Transcripts For CNBC Squawk On The Street 20140605

It means you stay with where youre at and buy risk assets. French wine, joe. Italian parm. All the good things. Cheaper for us if this works. Its 1. 35, give me 1. 29 and were calling the travel agent. Your car is made overseas . Yeah. Going to ask me if it runs on diesel like andrew. I wasnt going to ask you. Im about relative price if it goes down. Its harkening back to a previous. 129 and were getting the travel agent and taking squawk. Where are we going, joe . 130 is the you know what i think, andrew, you make the call, you know him, probably have his number, lets go game of throwns to bravnick. Call up ben. Game of thrones tour you can take. I bet there is. I dont think those people are actually there, though. You want to sit on the iron throne, dont you, joe . One thing i promised i would never discuss on squawk was me sitting on the throne. You violated that in the past. I think i have, yeah. Is there anything andrew, come back. I will. Im going to go to napa and bring back some wine and then you should know its cougar night at the Rosewood Hotel in the valley where i stayed last night but thats tonight. Im going to miss that unfortunately. Wait a minute. Did you say cougar . I did. I thought it was a kind of wine. Famous in silicon valley. You meant cougar. They go searching for billionaires at this hotel called the Rosewood Hotel. And he left . All right. Thanks, pal. Well see you tomorrow. See you in the morning. Tomorrow morning. Join us tomorrow. Squawk on the street coming up next. Thanks. Good thursday morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the new york stock exchange. A busy morning. The ecb has cut rates and introduced some new policy measures, but first in just moments, gm will announce results of that internal probe into faulty ignition switches that has been linked to at least 13 deaths. Ceo mary barra is about to address employees and dealers in michigan. Mean time, cnbc has learned the top executives will be cleared of wrongdoing, but that at least a dozen employees in the engineering and legal departments will be dismissed, including gm engineer ray de giorgio. He engineered those ignition switches and approved a change on the switch without following protocol. The journal has additional details, namely that barra, the board, heard all of their direct reports and former ceo dan akerson did not know about this prior to december of 2013. Here comes mary barra now. Thank you very much. Well, thank you and welcome to our global town hall meeting. I have a lot to cover today, so i want to go ahead and get started. On monday, former u. S. Attorney anton valieukez presented the findings from his investigation into our ignition switch recall. He shared those findings with the board of directors. As promised, we have also shared his report with the appropriate government officials. And this morning, i want to discuss it with you. I also want to update you on the companys commitment to create a Compensation Program for victims. But before i address the valieucas report, i want to take an opportunity to again express my deepest sympathy to the families that lost loved ones and to those who were injured. I realize there are no words of mine that can ease their grief or their pain. But as i lead through this crisis, i want everyone to know i am guided by two clear principles. First, we will do the right thing for those who were harmed and second, well accept responsibility for our mistakes and commit to doing everything within our power to make sure this never happens again. With respect to the valucas report, you should know he and his team had complete independence. The investigation covered more than 350 interviews with 230 individuals, and they reviewed more than 41 million documents. Mr. Valucas has confirmed that he and his investigators were provided unlimited access to interview any General Motors employee, and every request was granted. In addition, a number of former gm employees as well as third parties were part of the investigation. Today, i would like to share my perspective and announce some of the actions in response to the report. My understanding is nhtsa, our regulator, will post the report on their website, which will be available for anyone to review. I can tell you this report is extremely thorough, brutally tough, and deeply troubling. For those of us who have dedicated our lives to this company, it is enormously painful to see our shortcomings laid out so vividly. As i read the report, i was deeply saddened and disturbed. But this isnt about our feelings and its not about our egos. This is about our responsibility to act with integrity, honor, and be committed to excellence. With all of our colleagues around the world watching, i want it known that this recall issue isnt merely an engineering or a manufacturing or a legal problem. It represents a fundamental failure to meet the basic needs of these customers. Our job is clear. To build highquality, safe vehicles. In this case, with these vehicles, we simply didnt do our job. We failed these customers, and we must face up to it and we must learn from it. To that end, and on behalf of gm, we pledge that we will use the findings and the recommendations from this report as a template to strengthen our company. What valucas found in this situation was a pattern of incompetence and neglect. Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by the faulty ignition switch. If this information had been disclosed and i believe this in my heart the company would have dealt with this situation much differently and appropriately. Furth furthermore, numerous individuals did not take the responsibility to drive the organization to understand what was truly happening. The report highlights a company that operated in silos, with a number of individuals seemingly looking for reasons to not act, instead of finding ways to protect our customers. Let me be clear, this should have never happened. It is unacceptable. Our customers need to know that they can count on our cars, our trucks, an most importantly our word. Because of the actions of a few people and the willingness of others to condone bureaucratic processes that avoided accountability, we let these customers down. To give you a sense of the thoroughness and forcefulness of the investigation, let me paraphrase a few key conclusions. One, gm personnels inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures. While everyone who was engaged on the ignition switch issue had the responsibility to fix it, no one took responsibility. Through the entire 11year history there was no demonstrated sense of urgency right to the very end. The ignition switch issue was touched by numerous parties at gm, engineers, investigators, and lawyers, but no one raised the issues to the highest level of the company. Overall the report concludes that from start to finish the cobalt saga was rid dualed with failure which led to tragic results with many. I hate sharing this with you just as much as you hate hearing it. But i want you to hear it and, in fact, i want you to remember it. I want you to never forget it. Because this is not just another business crisis for General Motors. We arent simply going to fix this and move on. We are going to fix the failures in our system that i promise, many are already fixed, and we are going to do the right thing for the affected parties, but i never want to put this behind us. I want to keep this painful experience permanently in our collective memories. I dont want to forget what happened because i and i know you never want this to happen again. You should know that mr. Valucas report revealed there was no conspiracy by the corporation to cover up facts. In addition, the investigators found no evidence that any employee made a tradeoff between safety and cost. The pattern in this case is much more complex and more nuanced. What valucas found was a pattern of management deficiencies and misjudgments often based on incomplete data that were passed off at the time as business as usual. Unfortunately, the report found that the seemingly benign actions led to devastating consequences. In short, we misdiagnosed the problem from the very beginning. Experienced engineers with the responsibility for safety did not understand that the air bags would not deploy if the ignition switch changed into the off position. I know many of you are saying to yourselves that this problem isnt a fair reflection of the company as a whole. I know it, and i know you know it too. We are better than this. But we have to own this problem and we have to have the courage to deal with it in the right way. As we have learned more about the situation over the last few months, we have acted aggressively to uncover facts, correct the problem, and restructure internal systems that allowed this problem to develop in the first place. I mentioned it earlier that we are posting a summary of all of our actions on the website, but i want to highlight five of the most critical steps we have already taken. First, we named jeff boyer, Vice President of safety, for the company, elevating and integrating our safety processes under a single leader. Jeff reports directly to mark royce and he and i meet on a regular basis. Weve added 35 safety investigators that will allow us to identify and address issues much more quickly and i think were already seeing the positive results of their work. Weve instituted the speak up for Safety Program that encourages employees to report potential safety issues quickly and we will recognize employees for doing so. We announced the creation of and have already implemented the new global product integrity organization, and this organization i am confident will enhance our overall safety and quality performance. And finally, and this is incredibly important, we restructured the safety decisionmaking process in the company to raise it to the highest levels. Senior management will be at the center of these issues as we move forward. The valucas report makes a series of recommendations in eight major areas and im committing the company that we will act on all of these recommendations. In each of the major areas weve already taken steps, but there is much more to do. We will move forcefully to complete the recommendations on an expedited timetable. Evidence of our work is already apparent. As im sure you know we are taking an aggressive approach on recalls. We are bringing greater rigor and discipline to our analysis and decisionmaking process regarding recalls and other potential safetyrelated matters. This is the new norm. We are redoubling our efforts and i believe they will be substantially complete by the end of the Second Quarter. In the near term you might expect to see a few more recall announcements. We have also made a number of personnel decisions. Some of these were tough calls. Im sure you can appreciate this, and we held off making these until the investigation was complete, but with the facts before us, we felt it was important to make a number of changes and weve already done so. 15 individuals who we determined to have acted inappropriately are no longer with the company. Some were removed because of what we consider misconduct or incompetence. Others have been relieved because they simply didnt do enough. They didnt take responsibility, they didnt act with a sense of urgency. Disciplinary actions have been taken also against five additional employees as part of the company. And with these moves i feel we have addressed the personnel issues in this matter. Consistent with our priority to do the right thing for those that were harmed we will be implementing a Compensation Program for those who lost loved ones or who have suffered serious injuries. As a result of the ignition switch failure. To that end, we have engaged ken fineburg to review options and he will administer the Compensation Program. Again, with all of the changes we have implemented and are now undertaking the job of correcting our mistakes is only the beginning. Strengthening our systems and adding resources are critically important steps to improving our company, but as positive as these steps are, they still arent enough. To excel, to truly build the best auto company for customers, we have to change our behaviors as well. We have to personalize this challenge, quality and safety arent someone elses responsibility. Theyre mine. Theyre yours. We must all feel a personal responsibility to see that this company excels at every level. Together, we have to understand that the attitudes and practices that allowed this failure to occur in the first place will not be tolerated. And if we think that cleaning up this problem and making a few process changes will be enough, we are badly mistaken. Our job is to not just fix the problem. Our job must be to set a new Industry Standard for safety, quality, and excellence. To settle for anything less would be a profound error. So if you are aware of a potential problem affecting safety or quality and you dont speak up, youre part of the problem and that is not acceptable. If you see a problem that you dont think and you dont believe its being handled properly, elevate it to your supervisor. If you still dont believe its being handled properly, contact me directly. I want an environment at gm where the customer is at the center of every action and decision we make. After all, we exist to serve their needs, not ours. We jointly own our successes and our failures and we need to hold each other accountable. I know that every day over 200,000 gm employees get up and go to work with a sincere commitment to do their very, very best. You and i both know that the vast majority of our colleagues care deeply about safety and quality and have the highest integrity. The simple truth is each one of us has the power to make gm a better, more customer focused company. Its time we unleash the full power of this great company. When i started at gm 33 years ago, i never expected to be ceo. And i certainly never expected to be in a situation like this. But im here and youre here. And we have to be committed to leading in a way that brings honor and respect to this company. Even on a day as tough as this, i am proud and honored to work for General Motors. I know we have dedicated and talented team of employees that are loyal and honest. I know because of your efforts, our current vehicles are winning in the marketplace on safety, quality, and design. I know our dealers are proud to sell our vehicles and they care deeply about providing Excellent Service to our customers. And i know suppliers work hard every day to provide the best components for our vehicles. And most important of all, i know, as do you, that our products enhance the lives of millions of people around the world every single day. As i prepared for today, i thought long and hard about this very difficult message. I knew full well, it would be difficult for all of uss. But i also knew the only course of action was to be direct an totally honest. This is a test of our character and our values. And in the end im not afraid of the truth and i know you arent either. I want it known that we will face up to our mistakes and we will take them headon. The fact is, i believe in this company and i believe in all of you. And i know you, with me, want gm to be the worlds best Automotive Company for customers. Whatever it takes to do that, is exactly what we will do. Thank you. [ applause ] that is Ceo Mary Barra at gm speaking to employees and dealers, unveiling the valucas report which essentially clears top management, finds no conspiracy, although in her words shows a pattern of incompetence and neglect, a saga riddled with failure. Not a cost issue. Wasnt a tradeoff between cost and safety. Recall should be done by the end of q2 and about 20 employees dismissed or faced disciplinary result. To me totally forceful. I think were used to seeing ceos say mistakes were made, nobody loses their job, we just kind of hope that they sweep it under. I mean i wouldnt be surprised if once you cut these people loose, some Government Authority goes after them. Theyre not going to be backed by gm. Theyre on their own. That is a signal to any u. S. Attorney. Here you go. Heres your people. Go after them. Certainly the Company Already under investigation by congress, by justice, by the sec, by a number of states. Lets go to phil lebeau and get his reaction to what mary barra said in warren, michigan. Good morning, carl. The bluntness of the language is what stands out. She didnt try to gloss over this. She said look, it was incompetence, it was neg next, riddled with errors. It was very clear that individuals, the 15 who were dismissed and the other five who have been disciplined, they were at the heart of this entire defect recall situation and the fact that over 11 years, they had some role, at some time had a chance to raise their hand and say this doesnt make sense, something is wrong here, something needs to be done, and yet they didnt, she essentially said look, its incompetence and neglect and theres no excuse for that. The bluntness is what stands out here. The real question Going Forward, lets say two years, three years, four years from now, is whether or not General Motors truly does make the changes that are necessary or if it falls back into a pattern where maybe theres an issue and it doesnt rise to the level of being flagged immediately. Time will tell on that front. Really, i totally agree with phil. One of the things i think we were all saying, first we hear basically what she said happened and it was like, are you kidding me . Did you really just stand by . She says you stand by no more. I like that kind of strength. I wish some of the bankers would periodically come forward and say, heres the 20 guys, theyre yours. We dont tolerate this. I thought it was very strong. There have been some comments that said if only we can get some executives who have been down a similar path to make the same speech. Phil, well be coming back to you later this morning. The stock up more than 1 premarket. Not the only story by a long shot. The ecb did cut rates to record lows including reducing its deposit rate to negative territory, the benchmark. 15. And mario draghi announced new liquidity measures aimed at supporting lending to the real economy, including targeted longer term refinancing operations, those ltros. He also said key Interest Rates will remain at present levels for an extended period of time. Later on this morning well talk to former pimco ceo Mohamed El Erian get his take on the ecbs decision, but he said even with everything hes announced this morning they are poised to act swiftly if needed in the future. When we listen to them, we obviously have to put it in context of what happened to the 1920ness germany where deflation got out of control and led to social unrest. We dont tend to that, brief period of deflation in this country, not that long. When i listen to what he had so say, i felt like what he was saying it is your sworn duty to lend, better start lending, we will do everything we can to make you lend, we will lend if you wont lend. I mean, he is he invoked that malcolm x statement before by any means necessary. This is it. I cant think of another way. This man is this man is on a mission, and i think that when i looked at banco santear jump up immediately, what it says, stop with the hoarding of capital. The only capital hes willing to have banks hoard is what they will owe the u. S. Attorney in the United States. That number will be quite large potentially which were watching closely as it continues to develop on that front. Arent you surprised draghi says enough of that. Thats 10 billion that could go to french Small Business people. The problem with european banks, unwillingness or slow pace to recognize the losses and holes in their Balance Sheets and the willingness to sell those assets because of having the capital high enough to take them. That has taken place slowly but surely that has taken place. The key is now, okay, guys, open the spigot. The german dax cracks 10,000 this morning for the first time. Although it sits a shade below that at the moment. Get ready for the opening bell here in the states moments away. Honestly, the offseason isnt really off for me. Ive got a lot to do. Thats why i got my surface. Its great for watching game film and drawing up plays. Its got onenote, so i can stay on top of my todo list, which has been absolutely absurd since the big game. With skype, its just really easy to stay in touch with the kids i work with. Alright, russell you are good to go alright, fellas. Alright, russ. Back to work [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Little less than two minutes before the opening bell. Truncated mad dash. Manny, a guest last night on mad money. Ceo of pvh. A bad quarter from pvh in multiple ways. One is that manny was talking about how theres so much promotion. We know a lot of retailers did not have that promotional environment. I hate to think this company that makes all these shirts and ties is not doing that well. Second, when you listen to him, he basically is saying this quarter is going to be bad. This quarter. I mean, you know, i just have heard too many retailers say may was strong. He backtracked a little bit and said may is strong, but what im listening to is basically a story which says we bought calvin klein, hasnt done that well yet in europe, were not seeing any real pickup in the United States and hes gone manny has gone from being reliable to being a little questionable and i really respect his work, hes done a great job, but the stock has a premium that comes from manny terryco and the premium is being trained. He has to deliver the next quarter or the stock will no longer become the apparel go to name it will be all vf corp. Strong words. I was surprised and let down. I got to say it. Await the opening bell here in a minute. By the way, dow is going to open at some record highs again if the futures hold. We begin the day technically about 19 points below the intraday high and six points from the closing high. Thats going to be settled pretty quickly. At the big board, the new York Racing Association and california chromes coowner, steve coburn and jockey victor espinoza, ahead of the belmont this saturday, of course, on nbc. A lot of people wondered if california himself would come down and ring the bell. Thats hard to do in horseshoes. I met with the skechers people yesterday, 52week high, sponsoring california chrome, sponsoring the clothes, but this was a great day to sponsor they came in after pimlico, but the excitement is palpable and reminds me of the old days, the country would stop. Would there be a triple crown. Its been a long time. 78, right. Defirm. I think so. I went to see seattle slew. Seattle slew. Sec eight. Bar borrow. Theres a statute of sec cre tare eight at the park. That was the sport of kings. You got that right. At the nasdaq, its Priceline Group doing the honors. Pvh not the only retailer making news here, jim. Five below is out. L brands had comps of 3 for may. Five below should be up more, but it was up big in the afterhours. That was a very good quarter and they delivered. People think theyre back on track. Vera bradley following up on a tough handbag environment for some. Vera looking more like coach. Tough quarter right there. Again, i want to temper what i said about manny treeco because if he delivers this quarter he did not cut his back end. When you see a stock down like that thats people saying something is wrong here, bigger than i thought. Back end. If he keeps the number the stock goes back. Im not losing all faith. Im saying i was surprised. Joey global will be your biggest global on the s p. Bookings, the first bookings beat in a year says stephanie link. It was a Canadian Oil Sands order, not a called orrer that put them over the top. Coal seems to be leveling out. Natural gas has gone up so much. Joy global one of the companies that when you hear they are cutting coal people short joy. One of the most heavily shorted stocks there is. Who was thinking they would get big canadian oil, sands orders . Not most. Well get to tmo and sprint in a bit, i did want to point out shares of smith nephew down about 5 . Yesterday a bloomberg story saying met tronnic was evaluates, not that they reached out, evaluating a potential bid for smith nephew which got a lot of action on the story from the ft the week earlier about stricker doing the same thing. Stryker came out and said no. New uk takeover law they are barred from doing anything for a while. Mettronnic has its Analyst Meeting dlAnalyst Meeting. I am not sure what obligation they are under or not under uk takeover law again or whether this also means they cant do anything. The stock is down. How Many Companies can be you know by the end of the day, i suggested that j j buy smith nephew. It would not be an inversion for them because its not big enough to represent an inversion given j js size. However for met tronnic, were they to do the deal for stock, it would be. I thought that made great sense. Met tronnics, obviously, is not going to negotiate with itself at an Analyst Meeting. We know theres a lot of focus on inversion, on deal making and you get reports now about companies evaluating things. They always evaluate things. Sometimes they do move forward. Are you hearing oil deals right now . Flrg is one youre hearing. Energy is one im not going to play the game with the press and give you names, because thats a joke thing to do. Theres deals about to occur. Im hearing it. Trying to learn more and more, but in this not inversion names necessarily. No. Energy is bubbling up. Companies worth more, cheaper on wall street than in the permian. Leave it like that. Well leave it like that. I think mary barra having addressed employees and dealers will begin her news conference. I think we might take a touch of that live. Sure. Ken feinberg will be the independent administrator of the program. The specific protocol and rules of the program are still under development by ken feinberg. He expects to bring that to conclusion in the coming weeks. Any dollar numbers at this point . Our objective is to do the right thing and go out and compensate all the people that should be compensated. Wdav tv detroit. Mary, i think the two questions that strike me most are, one, what was the environment that led to these kinds of attitudes . In other words was it fear the Company Might go under if there was a recall or just an arrogant attitude . The number two question is, how is it does the company allow for a part change without changing the number, which as i understand it is sort of the cardinal sin of all of this and what did the report today tell us about all of that. Clearly there were a number of safety recalls that occurred over this period. Some, you know, fairly significant. I think if you look at the root of this issue, first off you had a part that was released to go into production that didnt meet the performance requirements and then, sadly, when the problems first occurred, they were misdiagnosed, they werent deemed a safety issue because engineers didnt understand the relationship between the switch and the circuitry that deploys the air bag. Lets go across. Tom . Mary, the can you say how high in the company of the people who were disciplined or fired, how high in the company did this go . And also, under the organizational chart, safety reported to you as Product Development chief for three years, should you not have known about this . I wish i had known. Because the minute we knew, we took action. I think youve seen swift action being taken since the end of january. As it relates across the organization, to the number of individuals that are no longer with the company, they represent, you know, many functions, engineering, legal, public policy, quality. A disproportionate number of those no longer with the company were in senior roles or executive roles. Yes, sir. James, auto deck. Just curious, mary, how confident you are that this is an isolated incident . You know, the part change being made without the part number going along with it . Again, commented on that, that is not an acceptable process. It never has been, it isnt Going Forward, and so as we looked at this situation and we looked across the company we feel, again, this was a tragic set of events of serious mistakes that were made over an extended period of time on this issue. Okay. From warren, michigan, we take you to bruise sells where the g7 is taking place. In this case a joint press conference between president obama and uk Prime Minister David Cameron. Taking tee ing steps to impo on russia for its behavior. Today in contrast to a growing global economy, a sluggish russian economy is even weaker because of the choices made by russias leadership. Meanwhile our nations continue to stand united in our support and assistance to the ukrainian people and the g7 summit was an occasion for me, david, and our fellow leaders to ensure that were in lockstep Going Forward. On ukraine, i shared the results of my meeting yesterday with president elect pore chenco. Like so many ukrainians he wants to forge closer ties with europe and the United States but recognizes that ukraine will benefit from a constructive relationship with russia. So i believe his inauguration provides an opportunity, particularly since he has demonstrated a commitment to reach out to the east and pursue reforms. Russia needs to seize that opportunity. Russia needs to recognize that president elect pore chenco is the legitimately elected leader of ukraine and engage the government in kiev. Given its influence over the militants in ukraine, russia continues to have a responsibility to convince them to end their violence, lay down their weapons, and enter into a dialog with the ukrainian government. On the other hand, if russias provocations continue, its clear from our discussions here that the g7 nations are ready to impose additional costs on russia. I also briefed david on the new initiative i announced in warsaw to bolster the security of our nato ally, especially in central and Eastern Europe as well as our focus on building counterterrorism capabilities across the middle east and north africa. David will be hosting the next nato summit in wales in september and i appreciate him updating me on the preparations for that summit. We agree that its going to be an opportunity for every ally to make sure theyre carrying their share and investing in the capabilities our alliance needs for the future. The situation in ukraine has also highlighted the need for Greater Energy security. At the g7, we agreed to help ukraine reduce its energy risks, to include diversifying its supplies. Were going to help countries in central and Eastern Europe strengthen their security as well and following the review i called for in the United States earlier this year, every g7 country will conduct an Energy Assessment to identify the possible impact of any potential disruptions and to offer ways we can better prevent disruptions and recover from them more quickly. Related to this, we agreed at the g7 to continue to lead by example in the fight against Climate Change, which poses a danger to our environment, our economies and national security. I made it clear that the United States will continue to do our part and earlier this week, we took a major step proposing new standards that for the first time would limit Carbon Pollution from our existing power plants. One of the most ambitious steps that any nation has taken to combat Climate Change, it would reduce Carbon Emissions from our Electricity Sector by 30 , it will help us meet the commitments we made when i first came into office at copenhagen, and it will improve our Public Health and its also going to be good for our economy by helping to create more Clean Energy Jobs and lower electricity bills for americans. Its the right thing to dop. This builds on the steps weve taken over the past five years to invest more in renewables like solar and wind, raise fuel standards for our cars and trucks, and make our homes and businesses more Energy Efficient and today were holding our Carbon Emissions to levels not seen in nearly 20 years. So were making important progress, but my action plan for Climate Change indicates weve got to keep at it and do more. I know its a cause david is also passionate about. We agreed that every nation has to do its share. All the major economies, including the g7 and emerging markets like china need to show leadership as we work on a new Global Climate agreement and that includes putting forward by march of next year ambitious longterm targets for reducing emissions. So again, i want to thank Prime Minister cameron and our fellow leaders for our work here together in brussels. David, i believe that whenever our two nations stand together, it can lead a world that is more secure and more prosperous and more just and well be reminded of that again tomorrow in normandy as we mark the 70th anniversary of dday. On that day like so many others, american and british troops stood together and fought valiantly alongside our allies. It didnt just help to win the war, it helped turn the tide of Human History and are the reason we can stand here today in a free europe and with the freedoms our nations enjoy. Theirs is the legacy that our two nations and our Great Alliance continue to uphold and im grateful to have a fine partner in david in making that happen. Thank you, david. Thank you. Good afternoon. Im delighted to be here with you today, barack. As we stand together in europe, on the 70th anniversary of the dday landings we should remind the world of the strength and stedfastness of the bond between the United Kingdom and the United States. Prime minister David Cameron along with the president speaking at the g7 in brussels which russia is not a part, although three countries will hold bilaterals with putin over the next couple of days. Eamon javers is in washington watching the developments. Yeah, considering, carl, here the president speaking about developments in the ukraine a day before hes going to be in normandy, france, celebrating the 70th anniversary of the dday landings. Vladimir putin will be in normandy. Not clear whether theyll see each other or interact in any way at that event coming up tomorrow. But important in terms of National Leadership here for the president , waving the u. S. Flag overseas and at normandy tomorrow. One of the questions is, how is u. S. Foreign policy going to undue whats happened in the ukraine . The president laying out a series of conditions here not clear what happens next, though, carl. Very uncertain situation. Well see what other statements bring us throughout the course of the day. Eamon, thanks a lot . Thank you. David . I want to move on now to a merger and acquisition story weve been following, my god, its been years basically. If you recall when we first reported way back when on softbanks interest in buying sprint it included originally in those discussions tmobile. And its parent Deutsch Telecom. Fast forward a long time later, of course, softbank controls sprint and the talks that have been going on, seemingly endlessly between sprint and tmo about combining continue. Late yesterday we got a number of news organizations reporting that they are getting closer and closer to terms of which are roughly speaking and i can confirm this, a deal that would involve the payment of about 40 a share to tmo shareholders, half of that being in sprint stock, half of it being in cash, and again, these could move around a bit. I dont and a 20 ownership by Deutsch Telecom in the remaining combination. Thats basically what were working with here. Again, as you know ive been reporting on it for quite some time, these two companies have been in on again off again talks for quite some time. They are still i am told by sources at least six to eight weeks away from signing a defin tish agreement. Still need to shore up financing for a deal. Still need to do due diligence, but they are on the road clearly to potential announcement, one i have said many times is not when, not if, but when. And that when seems to be getting closer at some point this summer. The other question, though, of if is, will this be allowed by regulators who have, frankly, stepped out in a way that they dont typically do, to say were not in favor of this, that being fcc, the fcc and its chairman tom wheeler, the doj. Its going to be a difficult deal to get through the regulators. You have outliers on both sides here. Craig moffett, wellknown analyst, saying he thinks theres a 10 chance this deal will get through. 1010 . Hes conservative. If you asked him if that may still be the case although let me say thats one side. Another says hey you know what, this is exactly what is needed and they believe in the arguments that have been made continuously by massason who controls softbank who controls sprint saying this is a capital intensive business, scale is of the essence. Were competing against two behemoths in at t and verizon and we need a well capitalized third competitor to bring the level of service that we think we can to really start to bring competition in a real way to both of them. Not to mention to comcast, our parent company, that in many ways can start to almost act as a wireless opportunity for many people, given that broadband is everything right now, and that masa son talks about bringing speeds into the home if he could actually or into the phone that if he could bring them into the home would be faster than your internet broadband connection right now. There is a lot to be made on both sides of this. We know at this point it seems where the regulators stand and we are getting closer and closer, although still not there, of an actual definitive agreement. The 40 price, tmo is down rather sharply over 2 . Why . Well, of course, because of the time its going to take here and because of the great uncertainty that the deal will actually happen. There is going to be a breakup fee of at least a billion dollars. Im told it will be a bit more than that. Lot less than what at t paid when it failed to acquire tmo because, of course, regulators said no, were not going to allow that to happen. Well, i think that tmo shouldnt be down this much because the company is doing well with or without. This is not like the old days before they came public when at t walked away, tmo had a big stumble. This tmo is a radically strong tmo and i would be a buyer. Interesting, under the leadership of john legere, disrupting in a way that many expected masa sons sprint would but has not. Thats interesting. Dan hessy not being as aggressive or they dont have the capital . Listen, this is, as i said, capital intensity of this business is great. You never stop spending. And you do need a Balance Sheet to support that. A decent amount of debt already from sprint. They will be adding more to that. The potential synergies are enormous were it to get by the regulators and thats where youre going to see investors sort of try to wage their bets so to speak. I thought American Tower would be down. You need fewer towers. Some people recommending those stocks have been hot. The stocks are acting as if there is no deal which is extraordinary given the fact that today was in the conventional press as opposed to what youve been saying because youve been way ahead, saying listen, its going to be done. It seems like everyone has said now, all right, we know. Well, well be following it from here. Another six to eight weeks potentially for a definitive agreement and then we deal with the regulatory side. Those regulators are going to be busy, between at t and directv and potentially sprint and tmo. Whether regulator or world leader, the q a has begun with the president and Vice President cameron. Back to brussels. Your position on the European Commission president and who would you like to see get the job and separately, do you feel pressure from president obama about your position on keeping the uk in the eu . Thank you. First of all the relationship between the United States and france has never been stronger. On a whole range of issues, were seeing intense cooperation. And im looking forward to seeing president hollande this evening to talk about a range much issues and of issues and continue the work that was done here in brussels. My answer on the banking case is short and simple, the tradition of the United States is that the president does not meddle in prosecutions. We dont call the attorney general, i do not pick up the phone and tell the attorney general how to pos cute cases that have prosecute cases that have been brought. I do not push for settlements of cases that have been brought. Those are decisions that are made by an independent department of justice. Ive communicated that to president hollande. This is not a unique position on my part. Perhaps it is a different tradition than exists in other countries, but it is designed to make sure that the rule of law is not in any way impacted by political expediency. And so this will be determined by u. S. Attorneys, in discussion with representatives of the bank and, you know, ill read about it in the newspapers just like everybody else. He says hes going to report to you about it. Hell hear the same answer from me tonight as at this podium. [ inaudible ]. I have expressed some concerns and i dont think im alone in this, about continuing significant defense deals with russia at a time when they have violated basic International Law and that territorial integrity and sovereignty of their neighbors. President hollande understands my position. I recognize that this is a big deal, i recognize that the jobs in france are important. I think it would have been preferable to have pressed the pause button. President hollande so far has made a different decision and that does not negate the broader cooperation that weve had with france with respect to its willingness to work with us on sanctions to discourage president putin from engaging in further destabilizing actions and hopefully to encourage him to move in a more constructive direction. We are at a point where mr. Putin has the chance to get back into a lane of International Law. He has a president in pore ra chenco he can negotiate directly with. Having spoken to president porachenko yesterday morning its clear he recognizes ukraine needs to have a Good Relationship with russia, but also rightly, affirms the right of ukraine to engage with the rest of the world. And the steps that david outlined earlier and that the g7 unanimously agrees with, which is for mr. Putin to take seize this moment, recognize pore chenco is the legitimate leader of ukraine, cease of support of separatists and flow of arms, work with ukraine to engage those in the east during this process of constitutional economic reform, if mr. Putin takes those steps, then it is possible for us to begin to rebuild trust between russia and its neighbors and europe. Should he fail to do so, though, there are going to be additional consequences and one of the important things that came out of this meeting today was the recognition on the part of all of us that we cant simply allow drift. The mere fact that some of the russian soldiers have moved back off the boarder and that russia is now destabilizing ukraine through surrogates, rather than overtly and explicitly, does not mean that we can afford three months or four months or six months of continued violence and conflict in eastern ukraine. We will have a chance to see what mr. Putin does over the next two, three, four weeks, and if he remains on the current course, then weve already indicated the kinds of actions that were prepared to take. All right. You asked a couple of questions about europe. Its worth setting the context we just had a set of european elections where to take two countries at random, france and britain, and france the national and openly antieuropean party won, and antieuropean party in my country won, and when these things happen you can stick your head in the sand and wish the results would go away or have a strategy of addressing the concerns of the people you represent in your country. I have a strategy to represent and understand and reflect those concerns and thats why i think its important that we have people running the institutions of europe who understand the need for change, the need for reform. I would argue that that is a view quite widely shared amongst other heads of the government and state in the European Union. For britains future im very clear what i want to achieve is secure britains place in a reformed European Union and i have a strategy of delivering that, renegotiating our position, recovering some important powers, make something significant changes and putting that issue in a referendum to the british people. Again, its a strategy for dealing with an issue which i think if we just walked away from it we would see britain drift towards the exits and i dont want to see that to happen. Talk to the United States about that it . We have good discussions about these issues as we discuss everything else. Absolutely. Lets have a question from the bbc. Mr. President even if you dont have a meeting scheduled with Vladimir Putin yourself, are you going to end up talking to him face to face in france and do you see real possibilities of opening up a pathway for the crisis by you engages with him . Britain is potentially facing two major decisions whether or not scotland stays part of the United Kingdom, what do those decisions mean to you and the people of the United States . Prime minister, youll be the firsts i think after the summit to engage with Vladimir Putin face to face, despite everything youve said, is there something of an olive branch in your hand after all, mr. Putin has not actually denounced the electoral process which brought the new president to power in ukraine, this a way out and is that what youre going to be exploring with him this evening . And do you accept that germany may not come to your aid and stop jean claude becoming Commission President , will blow your strategy off course . Do you think you may be able to negotiate a brilliant reform of the European Union but if jean claude becomes president of the European Commission will your credibility be so damaged in britain people may vote to leave the union. Who are you more afraid of, Angela Merkel or teresa may . Great question. Right. Let me take those. First of all, my meeting with Vladimir Putin, i think its just important to have this communication about some very important messages about whats happening now is not acceptable, about the changes that need to take place. I think as the president said, there is an opportunity for diplomacy to play a role and to chart a path because weve had these elections. The ukrainian people have chosen a president. Hes a capable man. Its quite possible that he could have a proper relationship with putin that could be a proper relationship between ukraine and russia. But change is needed in order for that to happen and thats the message that i will be delivering this evening. In terms of your other questions, look, on this issue of who runs the European Commission, the european institutions what matters is people who understand the need for change, understand the need for reform, realize that if things go on as they have, this union is not going to work for its citizens and that was the message i think was loudly received in these european elections. As for who, as you put it, Angela Merkel or teresa may, im fortunate in my life to work with some extremely strong and capable women of which they are undoubtedly too. I have no doubt that ill see mr. Putin and he and i have always had a businesslike relationship. And it is entirely appropriate that he is there to commemorate dday, given the extraordinary sacrifices that were made by the people of the soviet union during world war ii. And should we have the opportunity to talk, i will be repeating the same message that ive been delivering to him throughout this crisis. Keep in mind that al know we havent had formal meetings ive spoken to him by phone repeatedly from the outset of the protests. My message has been very consistent, that is that russia has a legitimate interest in what happens in ukraine, given that its on its border and given its historical ties, but ultimately up to the people of ukraine to make their own decisions. That Russian Armed forces annexing pieces of a neighbor, is illegal and violates International Law. And the kinds of destabilizing activities that we now see, funded and encouraged by russia, are illegal. And are not constructive. There is a path in which russia has the capacity to engage directly with president pore chenco now. He should take it. If he does not, if he continues a strategy of undermining the sovereignty of ukraine, then we have no choice but to respond and perhaps hes been surprised by the degree of un enity thats been displayed. I do think the fact that he did not immediately denounce the outcome of the may 25th election, perhaps offers the prospect that hes moving in a new direction. But i think we have to see what he does and not what he says. With respect to the future of the United Kingdom, obviously ultimately this is up to the people of Great Britain in the case of scotland, there is a referendum process in place and up to the people of scotland. I would say that the United Kingdom has been an extraordinary partner to us from the outside at least, it looks like things have worked pretty well. And, you know, we, obviously, have a deep interest in making sure that one of the closest allies that we will ever have remains strong, robust, united and effective partner. But ultimately these are decisions that are to be made by the folks there. With respect to the eu, we share a Strategic Vision with great brit taain on a whole range of international issues. So its always encouraging for us to know that Great Britain has a seat at the table in the larger european project. I think in light of, you know, the events that were going to be commemorating tomorrow, its important to recall that it buzz the steadfastness of Great Britain that in part allows us to be here in brussels in the seat of a unified and extraordinarily prosperous europe. And its hard for me to imagine that project going well in the absence of Great Britain and i think its also hard for me to imagine it would be advantageous for Great Britain to be excluded from political decisions that have an enormous impact on its economic and political life. So you know, this is why we have elections and well see the arguments made and im sure the people of Great Britain will make the right decision. Steven collison. Thank you, mr. President. Have you been surprised by the backlash thats been whipped up by your decision to do a deal to free Bowe Bergdahl and what do you think is motivating that . Do you think you could have done more to consult with congress or announce a deal that might have spared him and his family of being caught up in the police km crossfire . Prime minister how do you respond to criticism of your decision to meet Vladimir Putin and his meetings with other key european leaders is devaluing the punishment meated out to russia and should qatar be deprived of the right to host the world cup and is england willing to host it . Im noterer surprised by never surprised by controversies whipped up in washington. Thats thats par for the course. But ill repeat what i said two days ago. We have a basic principle, we do not leave anybody wearing the american uniform behind. We had a prisoner of war whose health had deteriorated and we were deeply concerned about it and we saw an opportunity and we seized it. I make no apologies for that. We had discussed with congress the possibility that Something Like this might occur. But because of the nature of the folks that we were dealing with and the fragile nature of these negotiations, we felt it was important to go ahead and do what we did. And were now explaining to congress the details of how we move forward. But this basic principle that we dont leave anybody behind and this basic recognition that often means prisoner exchanges with enemies, is not unique to my administration. It dates back to the beginning of our republic. And with respect to how we announced it, i think it was important for people to understand that this is not some abstraction, this is not a political football. You have a couple of parents whose kid volunteered to fight in a distant land. Who they hadnt seen in five years. And werent sure whether they would ever see again. And as commander in chief of the United States armed forces, i am responsible for those kids. And i get letters from parents who say, if you are, in fact, sending my child into war, make sure that child is being taken care of. I write too many letters to folks who unfortunately dont see their children again after fighting a war. I make absolutely no apologies for making sure that we get back a young man to his parents and that the American People understand that this is somebodys child. And that we dont condition whether or not we make the effort to try to get them back. Did you have a second question . For the Prime Minister. Okay. Im you can ask him about football. On the issue of first of all on the issue of meeting president putin i think its right to have this dialog if you a clear message and point to make. I think theres a world of difference between having a tie log with president putin and excluding someone of the g8 and g7. It was absolutely right to exclude russia. I think i was one of the first leaders to make that point. A difference between the meeting weve just held which did not include russia and having a bilateral meeting where we discussed these issues about ukrai ukraine. On the issue of football we should let the investigation run its course but, of course, england is the home of football as its the home and inventor of many sport, tennis, golf, rugby, cricket. Baseball, basketball . Were always happy to provide a home. We did invent the english language. Youve made a few changes to it. They dont hold us back. Final question for itv, i think. Itv news. You spoke about the importance for you and your allies to be in complete lockstep on the crisis in ukraine. If this crisis shows no sign of deescalating you say the next step will be sanctions. Are you confident that you will be in lockstep with all of the european allies and g7 allies because there will be costs and consequences for them and their economies as sanctions get widened. Prime minister, my question to you, as you spoke forcefully about the threats of extremist ideology at home and abroad, described it as the greatest threat to britain and its allies, and even by your own governments estimate there are several hundred british citizens learning to fight and kill in syria. With regard to extremist ideology at home, particularly in schools where theres been a lot of concern, dont you think its not only unseemly, but wrong, for member es of your own government to engage an argument where the priority should be protecting british children against extremist ideology . Thank you. First of all, let me just say on the issue of sanctions and this issue of lockstep between the u. S. And countries of the European Union i think its been striking over the last few months how weve been able to stay as unified as we have. I pay tribute to barack for his understanding of how important it is to deliver these messages together and support. I think its surprised people. In terms of tackling extremism i set up the uk Extremism Task force which i chaired after the appalling murder of lee rigby because i wanted to make sure the government was doing everything it could to drive extremism out of our schools, our college, off campuses, active prisons in every part of National Life and i think its important we recognize that you got to deal not only with violent extremism but the sink of extremism of tolerating extremist views from which violence can grow. The whole government is signed up to that agenda and driving through changes to deliver that agenda. As for these issues for the last day or so, i will get to the bottom of who has said what and what has happened and sort it all out once i finish these important meetings im having here. I think what has been striking is the degree of solidarity between the United States and europe dealing with the ukraine crisis. I hing a lot of people i think a lot of people anticipated very early on immediately the two sides would fly apart, and, in fact, there has been consistency in affirming the core values that have been at the heart of a united and prosperous europe. And thats despite the very real economic consequences that can arise by applying sanctions against russia. I think europeans understand that the reason weve seen such extraordinary growth and peace on this continent has to do with certain values and principles that have to be upheld. When they are so blatantly disregarded, you know, the choice is clear. Europeans have to stand up for, you know, those ideals and principles even if it creates some economic inconvenience. Now, having said that, sec torl sanctions are broader, they would be more significant, our technical teams have been consulting with the European Commission to identify sanctions that would maximize impact on russia and minimize adverse impacts on european countries. And that work is ongoing. My hope is we dont have to exercise them because mr. Putin has made some better decisions. I think by the way it would be better for russia because the russian economy is not in good shape right now. Weve seen significant capital flight just from the sanctions weve already applied. That could easily worsen and if we have sec torl sanctions i think it will inevitably hit russia a lot more than it hits europe which have much more diversified and resilient economies. Do i expect uninimty among the 28 eu members . I have now been president for 5 1 2 years and ive learned a thing or two about the European Union, commission, council, sometimes i get them mixed up welcome to the club. But the basic principle that if you got 28 people sitting around a table, not everybody is going it agree, i think we take that for granted. And i also think that if, in fact, we have to move to sectoral sanctions its important to take individual country sensitivities in mind and make sure everybody is po ponying up, everybody is bearing their fair share. Some people are going to be more concerned about defense relation, some people are going to be more concerned about the financial sector, others might be more concerned about trade and basic goods and services. So thats the Technical Work that is being done. Again, my hope is we dont have to use it. But ive been heartened by the stedfastness of europe thus far. I think that people underestimate the degree to which, given the history of this continent certainly in the 20th century, that people are not interested in seeing any chinks in the armor and they recognize that thats worth working for. All right. Thank you very much, everybody. Thank you, david. Thats the president with british Prime Minister David Cameron. The president saying he talked to poroshenko this morning on the phone, might see putin at normandy tomorrow, putin has a chance to get back into a lane of International Law through poroshenko. Your thoughts . Interesting on the parabass issue in terms of the Banking Sector a point of tension between the United States and france, potential large fine, multibillion dollar fine for that bank for engaging in alleged sanctions violations with sudan and others. The president saying he doesnt have any influence over this decision thats pending here in washington. He said hes not going to pick up the phone and call the attorney general. He said that would just be inappropriate. In terms of the possibility of sectoral sanctions against russia, something the president was hinting. Theres not euna nimty in europe on that and which sectors are issued sanctions and how thats impacted will impact Different Countries around europe in different ways. The president saying hes been impressed by the degree of solidarity between the european side and the american side as they negotiate this and said that he hopes they dont have to use sectoral sanctions at the end of the day. Very much keeping that possibility on the table, carl. All right. Eamon, thanks very much. In washington today. A busy news morning. We have a live shot here of gms Ceo Mary Barra holding a news conference, taking questions about the results of the companys internal investigation into the ignition switch flaws. Barra saying the company is redoubling its efforts and 15 individuals have been removed from the company in regard to the recent recalls. Lets bring in john odell to talk about it, Senior Editor with edmonds. Com. Thanks for being with us this morning. Thanks for having me. So mary barra was tough and she said the investigation that was conducted internally was brutally tough and deeply troubling, she was forceful and took action. Is it enough . Its a good first step. Theres going to be more. Gm would certainly like to think that this will end it all, but theres still congressional hearings to be had, there are lawsuits, theres a federal investigation, so this will trail on for quite a while. However, it was a pretty moving thing to see the ceo of gm stand up and say what miss barra said. She alluded to the culture, silo culture, when there was a problem, it didnt go up the food chain and that was something she was determined to fix. Given what you know, your study of this company and how hard that would be, how gigantic the company is, is this plausible that she can fix it and fix it fast enough to prevent Something Like this from ever happening again . I think its possible. I dont know that you can ever prevent Something Like this from ever happening again. I think you can take a lot of steps to do everything you can to make sure it doesnt or make it awful difficult, and i think that its unfortunate that its a situation that involved, you know, deaths and injuries, but this is the kind of rather significant fault that shakes things up enough to make it possible to make the changes that they say they want to make. John, i can understand why any organization has to go through this kind of forensic examination of what happened in order to renew itself for the future. But i equally dont understand how the leadership of an organization can identify what went wrong within it and say, the organization didnt function properly, people have basically lost their lives but the management rides on. Surely the management has to take responsibility for the deep misfunctioning of the organization and somebody at the top should pay some price for that dysfunction . You would think so. Certainly tends to work that way in politics but this is Corporate America and they have i think theyre going back to that silo compartmentalization saying that it did not percolate up to our attention and thus we can disclaim any responsibility. It is difficult for the outsider to sit there and listen to that and come away without shaking your head a little bit. Again, time will tell whether theyve done what they need to do. Im sure that by the end of today well know pretty much who all the 15 people who lost their jobs were and that might tell us a little something. Miss barra said they were all Senior Executives and slightly higher than that. So there may have been certainly wasnt anybody at the very top of the Company Whose head is going to roll over this, at least at this point. John but well know by the end of the day or early tomorrow i think who the 15 people. That might answer a little bit of that responsibility question. Beyond the problems and the investigations, whats fascinating gm car sales rose 13 in the month of may. They beat ford which is only a 2 gain. Why do you think that customers, this is not res sew nating and turning off customers, in fact just the opposite . Weve seen that with recall after recall after recall. You know, with rare exception, bad news in the Auto Industry doesnt seem to carry itself all wait down to the sales chain. People tend to vote with their pocketbooks and if gm is making won what appears to many people to be a goodfaith effort to correct the horrible problem and two, offering some awful good deals at the showroom level, you know, its working for them and its worked for toyota, its worked for ford, its worked for every auto company in existence that they seem to be able to compartmentalize the Sales Channel from the rest of things. But yeah, it is rather remarkable. They had the best month in six years. Yeah. Up believable. Thanks so much for the perspective this morning. John odell with edmonds. Com. What is the latest out of the gm investigation mean for the shares . On the phone michael ward, with stern ag. Good morning to you. Good morning. Stock has fought its way back from under 32. Back to 36 today. Sara mentions the sales have held up there. You see todays fuse as negative, dont you news as negative, dont you some. First of all its not a news flash that old gm was a bad company. Youre talking about events that took place ten years ago. Having the current management held up for events that took place ten years ago, is unfair. The leading executives at gm have lost their jobs. Im concerned about current shareholders at General Motors. On balance i think the news today is negative because what youve done is opened the door for lawyers and ive never seen a time when lawyers were good for a stock. Referring specifically to what, the victims fund and the litigation that invites . Absolutely. Its an unanswered question and we dont know, but the only thing we do know is that gm, unless they insulate themselves from some of the bankruptcy law, youve opened up a potential additional litigation. You could open up the potential litigation from current gm shareholders. Because why should current gm pay a liability of an old company . Can we look back at feinbe feinbergs previous projects so to speak and use those as a learning tool . I mean im thinking back to a bp, but what about feinbergs efforts i hope not. Because the stock i hope not. What he dealt with at that time was a current company. Remember this is a liability from a company that existed ten years ago from a stock standpoint, legal standpoint, current gm stock is a Different Company than the old gm. Youre concerned about the legal ramifications here, michael. Have you put any numbers on this . No. What kind of expenses, litigation expenses this company is facing given no theres still a criminal probe. Its the overhang. It could be a distraction and could take away potentially money that could be, you know, basically allocated towards shareholders. Before we let you go you have a 50 target. Does that change . My target price on General Motors is 50. All right. Michael, thank you for that. Michael ward from stern agee on the big news day today. A lot of news to digest. Ecb rate cubs, jobless claims here and the big payrolls report tomorrow. The dow and s p actually hit records this morning. We are inching back into negative territory as you can see at the top of the screen. Lets bring in ward mcafee, chief u. S. Financial economist with jefferys and Jerry Castellini with castleark. Thanks for staying with us. Kick off with you, jerry, the europe peen central bank, the buildup was huge that was going to be the big event of the week, possibly more important than the employment report tomorrow. In your view, jerry, has the ecb delivered . Absolutely. I think the question of whether theyre going to pull back or wait for more information i think thats behind us now. Look at just the idea of a negative Interest Rate should give investors there and here that the taps are wide open, the Downside Risk has been probably well established, and where is all this liquidity worth, and going to flow. What taps are all open . I dont see qe at all . Qe is the next step. The fact theyve exhausted all of their interest Cutting Options and pointed to qe, i think were well in position for that to happen. Qe when announced will just be a footnote. The reality is, thehe e ecb is saying as we did three or four years ago, lets remove all the stops, lets renate at any cost and bring Financial Assets with it. My colleague sara eisen disagrees with you and i strongly. I mean my feeling and, ward, maybe you can weigh in, for central bankers to be effective here and the goal obviously is to stimulate lending in europe, fight the super low inflation and get the euro weaker they have to surprise in big way. Negative deposit rates was baked in. Strategists writing about it a long time. Even the lending programs. What was the big surprise here . I dont think there was a big surprise. The ecb did what was expected. However, they did hold out potential to do more with, you know, sort of vague promises of buying abs and vague promises of not continuing to drain some of the other purchases that theyve already had. I think theyve delivered on what their promises are and held up some potential to do more Going Forward. Draghi is pretty good at that. Pretty good at holding the carrot out there and keeping the market moving along. Do you think it will work, ward, the desired effects hes trying to do . Well, i think the desired effects are number one, to get the euro to weaken and that will happen over a period of time. And number two, to get banks lending. Neither is an immediate solution, but its the ecb had to address and they will continue to focus on and try to accomplish. This isnt the end. Youve got the detail here, there could be a further liquidity injection of super cheap money, 400 billion euros. Getting over half a trillion dollars more of lending to the banks, do you not s that has to go through into the real economy, nonfinancial loans. Do you think thats not significant . It is significant. Hes pushing the banks to do everything they can to lend. The question is how much of it . Weve seen european stocks at a sixyear high, euro at a three month low. What is the trade Going Forward . How much more juice can you get at least if asset Price Inflation is part of the goal here . Sure. Look at the fact that germany, france, spain, and italy all have p e ratios of their stocks between 12 and 13 times. The u. S. Market is at 15, 16 times, and we could argue all day that these Interest Rates, those numbers should be in the high teens at a minimum. Theres upside potential just to bring european stocks back to normal valuation levels. If a very aggressive monetary ease will drive growth in the economies that gives you lots of upside room in that economy. In the u. S. Its another wind at the back of a very good economy to begin with because youll expect to see a lot of that liquidity float into the u. S. Economy as well. Jerry, you know, average trading range on the s p over 20 days is the narrowest in almost 18 years. We know volatility has been very low pop people talking about june being weak. On the other hand s p takes their 12month target to 2100. I just wonder whether this summer makes you nervous or longterm picture is bright enough to make it worth while . Well, one thing ive always observed in my 35 years, is when the fed and with monetary policymakers, this aggressive, your biggest Downside Risk is really Economic Growth. If you look at the United States because of the u. S. Economy, because of what happened this winter, Economic Growth is unlikely to do anything but surprise on the upside here over the next three to six months. Im more constructive right now than i might be at year end, but 3 to 4 gdp in the Second Quarter and following another surprise in the third, this is probably the time to wave off those, quote, seasonals and Pay Attention to whats going on in the overall market . Who thought that six years into the crisis, wed still be talking about Central Banks advancing. Jerry castellini, ward mccarthy, thank you for your time. Were going to dive deeper into the Market Action right now. Take a look at the s p industrial sector. One of the leading sectors today. Morgan bren nonback at hq. The industrials the leading sector in the s p. Joy global the biggest gainer after the Mining Equipment maker posted better than expected Second Quarter earnings. Rockwell automation approving a billion dollar stock buyback plan. Caterpillar, floor and masco in the green overall. Good day for the industrials. Thank you very much. Lets send it over to the nymex and Jackie Deangelis gets breaking news on nat gas inventories. Good morning to you, carl. The number just came out from the department of energy. We did get an injection for last week. Were looking at 119 billion cubic feet. This is a mildly bearish number this morning because were looking at last years number which was 108. This is not higher enough that we need to see in terms of the injection on a weekly basis to really start making that catch up that weve been talking about. Were looking at the fiveyear average which is 93 billion cubic feet. This is no the a big enough injection over that number to make us convinced these prices are going to go down. Yet it has had an impact on natural gas prices. We are lower this morning. Currently trading around 459. The weather is going to be the big wild card as well. How much that is going to boost demand as we start to get a little bit warmer and head into the late session of the spring and also into the hot summer season. But again these prices taking it on the chin here losing a little ground. Back over to you. Okay. Jackie thank you very much. Straight ahead, gms Ceo Mary Barra saying the companys internal investigation found no evidence of a coverup on the ignition switch floor. But are those results enough for the victims . We will talk to a lawyer representing some of those families after this break. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening, they dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Bulldog i cant wait to get to imattress discounters because the tempurpedic bonus event is ending soon. Ill have first pick from the huge selection of tempurpedic mattresses. Then, ill get to choose 300 in pillows, sheets, and other free gifts. On top of that, up to 48 months interestfree financing. Its a Beautiful Day for mattress discounters tempurpedic bonus event. Mmm, some alarm clock you turned out to be. Mattress discounters we want to get back to General Motors which has been in focus. Weve got on the Cnbc Newsline Bob hillyrd representing the families of those allegedly killed and 682 who say they were injured. Bob, good to get your reaction this morning to mary barra announcing the result of the internal investigation. What does it mean for your cases . Well, first, can you imagine what my clients think they hear the ceo of General Motors confirm that this was a needless loss. Their loved one died, the level of carelessness that is just stunning. So i mean its a sad day for them because the loss is permanent and the family members are gone forever and then the folks that i represent that have catastrophic injuries and dealing with that daily are trying to now get their head around the idea that this was simply a level of neglect that has never been seen before, that caused these injuries. Right. I mean im curious what steps you take next . Are you going to, for instance, go after the 15 people, the people that were made to be blamed here and left the Company Fired from the company, or do you stay focused on General Motors . Well, twopart answer because if General Motors creates a company that allows this conduct to exist and someone works for that company and complies with the attitude of the company, why are they fired . Why would an engineer and a lowlevel or midlevel attorney be fired when its the companys basically corporate mood that allows them to behave that way. The head of the snake would be the general counsel. If youre going to change the culprit culture of General Motors you dont fire people who were operating within an acceptable culture. Well the company i mean i think the company would argue that the people involved that did not kaes late it wrp fired escalate it were fired. It was wrong according to mary barra. A former culture of General Motors before bankruptcy and her mission was to change that. She was very forceful about it. But they werent fired at the time because the culture was acceptable. If youre trying to change a culture you dont fire lowlevel individuals who simply were complying with an acceptable culture. You go to the head of the company and you make the change starting from the head going down. Bob, where are you on the line that is in the sand, the june 2009 bankruptcy, presumably a blot of this predates that which is a problem for you in attempting to soon and where are we on Kenneth Feinberg and his decision about voluntary compensation of your clients. He put out a statement saying the program will be ready by august 1st. Hes going to be spending the next few weeks figuring out how to doll out any compensation to the victims. Well, the lawsuits i have filed, General Motors attorneys have asserted bankruptcy, come into court and said these victims cannot recover any money in the Justice System because we have a complete bar to their recovery and that bar is bankruptcy. So when i listen to mary barra if she is being forthright about trying to do the right thing, then i call upon her to withdraw all of those filings in court. Do not use bankruptcy as a defense to my clients. One of which they filed just days ago against a little boy in pennsylvania whos paralyzed from the chest down because of this defect. Now [ inaudible ] if they are going to come through with compensation via kenneth fine burg doesnt that equally make your clients whole . Perhaps. Potentially . Perhaps. But its a voluntary program and only fair if its going to be administers properly and going to be a recovery that is similar to what you could get in the courtroom. Just out of interest if they hold up the bankruptcy card and say take the feinberg compensation or get kicked out of the courtroom because of bankruptcy how is that a fair Compensation Program . Just out of interest are you working on conten againsy . In other words, is your emuner in rags dependent on whether they go to court or approved by feinberg and presumably you get less money in that process . No. Its the same either way. And you bring up a good point because, you know, these video individuals are just regular folks. They cant fight General Motors they cant put the money forward to fight them when General Motors has an army of attorneys ready to go and fight these individual victims. Very quickly, are you representing any cases that were settled before the defects were disclosed and would you consider reopening them now after what youve learned today . We represent two families, both who settled cases, both General Motors now admits are part of the 13 that caused the defect caused the accident. We intend to reopen one of them biby filing the by filing the lawsuit today or tomorrow and open the other one in the next week or two. Bob, thanks for joining us with your reaction. Of course he is a lawyer, representing families of 68 people allegedly killed because of the gm safety defect. When we come back, an exclusive interview with Mohamed El Erian. Well get his take on the markets and todays headlines from the ecb. The dow is up 10 points. Squawk on the street is back in a minute. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. Geicmoney for over 75 years. Save theyve really stood the test of time. Much like these majestic rocky mountains. Which must be named after the. That would be rocky the flying squirrel, mr. Gecko sir. Obviously ahh come on bullwinkle, theyre named after. First president george rockington that doesnt even make any sense. Mr. Uhh. Winkle. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back to squawk on the street. Im morgan. Check out shares of rite aid moving lower after the drug store chain lowered its earnings forecast for fiscal 2015 after experiencing higher than expected drug costs in its recent quarter. The stock currently trading down about 8 before todays decline. The stock had been up around 60 this year. Carl, back to you. All right. Thank you very much. Lets get to the cme group this morning, check in with Rick Santelli who has a special guest. Hey, rick. Hi, carl. I do. Mohamed el erian, he needs no introduction, Everybody Knows hes the smartest man. Thanks for taking the time this morning, mohamed. Thank you, rick. Listen before we get into every question that im supposed to ask you about the ecb i want to ask you a wild question, do you think the ecb has the authority to make purchases . I think it has the authority to make selective purchases and i think theyre being careful on how they apply that authority. I think you see where im going with this. They basically announced theyre going to purchase something whose market of available security for sale is too small to make a difference. They didnt at all talk about that secret 1 trillion qe euro book that everybody has been saying, the ecb has in the drawer. Maybe they dont have the authority, this in a way is a lot like july of 2012 on the purchase side. Its more of a hollow graph of a bazooka than an actual bazooka, would you agree . I would call it more like firing lots of small bullets. They move simultaneously on lots of fronts knowing that the experience away from them hasnt been great on a standalone. Theyre trying a package approach hoping somehow they will get to critical mass. All right. Now lets go to the more conventional questions. Summarize quickly what you think the ecb did and why after they did it, is the euro higher . So the ecb looked at something we all know about, the transmission pipe between money and credit on the one hand and the real economy is partially blocked. They know that engineers, the politicians, are not going in and fixing it with Structural Reforms and what really matters, productivity and competitiveness. So what are they doing . Theyre just trying to put more credit, more money into the system hoping that will unblock it. You see, the impact of the market is saying wait a minute, im not sure thats going to work fully. In the meantime there are a few trades i can do, hoping that at least ill get a bit more market tranquillity. All right. Now lets dig a little further in and look at concrete issues. Last look, there was somewhere between 750 billion and 850 billion euros in the european money markets. How will those funds now behave considering the ten basis points negative rate to stash money . Its not going to change very much because fundamentally, theres a reason why that money is not moving and thats because Everybody Knows the structural impediments, Everybody Knows they still have overhang. It will move a little at the margin but not fundamentally do it. They are hoping through credit easing to get some impact and buy time for the system to heal. Its not an obvious one and does come with costs and risks. Now i totally agree. Its all about buying time but, you know, as ive talked about and even heard simon talk about today, 5 1 2, 6 years after the crisis these are not the kind of conversations we should be having. Now having said that, what makes anybody believe that the reforms that havent been done over the last handful plus of years will happen in the next several years . In other words, is it limitless . Can they talk their way into a whole generation of this without any real economic horsepower to back it up . No. You said it a few days ago, saying the people in the street arent fooled. The markets arent either. I dont see lots of people betting on its going to work great. Neither do i see people still betting on its going to blow up because they dont know when thats going to happen. What people are basically betting on is for the time being, for the time being, this is a tranquil environment. Of course its a fallacy of composition if we all believe it and we all go too far in terms of leveraging risk factors. At the end of the day we may find ourselves in a rather unpleasant situation. That is the risk right now. Its Financial Stability versus using an imperfect policy instrument. We better hope theres no hiccups or recessions ahead because there is no encore performance and i think that more than anything scares me when you try to basically throw out the notions of Business Cycles and cleansing processes, what youre left with is very artificial would you agree with that . Were out of time. Quickly. Very few spare tires left on this car and this car is navigating a bumpy road. Thank you so much for taking the time, mohamed. There will never be enough time to continue these discussions with you. Thanks again. Simon hobbs, all yours, buddy. Thank you very much, rick. Up next on the program more on gm. The house energy and Commerce Committee announcing plans for a new hearing seeking more detailed testimony from Ceo Mary Barra. Congressman lee terry, a member of that committee, will join us after this break. Passion. Became your business. At t can help simplify how you manage it. So you can focus on what you love most. 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An internal investigation found no conspiracy to cover up the faulty ignition switch problem that led to at least 13 deaths. This as the house energy and Commerce Committee announced plans for new hearings seeking additional testimony from barra and the author of gms internal report anton valukas. Joining us by home is the house energy and Commerce Committee member from nebraska, republican lee terry. Mr. Terry, congressman, welcome to the program. Thank you for having me. What do you seek now from mary barra that you didnt have before . Well, i have the same opinion i had before. Shes been very cooperative in our investigation to providing us documents and the nagency document as well. Im impressed that shes come in as an outsider doing the investigation. But i would say our documents and my interpretation of the documents we provided is that there has been a culture of coverup regarding the defects, and we will continue our investigations into how that was allowed to cur and whether it did reach the top of the food chain and gms management. Would you at least at least have expected if you believe what you say is true, would you have at least expected that the General Council would come under some pressure . Oh, absolutely general counsel would have to come under pressure because i think they were involved in some of the discussions. But the culture there was disturbing at that time, and im glad mary barra is trying to change that culture there. But a document, for example, in 2008 that sent to employees particularly the engineers for them to not use the word in any documents or emails such as problem. They had to use the word issues or conditions. They werent allowed to use the word defect but did not perform to design. Thats how you develop a culture of misguidance or coverup. You know, going into this internal investigation, the biggest question for the public and for everyone involved is how this happened, why this happened, the coverup, in other words, why it wasnt exposed earlier, and hos to blame. Did you get the answers that you were looking for . Do you think there is satisfactory information as to the answers to those questions with todays internal review . Well, that internal review we e will pick apart and make those determination, and that could aid us in our own investigations from the oni, the oversight investigations of the committee and the one i chaired that oversees the national highway Transportation Safety administration. It in so we will use that as a tool but not as our complete guidance. We will use the documents that they use and make our own decisions. Congressman, briefly, is it your understanding that if in some sense there was a coverup as you are suggesting, that the bankruptcy ruling does not therefore protect the business from the claims of the victims . Well, thats outside of our jurisdiction, but just in my legal experience i think that would be a valid defense for the victims families to use. I heard the attorney on earlier. And you can certainly void a bankruptcy if there was a coverup. Its good to talk to you, sir. Thank you very much for your time. Congressman lee terry for nebraska. Thank you. Obviously still a lot of questions to go on this story. In the meantime, we send it to john on whats coming up on skauk squawk alley. Microsoft upgrades and management changes, whats up bezos sleeve and the big four closer to becoming three. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. 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Tomorrow is the jobs report so this is a bigtime event. By historic she means down swift. A lot of little bullets, not a bazooka. Good morning. It is 8 00 a. M. At Amazon Headquarters in seattle, 11 00 a. M. On wall street, and squawk alley is live. Good morning. As you can see a full slate of tech stories today but overall a mixed day for stocks. Dow has a new intraday high this morning, that dramatic decision by the ec fwoshgs cut their refi rate, introduce some lending facilities. The g8 taking place in brussels as well. First General Motors. Fill art filly bow is live as they unveil the results of that internal investigation. Hi, phil. Carl, we just had a chance to talk with Ceo Mary Barra during a press conference where she answered questions for about 45 minutes. Heres the findings of this threemonth investigation and what a lot of people are focusing on today is 15 employees have been dismissed from the company, some at Senior Executive level. Five other employees