demagogued this issue. You are a republican. Weve gone out of the way to acknowledge the fact that we do need incentives for the pharmaceutical companies that are engaged in highrisk research. Most of the drugs that theyre developing will never make it to market. Right. It can cost more than a billion dollars to bring a drug successfully to market. But thats not going on with these companies that arent doing r d. Their r d percentage is minuscule or in some cases is nonexistent. Theyre taking advantage of decadesold drugs that have been around for years, and theyre buying them and then jacking up the prices, simply because they can. Right. And thats why we need to look at the fda process on how we can produce more competition. Your impression of bill ackman and other investors. Many of these Companies Act more like hedge funds than traditional pharmaceutical companies. Ill take mr. Ackman at his word. He promised that he would bring the board together today to discuss the drug pricing, and i am very pleased that our hearing has had that effect. Senator collins, thank you so much. Joining us this morning right after the hearings last night. Coming up, breaking Economic News. First read on First Quarter gdp might not be a great print. Minutes away. Coming up, going for growth, breaking Economic News. First read on the First Quarter gdp numbers. And instant Market Reaction. Steve liesman standing by. Handing it over to joe and kelly. Squawk returns in just a moment. Welcome back. Just seconds away from the first read on the nations First Quarter gdp and the weekly jobless claims. Futures under pressure after the bank of japan didnt deliver the stimulus or actions many were expecting. Dow poised to open lower, 129. Right to the numbers. See how they move markets with rick santelli. First look at First Quarter gdp. Always a biggie. We were looking for up. 7. Survey says up. 5. This is where it was hovering with atlanta for a while. Upgraded a bit on numbers like a smaller trade deficit. But of course, that follows the 1. 4, which is unrevised. And it is the smallest since the down. 9 of the First Quarter of 2014. Remember, it was up. 6 in the First Quarter of 2015. Lets look at jobless claims. 257,000. So last week 247, lowest in 73. Upgraded to 248. Then we add 9,000 more. There is your jump. Lets go back to the gdp. Look at some internals. Personal consumption expected up 1. 7. Up 1. 9. The gdp price index expected up. 5, is up. 7. The personal Consumption Expenditure q over q expected up 1. 9, jumped a handle up to 2. 1. We need to factor those things in, especially considering that oil certainly seems to be eyeing 50 versus 40 or 38. Commodities in general, as advertised by the crb index up close to 5 on the year. Kelly said no stimulus in japan. I dont know if when they went negative rates that was a stimulus. I think its an economy killer. They didnt do any more of it per se but they were rewarded still with a down 3. 5 plus percent move in the stock market. The dollaryen. Dollar hit again. Yen screaming. Almost made up all the ground. Close to october of 2014. A little bit away. Has the 1. 08 handle in sight. Trading at one and a quarter right now. I dont know if you were watching andrew interviewed the president. It will be in the New York Times magazine. There is a quote at the he end where the president is talking about finally being able to burst the myths of the reagan economy and the notion that that was an actual i dont know, flush period in the United States. Youve got to read this article. Because the last quote is amazing. That if the president is able to do one thing it will be to dispel that myth that those were actually better times. Is there any doubt in mind we dispelled the myth of Ronald Reagan . Who has won almost half almost half of the primaries . Confirmed independent sources. I rest my case. 5 . Eight years. 5 . Thats what we get. Not just taking the victory lap to spin this legacy of his own but actually going back to impugn the reagan numbers historically. Its amazing. Dont miss that piece. No, i cant wait to see it. You know, all the seeds reagan planted that end up sprouting in the clinton administration, i dont know how much seeds are planted in this barren farmland right now. Right. Okay. Lets talk about these sort of scanty gdp numbers this morning. Steve liesman is here. Thank you, rick. Ethan harris joining us. Head of Global Economics research at bank of a merrill lynch. Steve, big disappointment. Plenty of people telling us this morning it may be higher. Half a percent. Whats going on . Its not that big a disappointment. The disappointment came about a month ago when the numbers started to crash on us. Another weak First Quarter in a string of weak First Quarters. Six out of the last eight First Quarters have been weak. Fourth quarter was weak this time. The previous. Youre right. Joe, we dont know. We simply dont know if this is a seasonal adjustment issue or real weakness. Youre the Nobel Laureate on i havent won the prize yet, but i am expecting it for that great statistical he doesnt think the gdp data is reliable. In our fed survey we asked economists faced with better gdp numbers. Most said they stay with the better jobs numbers. I want to give you what was weak and what was strong with quotes around it. There wasnt a whole lot that was strong. Big story that jumps out at the page Business Investment tanking 5. 9 . Some will be oil and gas, but you dont have other nonoil and Gas Companies picking up the slack. We have a problem with Business Investment. Its a big issue we need to deal with. Part of the problem is that consumer spending, which had been running, by the way, for most of the last couple of years at a 3 clip has steadily ratcheted down. You did 2. 4 in the Fourth Quarter and now 1. 9 with a big tanking in durables. I think that has to do with car sales coming off. Income is doing okay. So some people again, the big story for investors is this. Do you once again play a Second Quarter rebound, its worked for you the last couple of years. Lets turn to ethan now. Ethan, one other thing i want to say. Housing numbers are very strong. Up 15 . Housing investment. Are you writing this off because of seasonals . Or is there real weakness we need to worry about . I think its mainly seasonals. Two years ago, our published research we said dont get too excited. Six years in a row. Weak First Quarters. What happens in the economy in the First Quarter is, if you dont adjust the data you get a major recession every First Quarter. As the winter hits and as the shopping season ends. So that means they have to put a massive i want to push back on this. I am the first guy as joe says i am a candidate for the big prize. Standards arent that low yet. I agree. I agree. Im pretty low. For economics. Youll win one, joe. On apple here is the thing. We didnt have the weather issue we had last year. We have real weakness in certain inputs, like the autos were bad. And the earnings are terrible. So there is other stuff that seems unlike past years when i was a skeptic on the weak numbers, i am less of a skeptic now because there seems to be other corroborating evidence from outside of the economic data. I agree the economy is a little slower. Were later in the business cycle. No big surprise there. Back to what you talked about earlier. If you look at the payroll numbers over the last six years, steady as a rock. Every quarter they rise at a 2 annualized rate. Gdp flies around zero and. 4 . That was going to be my question. Are we looking at gdp and not factoring in things that would actually make it much higher like, i dont know, the technology that we all have now and these things that arent measured in gdp numbers, so its actually a 3 gdp . Or is it actually not a 5 Unemployment Rate . Is that the fake number because of whether its parttime or no wage gains or the participation rate. We seem to be we dont know which one is fake. Are they both fake . Im going to be an economist and say its both, right. It is true that the underlying productivity gains in the economy are not very good, for whatever reason the new Technology Gains arent generating gdp. But there is also mismeasurement. For example, medical technology, medical technology is remarkable, the fact that you can do laser surgery and very surgeries that are very unintrusive. The way we measure it in the gdp accounts underestimates the massive benefit. The trouble with that theory is, joe, it would show up in profits. If there was productivity not showing up it could theoretically show up in profitability and youre not seeing that. The other thing is that i think, when you think about companies, government can be stupid, and businesses sometimes can be stupid. But more often not. I dont think theyre hiring all these people because there isnt sales and revenue and business for them to do. This is not a Public Works Program thats going on with these 200,000. That would suggest that there is more activity going on with the economy. The percent is very disappointing. Its very disappointing. My other work plus or minus 1. 3 . On average. We could be negative or we could be positive. A whopping 2 . Steve, ethan, thank you. I have to make my plug for the prize here. Its not that big of a deal. He just blew stuff up. He did more than that. A few big corporate stories this morning. Priceline group ceo Darrell Huston resigning following a Company Investigation into a personal relationship that he had with an employee over whom he had direct supervision. The chairman jeffrey boyd serves as interim ceo. Abbott labs buying st. Jude medical in a 25 billion deal worth 85 a share in cash and stock. Price is a 35 premium over st. Judes Closing Price on wednesday. A programming note. Abbott labs chairman and ceo miles white, my friend, will join squawk on the street at 9 30 eastern. Earnings from ups. Profit of 1. 27. Five cents above estimates. Revenue below forecast hurt by lower fuel surcharges and currency fluctuation. Do we really need to break . Ethan, if the United States was doing better, if we were doing 3. 5 we always say were doing better than the world because theyre doing. 5 . If we were doing better wouldnt the whole world be doing better . We cant say we cant do any better because of them. Could be that theyre not doing better than they could be because we arent doing better. We used to be an engine of Global Growth and were not anymore. Everyone is so much bigger now. Its harder for us to do the heavy lifting. Coming up with all the regulations. Hearen a echo . Amazon out with earnings after the bell. Will the tech giant continue its march of prime and cloud domination . Well talk to an analyst about that. Facebook and twitter shifting focus it live video, could mean big bucks for content creators. More about that next. Later today, live on power lunch, 2 00 p. M. Eastern. Squawk box will be right back. Everhas a number. Olicy but not every Insurance Company understands the life behind it. For those whove served and the families that have supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound welcome back to squawk box. Amazon is ready to post results after the bell. Joining us to talk about the cloud and streaming competition that amazon is facing from Companies Like netflix and google, neil doschy. The Securities Equity Research analyst. The overall question is amazon going to be a facebook or is it going to be an apple, a microsoft, you know, old tech disappointment or newtech star . Were definitely hoping its going to be a newtech star. We think the core business will continue to do well. They added about 3 million prime members towards the end of last year. I think that should flush through into this quarter, so it could provide upside into the north america business. Also, were quite positive on a lot of their initiatives, including the echo and aws. So a lot of positive things coming out of amazon. The one concern will be around csoi, their operating margin. Big concern about them going into a deep investment cycle. We dont think it will be as bad as some investors think. Its to fulfill the higher margin thirdparty business. I think thats the right way to go. Invest a little bit now. It will ultimately drive higher margins in the midterm. The cloud is so interesting. Others like microsoft have rushed into the space, tried to do it pretty well. For amazon a couple years ago it was kind of the surprise factor, right . Hey, in the meantime theyve built this huge Amazon Web Services business. Now its known and priced into the stock. I guess there is concern about growth decelerating . How do you see prospects there . We still think this will be about a 12. 5 billion business for amazon this year. There is definitely concern around google and microsoft, especially google coming in and undercutting amazon. Based on our checks, we think that amazon will still continue to gain outside share. Google is still fairly nascent in this business. Microsoft is going after the enterprise customers. Amazon is going after the enterprise customers. From a technical standpoint we think amazon is pretty much on par with microsoft and definitely far ahead of google. So i think its going to be interesting to see how this all plays out. But amazon definitely is the 800pound gorilla in this world. Oh, yeah. Is the company its still planting and watering and expanding its acreage. Is it still sowing its seeds . Or is it reaping any of the crops . How should we look at it . They dont need to make money. They just need to keep building, building . Do we care about earnings per share . We do care about earnings per share. We saw margins expand on a year over year basis for the past five quarters after many quarters of margins being compressed. Were expecting probably modest margin compression in the first and Second Quarter with margins expanding in the back half of the year. But ultimately we are expecting this company to post profits. And i think theyve gone through a multiyear investment cycle and now theyre starting to come out of that. And you are starting to see new highmargin businesses like thirdparty and aws which amazon never had in the past. Seven, ten years ago they hit 7 or 8 operating margins. They didnt have high margin aws or third party. Today you have both. And new Services Like prime. Neil, whats the earnings per share figure youre looking for . Were we base it on free cash flow. So we think that amazon should be able to hit our target of 685 and about 26 times the forward free cash flow, about 26 billion. How old is bezos now, neil . I am not sure. Probably mid 40s, early 50s. Its just insane. So he is the he is the current he takes the mantel from steve jobs, no doubt. [ laughing ] he is laughing at that. I was serious. Serious question. Neil wasnt laughing. The sound. The bezos sound. Anybody that bets against him, you would have to be crazy at this point, wouldnt you . Yeah. Its amazing. I think amazon is also starting to take share from Google Search on retail side. Couldnt be done. I cant believe that. In his 50s. The whole thing couldnt be done. And he did it. Reminds me of like fedex wanting to replace the post office. Couldnt be done either. That was his masters thesis or something. Amazon, no way they can deliver things to people that quickly with all the warehouses. I still dont believe it. Well have the results on closing bell later today. A nice promo there. Facebooks latest Quarterly Results meanwhile beating the street. Ceo Sheryl Sandberg saying users are sharing and creating three times more video on the social network from a year earlier. The company is not alone. Twitter, snap chat and vine relying on video content. How much will the tech giants have to pay for the socalled programming. Alex canterwitz wrote the article, quote, as social shifts to video content creators win power and dollars. Alex, good to have you with us. Youre basically saying the 12yearolds putting out all the new video now have the power . Its not necessarily the 12yearolds. It could also be the professional content creators out there. Basically there is a limited set of quality video that facebook has to draw from, and as they compete against twitter and snap chat and other platforms that want to show users video. Theyre going to have to pay for the good stuff. What is the good stuff . I was being a little glib about who is posting content. What kind of stuff are we talking about here . Facebook and twitter are both trying to figure out exactly what is the good stuff. Youre seeing experiments. Twitter paying nfl millions of dollars and stream games over the next season. Facebook working with celebrities and athletes and other Media Companies and paying them to do live video. So i think youre going to see a lot of experimentation from the social platforms to the free ride is over. Facebook is paying 350,000 over two months to make live videos. Ive heard from folks its even more than that in some cases. So facebook has live video, twitter has live video with per perpe periscope. Its very difficult to make live video. This is going to cost the networks big. I was on very case recently and the woman who ran this little inn, she said look at the videos my daughters been making. Those are the people that are going to benefit from this. A little inn . It was cheap. Of a good car company. People have always bought cars. But we saw an opportunity in sharing cars. So we moved fast and launched car2go in 29 cities, all around the world. Doing that required dozens of data centers, designed for speed and performance. We built our business on the ibm cloud. Because thats what the ibm cloud is built for. Welcome back. We have had a ton of earnings this morning. Still trying to digest the japan move. Lets get to the New York Stock Exchange with thoughts with jim cramer. Hi, cramer. How are you . Im great, loving life here. Whats on your mind . I think these future traders are wrong. They need a level playing field. If the yen would stop going down, its great. I would raise numbers for ford. Thats positive. Look at caterpillar. What is their Principal Energy . Japanese competition. Thats going to die down. Hewlett packard. Its an unbelievable to buy off our stocks of what future traders do, look at their weakness and buy. The health care business, fantastic. Big deal in the Cloud Business with oracle. So much positive is happening, im not even talking about facebook and pay ball, which are amazing. The deals, is that a trigger for a next round of space, medical devices . I think st. Jude is being left behind. St. Jude has best of breed, best advice, abbott can give you the scale. I looked at the dow chemical number. I liked that. I think there are going to be a lot of deals in health care. This valiant story, that was the peak of the negativity. Bernie sanders going by the wayside. Hillary takes a lot of money from the drug company. I doubt her to be a serious opponent. Health care has been down and out. If if can come back to the fore, its probably good for the market generally. If we have roving bear markets roving bear markets, i love it. And foxes about to turn lions. Jim cramer, thank you. Coming up, our future workforce. Then becky tomorrow reports live from omaha for this weekends big Berkshire Hathaway Shareholder Meeting. The workforce looking younger this morning. Lets get this out there, you not my daughter, as far as we know. We are celebrating here, there are kids out at cnbc headquarters. Fortunately since my two wonderful kids are here. Since were done at 9, you still get to go to school. Most kids get out of school but you still get out in time. Its great having you guys here. I dont get to see enough of you at home. Thank you for being here. Make sure you join us tomorrow, squawk on the street is next. Welcome to squawk on the street, im carl quintera
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