alix: welcome to the most important hour of the session. 60 minutes left to the closing bell. this is "street smart," stocks are looking for a direction as investors weigh dealmaking and a slew of earnings reports, and where counting down to results from yahoo!, yum, and chipotle. plus, bill gross himself joins me to talk about what he considers the short of a lifetime and mario draghi's line in the sand. "street smart" starts right now. here are the top stories we're watching ahead of the closing

bell. goldman sachs is buying over $20 million stake in a company that provides high-frequency trading from the networks they need to do business. firms that did the fastest available technology because many of their trading strategies rely on speed, and perseus is among the handful of companies that trend data -- transmit data between exchanges using microwave towers. teva pharmaceuticals making an unsolicited bid to buy mylan, which says it wants to stay independent and that a combination with have a -- with teva would face antitrust hurdles. it could create a powerhouse with more than $27 billion in revenue. and google is revamping its search service. the company boosting the ranking of mobile-friendly pages and analyzing what websites are suited for handheld devices. another top story were following at this hour -- an arrest made in connection with the 2010

flash crash. a u.k. traders accused of engaging in illegal bait and switch practices according to u.s. authorities. for more, i'm joined by senior markets correspondent julie hyman at the breaking desk. what did this traitor do that was so different than what is allowed through high-frequency trading -- what did this trait der do? julie: the man who was arrested as navinder sarao. he was arrested in the u.k., and he is a resident of that country. the department of justice is working out extradition. he has been charged with wire fraud, commodities fraud, commodities manipulation, and what is called spoofing. that would be to bid or offer with the intent to cancel the bid before execution. in other words, he was trading in e-minis contracts, mimicking the s&p 500, but he would put in many, many different bids that

would be relatively far from the asking price to sort of game the market and cancel them before they were executed, in the meantime trading other trades in order to profit from what other people were seeing in the books. yes, it is a little bit complicated here. to look at some of the details from the complaint sort of illuminates what exactly he was trying to do. first of all, he had bought an over-the-counter software system, ordering system, to place these orders, and he wanted to have that modified to include a cancel if close function. in other words, if the price got close to what he was bidding, it would automatically cancel it. that appears, at least in the eyes of the justice department, to prove intent. alix: interesting. in these cases, it is hard to prove intent. very interesting development. thanks so much. bill gross making headlines again, this time for his call on german but yields. the janus capital partner

trading -- tweeting earlier today that german bunds are the short of a lifetime. joining me now is bill gross. thank you for joining us today. bill: thank you. nice to be here. alix: always good to see you. the question is timing. when is it? when would you put on this trade short? bill: most investors would probably want to wait for 12 to 18 months because that's when the euro zone ecb's quantitative easing program ends. one of the reasons for the overvaluation has to do with mario draghi and his program of 60 billion euros a month in terms of buying power. you don't want to fight the fed or the ecb i suppose, and then getting an early is doing that to a certain extent, but i would say that the overvaluation is

due to a number of things. one, due to the low growth and two, due to the quantitative easing program, and three, greece. if the eurozone should strengthen in terms of growth and the need for a quantitative easing program over the next 18 months it would sort of diminish, where if greece should be healed so to speak, then the bid for the 10-year german bund at 10 basis points or 30-year at 15 basis points would probably move higher, and the price would move lower. alix: i hear from you that it's the end of ecb qe that is going to be that short for you, but if a trigger at the end is kind of what is up for debate, what about the fact that greece might not heal itself? we're seeing you to really sore nearing 30%. the rhetoric getting

increasingly negative. is there an event risk to your trade. >> i think it is. to assert next and, it's alleviated by the fact that mario draghi has promised us -- and hopefully, his promises are good on either side, but he has promised us he would not buy anything at a yield of anything less than -20 basis points. if that's true, if he's good to his word, then even in the case of greece, the 10-year german bund would have a limit in terms of a yield of -20 basis points. in a nine duration world basically would imply it up or three points maximum downside risk. drug he has told us that he's going to buy some, but it's not going to get ridiculous -- draghi has told us. if and when it might happen, what about the how? what does it look like when your trade starts to unfold, we ecb comes out and says they are done

with qe? bill: let me point out that during the u.s. qe, nominal rates rose, even in the face of the red's buying because inflation rates are moving higher because of quantitative easing. with the ultimate trigger will be, it's hard to say. if you buy a 10-year, you know you are getting nothing over the next 10 years, but what is at risk as the next five or 10 years going forward, what will happen at that point in time and it gets -- not easier, but it gets possible to evaluate a german bund and u.s. treasury bond on an even basis because

the note from inflation index to securities from tips to inflation index securities in germany the expected inflation rate is about the same five years forward, but the yield difference between those securities is about 200 basis points, 200 basis points lower for germany. it either says u.s. treasuries are a whale of a buy, or it says that u.s. german bunds are a whale of a short. to jesting that if you want to hedge, the best bet is to sell the bund is a post about the treasury. alix: implying that this is the trait of a lifetime means to me you will make a lot of money off of the trade, which means we will see a lot of volatility and a lot of long get trapped and have to liquidate fairly quickly. is that the kind of liquidity exit that you are expecting in

this scenario? bill: i don't think so. as long as mario draghi is good to his word. he has told us he will provide liquidity for the next 12 to 18 months he'll be buying euros so the liquidity basically is a promise from mario draghi to think that sellers would be rushing to the exit or shorters would be jumping in the pool, so to speak, i think is a little bit of a stretch. i don't expect that. i don't expect the 10-year bund to go from 10 asus points to 50 basis points but the key point is it doesn't cost you anything. historically, over the past, it cost an investor to short or sell a security because that's a negative carry. there is no negative carry here. you can basically do a written

and winkle, -- rip van winkle go to an island, come back in five years, and know that the odds highly favor you made a lot of money area alix: good deal. thanks for joining us. stay tuned. coming up after the break, we will get views on greece event risk of their, and earning season with tech kicking it off today. ♪

alix: welcome back. here's a look at some of the top stories were watching ahead of the close. a futures trader has been arrested in the u.k. for his alleged role in the 2010 last crash. the u.s. is seeking extradition according to the justice department. flash crash happened on may 6, 2010, when the dow plunged 1000 points in just minutes before recovering from the losses

later. it was a crazy day. british regulators challenging their u.s. counterparts over their reluctance to classified warren buffett's berkshire hathaway as too big to "the financial times." regulators have already designated insurance companies as systemically important but have not said which reinsurers should be included. a new york regulator says he will not block barclays from reaching a settlement with the justice department provided the bank agrees to cooperate with a probe of his own. the end of june -- that is the main deadline for greece to unlock aid payments according to an eu official, echoing what the german finance minister told bloomberg and an exclusive interview last week. that's great, but does greece actually have the money to keep going until then? joining me now to does us -- to discuss, the global financial chief at black rock. great to see you.

maybe not good for greece. does greece really have the money to last until the end of june? it seems like a very long time away. russ: it's not clear they do. there are even questions about if they can scrape together the money for a payment of about 780 billion euros due on may 12. it's a long time away and it's doubtful they can go that long. alix: what did you make about the news today that the ecb was trying to squeeze greek banks? that the collateral that these banks will put up -- they will get less money back -- what did you make of that? russ: this is clearly an indication that greece right now is very much on life support and very much dependent upon the european central bank. the main mechanism asbestos to change, that will increase the pressure on greece, but i don't

think the eu wants to be the catalyst for greece to come to the negotiating table. obviously, it just adds to the pressure on the great government to present a credible list of reforms that can unlock the aid they need. alix: what kind of situation do you think the markets are pricing in? we have seen greek yields really rise, but not a lot of shake up anywhere else. russ: this is an excellent point. we've seen greek 10-year yields go back up but you do see the stress. what has been changing the last week is that up until last thursday, that stress was not apparent anywhere else in the european periphery. other peripheral yields remain low. that change on thursday portuguese, spanish/italian yields start to back up. this is a regime shift. to the extent that the issuing greece lingers, i think you will see a bit more pressure on those other peripheral countries than was the case in early april. alix: we are also seeing action

in the credit default swaps market. 87% probability within i've years -- is that reflected yet in other areas? russ: i don't think it is, but there's a complication, which is that it used to be the case that people assumed a default would lead to an immediate greek exit, and now, there are a number of scenarios that really could place greece in limbo, where you have a technical default. you may have the a position of capital controls as was the case in cyprus, but no imminent exit by greece. i think investors are trying to wrestle with a growing number of scenarios as was the case a few months ago. alix: you are a strategist and overweight large global financial firms. how do you reconcile that call with what we's in greece and the turmoil that could unfold? russ: greece obviously is a risk, but most greek papers held by official institutions -- it's

not nearly as systemic risk for the global financial sector as it would have been back in 2011, 2012. helping the situation is the fact that you have the ecb buying 60 billion euros a month, and this will contain any potential contagion that might happen should greece default or even under the event of a greek exit. alix: you are sticking with me to talk china and tet, but in the meantime, we have breaking news for you. scarlet: bloomberg has learned that hedge fund elliott management is going to start a tech buyout on that will be run by activist investor jesse cohen according to people familiar with the matter. this is a private equity strategy fund that will be based in san francisco and it's pretty infamous across technology boardrooms for offering to acquire companies. this is now what elliott management is going to move over and shift a little bit to do.

elliott has been looking to recruit staff from other silicon valley firms for a multibillion-dollar buyout and. again, according to people familiar with the matter. the headline once again is elliott management, the hedge fund, is looking to start a tech buyout on that will be run by activist investor jesse cohen. when we contacted elliott management, they declined to contact -- two common officially -- they declined to comment officially. alix: coming up two chinese defaults in today's may actually begun for investors. i'll explain when we come back. ♪

alix: it failed to pay an early

$14 million in interest due today, just a day after the developer defaulted on its dollar debt. you would think that two defaults in teen of days would be negative for markets, but apparently not. joining me to discuss is bloomberg's lisa abramowicz, and still with us is blackrock's global economist and strategist. why is this good? lisa: the high yield bond index for chinese companies is gaining almost twice as much as u.s. high-yield and debt so what gives? basically, people have been waiting for this for a long time waiting for chinese companies to be allowed to default. in the past, chinese companies would asked up companies. it was hard for investors to get a true view into how companies were doing. now it's the chinese government is allowing the market to operate more according to free-market pencils, and it actually gives investors comfort . >> you are a strategist and investor. does it give you comfort? russ: i think there are still

lingering questions about the chinese financial system, but lisa is exactly right. china has had a haircut on many of its financial stocks because of the opaque nature of the financial system. the fact that a company is a love to default, some of the liberalization we are seeing in the chinese financial sector on lending rates, the currency -- this is all good news over the long term. it means china is moving towards a more normal financial backing system, and as lisa said, this is something investors want to see. alix: given what has happened and that the market is not falling apart, are you buying and china? do you see that as an opportunity? russ: there are opportunities in china, but i focus on the hong kong market. while i think there are good opportunities in china, if you look at the composite market that has already run tremendously, up about double from where it was a year ago. there has been a lot of multiple expansion of the market. the a shares traded out of hong kong look to be a much better market right now. alix: where do you see the

strain perhaps in the markets if these defaults were to pick up steam? defaulted due to corporate governance and complete financial disclosures. you could think this is not a one-off. russ: i doubt this is a one-off. the view was that this is manageable, that china has significant resources, and they can manage through this transition, but there will be bumps along the road. again, i got to emphasize, a year ago, china was trading at a very big discount, because of the opaque nature of the financial system. as that becomes more transparent, expect the yield to rise. lisa: how much are we going to see the bankruptcy system for china, the legal system exposed for what it is you that's a big question -- where are creditor protections, and how secure are they? do you have insight into that? do you feel like there's more of a predictable legal process?

russ: i think this goes to the key reforms china needs to implement with his legal system really having more clear and transparent property rights, and bankruptcy is a part of that and this is one of the developments investors will be watching. alix: you seem to have a relatively optimistic view on china. is that based on the fundamentals? russ: clearly, the central bank is helping. china has followed a pattern onto similar from the u.s. in recent years where bad news has been treated as did news because the view is that the central bank and central government will try to stimulate the economy am a both with monetary policy and also fiscal policy. the fact that china is slowing i do not think is a tremendous risk because everyone knows it. to some extent, it's already based into the price. the key is -- is it a manageable slowdown rather than a hard landing? alix: thanks so much.

up next, we go to san francisco for the cyber security event of the year where experts try to stop cyber crimes before they happen. we'll be right back. ♪

alix: welcome back to "street smart." here are the top stories were watching ahead of the closing bell -- elliott management putting a private agreement fun for the term according to people with knowledge of the matter. cohen is infamous throughout the industry for offering tactics that have proved look at it. his new firm will be based in a new office. elliott declined to comment on the firm's plans. and blackrock's ceo says low interest policies by central banks around the world are threatening insurance companies and pension funds. he was speaking at a conference in singapore and added that policy makers need to think broadly about the long-term impact of their decisions.

elizabeth warren, out franken and four other u.s. senators asking federal regulators to block comcast's proposed purchase of time warner cable. lawmakers say the merger would lead to higher prices and fewer choices for consumers. we got less than an hour until the close of trading. want to get right to the breaking news desk where scarlet fu was looking at two names reporting after the close. a lot of names trickling out. scarlet: keeping an eye on yum which is as much a china play as it is on -- a bet on casual dining. it is expected to report another double-digit percentage drop in earnings. the consensus is for earnings per share to fall. revenue, meantime, seen all in for a third straight quarter while comparable sales projected to fall .4%. china will be the trouble spot because comparable sales are seen at more than 14% because of ongoing food safety issues,

specifically because of problems with suppliers. also, keeping an ion, of course yahoo!. right now little changed before its earnings report. earnings-per-share driving to $.18, although i should mention there's a huge range for the expected it earnings-per-share anywhere from a plunge to $.13 to a slight dip to 36 since is anticipated. when you back out revenues shared with her partner, sales estimated to fall 3% and the focus will be on the core business. growth and display ads, which is yahoo!'s main moneymaker, have a company is integrating tumblr and how far along they are in making money off the business. the court business has been struggling. alix: thanks so much for that preview. an arrest has been made in connection with the 2010 flash crash. a futures trader is accused of illegally manipulating the stock market, causing the dow jones industrial average to plunge 1000 points in just minutes. it was a crazy afternoon.

joining me now on the phone is a partner at themis trading in new jersey. he also wrote a book on high-frequency trading and the new stock market we look at. thanks for joining us. really appreciate it. from where you sit, what did this trader do that was so different from what high-frequency traders do every day? joe: the case is troubling because it asks more questions than it provides answers. what he was doing was spoofing which is an illegal activity where folks place bids and offers they have no intent to buy or sell. that could be a high-frequency got, low-frequency guide, and it could be anybody, and the point is it hurts all market participants. retail institution, market makers, because it takes away confidence. people are not sure if the prices are being accurately reflected based on fundamentals, so this fellow was spoofing in the mini futures contract. the dow jones dropped 1000

points because all of our markets are so linked together by technology that what happened here was five years ago this guy was doing this, and now they just got around to charging him which is really what we question -- why did it take so long? why did the sec and cftc blame a mutual fund with now they're turning run them blaming this single trader in the u.k.? alix: they say he is not solely to blame on this but he is a significant player. joe: it was surprising how much percentage of volume he did do. he had 20% to 29% of the e-mini orders which is a huge amount of orders being placed, and those stick out like a sore thumb. each participant is identified, and that was noted in the case. he could have easily been spotted the day after this happened, but why, again, five years, are we hearing about this

one guy? it does bring a lot of questions. even in the case the one guy mentions to the investigator at the time that there was somebody else doing the same thing, so we wonder -- are there others? of course. you think when guys doing this in the middle of the u.k. when there are thousands of traders all over the world who have access to similar technology? alix: does that mean regulators are asleep on the job? joe: the cftc just got new powers which were recently clarified in 2013, which allowed them to go after school first. the ncc does not have that same power when it comes to stocks so the bottom line is you got different regulators dealing with different markets with different rules. you need to get these guys together, and even mr. volcker came out saying that maybe the cftc and sec should merge so they can get a better view of the markets. we live in a fragmented market with multiple asset classes trading that are linked together, they need to be regulated in a much better way.

alix: thank you so much for joining us. really appreciate your insight on this. more than 28,007 security experts are in san francisco this week at one of the largest security events in the entire world. our own cory johnson is on the ground that the muscovy center -- moscone center with more. cory: it is something of a nerd fest, but this is a really big deal. the deputy undersecretary at homeland security joins me right now. you have a very interesting gig because it seems like the relationship between government and private industry is greatly strained over issues of data and cyber security, and yet, greatly interest -- intermeshed. your job is to fix that. how is it going? phyllis: it's going great. there has never been a harder time for many companies to work

with the u.s. government, for all the reasons we hear about in the headlines, but there has never been a more urgent time. cory: talk about some of the issues around that. nsa has created problems with the relationship with silicon valley companies, apple or facebook or many others -- microsoft -- complaining about nsa policies. some of those -- we have talked to him as a people who say the job is to go to homeland security, and they share it with a world of commerce. you are in this particular point where you say you're here from the government and here to help. phyllis: we are here to help. our job is respond to mitigation of cyber threats so we are able to collect information with all the expertise, privacy and civil liberties, and disseminate out only cyber threat indicators. we have to understand for our businesses, cyber security is allowing an adversary that has no lawyers plenty of money to access our information, money way of life, and certainly do

worse with their ability to get into our systems. we have to act, and the way we do that is to take back our networks and to look. it means we built the network, and the adversaries right now are using that to do bad things. we have to pull what we see. business sees a lot, sometimes more than government. government sees different things. did just protect civilian agencies and we learn who is trying to hurt them. we can share that back out, and we do, with all of our stakeholders including why the sector. what legislation has done for us so eloquently now, given our national cyber security and communications integration center is give the ability to be the essential place where if you picture a weather map, all of that information can be put together, again with experts and privacy and civil liberties so that it's done right, and we can let every computer in the nation be too smart to accept the adversary. cory:3 tell me one thing you would like us to do better when it comes to dealing with the

government and the issue of cyber security. phyllis: use our information. it's free. cory: why are they not using already? phyllis: many resources could have been used already. what we just now put in place as an extension of our existing ability to share information in near real time between people. would now put in place and ability to share with machines. i would ask companies to take our information try to use it in your systems. there are a lot of places out there making this easy to do. we will help you do it. it is important to make systems smarter. remember one thing -- computers are not smart. they are just fast. we have to make sure they know -- cory: thank you very much. "street smart" will be back right after this. ♪

alix: the flash crash in 2010

when the dow sank 1000 points in a few minutes rocks the world, so are we safer now? joining us is td ameritrade's ceo from the floor of the new york stock exchange. thanks for joining us today. fred: it's great to be here. alix: i wanted to start on this arrest that was made of the u.k. trader. are we safer now when we trade? what support is in place to prevent this kind of flash crash from happening again? you had a roast. fred: there's been a number of changes in the market structure in regulation since the flash crash with things like limit up, limit down, and circuit breakers, so i do think it is in better shape today. we're in a much better position to do with the today than we were three or four years ago. having said that, some buddies doing something wrong, they should be brought to justice and i think that maybe what is happening today. alix: you have a pretty unique view where you sit. you see what every day guys do.

a lot of people benefiting from the volatility we saw -- what happened with td ameritrade? fred: the first thing you have to recognize is look at last year, the same corner. we had our best trading quarter ever -- 492,000 trades per day. volatility right through the re-month -- three-month period, and this was our second best corner, just not as strong as it was year ago. it's a was good, but volatility did come off in the month of march and that did impact trading. alix: i want to pull out one nugget from your quarter, which was average revenue per trade has been declining over the last two quarters stands at $12 zero two cents -- $12.02. fred: some of that is mixed. we definitely have a shift of

clients trading in futures which is one of our lowest commission for trade products barely going in because they see what is happening with the price of oil coming up. secondly, we are seeing that we are getting more trades in this quarter from our more active client. a lot of it is about the mix of traders trading and the mix of they are trading. alix: thanks so much. appreciate your take on the corner as well as the flash crash. up next, can marissa mayer demonstrate that yahoo! still has a fighting chance in search? more details after the break. ♪

alix: we are counting down to the close, minutes away from yahoo! kicking off tech earnings right after the bell. joining me to pass the numbers is a senior tech analyst with bgc partners.

always great to see you. you're excited. i'm excited. what is the number one way that yahoo! can deliver value to shareholders in their core business? colin: the number one ways to spin off their assets right? the biggest piece of the value of yahoo! is in alibaba. the next biggest pieces in their stake in yahoo! japan in cash. their core business is actually quite tiny, which is why the numbers that come out tonight will mean a lot less than the numbers that come out on may 7, which is alibaba. when yahoo! used to print results, we used to flip white through and see what the alibaba metrics would be. alix: there is something its core business can do. colin: in that 6.5 billion dollars, there's a lot of room for upside and search is a great area because of the fact that they do have this flexibility, and that will mean a lot in the hands of private equity. let see if we get a little bit

of rebound in the search numbers in this quarter because of the firefox deal. when the new microsoft terms kick in, that will also help the search revenue but you have to remember that there may be 1/3 the revenue per employee that yahoo! gets compared to google, so this would be an attractive candidate once they have spun off the assets for a company like silver lake or private equity firm that wanted to take it private and retooled the entire business. alix: yahoo! private? what? crazy talk. you are sticking with me, but russ is still with me from san francisco. you wrote that tech is still the best and safest place to park investor money. we're headed into another earnings season. do you feel the same way? russ: we still like tech relative to the market.

there are definitely pockets of froth them into the broader u.s. sector, trading at about 19 times trailing earnings. there's barely a premium to the broader market. this is one reason we still think the sector can outperform. alix: what is the risk of when the fed raises rates you may see some volatility in sectors -- does tech have some insulation to this? russ: i dig it does. this is a very low debt sector. tech along with health care has been one of the most resilient in rising rate environment. you compare tech with utility sector or reit's that are much more rate-dependent. alix: what about the ability to generate cash? nasdaq on the hook to generate over 300 billion dollars in profits this year, more than the internet craze. what are we doing with all that cash?

russ: a lot of it is being returned to shareholders. this is another argument for tech -- cash-rich, ironclad balance sheets, and a lot of latitude given the amount of cash being generated. again, in a low rate environment, that cash flow is even more valuable to investors. alix: any risk in terms of exposure? we had a lot of that from intel and ibm, for example. russ: we did get some headwind in q1 with a strong dollar. it's another very rapid appreciation of the dollar, take is exposed because of sales, but it will be a broader exposure to slow down the global economy begin, we see some string in the u.s. in particular in q2. alix: always great to have you. always great to have you and your perspective. we are counting down to earnings from yahoo!, young chipotle -- yahoo!, yum, chipotle.

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omberg television, and this is "street smart." we're counting down to the closing bell. stocks fluctuating all day as investors bet on corporate earnings results. we are moments away from results from yahoo! yum, and chipotle. scarlet: action is a good way to describe it, or perhaps not so great because it was a mixed day with mixed earnings that made for a modest-moving market overall, at least we go by major

indexes. had two days in which the dow close up or down by at least 200 points friday and yesterday and today, we just dripped lower . the net change, 79 points. nasdaq getting a boost in biotech names after teva made an unsolicited bid to buy mylan. mylan is trading below that $82 a share offer. the exchange rate of fund that tracks biotech funds is off about 25% year to date. we should mention as well that all three indexes got within 1% of matching their record highs. no economic data on the calendar. investors are looking at overseas events. also waiting on more evidence from companies seeing how they are position for the rest of the year, especially with the dollar strengthening. we are getting into the heart of burning season, and more tech companies will be reporting this week and next. julie and i will be covering yahoo!, yum brand and chipotle

earnings when a pop over the next few minutes. alix: i'm here with lisa abramowicz. credit greece -- credit suisse chief economist, james sweeney. bill gross things will be a time to short german 10-year bunds. take a listen. bill: the eurozone and ecb quantitative easing program will end, and one of the reasons for the overvaluation has to do with mario draghi and his program of 60 billion euros a month in terms of buying power. you don't want to fight the fed or the ecb, i suppose. alix: what you think of this? james: i think it's pretty amazing where german yields are right now. 10 basis -- 10 basis points for a 10-year investment, so that's the market assuming ecb rates will not go up in 10 years. recently, we've actually had

very strong growth -- alix: your audio's not working, so we're going to get you hooked up. i'm going to go to lisa. you really wanted to know when he was going to make this short. did you get an answer? lisa: he basically the same right now it's not that much of a drag on performance if you are shorting something that has a negative yield or any young. one of the challenges of shorting a security that has any positive yield is you are losing that. the price has to drop enough to compensate that loss payment that you have to make. i think that's what he was saying -- if you are going to go along the dollar shortly bund you might as well short the bund. i don't know that he answer the question when, but that's on a lot of people's minds. alix: did you get a good read on when the volatility wouldn't sue? it seemed like he said it would be somewhat orderly, not the kind of crazy volatility we would expect from the trade of a

lifetime. lisa: it depends on the bank, on if they sell their assets or let them run off or how they couch the whole incident. alix: there is there's the bell. s&p is fallen more them 1%, and on the flipside, you had health care the biggest winner of the day. oil actually had its worst day in a week, posting a one week low. we are earnings from yahoo!, yum! brands, and chipotle, and it is supposedly better to sell than by treasury -- buy treasury. gu

bill gross: u.s. treasuries are a whale of a buy, i'm suggesting if you don't want to hedge that the best bet is to sell the bonds of from the treasury. alix: he says that is a whale of a buy for treasuries. lisa: that is what he is saying, if you are going to go one of the other, you might as go short and choose the lesser of two evils. alix: james, i think you are good you have a good microphone now, right? james: i do. alix: what is your call? alix: i think the --james: i think the best thing is the yield, so some people say you can stay here, but european growth data is begin up a lot right now, and all you have to price in -- all you have to do

is price in different growth rates, so i agree with him. alix: we're going to look at earnings and updates are poorly as it came in just under the wire, and earnings per share are coming in ahead of the estimates? scarlet: -- julie: that's right, aaa fell short on comparable sales, these are sales that are existing restaurants, up 10.4%, which would be impressive at any other restaurant, but any other restaurant chain is a not chipotle. now aaa is saying -- chipotle is saying it is in the low to mid digit range. this is what we're used to with chipotle.

that means it raises prices around the time a little bit after this time last year, so we are going to be looking at that price increase, and part of it has to do with the fact that they are getting bigger and mature and they are not able to keep up with that rapid pace of growth. that brings the total count to about 1800 chipotle restaurants. then again, the big disappointment is coming from that comparable sale number with an increase of 10.4%. alix: so this all depends on helmet he stores they thanks julie -- on how many stores they open, thanks, julie. now let's go over to scarlet fu. scarlet: $2.48, the consensus among analysts is $2.10, so this is a pretty big increase, so they are just over $5 million the consensus among the analyst

was a little bit below what it was going to turn out to be. insofar as amgen, they are respected to rise at its highest, $9.65, versus the previous rate of $9.05. alix: thanks so much on the amgen earnings, and that we have breaking news and julie is tracking breaking news. julie: the proposal of perrigo rejected by the proposal from mylan.

this perhaps came to big of a target. so this is sort of 83-way situation if you well, remember that they had made the unsolicited offer to buy mylan and then there was an offer to buy paraerrigo so that is the situation,. alix: thanks so much everyone and joining me right now is james sweeney and lisa upper what's -- lisa abramowicz. what is really coming up is the dollar and james, where do you fit in that camp? james: i think it is a headwind, but it is not a huge head went and i think the problem is that you don't just have a higher interest rates, that is possibly coming down the road with the

fed hike, you have labor costs starting to rise a little bit so i think it is getting a little bit darker for corporate earnings but i think the dollar by its self is not a catastrophe. alix: and speaking of the dollar, we want to talk about yahoo! earnings, and we are to go to scarlet fu has more. scarlet? scarlet: if that is a right number, if they have $.15 earnings per share versus the 18 sense per the consensus, so that is certainly a drop from a year ago where it was at $.38. they were one thing all $4 billion -- looking at the website, they were at one $4 billion, and there is a big deal of the core business, because we know what yahoo! is going to do with the holding of alibaba they are going to spin it off to the shareholders, so i

should say that the display revenue gets to grow a modest 2% while search is going up at a higher percentage. they are growing 61% year on year, but that is a smaller part of the search and display which other core businesses at this point. i looking towards the outlook at the second quarter and i will bring that to you as soon as i get that. alix? alix: thanks so much, and we are just getting the read here, it looks like a is up women on the bottom and the top. what is your take on this year -- it looks like it is up on the bottom and the top, so what is your take on it it this year? colin: expenses are mounting up, so it is a troubled business, but the nice part is that

because of this asset base there is that value that is going to be unlocked which is why the stock is only going to have a modest reaction, so it is really not a very pretty report. alix: we have heard from a lot of tech companies discussing a stronger dollar but is that kind of to blame here or is there another reason? colin: one of the few positives for yahoo! is that it revolves around north of 75% so they don't have a negative impact on currency like we are going to see possibly from some of the other major tech companies out there. this is a trend from a core business, so it has given us a lot of interest. alix: yes it has, and in general, what do you want to hear on the calls, moving forward from this, we want to look at what the forecast will be? colin: we are going to look at what they are going to do in search so that is going to be a business that will continue to grow because of the dynamics of how it is shifting, but the

search as we mentioned earlier is a really great area where they can. improve revenue and find some growth. -- where they can improve revenue and find some growth. alix: in terms of alibaba either asset sales? colin: it is still very much a tracting stocks, and they own shares of yahoo!, so they probably should have a view on alibaba, and i think a meaningful impact to yahoo! shares will come on may 7. alix: thanks so much colin i would go to scarlet fu. what other numbers can you tell us? scarlet: investors are a green here that this is not a very impressive quarter despite the emphasis on the surge of revenue growing 20%, the mobile gap revenue increased 60 percent or some odd percent year and colin was just talking about the search business, and you who and microsoft not long ago updated

their search sector to exit the business, nonetheless, the yahoo! is very much attached at the hip to microsoft, and at least 51% of its desktop traffic is through there, so i wonder if it is so goes microsoft, so goes the big net, so goes a yahoo!? alix: especially since yahoo! can kind of move away from its deal with microsoft, colin, give me a response to what scarlet said there? colin: being tied at the hip for just half of your revenue opens up a big 49% for you to modify either for yourself or with another partner, and that is a big opportunity, because quite frankly, the search alliance did not materialize and did not give them the lift and the price per click that they thought was

going to happen. we saw today that 21% growth at clicks come up at the price per click was only up 20%, so people want to see stronger numbers in that regard, and they can do that either with their phone efforts or possibly with a partner. alix: colin, i just want to go to scarlet, so what do we have? scarlet: excluding items yum! plans is looking at a high analyst -- high analysis, but not the highest that endless were predicting. this is a drop from one year ago, and revenue, you know what? i don't see that right now, i don't see revenue, and they'll all sales for kfc was a 5% and the number that is every -- that everyone is focused on is china, because that is where yum! makes

half of its revenue, and it sounds like a damaging amount, but the prior quarter they reported china sales tumbling 16% because of ongoing food safety issues, there have been a lot of problems with food suppliers over there in china with gamma! -- with yum! alix: as you can expect they get over half of their revenue from coming overseas, and that goes too operating profits by $20 million. scarlet: that is perhaps because that decline is not as bad as anticipated in china, but they may maintain a full year climb, but now we have 2.16 billion dollars as a revenue line with analysts were looking for a six $5 billion -- $2.6 billion.

alix: and this is almost only going to be based entirely on kfc which is out in china there. thank you so much to colin and james sweeney and lisa abramowicz and scarlet. stay with us we have so much more coming back up. ♪

alix: let's go back to scarlet fu at the breaking news desk. scarlet, give us the highlights. scarlet: that was expecting by analysts, the yum! brands has been hurt in its off-line profits by 20 million dollars, and revenue declined by $2.26 billion and it was projected to

fall by 2/10 of 1%, and that is in line with what the revenue line is overall. i am saying overall a lot here. china seems to be a trouble spot for the yum! brand. sales tumbled 12%, which is smaller than what analysts were looking for and this is because of ongoing food safety issues there are problems with yum! and its various suppliers in china but it is reaffirming its forecast saying that the momentum that it has made up in the third quarter will continue to build throughout the rest of the year. alix? alix: scarlet, thank you so much, and with more on yum's! earnings, we have julie hyman and christine.

julie: if you look at the company versus some of the other currencies around the -- yenuan versus currencies around the world, it is coupled to the first quarter, and you really don't see that, certainly not as marked of a difference that we have seen, so yes, there was a $20 million hit in operating profits, but all things considered, it could have been far worse. alix: we have seen that with tech companies in particular. christine, is there china worries --is their -- is their china worries over? christine: as of this morning,

about 75% of these investors imagine the dollar impact, and i was surprised by yum! they still beat our estimates, yes, they are down for the year, but the china -- but china has been moderating the revenue, and we have not seen the same growth in china that we have seen over the past few years, and that is to be expected but overall, i can see that their stock is going on up because everyone is expecting them to be terrible. alix: they are opening 700 new restaurant in china, and julie hyman, thank you so much on the update and sticking with me, and christine short, thank you so much, we will have more breakdowns coming up after the break. ♪

alix: welcome back to "street smart," i am alix steel. yahoo! is reporting losses on both the top and the bottom line, and joining me is colin gill, and also christine short. christine, were you surprised by the loss? christine: i was, those numbers have come down quite a bit, but to see them at missed by four cents, not only on the bottom line but also on the top line as well, it was somewhat surprising, i thought they were going to come a little bit closer in line, what it looks like they missed by quite a it. alix: and colin it seems like they were going to take this is this private what do you think,

colin? christine: i don't know i'd just think that this is what the investors are going to talk about monetizing their search business, there are just eating their lunch over the last couple of years how are they going to revamp their business and update it to be mobile and social and so there are other competitors coming in here and taking away growth from them in facebook -- them and facebook and other tech players come so we are going to need more updates for yahoo! going forward. alix: calling, what about their case that it gives them now by looking at these numbers? colin: even stronger right? this is not a great quarter to miss, they are still willing to put and invest and try to turn this around, but we are deep into the turn around, and we are

deep in the turn around, we do have declining revenue in four of the past five quarters, so this magic came in a small past because of alibaba, and that has driven the stock prices, and -- alix: is this it? colin: well -- when the spin happens -- but people are looking closely, like the tumblr acquisition, it has not panned out, so i think people are going to get more scrutiny than -- again, there is not much light in this title, turnarounds are hard but we don't have a lot of tend will numbers. alix: so let's get to it, who would buy it yahoo!? colin? colin: i think silver lake were involved in part of the initial alibaba spend, and again, what i would point to is that the modeling's are around --

modelings are around 1.5 percent, and so if you chase after that search deal, you have some flexibility, and you have some big piece of that, and whether you build your own or whether you partner with another company such as google, that is a great chance to drive google -- drive revenue. alix: is there some kind of investment strategy or lifeboat for yahoo!? christine: i disagree with one thing, and i think when they made that acquisition, i think tumbler might actually be part of a lifeline, they just had to figure out how to monetize that, and they had some of these things in place, but as colin said they made all these acquisitions, they got all of their docks in a row, but why are we not seen these numbers lineup right? alix: and the heat is on, thank you so much colin gillis and

christine short, and coming up next, why markets are welcoming companies in china this week. why the default in china may not be such bad news. ♪

alix: welcome back to "street smart" i'm alix steel, and now that the breaking -- the final bell has rung, we want to go back to the breaking news desk. scarlet? scarlet: this was finally the quarter where ollie bomb was not -- alibaba was not the focus, because this is all about the core business, and the search, the recent acquisitions, like tumblr and to that end it was not that impressive, sales dropped 4%, and that is the most since the first quarter of 2011.

search rose 20% and mobile revenue rose 61% versus last year, but display is really the biggest is best for yahoo!, and steve gross, who we just -- but steve gross, which we just told you about, is not that impressive. yum! has earnings percent or is -- earnings per shares the dropped 12%, and so that is a deceleration from the 16% plunge from the prior quarter, and also not has bad as analysts had been predicting. this fall that came from food safety issues in china, nonetheless, it is reaffirming its four it year forecast, and chipotle is down three and a half percent right now, and stocks were traded in the after-hours session, and after the first quarter sales trailed analyst's predictions --

analysts' predictions, so alex? alix: here are the top stories that we are watching after the quarter bell -- closing bell and the u.s. is seeking extradition according to the justice department from the future trader who was arrested for allegedly all in flash crash. and jesse cohen is starting a private buyout fund for the firm and he is infamous through the tech sector to invest on a firm. and china's power transformer became the start -- became the first state company

to pay 85 5 million yuan and yesterday, they had a group that became the first developer to default on the u.s. currency debt. you think that the default would be bad for the u.s. market in china, but it is not, and joining the today to discuss why is will hess the director of macro advisors. this was about a seven-year high why? will: i think for the short-term, it is a bad news is good news situation, and people want a stronger stock market but they are not going to look too far because this year there is such a enormous demand for bonds and for recapitalization for this company, so i think the assessment over all is that we should keep going because the government wants them to. alix: do you buy it? will: does it matter?

alix: you described it as a good thing, so are you a skeptic? will: for these two that we are talking about right now lots of the information has been glossed over butt totootooo -- too wanted to fault is not an issue here so i think that for now the bad news is good news scenario will propel us forward, but in the longer term, there was numb -- one number that caught my attention, and it is the first number in my memory anyway, the gdp is lower than the average level of interest rates in the economy, and that would be

really reaching an unsustainable level, so increasing demand and given the need to grow, there is something that we need to do to support that, so right now i think the sentiment is justified, but i don't think there is much of a beauty contest going on there. alix: any idea on that country's role and who is the one going to? pay the price -- to pay the price? eiwill: eventually someone will, so this is a state-owned company, but not a local-state-owned company, so there is the consensus of wondering who will go after themselves or let another state-owned bondholder go after them, so it remains to be seen, but the prc, for bond issues that it approves, they don't want to see default, so it is not going to occur, so i think at the end of the day, these

bondholders may be made whole, maybe not now, but eventually but overall, the consensus is pretty clear that the overall body issues taking place, they don't want to make the alix: markets to generate. alix:-- the markets too g jittery. alix: what is left in the toolbox beside that and the overall rate cut? will: we are looking at something that may seem like the european credit facility and that is either buying a bond or having a continuation of bonds for them to try and soak up the additional situation that is going to take place, so it is going to add systemic leverage, it is already pretty high, so by the end of 2015, there is going to be the percentage but that will make the gdp higher for systemic leverage, so that is really the function of the transition taking place and one that is managed quite actively so i don't think that they are

excited about it, but i think that it will spur them to make some investment work to smooth out these blips in the market. alix: well will, thank you so much, we really appreciate it, and that is will pass the head of macro advice so find out what black rock's chairman is saying about precious metal. that's next! ♪

alix: gold is no longer the best store of wealth, that is according to larry fink. think says the greatest store of investments today are contemporary art and apartments in new york, vancouver, and london. joining me now is larry think -- is ryan, and from where you

sit, why is real estate so hot? why is it real estate versus gold, for example? ryan: a lot of the global real estate activity that is going on is driven by low interest rates and the spread of yields offered to low interest rates. you also have a global phenomenon, and so that is chasing these assets, and so there is a really compelling investment with a great long-term it yield and that can hedge against inflation is is apartment investing, and he can play against liquidity globally. this has played out in many instances against china and the u.s. with the real estate dynamic. china has received so much headline news lately as to what is going on there. i thought it would be interesting as just an example and -- alix: right, to see the money

coming out of asia, to talk about the shift in to see how much money we are seeing. brian: right, it is really phenomenal. what is happening in china is a diverse vacation strategy, it is not a run to the exit strategy that many people have suggested yes, china has some struggles for sure, they have slow gdp, the forecast is around 7% growth, but i'm looking at more of a 6% growth and it has relations to the real exchange rate, and the chinese yuan has been tied to the u.s. dollar, and the dollar has increased substantially in the last year. alix: so you're looking at diversification, so where are kind of the hotspots of what kind of real estate and for where in the u.s.? brian: sure, i think it has changed, 12 months ago i thought

it would be new york and san francisco, and that was very yield-motivated, and today it is real capital preservation-motivated, so it is a real diverse approach, but that being said, this is really looking a secondary market and going beyond new york and san francisco and looking up austan and seattle, and los angeles and even chicago and the like. again, as capital searches for yield in relation to other alternatives that it can deploy two, this is a dynamic -- as capital searches for yield in relation to other alternatives that it can deploy to, this is a dynamic that we will see continue to grow. i would be surprised if the fed moves rates much at all this year. some of that has been overblown. i have seen very little impact right now, the spread of the interest rate remain so

great, that i think the fed is going to be very, very slow and very cautious in the light of unemployment, the strengthening dollar, a real wage growth that has some challenges. u.s. real estate is no investment of nirvana ted a, there are challenges in the price market so in the basket of the global alternatives, again, it proposes a really great long-term solution. alix: brian, thank you so very much, a fascinating look into the real estate world. coming up next as racial tensions remain high across the u.s., i will have perspective from the mayor of new york -- newark, new jersey. ras baraka joins me next. ♪

alix: well another police incident has left another african-american males dead, and in this time, it is in

baltimore. for perspective, let's take a step back and examine another american city with challenges of its own. with me here to discuss newark new jersey's+++ ras baraka. welcome. ras baraka: crime is down 13%, and homicides are down, and we had a double murder this week, but of course, there are always the same issues, poverty, lack of opportunities, and better relations between police

departments and the city that they police. these are things that we have to work on consistently in order to change that, and find a way to reduce the violence between residents and police. alix: what are you seeing more of, is it residents or is it inter-population? ras baraka: i think there is more inter-population violence that is happening, and at the same time, we have a lot of innovative things to fix that and our police force is doing a great job of that. alix: you kind of mentioned that you need better support and better things for the people and in 2010, mark zuckerberg without $100 million to the education of the city. what does that money do? where did that go? a lot of critics say that it had failed in the impact that was intended. ras baraka: it went to a lot of the public schools, and i'm happy to say now that it is supporting us in the city of newark for summer jobs and other employment opportunities and we are excited about that opportunity, and there were issues of where the money was being spent, and a lot of the money is spent around education reform issues, and we want to

make sure that the things that are happening for the community are happening for the community of newark. alix: what is the biggest fix that you are most happy about in the education world? ras baraka: have is a learning collaborative where the university is parting -- partnering with the city and the schools and the higher educational institutions that we have in the city will increase by 2025 and everybody is on board together, and we are making sure that our students at our residents are going to school and colleges. alix: what is the hardest thing about your job? what is the hardest thing to get done? ras baraka: the big shift, sometimes things don't happen as fast as you want them to so sometimes you get frustrated about how slow things move, but you have to keep at it, and they move a lot has to than congress does. [laughter] alix: a low blow there, but true. as far as the political

landscape, should chris christie run for president? he has been probably a lot, you know, canada, mexico. ras baraka: in new work and -- in newark and new jersey, we have decreased issues in poverty in the city there, and other issues that we have to fix in new jersey, and we still have to focus on those things. alix: so what are you saying, are you saying it know governor, don't go to canada,? -- canada, don't go to mexico? ras baraka: he has to make the decisions that are important to him. alix: talk about development. when am i going to say, i have to move to newark? ras baraka: in the next couple of years, right now we are building a tower in downtown newark and we're been building

hotels, next year we will have eight hotels downtown in newark. we have new schools that are being built, and i am excited about the direction that newark is going and i think people are moving to the city quickly. alix: how are you going to get the money for that? what is the public versus the private sponsorship? ras baraka: there are incentives to folks for tax incentives that the state is giving out, and we give out other subsidies in newark, and we also give subsidies to people who want to come and invest in our city, and we do things to help grow the city, and we were bored those who want to do that as well. alix:mayor mayor, thank you so much. mayor ras baraka. next, we're going to talk about

sharing car services, and why uber abdnd lift need to take notice. ♪

alix: this is "street smart," i'm alix steel, and here are the top stories that we are watching after the closing bell. oil had its worst day, prices dropped to one dollar a barrel because of sustained. d periods, and there is a need to invest in new supplies, and blackberry agreed to buy filesharing company watchdoc to ease overall reliance on smartphones, and this will keep details on assets with an internal documents. and kpng is naming its first

female ceo lynee doughtie was elected to a five-year turned beginning on july 1. watch out uber. there is a new player in town. there is a direct attack on uber 's pricing strategies. but will it get the attention it needs to take off in the u.s.? right now we are joined by the founder and the ceo of gett. is this base fare higher? gett founder: gett is the largest international player outside of north america and we hope to compete in the markets such as the u.k., russia, and israel. when comes to new york, we have a different model that people are using, and this will be the

same model that we will eventually share across other countries, and we have no storage and we never charge storage or premium pick time, so whenever you pick a right between a or b, there will always be a predictable fare. alix: so you do have other fairs, whether it is a stop, it is five dollars, and it is five dollars after the first three minutes, so do you have add-on fees? gett founder: the fares are so competitive on gett that you can get them only in manhattan and new york and if you make the car weight more than three minutes, it will increase on your charge, but if you wait under three minutes, the price at you get was the price that you saw in your original quote. i can take you from home to work or from a to b, and you'll end

up paying the same amount, it does not and depth changing -- end up changing whether the weather is different or whether it is day or night. alix: how do you compete with these enormous businesses that have already got the center here in the u.s.? gett founder: the transportation demand is huge and there are players that are currently unknown in north america, and gett is available now all across new york, but the difference between those players is very prominent. if you look at uber and lyft together, they all have a similar model where you get in the car and you pay a fee. when you get in the car, you pay a fee, but when it is a different time of day, you pay a higher fee, and if there is traffic, you pay for that longer time, and then there is gas which comes onto the consumer time. alix: so you are trying to do flat fee versus flat fee. thank you so much, it was so

much fun having you on, that is the founder and ceo of gett. do not miss our former sec commissioner to discuss the flashback session. that is coming up. ♪ . .

>> "with all due respect" to bill clinton, if you're going to wear pink, you've got to go very, very big. ♪ in our lineup tonight, researchers line up their targets. congress lines up loretto lynch. baseball debates the semantics of the lineup. first, hillary and bill clinton line up their events. they each spoken about the same time this morning. the president at georgetown university and the would-be president at concord, new