Transcripts For CNBC Squawk On The Street 20160429

Our roadmap begins with shares of amazon soaring in the premarket after a Solid Earnings report. Well dig into that report plus how amazons game plan is going after netflix. And becky catches up with Warren Buffett in omaha. And more on apples rough month. What does it need to recover . Exxon and chevron out with earnings. What you need to know about big oil and all the energy names leading the way isnt the s p this month. First up, amazon up sharply after posting its most profitable quarter ever. Revenue growth the highest in almost four years. The sales in the companys Cloud Computing business up 64 . And then theres the upbeat guidance, the margins story, the operating net out of web Services Bigger than their north american business. I have to tell you, you know, on the Conference Call, the Conference Call is very flat. People understand amazon Conference Call its almost like its being spit out by amazon itself. Its just a very without any emotion. When youre seeing numbers and margins and the improvement, you feel like what do they do . The whole time theyve been doing this weve been waiting to see this Conference Call. Amazon web service, david, you were the first to flag. I mean, this is a business that i think could scale i think bob did a piece two weeks ago he said that on air. It was widely when he said that number, i said what . 100 billion business in terms of its value he believes. We were both doing the Conference Call at the same time and i said, listen, i think youre wrong. Might be conservative with the amount of money this could make over a fiveyear period. The margins in that business opposed to what we know amazon for are quite different. They are much, much larger than the business of selling people things and getting it to them. Right. And telling me about international, how you can have it at home. This is one of the they keep using the term flywheel, which is something Starbucks First talked about, thats the energy. Kind of a thing you cant, but they are. They have this ecosystem that is amazing. Then you have things like the ek co echo doing well, kindle digital, people love prime. To your point they would basically break even internationally. Yes. Speaking to a couple of people this morning was a surprise and seen as a real sign of strength for the overall company. Stock has a good shot at reversing its yeartodate losses, which we know were notable with the exception of facebook had a tough year. Well, its fa. What is that a note that follows do . It follows do. A long, long, way to run. Right. Ive got to tell you i look at this quarter and i say the bears who got short this perhaps say at 2 00 there might have been an interview with someone saying the worlds coming to an end. Theyre not even in china yet, so they dont have to worry about china. India, india, i mean, like india discovers amazon and they love amazon. Yes. So this is a defining quarter. I went back and looked at the last quarter. I spent this morning looking at the previous quarter. It was just there was a little bit of like are you ever going to make any money and what are you doing and give us time. Theres one moment in the previous quarter in the Conference Call where literally theres just kind of a, hey, guys, is this Amazon Web Services is this ever going to come to fruition . Well, it was three months. It was an astonishing Conference Call. Yeah. By the way, there was only one congratulations. I mean, there should have been a million congratulations. Last quarter they had an amazon prime day and they talked about pricing pressure. And no one believed them. Onetime only, they were a lot in the onetime previous, everyone figured it was like a secular problem. Wrong. The onetime only was right. Right. Sorry, go ahead. Meanwhile people have been talking a lot about bezos paper profits in 20 minutes last night he made 6 billion on paper. Who cares . Thats enough to buy 24 the washington post. In 20 minutes i didnt have to go to the store, they brought it to my house. Theres a rite aid across the street from me. Really . No. I go to ti have it ordered. I go to amazon, they bring it to my house. Im never carrying the toilet paper again. I wonder if youre paying more though. Embarrassment factor is so big. Really . Have you ever carried you dont go to the store. Your wife goes. My wife sends me to rite aid. Go bring those bulky products no more. I go to amazon prime. Try not to use plastic bags. Oh, god, its an ecological thing with you. Yeah, get stuck in the trees. You dont know what im talking about. No, to your Point International 27 , fx neutral growth. Strongest in three years incredible what you said, jimg, the cfo saying we attribute it to the prime flywheel. Bringing more people in and that thing just keeps going faster. You thought it was a competitor to sole cycle. What it is an earning machine. Meanwhile the dow and s p in the green, nasdaq in the red as we go into the final trading session of the month after the blue chips did suffer their biggest oneday loss since february. Becky in omaha asked Warren Buffett about carl icahn, who was on our air predicting a day of reckoning for the markets. Heres buffetts response. Well, there were probably this is the most wild there were probably 50,000 or people more that bought stocks today and 50,000 people that sold. So i dont know that i would pick out any one of them and put too much weight in what they did. Icahn said a lot of things about the need for fiscal stimulus, about his support for donald trump, obviously exiting apple. Yeah. Well, it certainly hurt the market. Wapner did it our friend scott wapner did an incredible job. But i will point out for the aficionados of Warren Buffett, seven out of the last ten years the s p has closed up half a percent after buffett. So monday. So monday youre going to get half a percent bump, typically, from what buffett has to say. Be aware of that. It gives it up more than half of the time by the end of the week. So youre going to come in with that rosy hue, traders decided to sell off of buffett, maybe you buy today i mean sell off of icahn, buy today, youre going to get the same gain typically that carl icahn took away. So this is a, you know, when worlds collide icahn, wapner takes the market down, buffett with becky takes the market up. Only one is going to be treasury secretary. Probably i guess in a Clinton Administration buffett wouldnt take the job. I dont see that happening. I dont either. Good point. Be on the 32 bill, icahn. Icahn did warn on markets since september and since then s p up 11 . I was going to point that out, but you did. Yesterday kind of chided me for not calling him on an interview that was like going the guy suke dropped a bomb that said icahn fired me and said to scott why didnt cramer called me, well, because i didnt know, the interview going on, i could have said we have to hold off, cancel tonights show. Lets get ahold of icahn, lets run a rerun, but i was mid show. It was a bomb. I called carl on wednesday and he didnt call me back when i heard that he was he had exited all of apple. Were even. Im still waiting for that call back. Well, i tweeted im sorry. He thought i read tweets, wapner did not have his pc ob on so he was not reading my tweets and i felt very hurt. But i know jack was watching. And jack knows this weekend im taking over the company. Thats right. Im being facetious. I cant do it because im at the white house correspondents dinner. So im delayed a week in taking over twitter. Whats the matter . Okay. When we come back, its been a rough year for shares of linkedin, as you know, but the stock getting a lift on better than expected numbers and guidance. Well have a live and first on cnbc interview with jeff weiner when we come back. Stocks at the highest since that debacle in february. Look at the premarket, nasdaqs down six straight and remains the only major index in the red for the month. Were back after a break. Why do we have aflac. Aflac. And Major Medical . Major medical boyyy, yeah berr, der berrp. I help pay the doctor, aint that enough for you . Theres things Major Medical doesnt do. Aflac pays cash so we dont have to fret. Something families should get like a safety net even helps pay deductibles, so cover your back, with. Aaaaaaaaflac learn about one day pay at aflac. Com rap linkedin out with results. We want to bring in ceo jeff weiner from the Company Headquarters and Julia Boorstin joins us from l. A. Good morning to both of you. Jeff, this must feel a lot better than february. Good morning. I just wonder, all those worries about Enterprise Spending that came out of your prior quarter, were they misguided . Yeah, i dont know that there were any significant concerns on our end. The core of our recruiter business has remained solid. And we saw continuation of that in the First Quarter. But, jeff, looking at whats changed over the past three months, your outlook is so much rosier than it was last quarter when your comments and your outlook sent the stock down 34 in one day. What has really changed in the past quarter . Well, i think weve seen stronger than expected performance relative to our own plan internally. And as the year progresses we get better visibility into how were performing. So i think in addition to that some of the bets that we place ed in the latter part of last year for example, weve seen accelerating growth in terms of consumer engagement. And by virtue of the way the ecosystem works that has also had a chance to lift a few of our business lines as well. What has been go ahead. Im sorry. Its jim. I was just going over the last quarter. And i know that you said maybe the perception, but your cfo said at one point that there was continued pressure in europe. Continued pressure in asia pacific. Before that this is right from the Conference Call, so im not its not just the gies of the situation, in previous said headwinds prior periods displaced it wasnt there were things that basically said you had secular decline. Are you saying it wasnt secular it was one off . I dont know that it was secular, jim. With regard to the regionals in what were seeing, interestingly enough we saw Strong Performance across all lines that may be more about execution than it was about a secular trend one way or another. With regard to the display dynamic, you know, weve been able to stabilize that. And weve seen stronger growth coming from our sponsored content business. Tell us about your sponsored content business. Its been growing very fast. And my question here is these are basically ads. Who are you competing with . Is it facebook . And is facebook moves more into the work space, is that going to be a big problem in terms of competition . Yeah, were very focused on btob, its a large addressable opportunity. We think we have opportunity there by virtue of our members and the context in which we serve those members. Weve got a wonderful opportunity for marketers to be able to target influencers and Decision Makers within organizations. And the growth of that business is not only a byproduct of the accelerating engagement trends that we saw, but also increasing focus on sponsored content. We really doubled down on that this year. And were seeing the benefits in the byproduct of that. Jeff, its david faber. I mean, to be clear, the stock collapsed last quarter in part because you lowered guidance and you did so because of Talent Solutions which still represents 65 of revenue. It grew 46 in 2014, 41 in 2015. I think the streets modeling 27 growth for Talent Solutions this year. The question, i guess, from a lot of your investors is, when will that stabilize . It was down 700 basis points year over year, are we at a stabilization point, or does it still have more declines ahead . The core of the business, which st north american recruiter sales, our enterprise sales, is ab shuts lyabsolutely. Its been stable the past four years. Thats where were going to continue to focus. Growth catalysts for the overall towns solutions includes launching next generation of recruiters, first overhaul to that product that weve had in roughly seven years and were already seeing strong lifts in exactly the right areas there, far greater efficiencies and effectiveness for our recruiter customers. Weve launched two new skews. Weve acquired a company, we Just Launched referrals business, we see upside in our career pages area, which is an area thats been fast growing part of our business, talent, branding talent media. And we havent necessarily had a chance to innovate there. Thats going to be an area of focus Going Forward. The core of the business remains stable and we think we can continue to add Growth Drivers and catalyst Going Forward. Another issue raised by some investors is stock raised comp been as much as 16 to 17 of revenues. Given the decline in the stock and your ability to need to attract talent, how are you going to get that down to a lower number, which i know a lot of people who own your stock or think about it want to see given how large a percentage revenues it has been. Yeah, we want to remain and strike the right balance exactly to your point. We want to continue to be in a position where we continue to attract world class talent and at the same time were cognizant of stock based comp percentage of revenue. As we talked a little on the Earnings Call we saw 100 basis points of improvement with regard to that expense. And Going Forward we think we can find our way towards far greater leverage in that area. Were going to start to see ongoing improvements in terms of stock based comp as percentage of revenue. Do you think cash based comp has to go up though . If so isnt that going to hurt operating margins . No. I think cash based comp will remain largely stable. Its just a question of managing stock based comp. And i think were already starting to see the right trajectory there. And were going to continue down that path Going Forward. Jeff, how is that position with linda. Com going . Can you give us any expectations now as youve had the company for a couple quarters and what its going to do for your earnings and revenue down the line . Yeah. So were largely through the integration of the team. And thats gone better than we expected. It happened faster than we expected. Right now were largely focused on the consumer elements of that business and the enterprise elements of that business. With regard to the consumer part of the business, deeper integration of linda content throughout linkedin. Com, which were excited about. We can ago gregate content not just course work. We seep deeper integration with our general subscription package, which were already seeing the benefits of. And weve seen very strong improvements in the User Feedback that were seeing for people that have had a chance to see the benefits of that integration into their existing general subscription package on linkedin. Going forward the second half of this year we believe theres meaningful enterprise opportunity for linda and our learning Development Efforts as we continue to build out course work thats in high demand from the enterprise. And were going to continue to develop the enterprise product suite. So were looking forward to launching that in the second half of the year. And, jeff, finally from me, i mean, you mentioned the mobile app of course. Youve seen real success there it seems in terms of Marketing Solutions. Are you expecting that is going to continue to ramp in terms of your ability for example serve as successfully . And have that become a more robust part of your business . Yeah, thats absolutely the objective there. With regard to Marketing Solutions and sponsored content, were not only benefitting from the launch of that mobile app, which is accelerating unique user sessions, page views, engaged feed sections where the inventory is generated for our sponsored content, that is happening on mobile and desktop. The desktop acceleration was a bit unkpmted. So looks like the rising tide is lifting both of those boats in terms of the channel mobile and desktop. Were also seeing increasing online for marketers there. Weve improved our targeting capabilities. And weve just now started to pilot a program where we can sell sponsored content off of our network. So were looking forward to seeing results from that. Still early days. Finally, jeff, weve been through a week where we saw twitter raise questions about the stickiness of social overall and arguably those were canceled out by facebook. But i just wonder where you think we are in the overall narrative of people wanting to be on social networks, at least this this country . Yeah, i think people wanting to be connected with one another, wanting to feel like theyre heard, wanting to grow closer with people depending on the context, whether thats their personal lives, whether thats within a work environment, i think social is clearly here to stay. I think the means through which people are connecting whether that be traditional social platforms or this evolution and increasingly towards messaging, i think thats always going to be evolving. But i think these social platforms are very much here to stay. Jeff, its good to see you. Congratulations on this quarter. Jeff weiner of linkedin and our own Julia Boorstin joining us in l. A. Well get the mad dash and opening bell after a break. They work all the time. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. 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Because no one knows like at t. Given you have hardly slept i want to let you know its friday. And were doing a mad dash now. And because youre ahead of all of us you actually have news on monster. I want to say the reason im able to do that because of this monster thing which is just incredible. Okay. Look at this. Monster, which a lot of people have been saying had lost its edge, not unlike linkedin before you straightened that situation out. Yeah. They are announcing, monster and coke remember, cocacola it was incredible that mutar took that position, a lot of people say its not working well enough. I say youre wrong. Thats in your wheelhouse. It is. Right. The numbers people tender and then they figure it out but the stock is acting quite positive. 680 million versus 650. I think i thought i was wrong because the press has been so bad that this monster transfer to the cocacola distribution system, which is so fabulous in europe, would begin to pick up monster would begin to pick up sales. Im beginning to think what happened is it was a difficult transition because now its starting to burst through. This stock can go back to these levels without a problem. Now, i know you may think monster is not necessarily good for you but i have to given do you really care . Got it. Theres a man whos had a little monster. We have valeant halted for news pending. Vault holeant holding . Yeah, but they put out the it may be were going to get news on the board adjustments that have been reported but not confirmed by the company. So well keep you posted updated on that. Does keep you going, right . It does. Listen, lets do the valeant share between 12 and 1. Oh, im sorry, scott. We got to hit the bell. We have a lot more coming up. Fill you in on valeant on the other side. Images, videos, social updates. We call it dark data. 80 is invisible to most businesses. The ibm cloud has tools that can help see dark data and put it to work. Hello, my name is watson. Working with watson in the ibm cloud, we can help an Energy Company predict pipeline corrosion. And help a startup to use social data to predict market trends. Now businesses can get more out of their data. Thats what the ibm cloud is built for. [ applause ] youre watching cnbc squawk on the street opening bell in a few seconds here. At the big board today, the governor of utah, gary herbert ringing the bell with representatives from the state of utah, the utah symphony at the manasdaq medical Device Company pav med celebrating ipo from yesterday. A lot we havent gotten to, the yen at an 18month high, oil at a new year high. Savings rate up to 54. Im so glad you mentioned that because ive had a lot of Consumer Goods Companies on mad money, restaurants, anybody involved with going out. And you see the consumer was very strange in march. Just didnt spend a lot of money. On that yen issue i was quite let down by a piece bank of America Merrill lynch downgrading ford motor. I just felt that doesnt seem right given the fact the yen has subsidized toyota and subsidized honda, okay. And this has been something mark fields has been calling for as a level playing field. Youre getting level playing field. Do not leave ford right hire. It is too early to leave ford. I know that research is going to hit the stock. Its a mistake. Dont leave it on that downgrade. Meanwhile, Valeant David mentioned before the break, halted for news pending. The annual report is out, which resolves some of the default risk, but it is chock full of headlines about changes, potential changes to the business practices, material, things theyve found. And not to mention what we might hear after its resumed for trading. You know, carl, i dont know if this is related simply to people digesting more of the although it wasnt halted earlier. Or whether its related to new news. I dont believe weve gotten this the actual news on reports of a board shakeup, number of directors coming off and others going on the board of valeant. In terms of the 10k that carl just referenced, of course an important moment for valeant in terms of being in compliance with its various debt kcovenant and agreements with bondholders and banks. The 2014 statement seems to be in line with what the Ad Hoc Committee communicated previously. There were revisions in the Fourth Quarter 15 results versus what had been unaudited press releases we got from the company. This also im getting from one of the analysts that the slides that are posted today are with the 10k suggest change in the revenues and change in valuation of certain deferred tax assets and liabilities. We are getting the news now and there you see it not guilty nignig nominees to the board of directors. I think its three. Five independent directors will not stand for reelection. This is along the lines what was reported yesterday or perhaps the day previous. But a big board change there. Bill ackman stays on the board, would have more influence it would seem at this company. The auditors while they did move revenue and profit amongst the years, positive seems to be that theres not a big black hole there anymore. Theres no criminality that were aware of at this point. So well see how people go through all this, jim, and try to figure out what valeant is really worth. With jeff papa taking over in a few days having exited perrigo under less than great circumstances. I believe ackman on the halftime one day, if im not mistaken. Scott wapner has ackman on monday . Thats going to be fabulous. I do think that you could argue that weve seen the worst after pearson apologized and papa as much as i wasnt happy the way he left perrigo, i do think that he is grownup in the room. So i can understand that. People might think its now a cash flow story. Lets look a cash flow. The debt, david, they havent turned the debt issue. They have 30 billion in debt. Thats a big issue for them. The question is will he move to sell some assets and sort of put that concern aside . Or do they feel that they can run the company as is with the that they have with the ever raising drug prices and till be able to meet obligations in terms of growth. Or is the heat going to die down . Hillary has been pretty heavy about this, but she couldnt look at her as a person who maybe the bark is worse than the bite. Maybe weve hit the 52week low. I dont know. We did get numbers out of amgen, beating but a 9. 3 hike. Gilead has issues. Revenue per payment declined because of higher rebates, higher volume discounts you need pipeline visibility here. While they generate at 3. 9 billion, they have 21. 3 billion in cash. Can i say right now they have to buy someone . And the fact that they bought back 8 billion in stock 46 million shares with 1. 3 billio shares outstanding, doesnt cut it. They have to buy someone. And they have to do it now. Because people have decided that this theres competitions coming in even though they have 90 of the market. People just the hmos are not going to let them get away with it. This is a very troubled rich company. They have to your point, rich, huge Balance Sheet capacity. An enormous amount to have debt to buy Something Big if they wanted to. Right. But i think theyre looking at what happened to their stock today and making a judgment is our buyback really doing anything. And the answer is no. Its not. Speaking of buybacks, we got exxon and chevron. Exxon well ahead although it is the smallest profit since 1999 for xom. Chevron a little bit wider loss than expected 39 cents versus 20 cent loss estimate. Although chevron is the third best dow stock of the month behind pfizer and jpm. Chevron has been a growth stock. They had a lot of oil come on the gulf of mexico. But i think the key thing actually a couple things. We heard they put the 33 Capital Expenditure cut. We know how big that is. This is a very tough situation. Exxon is really showing absolutely that they knew what they were doing. And i got to hand it to them. Ive been critical sometimes because they dont have the growth, but heres an amazing statistic. They upstream down 2. 9, be ware the actual oil patch 2. 9, but chemicals plus 1. 4 billion. Thats 373 million more than thats a huge margin. So theyre taking the oil, but they kept their downstream. Remember they kept their refining and marketing, and they have the fabulous chemical business. Exxon is so good. I feel bad that ive been so critical of them because this is they show what theyre really like. Theyre like Warren Buffett when the tide goes out they have a sw swimsuit on. Other guys like, man, thats awful. Nobody wants to see that. No. Theres no shrinkage to the quarter though. Let me quickly mention deal we covered closely yesterday, that is unsolicited bid to acquire medivation. They were swla slow yesterday to even really communicate with the market and try to get the upper hand, but this morning they reject as we might have expected they would the board unanimously determining that the unsolicited proposal is in their words substantially undervaluing medivation. They didnt use the words grossly inadequate. Perhaps on the sanofi side theyll take some comfort in that. Well see where this goes. They say medivation has value as one of the few companies with key therapies for Prostate Cancer and key for label expansion for that same Prostate Cancer drug, jim. This is going to go on as i reported and is most important perhaps you can act by written consent. This company is likely to be sold. The question is simply at what price and to whom. You know, look, ive got to tell you, we are seeing a level of deals which tells me to whom could be anybody. Sanofi great relationship with general doesnt really seem to matter. Deals have been working though. Weve seen deals work. Look at that deal with rubbermaid with darden, martin frankly combining with mike polk, that is the kind of thing that happens when you do m a here and theres a shortage of growth. So lets point out m a has to come back for these companies. Has to. Youre in the sweet spot, david. On a day where we got row v. V. V v. Tee tivo. Yeah. Billion dollar deal. Tom rogers. There you go. Oechbtly going to happen. David, what are you hearing about national nothing. Its up every day. Is it . Ge i know i was looking at this is the chatter. Not so big versus baker hughes that ge couldnt afford it. They could use their digitization, i think the deal makes sense. I know there are a lot of people to say where are they to double down on the oil patch. Im looking at Oil Every Day and thinking when will someone buy when is someone going to make a move . Look at this freeport. Oil is doing well, coppers doing well. Nobody bought anybody in the oil patch. Its time before it gets away. Exxon and cat the two dow leaders today. Lets get to bob pisani on the floor. Bob. Hi, im just checking on valeant here. Were waiting for it to open. We still have indications 35. 50 to 37. 50. Just a small crowd there. Might open in the next couple minutes. Ill keep an eye on that one for you. The important thing is we went through a very rough patch on earnings for the early part of the week and the middle part of the week. A lot of disappointments. At least in the new tech in the last 24 hours or so numbers have been notably better. So we saw this with linkedin, with amazon, with paypal, with pandora, put up numbers here, expedia, facebook of course we got earlier. All numbers excellent, expedia up 8 here, freeport slightly smaller than expected in advance of sales of mining and equipment operations here, that is going to accelerate debt reduction. Debt reduction is a big theme. Look at what happened to a. K. Steel. They floated 52 million shares in a secondary. Thats onethird of the float of the whole company at 4. 40, thats a discount of 10 . Thats Pretty Amazing here. Theyre going to use that to pay down debt. This is energizing the market. Exxon mobil, oil and gas, upstream, downstream big in chemicals here, smaller loss in downstream than earnings expected. Jimmys right about the chemicals business. Its at the highest levels since may right now. Finally just want to note chevron had a loss bigger than expected. The problem with chevron is more than any big oil company. Its leverage directly to the price of oil. Still waiting for valeant to open. Guys, back to you. Thanks very much, bob pisani. Want to get to some news we were sort of hitting a bit yesterday. When we talk to miles white, ceo of abbott, but overnight an Interesting Press release. A deal some time back between abbott and a Company Called aleer, make tests for point in your Doctors Office to check for things like tuberculosis, malaria, dengue, it was a 5. 8 billion deal when it was announced back in february. But since then weve gotten some strange comments from abbott in which they dont seem to be willing to affirm their willingness to follow through with the deal, at least in the way that aleer shareholders would like and the stock has suffered. Last night a very Interesting Press release from alere where it said we got lender approvals for Extension File for our 10k, kind of similar issues valeant was facing not long ago. This in part because of investigations that are underway in terms of revenue recognition from latin america and china, this was all disclosed by the way some time back, all disclosed to abbott prior to them doing the deal. It involves fcpa investigation at least at this point that is an fcpa investigation, foreign corrupt practices act. Abbott though apparently wanted to get out of the deal. And yesterday we asked miles white this very question as to why they would not confidently reaffirm their support for the transaction. Heres what he had to say. Alere is working for its issues. Its not appropriate for me to comment on that while theyre working through their issues. And ive said, you know, not appropriate to comment and ive got to maintain that position. Now, at the same time ive said, look, we have contemplated in our financing the ability to close both deals. You know, murphys law, same time. Abbott excuse me, alere says in press release that abbott expresses concerns it tried to get out of the deal by paying them between 30 million and 50 million in terms of covering their expenses and abbott and alere said absolutely not. What i can tell you is its a very tight merger agreement that does not allow for material adverse change being considered as an fcpa investigation, such a thing is not allowed for under the mack. So given that tight merger agreement, if in fact this company is able to produce financials, that 10k, lets call the next four to six weeks as they have made it clear that they expect to, one would expect that this will be a very tight deal and a hard one for abbott to get out of. But were going to have more on that. Right now lets head to the bond pits and Rick Santelli at the cme group in chicago. David, your timings impeccab impeccable, the buzzer rang, data is out. 50. 4, 50. 4 we were expecting a number closer to 53 last month unrevised at 53. 6. When was the last time we had a number as weak as 50. 4, look at february. That read was 47. 6. Lets get to the markets at hand, shall we . I have to start in europe, okay. Lets look at a oneday and oneweek of bund yields. Theyre right back on top of a big range. If you look at a oneweek of tens, we are not necessarily on top or close to the top of our recent range even though were not far from it, which means the next chart has to be lets look at the history of tenyear yields minus bunds. Notice that dropped us from march 1st dropped under the 160 which seems to holtd us, 170 always seems to stop us, what that 157 differential tells me is either bund deals are going to come down quick or tenyear note yields are going to rise. I think europes leading. Could be a trade there, what do you think . Foreign exchange, dollar index, lets not look at day or week, lets look at 20year chart, why . Weve been talking about were in some big areas in the marketplace. Look at that 20year chart, look at 100, look at the way its coming off, significant. Lets look at a oneyear chart of the euro versus dollar, its rather significant level although theres a lot of areas right around here at 114 up to 116 but we are virtually at the best since around halloween last year. Yeartodate of dollar yen, theres where all the action is, weakest level on the dollar since october 14. Carl, back to you. All right. Ill take it, rick. Were going to update people on valeant which has now opened for trading. The company has said it will add three new independent directors nominating them to its board. Five independent directors not standing for reelection. The company also releasing its longdelayed 10k filing this morning. And you can see the reaction is positive right now. Joe papa will soon take over as the companys ceo. Michael pearson of course stepping down as ceo and as a director upon his arrival. Also Howard Shiller who stepped in for mr. N part when he was ill and was longtime cfo will be not standing for reelection to that board of directors. Guys. Back to abbott for a second, they by the way say they are awaiting access to the information theyve requested from alere relating to filing delays in that 10k, and circumstances surrounding criminal grand jury subpoenas about the foreign corrupt practices action, jim. Its very rare to see this kind of fight. And people simply think once the st. Jude deal came along for abbott they decided maybe we dont want to do the other deal. Something, i cant wait to see bill ackman on for a full hour on monday with scott wapner because i still think there are issues. But you know what, i see a trend going on here in terms of the Company Coming forward to get some of the new board members. Yeah. Maybe some people think the worst is behind them. Im starting to head that way. But i did have this fondness for joe papa, i just didnt like the way he left perrigo. I used to live next door. Perrigo shareholders. Then i got i dont know, stay at 10, 15 . As long as you like. When we come back taking a pulse of the travel industry. Well talk with the ceo of expedia. Big gainer today on the surprise profit and some decent guidance. The ceo of the cruise ship operator Royal Caribbean is up, although the dow is taken a bit of a spill on that weak chicago pmi. 50. 4. Back in a minute. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Trolling for a gig with cant blame you. Its a drone you control with your brain, which controls your thumbs, which control this joystick. No, im actually over at the ge booth. Were creating the operating system for industry. Its called predix. Its gonna change the way the world works. Ok, im telling my brain to tell the drone to get you a copy of my resume. Umm, maybe keep your hands on the controller. Look out ohhhhhhhhhh. You know what, im just gonna email it to you. Yeah thats probably safer. Ok, cool. Amazon awful close to getting positive for the year with a 9 gain today on back of results that crushed estimates last night. Well talk about that and get stop trading with jim after a break. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound mobility is very important to me. Thats why i use e trade mobile. Its on all my mobile devices, so it suits my mobile lifestyle. And it keeps my investments fully mobile. Even when im on the move. Ahhh. Andheres to breakingtments fulmore glass ceilings in golf and everywhere else. Kpmg. Continuing our commitment to the next generation of women leaders. Omg. You are so funny. In the time it took me to type that, if i were driving 55 miles an hour, id have driven the length of a football field blindly. Not funny at all. Dont text and drive. The more you know. Not funny at all. Man 1 man 2 i am. Ive. Woman exmilitary . Man 2 four tours. Woman you worked with computers . Man 2 thats classified, maam. Man 1 but youre job was Network Security . Man 2 thats classified, sir. Woman lets cut to the chase, here. Man 1 whats youre assessment of our security . Man 2 [ gasps ] porous. Woman porous . Man 2 the Old Solutions arent working. Man 2 the world has changed. Man 1 meaning . Man 2 its not just security. Its defense. Its not just security. Its defense. Bae systems. Time for cramer and stop trading. That controversial interview scott wapner had with carl icahn last night. Basically say iing feeling less certain about china. My hats off to carl icahn who i love, love, love. Today suke missed his reaction. He didnt realize why i called him fe sees facetious but ca in 1919 the Company Going to pay bigger dividend. Disagreement was over return of capital. And suke questions whether a 5. 19 whats it worth today and he says its not worth 70 and that carl icahn, well, hes basically saying there was a real disagreement about reinvesting the capital versus dividend. I wanted to followup because i know carl felt i didnt call him. Well, at least i went back after scott wapner, trying to be following up on carl. Love carl, disagreement between these two. But no disagreement that he fired suke. Indeed. Yeah. Look forward to carl talking with we got ackman on monday. I know. Wheres wapner . On squawk monday. Will you see him tonight, wapner . Tried to put in that plan that was outrageous. I never felt bad. Suke made a lot of money. Not an issue. He made a lot of money. But he also made people a lot of money for people who used to watch the show. Its controversial. Yes, it is. Thats fine with us. Whats on mad tonight . You know, this deal broke down with first energy just to get a sense of where things are going, tim boyle, they got hurt by bankers in bankruptcy, they make columbia, and greg silver is one of the best performing stocks ive had on mad money. The stocks been fantastic. You can make money doing boring. You dont have to necessarily be in the crosshairs. You dont have to apple, bulls and bears at it again or linkedin. Jim, long week. Well see you tonight. And this weekend i hope. You always lean back when the show because i got to get oxygen. I need oxygen for the show. You have to provide oxygen. You do. Well get Consumer Sentiment after the break. Under your seat cushion. Before earning enough cash back from bank of america to buy a new gym bag. Before earning 1 cash back everywhere, every time and 2 back at the grocery store. Even before he got 3 back on gas. Kenny used his bankamericard cash rewards credit card to join the wednesday night league. Because he loves to play hoops. Not jump through them. Thats the excitement of rewarding connections. Apply online or at a bank of america near you. Looktry align probiotic. Our digestive system . For a nonstop, sweet treat goodness, hold on to your tiara kind of day. Live 24 7. With 24 7 digestive support. Try align, the 1 ge recommended probiotic. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Good friday morning. Welcome back to squawk on the street. Im carl quintanilla, sarah, simon. That drop yesterday being met with biggest in two months. Dow down 118, chicago pmi comes in light that despite the fact crude is managing a very slight gain. We got some data on the way too. Yes, weve got Consumer Sentiment data at this hour. With that lets send it over to Rick Santelli for the numbers. Rick. Thanks, sarah. Well, first of all 89. 7 midmonth read toss that out. The final read for april, 89. 0. And even though 89. 0 is a bit smaller than the 89. 7 as i said, thats the midmonth, you have to go all the way back now to september of last year 87. 2 is the read we comped at since the last time wed been this week if you look at Current Conditions they did improve to 106. 7. So of course we want to continue to monitor this. And in about 20 minutes well dig down on the chicago purchasing number which was also a bit weaker than expected. Carl, back to you. Rick santelli, thank you very much. Amazon is the big mover of the day. Sales are surging after company crushed earnings last night. The cfo addressed the companys relationship with u. P. S. On the call. Take a listen. Logistics question, the reason is so we can serve our customers faster and faster delivery speeds. And weve need to add more of our own capacity to supplement our carriers and pafrtners. Theyre still great partners, have been and will continue to be for the future, but we see opportunities where we need to add additional capacity. And were filling those voids. Joining us this morning mark may, senior internet analyst at citi. Mark, good morning to you. Hey, guys. Good morning. Thanks for having me on. There was some trepidation going into the print on that margin story. Did they answer anybody who had any questions about that . Yeah, thats right. A few weeks ago we wrote a deep dive on this with our transportation analyst here. And we thought the concerns were unfounded. I think when amazon is doing is actually like brian said, bringing on new partners, new capacity. And it intends to both continue to improve their service delivery, but importantly actually lower costs for them. And thats what weve seen historically, and thats what we saw in q1. Theyre actually continuing to manage down the cost of fulfillment and shipping at the same time improving the service levels. The revenues are not even close yet, but when you look at web services versus the Retail Business, people are trying to draw the argument now that theyre increasingly relying on aws, in a good way. Do you agree . No, not at all. Look, retail is still 91 of the companys revenue. Retail grew in the high 20 year on year in the quarter. So absolutely not. But that being said, look, aws is growing twice as fast as the Retail Business. It has five to six times greater profitability than the Retail Business. And like i said its only 9 of revenue. So as that mix continues to shift, you know, i think the biggest impact here is that the company on a consolidated basis is just becoming more and more profitable. And i dont think were not that long from now when amazon is going to be generating 20, 30 a share in earnings. And to the surprise of some of the skeptics out there, you can actually value more on earnings. Thats just what i was going to ask you this idea that this is the Fourth Quarter in a row of profits, how reliable are those profits going to be, i guess, Going Forward . And just walk us through quickly what that does when it comes to changing the multiple . Yeah, well, the good thing here is the Retail Business is actually improving profits as well. We saw the International Segment turn profitable in the quarter. North american Retail Business is trending towards 5 , 6 operating margins. So that is definitely a tailwind. But, yeah, as the Cloud Business is still in the early days here 60 growth doing, you know, significant profit margins. And as that mix continues to shift toward faster growth, higher margin cloud, we think the multiple goes higher. And thats why we have a buy in our price target close to 800 a share. Hey, mark, what happens to the relationship with u. P. S. Over time . And the other delivery companies, but i guess u. P. S. Ased main logistics provider. Are they able to essentially take the value from that relationship, do they beat them down to really low marginmargin . Doi they expand their own delivery options so they can take on other customers as well . How do you think it plays out longer term . So actually this has been going on for two years. I think people dont fully appreciate that theyve moved a lot of the capacity already to other channels for less miles. But theyre creating a federation of partners, right . Not just relying on u. P. S. And fed ex which delivered 70 something package volumes two or three years ago, now only 30 something. And it brought on local regional partners, the u. S. Postal service theyre acting more like a Freight Forwarder where theyre working with a much broader array. We dont see them building a big Logistics Business to go headtohead with u. P. S. This is in delivering packages for say citi group or cnbc, this is about trying to improve logistics for the amazon business. Mark, were dealing with a company where, i mean maybe you disagree, but quartertoquarter the results are lumpy. We never know exactly how the margin storys going to come in. You see big swings after the bell, bezos either makes or loses billions of dollars. So how do you best advise investors to know which quarter is going to be which . I would advise investors that are focused on quartertoquarter, you know, profit to maybe look somewhere else and for investors that have a view thats more consistent with bezos or with Warren Buffetts. I know you had him on earlier. You know, to take a longer term view and are believers in the longterm vision of bezos and of the amazon story. You know, more appropriate for them. And i think investors that are focused on quartertoquarter have had too many sleepless nights for amazon probably time to get some sleep. Mark, thanks so much for the insight today. Mark may talking at amazon. Ahead of the best of my recollection berk shire hathaway our own becky talks with Warren Buffett. Lets talk about gdp because First Quarter numbers that came in today stunk. 0. 5 , that was the weakest growth in two years. Does this feel like a 0. 5 gdp economy to you . Something like that. Yeah. Its certainly not accelerating. And it isnt declining. But its very slow growth. And of course as you would expect when the numbers very low its irregular in various parts of the economy. The economy is not booming. On the other hand its not falling apart in any way, shape or form either. So economists say that the quarter were in right now already feels like its better 1. 5 to 2 , you dont think so from where you stand . I dont know, but i dont see them accelerating. One thing that struck me from the gdp numbers was that the consumer really hung in there. Consumer spending was very strong. You think about that in the context of lower prices at the gas pump. Sure. As were watching oil prices pick up, should we worry that that is going to hurt the consumer that maybe weve taken for granted all of this extra spending theyve been doing because of low gas prices . Yeah, but theyre still low. I mean, sure if it goes back to 100 a barrel thats different. But not only are gas prices low, but Interest Rates are low. So people borrowing money on cars have a lower payment than they would have to make if rates were quite a bit higher. And certainly on Homes Mortgage payments have dropped dramatically. So people have more money to spend on other things. And employment is not bad. What do you see just in terms of the economy through a lot of different sectors . You have so many businesses and so many reads that you get on this, how do you think the consumers doing right now . I think consumers doing pretty well. But i can tell you railroads are also doing very well. Big part of it is coal. Way more than people anticipated. Coal stockpiles were already very large at utilities going into the winter. And then having a very mild winter, there was no more electricity produced last year than the year before. So the coal stockpiles remain high. So the falloff in Coal Production has been a lot more than any of the railroads anticipated including ours. If you stripped out coal, would you be thinking railroad shipments are doing well . Or is there weakness across the board . No. I think when i get the figures every week theres about 25 categories or something of the sort. And a very significant percentage of those are disappointing. When you think about the industrial economy, that was what we were so worried about at the beginning of the year. You have a lot of industrial businesses too, how does it look from that perspective . They do okay, but theyre not accelerating. The economy is not but its not getting worst. I dont want to give that impression in the least. And as you pointed out the consumer is in better shape than before, so the worlds not falling apart. But were not seeing a lot of buoyancy either. Warren buffett ahead of course of a huge weekend and as usual a bonanza on monday morning. I didnt realize the extent of the International Attraction here. Apparently there are hundreds of chinese for example theyre actually set up in a room at the meeting and watch with simultaneous translation. Its really a world event. For the first time they can stream it on yahoo finance, the berk shire hathaway meeting, so i wonder if attendance will be as great. He also made other comments i thought was interesting, becky asked him about new Interest Rates phenomenons out of japan and europe, he said the idea is uncharted territory says he, quote, hopes to live to find out how the story ends, but do not believe they signal the end of the world. Which is a view that is out there right now, all the doom and gloom has to do with special negative Interest Rates watch the yen strengen in opposition of the bank of japan only you can take a Warren Buffett discussion to the end. He talked about negative rates. Well sit down with Warren Buffett, Charlie Munger and bill gates a threehour special starts at 6 00 a. M. Expedia is one of the top gainers today as results homeaway acquisition really starts to charge big bucks to list a holiday home on its site. Expedias Ceo Dara Khosrowshahi will join us next. I could get used to this. Now you can, with the luxuriously transformed 2016 lexus es and es hybrid. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive welcome back to squawk on the street. We have a market flash for you here on shares of mdc partners. This is a marketing and communications company. The shares are down 14 right now on heavier than average volume. They were down as much as around 23 triggering a downside trading curve at one point. This after noted short selling Research Firm gotham city targets mdc partners in one of their research reports. In it daniel yu, the principle there says that, quote, mdc shares are now worth less than 1 per share implying 96 downside. It said mdca will restate several hundred historical title of the report mdc partners Like Valeant Pharmaceuticals but with understated debts. Nbc we should point out, simon, did not immediately return a call for us. We wanted to bring it to your attention, simon. More details to come. The rest of that story by the way on cnbc. Com right now, simon. Back to you guys. Thank you, dom. Expedia is one of the top gainers underlying profits 9 cents a share not 6 cent losses expected. Of course expedia integrates 6 billion worth of acquisitions from last year, the orbitz brand and vacation site homeaway. Together theyve helped boost growth in room night sold to a gain of 37 last year. The ceo of expedia Dara Khosrowshahi joins us now exclusively from l. A. Dara, good morning to you. Good morning, thanks for having me. Its nice to see you. I guess the swing factor here is the fact that youve started to charge the homeaway customers 349 for listing online, 409 if they choose not to go online. How does that stack up for that business . And i guess the ultimate question is against air bnb. Homeaway has been a listings model for some time and a number of different tier which is made the business complex as to what kind of listings you should buy. We wanted to simplify the program, have one price. Obviously a discount if youre on like bookable because consumers really want to see that online bookable inventory. Weve taken average listing price down and really encouraging our owners and managers to make their listings online bookable so they can get as much demand as they can on homeaway and eventually on expedia and other sites. Do you look at air bnb for comparisons . Oh, yeah, we look at air bnb all the time. Terrific competitor. Obviously they have brought a lot of sharing type of inventory online and clearly Consumers Want to book that inventory. Theyre very attracted to that inventory. Homeaway has whole Home Inventory in resort destinations, florida, et cetera. So we want to take that inventory online. And as you know we know how to bring Properties Online and we know how to market those properties to travelers to book. Of course the outgoing ceo of your bigger rival priceline posted he passed on buying homeaway because he felt it was too expensive. Youve been a serial acquirer and theyve broadly focused on organic growth. How did you feel yesterday when you learned that daryn had resigned as a rival because of an inappropriate relationship . You know, it was real surprise. Daryn was an incredible competitor, really, really strong ceo and just very unfortunate that he made a mistake. And i think the priceline board did what they had to do. Theyre really lucky to have jeff boyd as their chairman because he was running that company, you know, for years and years and years. I dont think theyre going to miss a step. Were going to focus on running our business and growing our business. Woe had a good start to the year with q1. Right. And we hope to continue that momentum. I mean, how do you respond as a business now to not knowing whether the strategy will be maintained . Do you buy up properties just in case theres a new ceo who changes strategy . I mean, have you locked down have you super locked down the Management Team so that nobody takes its place . Because theyre looking for a new person. Yeah, im sure theyre looking for a new person. You know, our senior Management Team has been together on average id say between seven and ten years. Its a group of individuals who are very passionate about expedia. Ill tell you the last thing they would do is go work for a competitor. Im pretty confident of that even though priceline is an amazing competitor. I think we just have to focus on our jobs and our meetings. We have a big job ahead of us as far as integrating orbitz, bringing homeaway online and transactional. Continuing to grow our core brands, hotels. Com and expedia, and if we stick to our knitting, we keep pushing more strategy i think well be more than fine. Dara, i know so many people that have canceled vacations because of the zika outbreak in the caribbean and south america, im just wondering what your overall sense of it is in terms of Economic Impact to some of these hotels and airlines and countries involved. Its really unfortunate. You can add paris to the list there as well. Bookings to paris are still down year on year. A lot of hotels are hurting and we do everything we can to promote these destinations when theyre safe. Obviously we tell our consumers to do the right research, et cetera. Were doing everything that we can to help the hoteliers on the ground as far as promotions go. What we do find is consumers still want to travel. They still want to go on that summer vacation, et cetera. So we see demand patterns around some of these events. So for example southern europe, portugal and spain are really, really strong. Mexico for us as a destination is really, really strong. So consumers still want to go. They still want to travel. The u. S. Is a destination thats a great destination. Its really strong. They will go travel. Well be there to serve them wherever they want to go. Dara, its an open question still more broadly as to whether youre going to be a victim of your own success. Arguably you ate the hotel brands lunch for many years and theyre clearly very angry about that. And people have seen marriott and hilton with more direct advertising to consumers trying to get book directly not through an Online Travel agency and arguably for lower prices on their own website perhaps within the loyalty programs. Are you seeing that show up in your figures already . And when you see marriott rates itself partly because it now sees greater value in its 75 million loyalty subscribers, are you concerned that they could create an Online Travel agency effectively out of that . Were not concerned about that. With marriott, with starwood, what they do is very different from what we do. As many as ten times on a global basis as they do. Weve been partners for a long time and we really respect them and theyre a terrific company. And they are to some extent doing what anyone would do, which is you want a balance of direct business and you want a balance of indirect business. Were going to be there for them on the indirect side. That channel has been growing for years and years. As you know weve been growing substantially faster than the industry. And the hoteliers that give us that pricing, hoteliers that give customers the best experience are the ones that are going to gain share in the marketplace. And there are hundreds of thousands of hotels that are doing just that right now. Its good to see you, sir. Thank you for spending the time. Dara khosrowshahi joining us there. Ceo of expedia from l. A. Also in travel news, on monday of course we have the first ship really for 50 years thats going to head from the u. S. Mainland to cuba. Its with carnival. Carnival cruise lines. Since the embargo was lifted, and ill be on it. Onboard. Onboard reporting live into this show, satellites permitting. But you cant go to the beaches, right . In cuba. Because its not one of the tourist no. The rules havent changed so its still an Exchange Type of voyage. You have to meet people, you have to do good works although there are changes. Im excited. So i will go to the beach. When we come back, more headaches for google a week after the eu filed those former charges on using its dominance with android operating system. Getting images is lodging an official complaint in europe, what that means for the tech giant. Thats the latest column from James Stewart of the New York Times. Well talk to him. Meanwhile, s p within a point or two of going negative for the month. Back after a break. [ soft music ] e. T. Phone home. When you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. The European Commission launching a formal antitrust case against google and Parent Company alphabet this month. Regulators accusing the company of abuse iing its dominant position. Our next guest says the eus efforts might actually be helping the companys rivals more than customers. Joining us at post nine to explain cnbc contributor Pulitzer Prize winning New York Times columnist jim stewart. Jim, there are a lot of politics at play here googleersus the eu. Yeah. What kind of case are you making in this column . Well, lets be clear here about what this is really about. Everybody is claiming, oh, we want to protect consumers. This is not about consumers. Consumers in europe apparently love google. They have a bigger market share of search in europe than they do in the u. S. No consumer in europe is complaining because google is on their phone. And by the way, if they dont want to use google search, all you do is go in the google play store, tap and you get a different one. I wenlt on my phone there are like scores of these things id never heard of. So who is really behind this . Number one microsoft is pushing for this. Theyre obviously trying to get their bing browser on things, but they have now supposedly buried the hatchet. And this Russian Company yandex has been really pushing for this. They have the dominant share in russia, but theyve been losing ground to google. Ironically heres the European Union going to bat against google for yandex . The europeans really want to send their shopping, search data to a company that impugns russia which invaded crimea and last i knew was being sanctioned by the European Union . This is crazy. One thing i can say weve interviewed the eu commissioner on this program so many times. Shes in charge of these investigations and antitrust, and she would say to the political accusations that she loves google. Shes an avid user of google, but if youre going to do business in the eu, you have to be fair. They are dominant. And theyve abused that dominance. And that does hurt the customer no matter whos helping them build that case for them. There was a very similar case filed in the u. S. Plaintiffs went in and said we didnt know google was on there. And we dont like that. So the judge said, okay, ill accept that, ill accept those facts. But how are you hurt . How are you harmed . Well, are you paying more for your phone . No, can you get another one by tapping on it . Yes. She threw the case out said nobodys been hurt. Youve become much more tabloid in your approach to these things, jim. You know the system in europe that they are competitors antitrust are built around what competitors say. The accusation here is youre restricting competition and therefore innovation and therefore consumers further down the line. Its a much more theoretical approach. It may be wrong, but thats the direction in which theyre heading. Its not to favor the russians. Its say if you didnt bundle this in there would be more search innovation, more players and longer term that would help consumers. But there is not a shred of evidence to support that. Theyre asking the question, arent they . Theyre charging and say you respond. Yes, thats true. They have an opportunity to respond. Where are those responses going to go . Years ago that was a little more serious because it was harder to switch, you know, with the explorer on your desktop. But anyway they made microsoft give a choice. Guess what, technology went by, nobody cares about that, europeans dont even care about that. Microsoft is expired now, microsoft can put it back on there. It had no real effect. Is your advice this is the cost of doing business . What do you do . Well, if i do what google is doing, theyre going to fight it, argue about it. I suspect ultimately theyre going to have to take it off in europe. And guess what, the europeans 90 of them will probably just download it back on. So i dont think its a serious threat to google even if they lose this case. But i am calling out europe on this. Sort of like saying whats the theory here. Some abstract philosophy about competition, why spend all the money . Why attack u. S. Technology companies . And by the way, how about the giant cement merger between a Swiss Company and French Company the two biggest cement countries in the world that merge direct horizontal competitors. Did the eu have problems with that . No. Its harder to switch cement than it is your search engine. Exactly. Well, i would just say to fwo farther in your point the Conspiracy Theory here is that the American Technology firms are dominant. And european Technology Firms cant compete. And theyve just been left behind. And that the europeans what theyre actually doing is trying to make it easier for their own countries and continents to have successful companies. Ive been ive written a column this isnt the way to compete. Go out there and really compete and invent something. Do something. Youve got the skill. Youve got the technology, youve got the universities. Incubate something. Create something. Dont waste your time on these regulatory actions. Theyve all moved here. They actually have. The german sent that group to a parachute into palo alto for a few months to try to pick up the atmosphere or something. Maybe it will work. Jim, we love it when you get worked up. Jim stewart of the New York Times. Lets get to sue herera and get a news update. Morning, sue. Good morning, carl. Jim is one of my favorite people. I love to hear him talk. Heres whats happening at this hour, 20 people were arrested after donald Trump Supporters and protesters clashed in costa mesa, california. The mayhem erupted following a trump event. Dozens of cars were trapped as demonstrators blocked the road. Police in riot gear and horseback were called in to control the crowd. North korea reportedly attempted to launch two more ballistic missiles. Neighboring south korea reports that they were powerful intermediate range missiles and both launches were unsuccessful. That makes three apparent failed launch attempts by north korea in recent weeks. Vice President Biden brought his crusade against cancer to the vatican. Biden who lost his son to cancer received a blessing from pope francis at a vatican medical conference. The pope called for an economic paradigm shift in medical research. And the olympic flame for the rio 2016 games made a stop at the u. N. In geneva. Its an honor of the olympic committees decision to create a team of refugee athletes who will compete under the olympic flag. Next the flame heads to brazil for a nationwide relay ahead of the august games. And thats your news update this hour. Simon, ill send it back down to you. The excitement builds. 98 days. Sue, thank you. Take a look where we are on chevron and exxon. One higher and one lower as both companies clearly reporting declining oil prices central to where we are m some still able to beat though. More on that after this. To warn of danger ligent h from virtually anywhere. Its been smashed and driven. Its perceptive enough to detect other vehicles on the road. Its been shaken and pummeled. Its innovative enough to brake by itself, park itself and help you steer. Its been in the rain. And dragged through the mud. The 2016 gle. Its where brains meet brawn. Lease the gle350 for 599 a month at your local mercedesbenz dealer. Country tries to regain market share it lost under nuclear sanctions. Our very own Michelle Carusocabrera has been in tehran this week. She has a look now on who is buying. All of that new iranian crude thats hitting the market. Michelle. Reporter hey, sarah. When the sanctions were at their toughest, irans exports fell to only 700,000 barrels per day. Now we know this month theyre up to 1. 8 billion barrels a day. Tankers pick it up. What kind of tankers are coming in . We saw the list and we know various data centers. China, japan, india and greece are all big buyers. China is the biggest nearly 600,000 barrels per day. Theyve been a steady buyer of that amount for the last several months. India in march bought half a million. Thats way up from january. Theyve doubled their consumption. Japan is up sharply as well from less than 10,000 to more than 46,000 barrels per day. And greece stepped in right away the second sanctions were lifted. You can look at different tanker data sets. Spanish refiner, lukoil, they used to have a lot of market share in asia, theyre trying to get it back. And also trying to get increased market share in europe, guys. Back to you. Michelle, thank you very much. Oil in focus as well in the u. S. With exxon and chevron reporting. Pavel, everyone seems to be paying attention to the money exxon made in chemicals and their margins there. What do you think the story of the quarter was . You know, this doesnt look very much like an oil company anymore, does it . 75 of the earnings came from the chemical segment, which is by far the highest level ever. And in upstream in p e they actually lost money. So with oil 35 a barrel, this was a tough quarter. The reason im so negative on the stock is this company is fundamentally poorly positioned to benefit from an oil recovery. With 75 of the earnings in chems, this is not a business that benefits from higher oil prices. Neither does downstream. The emt business will benefit but even there a ton of natural gas exposure with exxon thats not looking nearly as bright. The inverse being said in the depths of the oil crisis, right, that they had a more defensive posture. But what youre saying is the upside is less marked as well. Exactly. Look, this is a stock that held up extremely well during the meltdown period all the way through february of this year. The stock its actually starting to already be a source of funds for investors turning more aggressive on energy. This by the way happened in 2009 as well. So, you know, its very hard to see this thing outperforming. By the way, on its valuation its already pricing in oil at about 75 bucks a barrel. So, you know, plenty of oil stocks are pricing in oil in the 60s a lot lower than what exxons pricing in. Pavel, on the flipside you have liked chevron. Do you continue to like it . And is it too early to say earnings have troughed this quarter . Well, q1 should be a trough quarter for almost everybody in the industry. So in that sense theyre pretty common. Chevron is a more oily story than exxon, absolutely. Its more upstream centric, it has much less of a chemical footprint. But about a month ago i did actually downgrade chevron on valuation. That stock is also pricing in oil in the 70s. So, you know, of course were anticipating a continuation of an oil recovery into the 60s by the end of the year, probably 70s next year. But in the case of these two names because of how well they held up during the meltdown theyre already pricing in essentially all of the recovery in the commodity that we can envision. Finally, pavel, speaking of recovery, the narratives been well written that when it gets to 50, when west texas gets to 50 that production responds and snuffs out the rally we got. Is that going to happen . Probably not. So we are asking all the operators this earning season at what oil price do you begin to add more ricks to work and 50 is actually at the low end of what companies are saying. A lot of them are saying theyre not going to add rigs until oil is close to 60 bucks a barrel. So capital discipline, i know its, you know, not always easy to come by in this industry. But the companies are at least being lip serviced to it. Pavel, appreciate your time as always. Pavel molchanov talking energy from raymond james. Groupon has had quite a run looking at this chart. When we come back, the ceo Rich Williams will talk about its earnings. Dow now down 53. I invest with e trade, where investors can investigate and invest in vests. Or not in vests. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Does the market bounce have any real legs . One technician says yes. And he has three charts to make his case. Well check out all three at tradingnation. Cnbc. Com. More squawk on the street coming up. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Welcome back to squawk on the street. Stocks mostly lower today with the s p 500 Health Care Sector you can see there lagging the most and trading today down by over a percent. Among the big names dragging the sector down are gilead. Gilead leading declines down 7 on an earnings report. Healthcare also, remember, one of this years underperforming sectors down by about 3 . Certain ll lly one to keep an e. Thank you, dom chu. Lets go to the cme and check in with Rick Santelli. Hi, thanks, carl. Chicago pmi means alice. Headline for april read was down 3. 2 to 50. 4, weakest since well just february this year. Lets go to it. Go through each one. Rick, this headline number is pretty much what weve seen for the last year. We have been averaging 50. 3 in 2015. Our sixmonth moving average is 49. 6. The threemonth leading average 50. 5 all lining up right here with us. What this means, rick, is companies are just reacting not growing. You told me this off air. Im so fascinated. Theyre actually saying theyre in reactive mode. I think thats very important. Right. It is important because thats why weve seen some of those big stops and starts that weve seen in the information that weve been getting out of the purchasers. So they dont have enough clarity, enough visibility to be proactive. That means a lot. Right. So what we have here is your ordering components down. Backlogs were down pretty good. This is the 15th month in a row in contraction. So even though its in red because its lower, less backlog time if i was looking to get something i would think that thats really a good thing, right . Well, no, because that really means you have limited future ofrders. Heyve been working this off and this is why ,productios high. As youve noticed production is still higher than orders and thats been a tre weve seen through 2015. The other big thing here, rick, is if you have your ordering components down, youve got to take in your employment levels, and thats down. And this again is in contraction. This is the tenth contraction in the last 12 months. Tenth. Theres my asterisk. Tenth contraction in the last 12 months meaning uer 50. Right. So the big story here, rick, is we see a couple of numbers that are moving higher. Your supplier deliveries are lengthing out. This is the longest time to get your goods that you need since october of 14. This is usually a sign that buness is booming and its taking longer to get your stuff. Not this time . Notn th i case. The situation is something that is normally like a shelf order e you wouljust t it right off, no longer. Its becoming a special order. Purchasers are telling us it is taking a very long timeo get stock. Theres been strikes, theres some transportation issues. Its all lengthening out. But the big thing is that the suppliers are under inventory. So whats happening is that companies are starting to build a little inventory because theyre having a really hard time getting their widgets, okay. So this doesnt necessarily mean that inventories, which is a number that we like because thats the gdp maker. Right. In and out of gdp. Its not that this is a good thing. Its going to help our gdp numbers because its still in contraction. Its in contraction for the sixth month. Purchasers are telling me theyre building a little bit but still staying lean. Sometimes numbers dont give you the real truth. Prices pay jumping 11. 8. Right. But you add a couple asterisks to this. Right. This is a big move. This is over a 20 move in this component. But the deal is is that a rookie purchasers would say, oh, well, oil and Commodity Prices are popping, the prices paid are going up. But the real truth is a savvy purchaser, a guy longterm will say, all right, oils maybe 14 off of the low, but where is it compared to a year ago . Its still in half so prices are still low. So this might be a very shortterm thing here. So it doesnt look as though were on the brink of recession, but it also doesnt look like were on the brink of an explosive recovery. Right. I think that what we said earlier is that companies are just reacting and not growing is consistent with what weve seen since february 2015. Alyce, youre the best. Thank you for that insight. Sara, back to you. Thanks for the conversation, rick. When we come back, a bizarre starto the nfl draft. A social media more with famed agent Lee Steinberg next. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Steve, other than making im here atme move stuff,rade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. With the 26th pick in the 2016 nfl draft, the Denver Broncos select paxton lynch, quarterback, memphis. There he is. He has been drafted, and his dream has come true, and he is is in tears. With that the Denver Broncos have chosen a presumed successor to peyton manning, and so has paxton lynch ready to step into the shadows of the likes of john elway and mr. Manning . Joining us on the phone is paxtons agent, and also the inspiration for Jerry Mcguire the founder of steinberg associate, and so as the agent for the draft quarterback, and everybody seems to think that he is a raw talent. He is as ready as any other quarterback is which is not very ready. The adjustment to the pro game with the more sophisticated defenses and the faster speed is not easy for anybody to take, but it tain takes time on the field, and they have mark sanchez, there and hopefully he will get a little bit of the learning curve behind him, but he is very excited. And can you imagine going to the Super Bowl Winning Team with the great organization, great coaching, and it is a dream come true. Yeah, quite a quest. He is 67 and can run extraordinarily fast, and we were watching the videos in there, and he has a strong arm, but your guess is that sanchez is going to be starting this the yea year . I think that he starts and you see how it goes, and then a quarterback who can have a long 10, 15year career, and not how fast you start. Aaron rodgers was a 24th pick, and had a year behind brett favre, and dan marino started out quickly at 22, so he is going to have the best teaching that you could have and the exquarterback kubiak and exquarterback elway and sanchez can mentor him and you know, with the draft last night, and starting with laramie tuncil, but somebody hijacked his account, but a bong mask there, and what is your takeaway on this . Well, what happens is that there is an anxiety and fear in the wake of Aaron Hernandez and ray rice that a team will end up with a player who might be behaviorally suspect, and they go ahead and give him a massive signing bow nushgs and then player becomes disqualified, and then the team is left with no player and not the cap space to replace him. So this is a draft with a enormous scrutiny into the character issues. What happens on the draft night, they are in different cities, and they see that a player ist not picked and they start to n wonder is will there Something Else that we dont know that everybody else know, and it can be totally unsubstantiated rumor, but under the heat and the hot lights of the draft war room decisionmaking tends to become anxiety prone. And the guy i felt worse for is miles jack who is still out there, and he went into the draft as seen as the number one linebacker, and he is an incredible athlete out of ucla and he admits that he may need micrograph surgery. And i felt bad for him. Well, i watched him at ucla, and the issue of a microfracture, some of them can come back, but some of them end up being careerending, so, again, you have a series of teams that didnt have a chance to totally get a prospective on it, and on draft night the fastest way for a general manager to get fired is to be using a firstround draft pick that ends up being a bust. Leigh, back to the bong gas mask story, and doesnt it offer a lesson for you, the agents when it comes to helping the clients and the players to manage risk in 2016 on Digital Media . Absolutely. So the truth is that the players believe that when they tweet or do anything else, that anything that goes up on the ether can be universal universally seen. In a situation like this, you sit the client down and say, look, i am not judging you sh, is there anything on the background, and we dont throw anybody on the trash heap of history because you did anything in college, and is there anything that we need to know. And if there is, you bring it up with the teams, and talk about the fact that it was five years ago and you are transparent. Right. Leigh, we have to leave it there. As always, appreciate your joining us. Leigh steinberg sports agent and founder of steinberg sports and entertainment. And it is time for squawk alley and jon fortt and what to expect in the next hour. Good morning, jon. Happen pu happy friday, simon. And last night, amazon had a better than expected call, and not so much for groupon because it is down 15 , so what does that say about growth and if you dont have it, and also, the social media and the nfl, and certainly some lessonsre out of this years draft, and what it mean s f means for the future of social media and the players on it. And jon gruden believe tas players should stay off, but does that make sense . All of that and more coming up on squawk alley. Warns you about incoming crosstraffic. Cameras and radar detect dangers you dont. And it can even stop by itself. So in this crash test, one things missing a crash. The 2016 eclass. Now receive up to a 3,000 spring bonus on the e350 sport sedan. The first stock index musicwas createdughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. 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