>> just going across the bridge. >> it will take me a few hours. >> it will. he may get home before you. >> probably afternoon. >> and you're not on the admissions committee currently at stanford? but you know people. >> yeah. well -- i know people but i'm not sure a letter from me is -- >> hurt not help. >> thanks. "squawk on the street" coming up right now. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer, david faber at the stock exchange. we begin with the s&p and dow, futures a bit lower amid reports the ecb is planning more stimulus in the weak macro environment. ten-year yield dipped to 2.57 this morning, producer prices did run a little hot. europe is down slightly this morning as well. our road map begins with macy's, sales fall, the stock up, though. investors shrugging off the cool spring as terry lundgren returns

more cash to shairps shareholders. >> sears shopping for buyers for its canadian unit. eddie lampert making more changes to that retail empire and sony, negative results again. >> more record highs for the s&p and dow despite the soft data. will we see new highs today? >> another acquisition for yahoo!. marissa mayer scoops up snap chat rival strategies by a thousand buys blink. you'll miss another one. whatever that meant. >> i don't know what i just said. >> alibaba liked it. >> first up, though, macy's did report first quarter earnings of 60 cents a share, beat estimates. retailer says comp sales down 1.6, hurt by the winter weather and macy's earnings released terry lundgren says sales trends did improve in april when weather started to improve. announcing a 25% dividend increase and boost in the share buyback. the story on m is margin control. despite the decreasing comp held

vndsers to the fire. >> got operating margin, 7.1, looking for 7, gross margin 38.9. that's in line. did they squeeze toomey? i don't know. squeeze michael kors, i do not want to bet against kors here. what's clear april/may must have been good or else he wouldn't have maintained his guidance. the buyback is for real, not one of the -- it's not a technology stock buyback where they're offering as many shares as they're trying to buy in. the company bought back 15% of shares since 2012. i like the stock very much. >> the worry the retailers we're going to hear are going to see the same comp action without the same margin control. >> you got kohl's. >> my daughter likes kohl's. you bought her a gift card for father's day? is that what you said yesterday? >> why not. i like the sonoma pant line, slacks. >> slacks. >> trousers. >> not trousers.

>> slacks. >> yes. i think but -- one of the things that's happened is dav david mentioned a company that is the gift that keeps on giving to the rest of retail that we'll get to, sears. they continue to lose share. they have clothes. wherever they have clothes they're not able to sell them that way. william zen has not been that good. >> if you heard eddie lampert at the company's annual meeting he referenced apple and lean years at apple making a comparison sears will, yes -- >> steve jobs -- >> apple bottomed out at a certain point and we know what happened from there. so this was lampert's -- these were his words. >> jobs. >> at the annual meeting which was last week. >> apple was a friend of mine, right? you know apple. -- senator you're no apple. >> the lloyd benson wrap. >> jobs, he would not -- probably wasn't a big sears shopper. maybe he liked craftsman. good brand. >> on macy's, the stock originally i mean i think began down briefly. >> the comps --

>> turned around. >> terry lundgren f you bought -- a lot of people like to look at the first line of a release, comp stores down. terry lundgren has defied that every time. great cfo too. the stock has been down a couple, everyone knew there were stores closed. people thought it would be worse. the whisper for macy's was worse than what people posted and therefore macy's is higher. >> as we said or at least we were talking about, two companies known for past dominance making news. sears is exploring strategic alternatives for the 51% stake it has in sears canada. that includes possible sale of the stake or perhaps all of sears canada. sears has also been trimming its operations in recent months including of course the recent spinoff of lands end. in the meantime sony forecasting an annual loss for a second consecutive year. company says it will accelerate restructuring moves and accelerate those fast. sony, of course, not clear what it all means for the stock

price, but when you look through the numbers it's difficult. now on film entertainment not so bad. playstation okay, other parts of the biz. phased out pcs but still taking charges. televisions. mobile phones, selling more but a lot of question marks. >> yeah. >> this reminds me there was period zenith brought a case against sony for dumping and sony with was ascendent and zenith before sony ripped them to shreds fell apart. apple, steve jobs, the legacy of apple, is that they ruined sony. i think that's a great pairing between sony and sears. sony destroys zo s zonist and a destroys sony. >> how you transform a business, we had this with ginni rometty than ibm, sony is smaller than ibm, turning it around, figuring out where to go and how to go, the current ceo seems to have

his hands full. he promised and did not deliver so far this would be a positive year and now it's going to be a negative one. >> overpromised. underdelivered. >> the multiple warnings. they just did it on the first. that was the third in six months. two weeks later another warning. >> also japan, obviously, they seem to have stopped spending a great deal there. put a tax on retail. the asian spying of sony, sony is a lost brand in this country when you got to costco where a lot of people buy tvs the price is so great, but sony is not the company you buy, you don't buy their brand anymore. you don't. sony is like our parents' brand or my brand. >> the trintron. >> yes. >> right after i bought the boom box when i got my first month at goldman yes, and hair too. i went and got a trintron tv, 24 inches. can you imagine? that's huge. >> it had the special something with the color. >> the pixels. it was great. >> that was a dominant product.

i bet the margins were pretty darn good too. >> i didn't buy it at sears. >> no. >> i buy mostly my kenmore washing machines at sears. >> inflation with ppi today, among all goods, prices of televisions have come down more than anything else. >> you know, this is one of the so-called football items where costco -- i don't think they make money on tvs. tvs are now -- how do you put up a 72 inch tv. like 50 people who help you. i can't lift a 72 inch. >> i don't know how people do that. come in and it's done. >> yes. >> that's the way you like it to be done. >> on sears we should point out the stock is going to be up. we'll keep an eye on it. it appeared to be in the early going. i don't want to prejudge it but it did seem as though it would have a bump up on the sears canada news. what's left? what is the real transformation here that is now going to take place if they've talked about the -- lands end is out. >> right. >> sears canada possibly.

still got the auto. >> right. >> which they talked about as potential restructure in canada. >> and brand. >> something. the monetization. >> ackman was involved and blocked sears for a long time. bad will there. >> that's right. wasn't he a big owner of sears itself for some time. >> i think there's a lot of smart owners historically of sears. >> that's right. >> fair holm sears. >> bruce burk wits. one of the largest positions. that's another thing. difficult to short. between lampert, tisch and fair holm not a lot of stock out there. >> no. it's tough. i still don't want to own it. i wouldn't recommend it. so many retailers not doing -- stock isn't doing well and the companies are doing well. >> to the broader market, yesterday during this show when the s&p surpassed 1900 for the first time ever. index at 1897.

new closing high. the dow posted a record closing high for a third consecutive session. nasdaq did finish to the downside. dow is going tore six straight today. we haven't done that since december. and as we're at the top of the range people are worried about low volume, highly leveraged names. do you need those to come back? >> yeah. i mean, i don't know. there's still upside to the s&p, nasdaq down yesterday. rupert sold the last two days where the weakness remains. there's got to be more news. trading up on nothing. not a lot of volume and not a lot of news and the market keeps going higher. the -- the blue chips go higher. so-called blue chips, reintroduce that term. we need new data. the data we're getting, the inflation data that's horrendous. interest rates would go up. interest rates are going down. >> yeah. >> again, people keep thinking something is lurking. recession, russia. but how can interest rates go down on one of the hottest ppis

we've had. >> not to mention the suspicions that we're seeing wage inflation. >> yeah. >> we know what food inflation is doing in this country. >> in the uk they reported some unbelievable numbers. they're going to raise interest rates sooner rather than later. >> if you had the choice between the ten-year spanish ten-year and the u.s. ten-year where -- and where they are right now, where would you go? >> it's a whole lot less of all evils. you have to own the u.s. versus the spanish ten-year. the portuguese ten-year. the irish. >> why wouldn't you buy ours at 2.6. >> the answer is it's shortage of high quality paper. no one wants to say that. everyone says the budget deficit is big. i'm going to talk about that with timothy geithner tonight at barnes & noble. how about that at union square. did you like that plug i put in? >> that was well done. >> done well, right? there's a bond shortage. government is not running the deficit. no one wants to hear that. the deficit hawks are always -- >> apparently senate got the word. because they want to make certain tax breaks permanent on

r and d. >> i saw that. >> the deficit has come in. percentage overall. and just actual dollar wise for now. >> that's something geithner talks about in the book. i liked the book. i liked the book. >> you mentioned that. >> 580 pages. not a quick read, not a steven king book. doesn't read like "the stand". >> i never read "the stand" no. i didn't read it. >> "under the dome". >> remember that was his first one. dean norris, big fan of the show. >> love dean norris. >> i've had some -- i have some with him later on. >> when we come back, yahoo! snaps up a rival of snap chat and facebook ceo mark zuckerberg gets a new milestone. happy birthday. a live interview with an investor in alibaba as the chinese e-commerce giant prepares for what could be the biggest tech ipo in history. again futures are lower this morning. but bouncing back just a touch. a lot more "squawk on the street" from post nine at the nyse when we return.

yahoo! is buying messaging app blink for an undisclosed amount, rival to snap chat and lets users to set their messages to self-destruct after a period of time. cnbc and yahoo! have a business alliance to share and coproduce editorial content. yesterday guys, "the new york post" had a picture of marisa mayor with shopping bags in her hands as the shopping spree

continues. this backs up that notion. >> they are out for her. >> you think so. >> i think the long knifes are out for her. people keep waiting and they keep thinking that these acquisitions don't do anything. i like some of the acquisitions. i actually like some of the things that yahoo! is doing. >> well -- >> but i really like alibaba. >> the tum bler deal unclear if they will be able to advertise, effective vehicle for doing that. not sure where user growth is at this point at tumbler. that was a billion dollars. >> he keeps coming on. >> more importantly, these are a forerunner to what may be larger potential deals and that's the question. >> thank you. >> because even if it's fully taxed the sale of their 9 or 10%, whatever the number is going to be, of the alibaba stake, is going to generate enormous proceeds. we can figure it out. assume $160 billion or -- you can do the math. 10% of $180 billion. >> taxes. >> you will have a lot of money coming back to yahoo!

>> yelp. >> what are they going to do with it? >> yelp. >> are shareholders going to judge some of these deals and say give it to us. give it to us. >> make it like a wasting asset a bond, yahoo! bond corp. >> give it back. >> bonds are popular. >> we don't want you to spend it. i don't think that's likely but you got to believe there's a lot of focus. they could start doing something now. alibaba is not that far away. any deal you did wouldn't close until they got the proceeds from the sale during the ipo, so -- >> but how about a transforming acquisition, is that snobl. >> it is possible. >> stoppelman doesn't -- >> 8, 9, $10 billion in cash not to mention borrowing capacity, yeah, it's possible. would yelp sell? >> the stock was selling at $7 billion, not now like $3.5 billion. >> they're not going to make a hustle. is he a seller at 6 billion. >> he's an opportunist,

worldwide rollout of yelp. i think he thinks it's going to be one of the largest companies in the universe, yellow pages for the world. it would be hostile. >> well, one executive who's not afraid of transformational deals, mark zuckerberg, turns 30 years old today, created the social media company facebook a decade ago. now a global juggernaut, 1.2 billion users worldwide. shares up 56% since the ipo which unbelievably nearly two years ago. at 30 worth $30 billion. >> the guy look, great entrepreneur. you have to salute him. think that's wrong? >> he's made it happen. i don't know how. from 20 to 30, look at what he's been able to accomplish. >> i'm not going the rap where the workers should own facebook. the companies all have these kind of weird structures where you're really benefiting him. >> dual class structure, he can do whatever he wants and you can't -- you can have an activist yell and scream but

nothing you can do to take over the board. >> sheryl sandberg comes out positive in the geithner book. >> really? >> yeah. high level exec, feels like she's going to do something political and a big seller of the stock. >> donating proceeds to charity. >> what's not to like about that? lot of women love that book. i point out. i have not read the book in terms of leadership. a lot of men love it. shes is another beacon. i love this company. >> you're just full of love. >> i came in with a happy attitude. >> so much love in you. >> went out with kevin and his wife last night, bar san miguel, one of our great assets at cnbc, came out with a beautiful night, happy feel. exo steshlal noncrisis. >> tequila will do that to you. >> mecall. i don't drink te keel la. had to cut back the after cacdo. we didn't give lime last night.

his wife marina -- i'm sorry i don't mean this is bad. her granola every bit as good as judy's. >> cut back on limes. thought you were sticking with the limes. serving the customer. >> not for me but the customers get the limes. >> okay. >> i don't need to take the limes. i did no bussing for the record. >> when we come back, cramer as mad dash. we'll count down to the opening bell. take one more look at premarket here with futures down just a touch. "squawk on the street" continues in a moment.

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we got about eight minutes before the opening bell. a hump day my friends. >> it is. >> let's start with take two. >> the bureau of misinformation is active again this morning saying take two missed. i've gone over that quarter. hardly a miss. $8 in cash, monetizing their different assets. you have to be careful. people who bet against strauss zell nick it's been a bad bet and will be today. those who think take-two is past its prime because of gta, forget about it. they are rolling out franchise after franchise, augmenting it using technology. you want to buy, not sell it. >> you do? >> y yes, you do. i'm adamant about that. not electronic arts where it was bad to great, it's just consistently good. >> what else? >> fossil, not doing a great job. poor execution. it's the u.s. that has done badly. europe is doing well. they do highlight the google

wearables but not enough to move the needle. they call out kors, the jewelry line of kors, doing well. remains a heavily shorted name. steve mandell from long pine filed on kors. korz can go higher based on the fossil call. >> fossil said they're seeing competition from kors. >> their kors line, they sell a kors line and this is not the beer, this is the jewelry and handbag business. >> that was not going well? >> that's -- business is doing well for fossil. few things it's doing well. the one things in the u.s. which is very bad is that kors is loved by the customers. it's like a highlight. they're looking for a highlight. >> any positive take away by kors not fossil. >> a highlight of a team that keeps losing. okay. it's like that. >> i got it straight. >> like the phillies. like a highlight.

like this big. >> how about my mets erupting. erupting offensive. >> juggernaut. >> and the rangers. >> love the rangers. >> all right. we're going to talk stocks. we're not espn. >> come on. >> might want to be but we're not. >> i'm adam schefter. >> you wish. >> six minutes to the opening bell. "squawk on the street" coming back right after this. to prepare our kids to compete main today's economy?way woman: a well-rounded education that focuses on science, math, and career training for students who don't choose college. man: and that's exactly what superintendent of public education tom torlakson has been working on. woman: because every student needs the real world skills for the jobs of tomorrow. man: torlakson's career readiness initiative is helping schools expand job and technical training across the state because it makes a difference. woman: so tell tom torlakson to keep fighting

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a research tool on thinkorswim. from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. opening bell here in just about three minutes. wrapping up the tale end of earnings season. >> yes. >> retailers coming in this week, although the ones that are reporting today, aren't seeing such good action. i'm thinking of plug and deer and others. >> look, deer is very important because once again, they're saying the farmer is tapped out. stock goes from 83 to 93 on a good quarter, kind of repeal the quarter. didn't like the ag business very much. the construction and forestry business was strong. take away that farmer part is not doing that well but doesn't make me want to sell cat. make mess want it buy caterpillar. >> due back the full year guidance. >> they do. remember the conference call is

key there. plug is -- they did a big secondary and i was thinking orders were going to be great. the company's shipments 165 units, versus 238 2013. plug is the speculative bubble peaked when plug peaked. it peaked early on in march. like done. stick a fork in it for now until they have a big order from another retailer which is what they need. >> that was the promise. >> the walmart. the hydrogen fuel cells. >> isn't it all promise and no delivering? >> completely. thank you. >> of course the plug people will plug me @jim cramer at twitter. no. it's been on for a long time. the thing may work. >> another one that's going to open down about 4% did beat by 7 cents, revenue in line, america sales down 28. >> horrendous. they use the term challenging.

i put that in quotes, challenging holiday season. what has to happen, someone has to float the pepsico rumor. >> you have to do that i'm not going to play that game, sick of that game. coca-cola has bought 16% of a company that david einhorn said shouldn't even be selling well, right? keurig green mountain. >> with the starter kits the razor, part of it, down 25. but they're going to have to turn that around. >> it's bad. bed, bath, going to be extrapolated. they sell a lot bed, bath, must be having a bad quarter. enough. >> take two, it's going to open down a little more than 2%. >> i still think -- >> yeah. >> revenue ahead. >> zell nick can buy back stock, make an acquisition. wheeler dealer. very good manager. there's guys who don't like the stock and they just push it down every time and i think they're uninformed. >> relying on some older video games, some argue. waiting for some new titles. >> they have evolve coming out in the second. people wanted them to do a

release schedule. he's not playing that game. >> right. >> he is saying they're digitizing the brands and they're going to well. he's not playing the release game. he's not disney. >> there's the opening bell and a look at the s&p at the top of your screen. down here at the big board institutional investor. >> that's a familiar name for one of the three of us. >> highlighting its 35th annual corporate financial executive summit. >> 35 years. i started there in 1987 in the news letter division. great place to learn. great place to learn. >> fantastic. >> we were doing weekly news letters. i start on a type writer. >> weekly news letter. >> fresh as the day it was canned. >> exactly. >> at the nasdaq, alcentra capital doing the honors over there as well. google is going to be interesting because of this court decision out of europe yesterday, jim. >> yeah. >> in which the highest court in the eu argues citizens have the right to have embarrassing information deleted.

"the washington post" calls it a maras for tech companies. legal challenges. they pop up elsewhere around the globe. >> google, news flow has not been good for google of late. stock hanging in there because it sells 16 times earnings. but no, my travel trust owns it. we scale back a little. enough. the news flow is continually negative. google in its own kind of subjective way, i read that and said geez, another problem. it's not like they're in china. remember, they're not in china. by the way, alibaba has got about half of the chinese people who are on internet, they're going to get the other half. that's the growth story. >> alibaba is a growth story in its home market. that's all it needs to be for now. although not as though it's not facing competition as it moves outside of pure e-commerce to other things. >> what a model no inventory model. every retailer loves it. mickey drexler model. alibaba has big margins. >> right. >> as opposed to some others.

>> they make money coming and going. >> how they're going to -- the idea of them moving here and bringing it to amazon is something of a -- >> i think -- >> fallacy. >> that model could work well in india. could work well in europe. they've got a five-year great leap forward earnings plan. >> five year great leap forward. that's all they need. >> thousand earnings. >> that's all they need to have if you believe that e-commerce -- >> right. >> i believe it. >> the -- you know, the chinese consumer, there's not a retail base that we have. brick and mortar base to begin with. that's an important point to make. not like they have choices. >> emerging middle class that is emerging. >> emerging middle class that can use what is available to them which is e-commerce when there wasn't that much brick and mortar. >> a lot do delivery in china which has stymied a lot of companies. the only guy that mastered china away from them is schultz. it's a high class people have abandoned for now. >> tea fits into the cultural of

china. >> same with india. oprah chai. >> never tried that. oprah chai. >> real good. >> oprah. >> as in oprah. >> oprah. >> give her blessing to this chai. >> first time she's put her name on a product. >> she was out there and she came here and they introduced the it. teavana stores are beautiful. i'm a tea drinker. how sweet it is. >> pandora is going to open up, the second upgrade for them this week. mkm on monday. today rayja. >> look, pandora, everyone wants to say a matter of time before they're acquired. the service is a great one and the stock has been footballed, it goes up, down. the analysts love it. uniformly they love it. by the way, the analysts have been chilling a lot of companies of late particularly anything that's been down a lot. notice the rubicon project today that they reported a quarter i didn't care for, rubi. the analysts all over it. like the experiment, the rubicon

project. >> i love that. >> they cost the rubicon a long time ago, meaning no earnings. >> to see them on an album cover all of them from the rubicon project. >> feels like the razor fish of the era. >> you know we got almost all the s&p has reported. and earnings are going to be up about 3.3 when it's all finalized. three weeks ago the estimate was down 1.1. >> that's not bad. >> you did have bad weather. look at i keep coming back to ups, very challenged company in the quarter and look at the stock keeps percolating. like people saying the worst is over. the economy very mixed. the overall retail sales number was not good but interest rates go down. i don't know. to me, i want to hear walmart. i want to hear cisco by the way, not the food kind which is doing quite well. i want to hear the other cisco. >> what are your other expectations? >> kind of what mr. t said about rocky. >> pity the fool. >> pain. >> pain. >> forecast calls for. >> forecast calls for pain. >> really?

>> this is the quarter. the stock has been softened. john chambers could deliver. the expectations are as low as i've ever seen for cisco. as low as i've ever seen. that's usually bodes okay. i've learned cisco has the ability to set new benchmarks. routinely. those who trade on the cisco release, please wait until right before the q and a when they drop the bomb or maybe enlighten you. >> you mentioned a lot of oil companies yesterday. >> yeah. >> takeovers. >> 50% div hike and did one in august. >> probably one of my biggs in the travel trust. i don't know how ana darko stays independent frankly. >> windowed is probably the right word. >> enter ro did a second. mar sell has. that's by insider selling as opposed to concho, but an ter ro one to watch, that is a company that has marcellus in utica.

>> slipped in ana darko and i heard it. you believe it won't stay independent. who buys ana darko? >> if i -- >> a game, i usually don't play this game. >> i know you don't. you know this area well. you've followed it a long time. many will agree it will get bought out, may not be for a while. still haven't closed that. the settlement and everything else. >> oh, yeah. >> who's the buy. >> not a lot of option buy. >> royal dutch or chevron. chevron. an now the thing that's important you have to understand ana darko is in every very good area and that's important. some of them are only in the -- people think noble doesn't have good assets. i like noble's assets, chuck davidson. eog is everywhere. remains my primary earnings driver stock in that group. ana darko is -- was kept back for a long time by that lawsuit and undervalued by 20 bucks. >> right. >> so even if you don't get a deal, you're going to be all right? >> an in darko is a great

company and had the lawsuit and also had the gulf, a lot of things. it was like the -- it was the jobe of the oil patch. >> position for marvin schwartz at newburgher if i remember. >> brent near a two-week high. >> if they get this pipeline which is about to reverse from the permian and if they ever are able to export oil, something that the president has been talking about, you get this pipeline from the permian, the discount ends, suddenly see pioneer and eog report unbelievable numbers including concho. concho is the pure play on permian, those who want to play the oil business, did a big secondary to pay down debt and they are munster -- >> some people believe -- >> 100,000 barrels -- >> there are some who believe we are reaching a new level in terms of production here on oil from fracking, of course, that will be similar to what we saw in natural gas and wti will start coming down. you have these differentials in price in part because of where it is and how you get it to where it needs to be but do you believe that is a possible

thesis? >> i think that there's -- that that's why you need the new pipelines to open up. otherwise yeah. there's such a backup of the permian, so much more oil discovered and pumped than the system can handle. it's backlog. you can't get it out. you get it out ground but can't put it anywhere. >> where does it sit? >> not pumping what they could pum. they could pump unbelievable numbers from the permian. the most prolific field after the eagle ford. eagle ford is saudi arabia. right there for the taking. any one of us could have had it. >> we'll get that pipeline maybe eventually some day. >> well i mean look, remember eog had to build a rail. keystone goes down, looks like keystone is dead, it's going to be rail, and the rails are all backed up. that's union pacific, burlington northern you want to do it but can't, those who want to do the derivative, trinity, some people worried about peak margins but they have the railcars. >> down dow is down 35.

mary thompson on the floor. >> a broad-based decline following yesterday's record performance for the dow and s&p 500. today a little weakness. again as i said, broad-based decline. seeing strength in utilities and that's about it. today traders keeping watch on retailers as a number came out with their results and seeing whether or not home builders get a bid today for a couple of reasons we do have the yield on the ten-year, 6.5 month low and reports out there saying regulators are looking at ways to maybe loosen up the mortgage lending market. you can see that home builders right now are under a little bit of pressure. also keep watch on copper because it's getting a lift this morning that news in china they're trying to speed up the mortgage application process. giving a lift there could be more demand for copper in that economy there. lastly take a look at the emerging markets. we're seeing a little weakness here in the u.s. but this morning the emerging markets are getting a nice bid in today's session. as we mentioned retailers in focus, we've been talking about

it this morning, macy's coming in with better than expected earnings, reaffirming its outlook for this year and also posting some pretty good margin numbers for the last quarter. kate spade coming in with better than expected reports. the company with earnings i should say, the company was held by its core kate spade brand in the last quarter. it stocks is responding over 5%. fossil with a disappointing outlook for the year, putting pressure on its stock. we just want to mention deer, while earnings were better than expected for the prior quarter, its sales outlook is keeping pressure on its stock. the dow down 35. david, back to you. >> all right. i'll take it. thank you so much. let's get to the bond pits. rick santelli is at the cme group in chicago. hey, rick. >> good morning, carl. we got hot hot hot inflation data and yields going down down down. how counterintuitive is that. that's what happens when you go down the central bank rabbit holes around the world. the bank of england thinking they're going to keep rates low

longer than many anticipated. the ecb trying to figure out ways to move interest rates down. like it's done a whole lot to help things like housing in this country. as you look at the comps going back down the curve, let's do a chart of april, for 2s and 5s, we haven't had closing yields in this area since roughly about the middle of april, look towards 10s, we'll move that chart back towards november of last year, because we are toying, yes, we are toying with that elusive close under 2.57 from february 3rd that will shift the comp back to halloween of last year. if we really want to pay attention to what's going on, we need to look at the price of other sovereigns, whether you look at the french versus our ten-year at minus 75, there's 75 basis points lower. okay. if we want to look at yield curves, by the way, that is the weirdest relationship in terms of the distance there, going back to 2006. now if we look at flattening

yield curve, it was steepening for a while, the reason this is a big deal f we keep it simple, 2014, lower rates. the dynamic, flattening curve. the correlation there, you could debate, but to see it reflattening on a day when rates are moving down, 10s to 2s, that's flattening, you look at the wider comp, 30s minus 5, that's flattening. they haven't reached their extremes but seems to have turned. pay attention to that. if we look at the currencies, euro versus the dollar, also hovering basically at extreme low we want to pay attention to. it's a little higher than yesterday. but in the end this is why mario draghi and the ecb and european bureaucrats and technocrats are talking the way they are. they want the euro lower. let's see how the game of poker and bluff actually turns out. david, carl, back to you. >> all right. thanks very much, rick santelli. i want to talk a bit about news out yesterday on a story we're

following closely, namely valeant and allergan and bill ackman's attempts to acquire, not during our show but later, preliminary proxy filed by mr. ackman. and then a letter from valeant as well. couple important things. the most important bogey, at this point they're not going to seek an exchange offer and 25% vote by written consent to call a special meeting. they're calling for a referendum that would in effect have the same impact conceivably if they got more votes, they got over 50% or whatever it would be to say hey, we vote, we want this to go forward, valeant/ackman offer for allergan. white have no material impact this referendum. all of this begs the question as to whether in fact by these actions valeant and ackman have given more time to allergan. it was yesterday or two days

ago, i was talking about the likelihood allergan had at least the summer to consider its options, try to figure out a way to create value beyond what the valeant offer will be, also try to take shots at valeant's currency in a significant way and stir up concern there, before having to do something. whi it would seem it may have more time. while the referendum may take place in july it is not binding. it does not appear if you want to act by written consent with an exchange offer that will have to accompany that, the 25% or more who would vote in favor to call a special meeting would not be able to sell a share of stock until the meeting. may make it more difficult than had been thought to get that kind of a vote even though that bar is fairly low. i don't believe they can include the 10%, owned by ackman. as for ackman himself, yesterday hearing from a number of people he did have a conversation with

the ceo -- >> i didn't know that. >> of allergan, i believe it was cordial, not particularly friendly, i don't know that there was any great progress made here at all. in fact, i'm hearing perhaps some vague threats made, but i have not had a chance. >> perfect. >> to follow up with mr. ackman. >> one of the great executives and hedge fund sgli to understand what may have been discussed. as a 10% holder of allergan's stock he has every right to talk to the company's chairman and ceo. >> company has been extraordinarily good. number of drug initiatives. fabulous extension in the eye care people don't talk about. op though logical genius with botox. >> you're in favor, you have a favorable disposition against allergan. >> came on the show at 85, after the stock came down from 120, he said do not worry about our patent problems with restasis. stock goes from 80 to 120. capital coming out today

saying -- i back david pie yot because he spends a fortune on research. not a sales company like our stagnant drug companies that have to buy british companies to get their -- do you want a tax company? tax break company or a drug company some what do you want? >> i want world peace. >> you want world peace. >> why not. >> finally -- >> how many -- >> i will say -- couple of unique things here. so much is unique but i have not seen in a letter a company saying we're going to raise our offer but not right now. we'll do it in a webcast on the 28. they did do that yesterday, valeant, saying we're going to go up at this point. but you'll have to listen in and see where we go up to. they will continue to try to apply the pressure, continue to try to create or close that timeline in terms of the window, but it doesn't appear at least by going to this referendum route that may be an effective way to do it. more to come.

>> maybe pie yot survives. >> never know. >> google glass, finally available for all. find out how you can get it yourself a pair. also ahead, five generations and counting for the brewery that says it makes america's friendliest craft beer. the executives behind that later on. cars are driven by people. they're why we innovate. they're who we protect. they're why we make life less complicated. it's about people. we are volvo of sweden.

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sfx: sounds of marching band and crowd cheering sfx: sounds of marching band and crowd cheering so, i'm walking down the street, sfx: sounds of marching band and crowd cheering just you know walking, sfx: sounds of marching band and crowd cheering and i found myself in the middle of this parade honoring america's troops. which is actually quite fitting because geico has been serving the military for over 75 years. aawh no, look, i know this is about the troops and not about me. right, but i don't look like that. who can i write a letter to about this? geico. fifteen minutes could save you fifteen percent or more on car insurance. drivers want to go further with their electrical vehicles. but you can't take a trip from lisbon to stockholm if you can't plan and re-charge along the way. the european commission is using cloud to make this possible. creating a single charging and billing network across 28 countries. so drivers can travel as far as they want to go and when they want to go.

google is making google glass available to anyone who wants them. and has an extra $1500 to spare. citing its success to the public last month the company is moving to more open beta testing. google glass in a so-called explorer program where user provide feedback on the preliminary product designs. hard to imagine they will get a lot of volume at that price point. >> no. google wearables did come up positively on the fossil call. their wearables. i mean google has a lot of

things going. maybe that's the problem. it has a lot of things going. people are looking for a more centered group of people than google. google has so many initiatives, maybe some of them stick and the opposite of what steve ballmer did at microsoft. but i think that people are worried what's google about, is it about glasses, wearables. >> come on. really? >> telco. >> just made an argument that -- >> we no what's it's about. >> david pyott is an innovator. >> solving lives is better than a good pair of glasses. >> a company that has to disrupt itself. the core business is doing just fine. why wouldn't you want them to make investments to make sure they aren't stuck the way hewlett-packard or ibm is. >> what i'm trying to do is explain the underperformance of the stock. i -- i personally -- my travel trust owns google, the underperformance is palpable. the last quarter did not deliver on mobile like they thought.

i am not against google and it is very -- sells at less than a market multiple of 2015 earnings. it's just that i'm trying to extrapolate why the stock is so bad. that's all. it's been terrible. >> i'll tell you, we've all got self-driving cars or taxi services that are going around with self-driving cars it's going to be good. >> travis from ubber, ever met him? >> from ubber? >> yes. >> does he think they're going to be self-driving. >> told us at the white house correspondents dinner said to me that he was the greatest guy on earth. you know -- >> do you believe him? >> he does not lack for confidence. >> i liked him actually. had that kind of like bravado i like. >> if you're an entrepreneur you need to have bravado. >> i like him very much. i love ubber. travis, i love you. come on the show any time you want. >> stop trading with jim? just a moment.

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goldman. >> analyst at goldman. >> research analyst. worked on the street.com. >> former army ranger. >> yes. >> and played football with torn ligaments for two years at west point. i love the guy. out of the closet, love him. big jet fan. tweeting the whole night. sent me an interest snap chat. a blast snap chat. sent it to everybody he's met. he will be missed. don't sell goldman because the m&a business is back. my partner on this side has been saying endlessly m&a is back. people are and -- >> he's going to a rf, coatue, they returned capital but in this world banking to hedge fund a big move up in compensation. >> i don't think he's motivated by money. he's not motivated by money. he wants to have fun and a fun guy and i said something good about a banker who's at goldman. i will be lynched on the way out. >> great doing work with you. >> pleasure.

>> i will mention lloyd blankfein tonight. >> going for a two-fer. >> geithner has funny things to say so watch me tonight at barnes & noble with timothy geithner in the interview. it will be funny. >> everybody can go. >> what's on mad? >> boulder brands. a company that makes gmo free kind of foods in the stores and iff the fragrance company, great technology company. when you're a celebrity and want a fragrance, beyonce fragrance, iff makes them and then choose them. i don't have a fragrance. >> see you on mad and barnes & noble. we'll compare macy's and sears when we come right back. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution,

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our road map begins with retail. macy's sales falling but the stocks holding on as investors shrug off a cool spring and ceo terry lundgren returns more cash to shareholders. >> sears says it's looking for buyers for its canadian unit. is this the beginning of the end for the century old retailer? >> it's almost summer and that means it is shandy season.

the father and son team behind one of the largest craft brewers in the country. the heads of leinenkugel will join us live. macy's hanging on a quarter of a percent after earnings beat estimates but did report disappointing same-store sales. matthew boss, he was the number one ranked analyst in broadline's last year, as rated by institutional investor, has an overweight on macy's and $60 target. good morning. >> thanks. thanks for having me. >> everybody is paying attention to the discipline they had on margins. how did they do it? >> yeah. look bottom line, i think it comes down to the management team. it's management, size and scale. these guys have the relationships with the vendors and the key brands and it's inventory management. inventory came up 5% out of the quarter. that's a key concern some people have looking forward. but these guys have a plan in place for the second quarter and a lot of this is key brands and inventory to drive the comp to

get back on track. >> how much low hanging fruit there is, when dealing with those vendors? can they maintain this into the coming quarters? >> i think it's going to be interesting to see as we see some of the other come out here from some of their peers and some of the other retailers in terms of, you know, how macy's fares on the margin lines versus some of the others out there. not only that but on the top line a nice devergens in terms of macy's as a clear winner and some of the others not fairing as well. size and scale plays a large part in some of the negotiations. >> obviously macy's is an outperformer. does it say anything about the state of the american consumer and retail n light of that sales report for april after the cold weather, when categories like furniture and electronics actually fell? >> yeah, look. i think what you're seeing right now, you're seeing a choppy backdrop, seeing a consumer that last year was hit by a 2% payroll tax. this year has the uncertainty around health care.

so i think you're seeing some shifts taking place between, you know, home improvement as well as apparel. there's not a clear trend in terms of an it item or a key fashion right now in apparel an that's why i think you want to be positioned with best in class retailers that have the organic traffic driving brands. i think macy's has that and that's why i think on a relative basis they're still putting up numbers that are somewhat reasonable. >> if you look out across the country geographically, what is your take on the fact that jc penney and sears have been closing down stores so rapidly, stores that are anchors within more than half the malls across the nation and as a result as they lose thosagers, other -- those anchors other retailers see their sales drop by 30%. what is the takeaway for an investor from that major dynamic playing out? >> it's a key theme that i think is coming to head here. if i go back ten years, this is

a question people have been asking retailers and mall reits for years and years but some of our recent meetings we hosted a lunch with general growth properties and at the lunch they said look, there's 1100 malls out there, we could see that be 00 potentially over the next five years. you're going to see your c and d malls go away. the question on everybody's mind, what happens to the b malls. there's going to be a level of investment needed to maintain these kind of b malls. i think a malls will thrive. the reality we're in an omni channel world and points back to, you know, guys like macy's and nordstrom spending the money, doing the right things, and if you can kind of have that best of both worlds you're going to be one of the ones that survives. >> you mentioned the divergence or potential between macy's and other broad lines. what about the vendors themselves? i don't know if they're in your universe. should we worry about margins at a michael kors or margins at a vf? >> yeah. they are in my universe and i

think the key just like at the retail side, in terms of having the key brands, i think the real key longer term is going to be, you know, brands that really stand for significance in terms of what are the brands that you would go on-line specifically as a destination. i think it's brands like nike and brands like ralph lauren and i think you look at a vf corp who has a portfolio of best in class brands that's why they're fairing better in an environment like this as some of the stronger trends in north face and tim berlands. >> why is there a glut of good ceos in your space? look at some of the major ones like target and jc penney, american eagle looking to fill that ceo position and not a lot of names out there about who could do it? >> it's funny. it's something we highlighted about macy's. it's rare to have such a deep bench and they have a strong cmo and president with jeff ganet, terry lundgren, one of the best

cf 0s in all of retail. a lot are looking for a strong leader to step in. it's a question mark because jc penney went through this a couple years back where their belief was they did have the answer and obviously didn't turn out to be the case. it will be interesting to see how it shakes out with so many management openings here. >> matthew boss, jpmorgan, talking about macy's, thanks so much. >> pick up the conversation specifically about sears. the company says that it is now exploring strategic alternatives for its stake in sears canada, possibly perhaps inevitably a sale. courtney reagan at hq with more details on that. >> good morning to you, simon. hard to find a retailer that struggled as long as sears and still hangs on even if by its finger nails. the company as it shrinks may be the beginning of the end for the 120-year-old retailer. today sears holdings says it's looking to sell it 5s 1% stake in sears canada.

saying it would hire an investment bank to help explore strategic alternatives for that stake. in march sears said its stake in canadian operations is worth $760 million. sears canada posted a profit of $364 million in 2013 making it the only business unit that made money last year. last month sears holdings spun off its lands end business in exchange for $500 million in gross proceeds and closed its chicago flagship location just a week ago, sears holdings ceo eddie lampert hinted the softer side of sears may see its footprint shrinking as well. reportedly said there's too much space sears dedicated to apparel and plans to make more frequent purchases of fashion merchandise but smaller qualities. it sits on the shelves for less time. sears has closed about 300 u.s. stores in the past four years but still has about 2,000 left. sears holdings shed more than $5 billion over the past three

years though its on-line operations have grown. maybe sears will wind down its physical locations and go back to its catalog roots with an on-line only operation. sears will report first quarter earnings on or about may 22nd. that's the wording from the company itself. sara? >> perhaps that is the future. i was wondering, you're going through the asset sales. mr. lampert trying to unlock shareholder value. what's left? is he doing anything to turn around the core business? >> what many have speculated is that lampert bought the business or invested in it because of the real estate and now trying to pick it apart and find the value, sell off what doesn't work, keep what does and i think it's only a matter of time until sears ceases to exist as we know it today. you were talking with matt boss about what happens to the malls when sales continue to shrink and anchor stores leave and that's a big question sears is a part of. >> presumably, there are hundreds of thousands of people watching you now, who are involved in those stores.

>> oh, yeah. >> whose livelihoods are at stake. >> sure. >> as you put it, he picks his way through the empire. >> he sure does. look, 90% of all retail sales are still made in store. it's not as if physical stores are going away any time soon. we know the growth is on-line. consumers like choice. so you don't want to close everything you have if you are still making some sales. profitability, however, that's a different problem. sears really is struggling there. it's been quarter after quarter after quarter of loss after loss after loss. i don't know how long you can put up with that. >> all right. courtney reagan, thanks for the context and move for eddie lampert. we'll send it to dominic chu for a market flash on kate spade. >> the stock is moving higher after the accessory and apparel design said first quarter sales grew driven by a surge in its kate spade brand. the company did post a wider loss from continuing operations. the stock you can see up about 7% towards session highs on that bit of news.

a lot of girls out there, a lot of girls at least buying those kate spade products. back to you. >> girls? >> girls. >> women. they make beautiful clothing. up next, the dow posting three record closing highs in a row. looks like that streak may be broken today. we'll talk about it. we'll show you where you should be putting your money. a lot of action in the bond market today. "squawk on the street" will be right back. ♪ ♪ (man speaking chinese) female announcer: when you see this truck,

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bring in dan greenhouse, chief global strategist, also with us david katz, investment officer with matrix asset advisors. the ten-year is at 2.55. what does that mean? is that bullish for stocks or not? >> well this is obviously a big topic of conversation not just on cnbc but with clients and i think it's really missing a larger story in that there's two dynamics in play with respect to stocks and treasuries and the short answer to the question is i don't think it's bullish or bearish. two different things going on and with respect to the ten-year, a number of concerns that don't necessarily affect stocks to the same degree. >> david, what do you make of it i wonder? does it say anything about the broader economy, markets or direction of central bank moves which could impact stocks some. >> we don't think you can read too much into it right now. basically we think the bond market is being driven by geopolitical concerns. the stock market at the moment is being driven more by fundamentals and less by the

geopolitical concerns. you can have the lower yield but stocks doing better as long as the market is focuseded on fundamentals. >> dan, back to you, you didn't complete your thought. what are the two things driving snox. >> with respect to stocks, i would agree with david there's a fundamental aspect, something carl was talking about a little earlier was how good earnings season went. and i think in comparison to just a few weeks ago when people expected earnings to decline, obviously now the number is between 3 and 5% in terms of earnings growth, how you do it, and that's going to be bullish for stocks. may not happen in the immediate but bullish for stocks. with respect to the ten-year, i think there's an important point to remind ourselves here and that's that we've spent the better part of four years expecting some breakout in inflation and breakout in higher interest rates and that hasn't happened and every time that yield has come back down, 250 or 270 or whatever people act as if this is the first time it's happened. four years into the low rate regime and we should cease being

surprised by the fact that we've got -- >> it's surprising. the fed is tapering. it's surprising she's starting to pull back on all of this -- >> but sara, and you and i have talked about this a long time now, the fed is not the only item affecting the bond market and this is why those are -- >> it is the most prominent. >> the most prominent because you talk about it in every segment but doesn't change the fact there's a number -- >> they are buying bonds. >> listen this argument has been disproven, the fact that buying 65 or $55 billion instead of 85 is bearish for bonds. look at price action. >> let me underline what dan is showing by throwing up a one month chart of the s&p 500 which has takens through earnings season and over that one month, 3.5% gain. look at that. just underline the point dan is making how well stocks have done. david, i mean, the other thing that we should mention, despite the fact that it's a u.s. centric channel, major central banks around the world, the

european central bank, the mail may not go into quantitative easing at its next meeting and a strong rally on the bonds in europe as well. you've got the bank of england today basically pushed the timeline back on when it was ready to raise interest rates. how do investors square what dan is saying the bullish outlook for stocks and the fact that central bankers and the fed as well, are still so very worried about what is going on? how do you square those two views of the world? >> the u.s. economy is in far better shape than the european economy. the u.s. economy is about ready to enter a self-sustaining process. in europe they need to get the economy help, especially becomes the case because what's going on in russia and the ukraine, so europe is trying to help their economy to make sure the fledgling recovery they're in continues. >> can i -- sorry to interrupt you, can i as an investor who's

conscious and present to the moment ignore the fact that europe is in such dire straits? i mean i know we like to think that and often it's a nationalistic fiction but is it true? >> they're not in dire straits. they're not in as good as shape as the u.s. the european economy has gone through a recession and in the recovery mode and that's why their central bankers are trying to help it out. >> everyone is talksing about the selloff in the large caps relative to the small caps. do you see more pain for the russell, smaller names and momentum players? >> i don't know when the sell-off and the smaller names is going to end. i think that the big conversation with clients is whether or not that suggests there's in some broader weakness or imminent large cap decline. history is clear there's absolutely nothing in the decline in russell to suggest that the u.s. economy is set to turn down or larger caps are set to turn down. the sell-off has been concentrated in the smaller names, very important to a lot

of our clients, no doubt about it, but they are smaller, higher beta, and they are lower quality and those names had gotten for lack of a better word stupid in terms of valuations. there's not even a valuation to put on them because they have no e and they've corrected somewhat. the stock market itself has held up and that's because a lot of larger cap names have and again, throughout history, nothing to suggest the decline in the russell means the s&p 500 is in imminent trouble. >> very quickly david, last word to you, do you see the valuations back to reality in the small cap names or more selling ahead for them? >> we think there are momentum stocks that have lost their momentum and can go higher or lower based on psychology of late. the trade is lower. valuations still risk. the broader market is about fairly valued and there are opportunities in the larger area of the markets. >> all right. thanks very much, both of you, for your perspective on the big themes in the markets going on. the dow down 63 points. dan and david, good to see you. >> up next on the program,

nearly 90% of dow jones companies uses platform to manage their data, so what makes it special? the ceo of informatica will join us live after the break. you, my friend are a master of diversification. who would have thought three cheese lasagna would go with chocolate cake and ceviche? the same guy who thought that small caps and bond funds would go with a merging markets.

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welcome back to post snin. a new way to tackle internet security. good morning. >> good morning. our next guest customers include 87% of the companies listed on the dow and today joining us as they unveil their intelligent data platform. sohaib abbasi, provider of informatica, about a 4 billion in market cap and you're coming up on your ten-year anniversary in just a couple months. so sohaib, congratulations. what's the news here about an lytics and security that you

guys are pushing? skl. >> we announced a new product code name secure source. the computing world has changed and it is time for a new way of approving security. the traditional security was to secure perimeter, to keep the intruders out. with cloud services, mobile devices, sensors everywhere, there is no perimeter. we've introduced secured source a new way inside out approach to ensure your data is never breached. >> sohaib, there are a lot of companies talking about new approaches to securities, paolo alto networks, semantic is saying anti-virus is dead. why is your approach and you've got multiple different products that you talk about here, being able to pinpoint who within an organization has access to data? why is that going to be the one to succeed? >> well, the threat, the nature of the threat has changed from denial of service attack to bringing the website down, to

data breach. the consequences are devastating. we've seen the retailers that have lost credit card information and we believe the approach to security must be to secure the single most important asset, the data. identify where the sensitive data resides. identity what the risks are in terms of data movement in terms of who has access to it and informatica has invested $2 billion in all things data and we have an approach to secure the data at the source. >> this is an extremely competitive space. there are competitors out there bigger competitors who will try to have their own data integration products and they'll come to your customers and say we'll give you this for free as long as you keep paying a premium for our core products. used to be at oracle, on the board of red hot, know how this works. do you need to link up either through acquisition or more partnerships with the bigger players to stay competitive in this market?

>> what distinguishes informatica is that we support data everywhere. we were one of the early pioneers in the cloud. eight years we introduced our offering, 15% of our revenue. we can secure data in the cloud on premise and work with the industry giant, with data stored in oracle and ibm and sap. we don't have hidden agendas to remote one way of storing date ta. >> mr. abbasi, to the point that john makes, if you already are paying sap or oracle a large amount of money for their enterprise software shouldn't you expect that their bar would be as high as yours? don't they have to either copy you or buy you? >> well, the challenge they all have they're trying to compete with one another. sapp is not going to promote orac oracle's technology over its own and the customers are looking for someone they can rely on for securing all of their

information assets, not just the ones that reside in sap or oracle but increasingly reside in cloud services like salesforce.com and work day and we also announced a partnership with amazon yesterday. we are very well positioned as a switzerland and data security and all things data. >> tell me about strategy then for how you go to market? do you need to invest even more in a sales force to be able to go up against those mega sales forces oracle has been spending on its sap, trying to retool and get lean. is that where you've got to put your investment to continue growth? >> we have a very strong ecosystem. over 50% of our revenue is influenced by partners. we work with the global system integrators with the cloud venders and many of the companies that you mentioned. so we will continue to invest in those partnerships and we are looking forward to partering in with a lot of security venders. our approach is not an

alternative. it augments the security mechanisms, securing the perimeter. we identify what the most sensitive data is and what is the risk associated with it and as i said, i mean we are known for all things data. >> well, tough market, interesting technology that you're coming out with, sohaib, thanks for joining us. >> thank you very much. >> straight ahead, the head of a hedge fund with $12 billion under management. find out where halcyon management is putting their money now. back after a quick break.

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welcome back to "squawk on the street." i'm jackie deangelis reporting from the nymex. oil prices continuing their rise this morning, up above $102 a barrel. a couple reasons the api reporting stocks in curbing last week fell to a low not seen since 2008 but geopolitics in focus. reports of conflict in ukraine traders are watching closely and libyan production not rising as some thought it might after the protests at some of the key ports have stopped. mean time we are watching this report on stocks from the doe and near 1 million barrel build this week reported by the department of energy. we were expecting to see a decline. this is a surprise. we're watching these prices decline slightly just by a few sense here. 102.24 the current for west texas intermediate. what analysts and traders will be watching is the report out of curbing and want to see if those

stocks have declined or increased. the expectation for a decline of 1 million barrels. another reason for the draw down that was expected is that refineries are returning from maintenance right now. they'll be using more oil so there's a little bit of a disconnect here in the market but we'll have more on this story for you later. carl, back to you. >> thank you very much, jackie deangelis. big money and big ideas, cnbc is exclusively covering one of the biggest hedge fund events of the year, the 2014 sky bridge alternatives conference in las vegas. we head now to sin city where kay kelly has the first live interview from the event. kate. >> hey, carl. thank you so much. here in sunny vegas where the events are about to kick off and i'm sitting down with john bader chairman and cio of halcyon management. welcome to our show. thank you for kicking off our several days of coverage here. nice to be with you. i wanted to start by talking with you, you do a number of things, equities, credit, bank loans, situations, distress, really a gamut of different investment strategies.

i want to talk about the equity market right now. we've seen a divergence, strength in the growth chips, weakness in the stocks, a volatile year, what do you see in terms of stocks this year and how have you pro positioned your strategy at halcyon? >> in a volatile and heady market, kate, i like to be focused on strategies that are not likely to be correlated with the broader equity markets. in particular, right now we're especially focused on opportunities, number one mergers, a return of merger mania, the first four months of this year have called for -- we've seen ten deals over $10 billion. that's more than we've seen in the first four months since 2007. and so that's the first area that really interests me. the second kind of event driven opportunity that interests me especially is one that i like to call corporate pro activism.

>> what's that? >> well, you've all heard about activists and much talk in the press and on television about the likes of carl icahn and bill ackman, pressuring companies to restructure, to sell underperforming assets, to spin them off, to distribute cash to shareholders through self-tenders or special dividends or what have you, to create real estate investment trusts. but there's an untold story. and that untold story relates to the fact that in board rooms across corporate america companies are taking the same kinds of restructuring actions that activists are calling for in the absence of them being there. >> we've seen a real divergence between the larry finks, the marty liptons who worry about things like short termism, asking activists to make a move to bring a short term, but in the long run not be the right thing for the company's long

track record and organic growth. there's that and the activist community you cited. you're trying to argue on blafts companies it sounds like they're trying to make these moves in their time as appropriate and the activists should lay off a little bit? >> i wasn't opining if the activist should lay off at all. i think a lot of companies are trying to do the right thing. i think they're soberly debating the difference between short and long term issues. they are restructuring themselves i believe faster than ever before. and what this is doing, is it's creating event driven opportunities because every one of these restructuring events often results in a move in the stock price. and if some of that is a little bit more in the short term i'm not sure that that's bad. >> let's talk about the m&a landscape. you tentered in the 1980s. ton of activism, ton of deals. i'm curious, for example, on

record in terms of your filings number one holding in late december was time warner cable. talk to me about the company in general. how optimistic are you the deal will go through and the possibility of an at&t/directv deal affect that or the landscape in that sector? >> well, first of all, i would say that time warner is an example of a blue chip asset, world-class assets, that attracted the attention not of one but two bidders. we're seeing a real return of multibidder situations and that's pretty exciting. we all saw that comcast has agreed to divest significant numbers of subscribers to charter communications, which certainly should facilitate the deal. in terms of at&t and directv, i haven't personally spent as much time on it at this juncture, but that may be a more difficult deal.

at&t does have a lot of assets that are analogous to assets that verizon has, some 5.7 million i believe, which is a lot more than maybe people realize and it's not clear whether that's as easy a deal as the time warner cable deal. >> we got to go in a moment. i did want to ask about the credit environment right now. the markets were royaled by janet yellen's comment she may look to a rise in interest rates six months down the road. if and when that happens, i would love to hear your predictions on the timing if she was being fully straight forward on that timing, what do you expect the core lirry effects to be. this could end up being a good thing could it not? >> well, you've seen a 30-year bull market in credit. not only are rates really low, but around 2.6% a bit less today i think, but credit spreads are incredibly tight. across most credit asset classes

i think the risk premiums you're getting are not very attractive. we still like seasoned liquidations where the cash has largely been monetized. >> like a lehman brothers situation. >> and others. we still like shorter duration situations. debt may be redeemed early. and a new strategy that we're excited about which may take time to play out is long secured debt and short unsecured debt. if you compare bank debt to bonds it's interesting because bank debt is typically secured, floating rate, if rates go up you get more interest. >> but you're secured so your downside is protected a bit. >> better recovery rate, better credit metric rates in terms of cash flow and coverage for the first time in my memory, bank debt has greater spreads than high yield bonds. >> we got to leave it at that, john. thank you so much for joining us. enjoy the conversation. sara eisen, back to you at the

new york stock exchange. >> thanks very much. kate kelly, look more from you at the conference in las vegas. to dominic chu for a marketplace on deer. >> check out that share -- those shares. the stock losing ground after the heavy equipment maker said second-quarter profit fell since 2009 this as sales in the u.s. and canada fell by 12%. it also trimmed its full year sales outlook citing deteriorating conditions in places like ukraine, russia and other former soviet republics. the stock down toward session lows 2% to the downside. back to you. >> thank you. still ahead on the program he sat on the boards of some of the biggest technology names in the world. he also led a huge investment in alibaba. what does he see ahead for the company's ipo. alex ferrara of besse mer adventures will join us. "squawk on the street" will be right back.

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let's get to the cme group and check in with rick santelli at the santoruelli exchange. >> we'll have a good one today. i would like to welcome my special guest jeff snyder who wrote an article that opened up my eyes forget free markets, finances, policy tool of the state, and anybody who's talked about tom's book on the disparity in wealth his article he puts forth, jeff, housing is really the issue that maybe mr. picketty avoided and many economists see the house is the way to get control of some of the issues that may be holding the economy back. jeff, why don't you try to explain, especially in light of mel watt, director of the fhfa yesterday launching subprime 2.0? >> subprime 2.0. thanks for having me on, rick. i think the basic element here is that mortgages as they're

currently construed are unprofitable to banks and so the only way to make any money in the mortgage business to have the government subsidize it in some way, shape, or form. the current thing with mel watt and the gse what they're looking to do there, essentially expand the mortgage pool to allow more leverage into essentially mbs trading. >> now, you know, if you want to figure out a way to create mr wealth, i think -- more wealth i think that's a great idea. if the piggy bank becomes this faux appreciation that gets funneled in a house that becomes an atm on the quote/unquote wealth effect you put that in an interesting perspective, maybe you can elaborate? >> well, first of all, i mean look the major economic orthodoxy is aggregate demand. the way you fill demand is through credit and debt. so the primary channel and all the orthodox literature agrees.

the primary channel for aggregate demand in the framework is through housing. for the last 20, 30, 40 years the monetary policy of this country and around the world really has been dedicated to using housing as a way to increase economic growth. but it's incredibly inefficient. that's what we've seen with bubbles, that's what we've seen with asset inflation and prices. the fact that it takes an immense credit production capacity to create even just a little bit of economic wealth and that's where your inequality comes from. the fact that you have massive financialism overriding the natural forces in the economy. >> now, in your article you talk about finance, not necessarily just mortgages. so another area i have to look at is student loans. doesn't that fit the bill as well? in other words, if the u.s. government puts its nose in any form of finance, ultimately the distortions occur, is that not what you're saying in your

article? >> absolutely. the largest fiscal stimulus in the u.s. since 2009 has been through student debt. you look at the numbers from the consumer credit figures it's been about $650 billion dollars in student debt since 2009. that's an immense fiscal stimulus. where has it got be us? gotten us nowhere. lot of college kids into debt where they're probably going to have trouble getting out. so the net effect is we have a growing inefficiency in the economy at the same time we're impoverishing an entire generation of students. >> listen, thank you very much, jeff. it's been a pleasure on your first interview on cnbc. hope to have you back soon. carl, back to you. >> thank you very much. rick santelli in chicago. when we come back, summer is almost here and we are celebrating accordingly with beer. shandys to be exact. the father and son duo behind one of the largest craft breweries in the country. leinenkugel. drink up. we're back after a quick break.

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winner will be the shandy. joining us here is the father and son team jake and cj leinenkugel from the leinenkugel brewing company which actually debuted nationally the shandy, summer shandy last year, a huge success, and this year hoping for more. >> simon, it has been a huge success and we're very pleased to have the sixth generation now finally representing our company bringing shandy throughout america. leinenkugel summer shandy has been in existence for seven years, but last year really was the start of the national distribution. >> does everybody know what a shandy is? >> do people drink shandy in this country? >> cj -- >> let me tell you, our summer shandy was the number one summer seasonal on the craft beer market last year. >> a mixture of beer and lemonade. i know that. children in britain we were taken to pubs at a young age and given shandys with a bag of crisps. >> i don't know anything about that, simon, but i do know it is

very popular and we're the first brewery to take this style of beer and brew it in the united states. we've seen just a phenomenal amount of new beer drinkers come to this. >> it's interesting, kind of thg lagger sales are down. it's these peripheral higher-premium areas doing well. why do you this i that is? search for more taste? more women? people drinking less perhaps? >> it's interesting, summer shandy, we found out in the last couple of years, a third of the beer drinkers coming to summer shandy are basically people who did not drink beer before. that's a huge new group. and variety and styles are real li hip and cool in beer now. >> i want to talk about your ownership structure, because you're owned by sab miller, a huge company, yet such a family business. >> well, there's really two groups involved. sab miller and moelsen coors, which really started miller coars coorss, and we're a faction under that brewing company. we're independent and separate

out of miller coors. we work as a team along with craft and imports, and we have a lot of fun doing that as a family. >> do you make it in wisconsin? >> we do. >> and ship it -- >> in the northwest, huh? >> yeah, chippewa, wisconsin. >> do people have trouble pronouncing the name? >> they do. >> well, pronounce it for us. >> leinenkugle. >> yeah, that's it. they basically call us leinies, so we know we have them at that time. >> what flavors do you have? i ask because there's a boundless amount of flavors people are willing to embark upon in this country. is it raspberry or just what you see there? >> we have about 16 different -- >> i knew you would. >> we have a lot. but i think the most important thing and the most exciting news we have coming is this fall,

three new shandys coming out in an autumn package, all brand new to the category and we're excited about those. >> -- ask you about hot prices, because you know they've been rocketing recently. what's more important in a shandy? hot prices or lemon prices? >> i would say it's predominantly lemon, because there's very little hopping in a shandy. it's easy to drink, very sessionable, and you could have a couple of these and you won't be filled up. hopping, though -- >> it's going to hit its margins? >> absolutely. >> the other big theme, craft beer has been beneficial to you, but in general, people are drinking more wine and more cocktails, and so the spirits business, as you know, has been doing very well. it's where you've seen the activity at the expense of beer drinking, or you think there's enough for all of it? >> well, i think that we can grow the pie as a beer industry, and that's really what we need to start to do. and styles of beer that are coming into play now are doing just that. as i said earlier, summer shandy

is bringing in people we didn't see before. >> does it go low alcohol, though? i was interested with the heineken campaign at the beginning of the year which was saying you can dance longer if you drink a lower fortified beer. is that the way forward? >> i don't know of the company you just named but i will talk -- >> how much alcohol is in this? it's low alcohol -- >> summer shandy is lower in alcohol. it's about 4% alcohol by volume. >> that's what heineken is. >> and it's around in the same range. and lower than most of your bigger beers that are being brewed in the craft industry today. so again, it's more sessionable and you can drink more of them. >> how much of a boost do you see in the summertime? >> it's significant, don't you think, c.j.? >> absolutely. people are more active. there's more recreational activities going on in the summertime. >> a long winter, huh? >> it's just like us moving outside right now. you know, we call this shandy season. and it is, when the temperatures rise and people are more active,

as c.j. said -- >> no one is happier to see summer or spring than those from wisconsin. >> absolutely, right. it has been a long winter. >> the father and son team, fifth and six generation, thank you. good luck with the shandy. >> thank you. coming up, google started testing out its self-driving cars this week. we'll see how those tests went when "squawk on the street" returns. predicting the future is a pretty difficult thing to do. but, manufacturing in the united states means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources to get the job done. tdd#: 1-800-345-255050 tjust waiting to be found. ties tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 bring what inspires you

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we're here outside the change, watching the markets, simon. looking at record highs for three days in a row. that's set to be broken with red arrows across. everybody is talking about the move in treasuries. buying up treasuries, new low yields, going back to last fall. wondering what it means. does it mean a weaker economy? >> what do you think? >> a lot of factors in the mix. quantitative easing, central bank in europe. >> should we ignore it then? >> don't ignore it, but there's this debate about what it means for stocks. >> in the meantime, we've had this strong rise, 3.5% on the s&p in the course of the last month and a lot of that has to do with earnings. it seems at the moment u.s. investors could ignore

potentially the bond market, while what's happening in the rest of the world? >> yeah, earnings a big thing. btig, that could be helping propel the stock market. we'll be looking for more retail earnings. macy's, pretty strong numbers out this morning, carl. there's the setup for the rest of the trading day from outside where it's a pretty nice day here on wall street. >> you guys look great in the daylight. enjoy the weather, guys. if you're just joining us, here's what you missed earlier on. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> you just got to own the u.s. versus the spanish ten year. the greek, portuguese ten year, the irish -- >> why wouldn't you buy ours at 2.6? >> i think the answer is it is a shortage of high-quality paper. [ bell sounds ] >> there's the opening bell. >> i don't think it's bullish or bearish. there's two different things going on. with respect to the ten-year, it's reflecting a number of concerns that don't necessarily affect stocks in the same degree.

>> with cloud services, mobile devices, everywhere, there is no perimeter. we've introduced a source, a new way inside-out approach, to ensure your data is never breached. good wednesday morning. 11:00 a.m. on the east coast, 8:00 a.m. out west. here's what we're watching. google glass now available for the masses. google putting glass on sale for everyone in the country, until the company runs out. but with a $1,500 price tag, are people going to buy? >> yahoo! making another new acquisition with this one. the company has its sights set squarely on snapchat. we'll tell you about the deal and what it could mean for the popular messaging app. alibaba's ipo is potentially not far off. what do we need to know about investing in the e-commerce giant? we'll ask one who led alibaba investment at the company and sat on the boards.

and what if silicon valley ran the fda? that's the topic today. a ceo will tell us how technology could protect you from unsafe vitamins and energy drinks. joining us this morning, still buzzfeed's ceo, cnbc contributor, jon steinberg is here, and also jon fortt joins us at post nine. we'll talk about the next steps in a few minutes. first, let's talk about google. the glass ceiling has been shattered. google glass is available to anyone in the country, assuming google has enough copies on hand. it's unclear how many people will buy glass because of the $1,500 price tag. more google news. the company helps a big demo of self-driving cars yesterday. google says they're about six years away. the company is talking to automakers about the software. jon, you've been in one of these, and the word you use to describe it is -- >> magic. yeah, magical -- the most amazing thing to me was the car looks at traffic lights, and if it can turn left, it will turn left. a truck pulled up on our side,

and the car had a blind spot. so it didn't make a left-hand turn. so it's pretty amazing how smart it is. the ride is smooth. it worked perfectly. >> why are they commenting on it now? is it moving forward in is it getting closer? >> the article this morning said claire johnson, a longtime google executive, will be working on the commercialization efforts. they think it will take six years to get it into mass usage. i think that's a long time. they need to get going with automakers. it's not the then you can deploy as a software release. >> you look at what's happening with tesla, obviously struggling with its efforts to sell cars directly to consumers. when they say they need six years to get to to market, what part of that is getting it ready for mass consumption? what part is trying to figure out how to sell this? >> part of my job is to be cynical about this thing. >> kayla, kayla, kayla. >> we had this e.u. ruling that went badly. these are science projects. these are r&d projects being rolled out as marketing initiatives.

and, you know, we gobble it all up. if google capital make enough of these things, then they've got a real manufacturing issue, because they've been talking about glass for years. you should be able to make enough to satisfy demand. you should be able to figure out what demand is. the point is, not a lot of people can afford a $1,500 gadget, even those of us that love gadgets, and those that can afford them, don't want to walk around in public -- >> are you saying the decision is more serious than they're willing to admit? >> i'm not saying it's connected. these are not real products. for today, they really have nothing to do with anything except they show a cultural whimsy and the ambition of google, which is great. we shouldn't mistake these for actual products that will make a bottom line difference for google. >> it's amazing. they did a one-day sale, what, two weeks ago? they didn't do enough. now, anybody can have it. pretty soon, they'll be advanced shipping them to you on credit. what's next to get these in people's hands? >> already 10,000 people have glass now. how big is the addressable

market. is it much bigger than 10,000? >> what's interesting, when i was thinking when they launched android, and then chromo-s, and chrome took a little while to take off, and now it seems to be doing well in low end and education. i think these are dual bets. to me, the android wear, the watches they're working on, are much more likely to be successful. i think it has broader appeal. >> yahoo! is another big story. buying self-destructive messaging app blink, that allows users to send messages that disappear. it's a major shot at snapchat. it's unclear what yahoo! will do with blink as the app is expected to shut down in the coming weeks. we've been talking a lot about their inquisitive nature. >> yes. it has to be either an acquire hire or i.p. thing. they want this team they're very good at disappearing messaging or intend to appear in other products. why else shut it down? >> it seems like an acquire

higher, the couple of people in charge of this company are interesting. there's seven people in all, looks like google is bringing in kevin stevens as a ceo, used to be at google way back. michelle northen, really more of a design interface person, yahoo! is in need of those. these are people that work on mobile. marisa m.i.sa mayer has been tro get people in mobile. yahoo!'s momentum is way ahead and it takes a long time to build up messaging momentum, and yahoo! is nowhere there. >> the app did have traction, however small, comparable to snapchat. they had users in the hundreds of thousands, a good foothold in the middle east. can they harness that in the near term in. >> when you look at product, do the engineers capture the zeitgeist of the functionality that people want? this is a trend-type thing.

yahoo! is saying this is a team that knows how to do this. if they had any real track, they wouldn't shut it down. >> all right. finally, big change coming to the ipad. according to nine to five mac, the next version of the operating system, ios 8 will health you multitask on the tablet with a new split-screen feature, meaning you can interact with two apps at once, a feature currently available on the surface. check out this ad for the surface. >> the surface 2 allows you to multitask virtually wherever you are, whether you'd like to record a lecture while taking notes, message your friends while studying, doing two things at once is easy. with the ipad, you can only use one app at a time. multitasking is difficult, or may require an additional device altogether. >> what do we think? we were talking about apple's ads when they were talking about the ipad as an enterprise tool. >> this is the enterprising.

the acts on this -- when apple came in with only -- with 500,000 less ipad sales for the last quarter, his point was smartphone is the big market. ipads are only going to take away from notebooks the way notebooks took away from desk tops. so this is saying we're going after the enterprise, and you need two-screen multitasking. >> samsung has had this for quite a while, too, and they've been advertising it. apple is behind in this. as they've been behind in a few other feature areas. we'll have to see if they really implement it well. but one of my back-and-forths with tim cook last year at the predecessor to the code conference was, hey, look, you guys haven't invested that much in software that's specifically for the ipad, that's specifically for mobile, not the way apple did with eyelife when the focus was on the mac. if they do this with ios 8 and the other rumored thing, we might be in an era where they're putting unique mobile software focus on the products to

accelerate growth. >> this is a small feature, what do we need to see on the ipad to say, okay, this is a game changer for microsoft? snap one keyboard? >> a keyboard could be nice. i use a keyboard with mine constantly. i think upgrades to icloud that bring up the amount of capacity you're able to use above the ceiling that they have now. if you pay 100 bucks a year, you get just a certain amount. it's not enough. it's not enough for me and my family. so there's a lot more apple could do with the data centers they're building out -- >> yeah, just one more point on this. we've talked about the ipad pro, the larger screen size, two windows makes sense. >> do you think we've seen the last quarter where ipads were a disappointment as a metric? >> no, i think until there's a lot more work done in software and services, there's not that much more reason for this to accelerate. i think we've got chromebook, got all these different factors coming out that intel is pushing. in windows pcs, they're gaining some traction. there's not a huge amount of

growth here, unless there's an entirely new idea. >> anything they can do to make people at multitasking, certainly -- >> yeah, i think the large phone, the 5.5, 5.7 inch is where we'll see the growth. i think people who have ipads love them, but i'm -- i love mine, but -- >> you're talking something other than an iphone 6? >> it's only supposed to come out about the size of the galaxy s 5. i think they need to go bigger. >> i think it's potentially a much bigger question. i see questions from my friends all the time on social media, thinking about getting a new machine, should i get a laptop or ipad in it takes way too much explanation for them to understand the way i work where i can use an ipad for 95% of what i do. apple has not had a really clear marketing message or really usage case that makes this a productivity machine. >> or acquisition strategy, right? 100 million users yesterday. the ceo announced that. it's an application that jon and i both use to make our devices

productive for us. that's an acquisition they should do, as well. >> before you go, jon, we want to ask you about your role at buzzfeed, that will come to an end at the end of the month? >> yes, an advisor for six months. >> why are you leaving? >> spectacular four-year run. the company is in phenomenal shape. i'm an energetic guys. it's very common in silicon valley. very proud of what you do and want to do something else. that's t i won't retire or spend time with my family -- >> more time with your -- >> i'm going to do work, just different stuff. >> who will be taking your role at buzzfeed? >> not decided yet. we've had a very deep executive bench. when i got there, there was no chief revenue officer. we have a cfo, a general counsel. it's a whole management team now. >> you could choose to start something new? >> yeah. >> could you choose to join someone who has something going. >> yeah. >> have you narrowed it down that much? >> i don't think i want to go back to something super tiny. i like a certain size. i mean, i couldn't do something

less with 50 people, 100 people, something like that, anywhere between that and something big is -- >> would you guess it's still in the space that's buzzfeed occupies? >> not necessarily. i love media and tech. that is my passion. but i've seen a lot of hardware ideas over the past six months that are interesting. educational services. i wouldn't say necessarily, but i won't go into natural gas or anything. >> and you're on linkedin. >> i'm on linkedin. >> you'll get flooded now. >> yes, yes, not on the ladders, not on monster. maybe i should. glass, i love that company. rich barton, those guys are great. >> you certainly know how to make a splash. congratulations to whatever happens next. >> thank you. >> the next chapter. >> you'll be the first to know, i promise. >> jon steinberg, still of buzzfeed. thank you. when we come back, as we await the alibaba ipo this year, what do you need to know about investing in the e-commerce company? the next guest has some pretty good insight. he's led investments in alibaba and he's down on the boards with start-ups like shopify.

alex ferrara will join us in a moment. first, to the windy city where rick santelli is standing by. hey, rick. >> hi. today, we're going to talk about three what is. what's up with the company? what's the attage of the horsepower on the interest rates? and last but not least, mel watts. you'll want to see and hear this. today is wednesday today, we greet you. treat you.

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dow is down 53. consumer discretionary one of the losers. seema has more on that. >> hey, carl. a tough day for consumer discretionary stocks. fossil, the biggest laggard after warning that its current quarter profit l come in well below street estimates. this as same-store sales in north america continue to decline. whirlpool, gamestop, kohl's and wynn resorts also in the red. kayla? >> thank you so much, seema. the next guest has led investments in alibaba and set on boards of yodel. we want to get his insight on what to expect. and we welcome alex ferrara. good morning. >> good morning. >> so we got the f-1 last week. we have about three months or so before the trade actually happens. what are you focused on between now and then? >> well, i think we've been spending a lot of time going through the f-1, doing primary research, using expert networks

to talk to people selling through alibaba, in china, trying to get -- just make sure we can get a better picture as to what the growth we think will look like going forward, southwest the profitability. >> when you led an investment in alibaba, it was two years ago at a previous company. what was it about alibaba then, at that time, that caused to you say, this will be big? >> sure. so alibaba is the largest private e-commerce company in the world, operating in what will be the largest e-commerce market in the world. so i think on a macro scale, that was really compelling to us. you know, two of the other things that we looked at and stats i find to be compelling are, one, just the shear scale, i think, it's larger than amazon and ebay combined. if the two of them combined are about 150 billion of gross sales, alibaba is 250 billion, so meaningfully larger. the second stat i love to point to is last year more than 50% of all domestic packages shipped in

china were the result of an alibaba group transaction. and in a country of 1.3 billion people, i find that to be quite a mind-blowing statistic. >> how much should we worry, though, about alibaba size? when i see these numbers, about how much of chinese commerce alibaba comprises, i wonder is china, is the chinese government going to get concerned that they have too much influence? are they going to maybe make them spin off more of their properties in a way that investors don't like? is there any assurance that investors can have that the chinese government isn't going to get more involved as alibaba grows? >> it's a great question. it's certainly a risk. you know, it's something that is very difficult to quantify. and it certainly has been an issue in the past with alipay. they were required to spin that off. i don't -- i think a lot of the value of alibaba, however, is the way in which the various marketplaces work together. so they're all working together,

i think it really would seriously hamper the company if they were to try to cleve off a portion of it. to your earlier -- the first part of the question, you know, i think this is a company that has tremendous amount of room to run. e-commerce penetration in china is still only 45%. in the u.s., it's about 85% or approaching 90%. so there's substantial amount of growth ahead of the company. >> and also the question about how beholden they are to the chinese macro economy, right, as stories in the paper every day about housing coming down and capital availability. do you think their growth potential outside of the country offsets that? >> you know, i think the focus clearly has been china. i think it's interesting to see they've set up an investment fund in the u.s. they have an office in california, an investment in tango and in lift, a ride-share marketplace. i believe they made an investment in a company called first dibs, a vertical marketplace that focuses on antiques and high-end

furnishings. so clearly, they're planting the seeds for an, pangs -- an expansion in the u.s. at some point. >> finally, aleil sail alex, anthony, one of the former meds of the mtt investment going to a hedge fund, one that lost a bunch of money. how big of a loss is this for goldman? >> it's certainly a loss. anthony nodo is an exceptional talent. i believe he was leading the tech group there. but, you know, having worked at goldman, there's a very deep bench there, a lot of strong -- strong talents. so i don't think in the long term it will have too much of a material impact. >> the fact he's going to a hedge fund, one that will invest in pre-ipo companies, what does this say of wall street's intention to get into this market? >> yeah, there's been a clear trend over the last several years as more of the late-stage, you know, funds are looking to

make pre-ipo investments. i think there's debate at this point as to what's -- what the results for those funds will be, given the softness in the market. but i think overall it's -- it's more of a cyclical thing. we've seen -- we see this every five years or so. i started in 2005, and we saw up until 2008, and the funds pulled back, and i wouldn't be surprised if we see the same cycle. >> -- no stranger to venture investing. thank you for being here. who says journalism is dead? policy's co-founder will tip us what separates them from the pack in just a minute. i always say be the man with the plan

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welcome back. the next wave of venture capital funding is headed straight

toward an industry that was supposed to be in decline. with start-ups like buzzfeed, business insider and mashable raising new rounds of funding just in the most recent months. today's squawk breakthrough is policy mike. welcome, guys. >> thank you for having us. >> the company started about four-plus years ago. chris you were at goldman sachs, jake, at change.org. why did you find it necessary to stage the platform? >> we saw that the media does not good a good job empowering young people to have smart conversations about important topics. so we created a digital media company for our generation specifically. now we reach over 18 million people a month with important stories that matter to millennials. >> in the last month, you guys raised a new round of funding, $10 million, bringing total funding to $15 million. i understand jim clark of netscape fame was in that round, as well as existing investors.

what's the pitch to them? how did you get some of them on board? >> yeah, so our pitch is essentially we're building the most important news and media company of our generation, with three huge trends happening. first, millennials grow be up to consume 6 media completely differently than our parents. second, mobile distribution growing at an incredible rate. and third, facebook and twitter changing the way young people consume content. >> you have been riding this wave at the same time as a lot of competitors that do similar type stories, upworthy is one, huffington post, buzzfeed. which do you consider to be competitors and how do you differentiate yourselves? >> there's a lot of people doing interesting things in our space. what we're really focused on is providing our generation with stories that matter to them. the big focus on quality and stories that impact people's lives. >> certainly, these are getting a lot of social interaction, a lot of shares, e-mails, but when you look at the funding,

business insiders got $12 million, so on, so forth over the last several months without being profitable. there are skeptics who say the companies may never be profitable. this is a web journalism bubble, if you can call it that. how do you defend that? >> well, we're excited about what everybody is doing in the space. because we're laser focused on young people, there's san opportunity for us. every brand wants to work with young people and is looking for creative ways to do so. there's a huge opportunity for us to take the audience and work with big companies and provide new ways to engage, you know, brands and young people. >> there are a lot of the brands in the political sphere trying to manage the way they appear to millennials, trying to build up the millennial vote. i know condoleezza rice has written an op ed, claire mccaskill has written an op ed. you have a lot of high-profile writers. jamie dimon, too. >> well, it's in the same way

brands are looking to reach young people, as we've built the audience amongst young people, politicians who want to reach young people have come to us and we've come to them and be able to sort of provide creative ways for them to tell their story, and our generation to engage with them. >> congratulations on the round of funding. jake, chris, thank you. carl, back to you. >> thanks. what if silicon valley ran the fda? one start upis exploring that idea. when we come back, find out how and why. plus the bells are about to sound across europe. we'll get the details in about three minutes. e

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what a day it has been for the news flow out of europe. simon is here to wrap up that. >> as you look at the markets, you can see we're relatively flat overall. the real action has been in the sovereign debt markets where europe's continued to lead this major worldwide rally you've had on fixed income. the yields on the french and the german sovereign debt, on the ten year, coming to a year-long low. reuters was reporting, this is one of the major reasons reuters was reporting now that the european central bank for its june meeting has a package of measures in place, which will include the ecb going into negative interest rates. the first major world bank to do so. however, reuters is also noting there will be no great avalanche of qe. they're not about to start buying sovereign debt. this has been backed up by an interview with one of the ecb

policymakers, as well. still, the ecb is moving clearly to some action in june. and that's one reason why that sovereign debt has rallied. also worth noting, you might look at that and say, well, it's fairly flat. look how europe has performed -- or outperformed -- since the lows we had quite literally two months ago. you will see this is europe here. this is the united states here, that we've got a clear outperformance here of call it 3%. so just worth bearing in mind that the market has moved, both the equity market and bond markets have moved in advance of this. another central bank, the bank of england today, governor mark carney has been suggesting -- and we thought maybe he would be hawkish in his report -- no, he is suggesting actually that the scope to make further inroads into the slack in the british economy before they raise base rates there. so that's, again, negative for sterling, as you can see. and you see the proud trading down to 1.6781, also lower against the euro. a lot of companies are reporting in europe today.

i would pick out one, which is allianz. it has a subsidiary call pimco. in the wake of that very public falling-out between bill gross and muhammad delairean, he is suggesting the outflows are getting less each quarter and at the same time he believes that the press is making way too much of it. take a listen. >> compared to q4 where we had to really some real outflows, it's really reducing, i trust half of what we have seen in q4, which supports my story. and then, additionally, you should really look at all the large competitors in the u.s. market. >> in the meantime, operating profits are down substantially at allianz. back to you. >> pimco, a huge earnings, no small feat. thank you. the cme group, and rick

santelli with the "santelli exchange," where he's talking about housing. hey, rick. >> we're talking about everything. we're talking about wattage of the economy. there's been a lot of discussion about interest rates. believe me, i love interest rates. nobody's followed them more closely than i have. i've been on these floors since '79. and in '83 and '84, i have been hooked. geopolitics may have a smidge to do with what's going on, but it really is the new weather of the fixed income markets. when it comes to stocks, flip a coin, up or down. you're pretty much done. when it comes to interest rates, it's which interest rates, yield curves, foreign, domestic, corporate, investment grade, the high yield, the fed, how much they own, how much they did buy, how much they are buying. there's a lot of moving pieces. to dismiss this move is anything significantly attributed to the geopolitical doesn't hold water. think about yesterday. retail sales comes out at 8:30.

bang! five basis points down. we saw it. okay? this morning, at 8:30 eastern, you have big ppi. what happens? at midnight, hovers around 2.61. rates start coming down. okay? there were stories about the u crane that were out. 8:30 eastern, we see the .6, .5 when it comes out on ppi. nothing. absolutely nothing. i think you have half a basis point, three-quarters of a basis point moved up to and 2.58. and then, around an hour later, we actually start to see the current move, as it moves through. the wattage of the economy is a significant piece of it. what's going on overseas? a french-- oh, french ten year, 75 under, front-running, what potentially could be the investors against qe or the imf, because maybe they're a bigger presence now. sorry. don't think it's real. the collateral that they're getting from the ecb isn't what an investor would pay for any of this paper. now, let ga's go to a different

area. when we talk about housing, the previous fha director, dimarco, put it on the screen, has said this -- do not confuse weakening underwriting standards and underpricing risk with helping people or promoting market efficiency. why am i bringing this up? first of all, remember, september 2008, gse's in conservativership, and now mel watt, launching this new lowering of standards, not going to raise limits, doesn't want to shrink the gses, puts back the banks, and wants to ease that up. if you believe any of this, you have to be crazy after what you've gone through! i tell you what, i think we've launched potentially subprime, too. congress, you're probably not going to get anything done before the election, but truly, how long do we have to wait for reform? 2008! it's 2014! carl, back to you. >> echoing what a lot of our viewers are saying today, rick. thank you. rick santelli in chicago talking housing finance. meantime, china's public

security ministry held briefings about smithkline. hi, eunice, she has that for us. >> hi, carl. well, the chinese police have charged gsk executives with bribery after a 10-month-long investigation. the authorities at the public security ministry have said that they found that sales staff and gsk engaged in bribery of hospitals and doctors, raising revenues for the company to the tune of hundreds of millions of dollars. now, the authorities singled out the former china chief, a british national named mark riley. they say that riley ordered staffers to take part in a massive bribery network. now, all day today, we've been watching the state tv and several of the chinese staffers of gsk have appeared in orange jumpsuits. it's been quite a bit of parade. they've been confessing to these

crimes, telling the viewers how they conducted these bribes, and, in fact, there's one staffer who actually accused riley specifically saying that he ordered hr and finance directors to destroy evidence in a -- during a crisis management campaign. now, the company itself has reacted. it's put out a statement about the investigation saying that we take the allegations that have been raised very seriously. they are deeply concerning to us, and contrary to the values of gsk. we want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of china and its citizens. now, as you can imagine, this case has shocked many in the foreign business community. one reason is because of the fact that a foreign national has been named for the first time in this investigation. also, there are many people who are wondering if this case regarding gsk is a one-off, or

if it could be the start of a wider campaign, as the government here continues to try to clean up all of these unsavory practices in the health care industry and tries to bring down prices of drugs. carl? >> eunice in beijing, thank you so much for that. meantime, let's send it over to seema mody and get a "market flash." gold is back above 1,300. seema? >> that's right. the precious metal higher after the dollar came under pressure as investors awaited confirmation of stimulus measures from the european central bank. now, trading at 1,305. as for gold stocks, take a look at that board. currently higher across the board with bear gold up about 1.6%. kayla? >> thank you so much, seema. when we come back, despite a lifetime ban from the nba, donald sterling is still the owner of the l.a. clippers. has the controversy hurt the value of ticket prices for that team? we've got the numbers and we'll bring them to you in a moment.

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fortita who co-founded the ufc and runs a gaming company. it's a special edition of "the half." it is straight ahead, carl. what happens in vegas doesn't stay in vegas, at least for the next couple of days. >> well, we'll see about that with you, scott. we'll see you soon, scott wapner in las vegas. >> all right. a quick update. the popular productivity app evernote now says it has more than 100 million users. the company says growth has come through the flagship sketching app, skitch, and phil liven last joined us here on "squawk on the street" back in november, and he talked about his company's future ipo plans. take a listen. >> i think two to three years out, i think it's really a good thing. i think it's a morally correct thing to be a public company. >> why do you say morally correct? >> well, we asked the world to trust us with the most important information. we want to make 100-year company. i think to build that trust, we

need to reciprocate. so having the transparency, allowing anyone who wants to be an owner to be an owner, those are morally right things. being a private company is an important first stage on the journey to being a public company. it will take a couple of years to get there. we want to make the actual day of ipo itself as nondramatic as possible. we're not really interested in that one day. we're interested in the story afterwards. >> that was evernote's phil liven here at post 9 a cup the of months ago. interesting to see a productivity app have roughly a third of the users as something, like, twitter so broadly accepted, and there's a land grab for the enterprise users, how many companies are using it. >> you were saying how much you want to get help multitasking, that's within day to do it. >> maybe i should check it out. up next, what if silicon valley built the food and drug administration? that's the business model of the next "squawk breakthrough" helping consumers learn what's inside the vitamins and energy drinks. why should we trust their ratings over the federal government's? who do you work for?

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welcome back to "squawk on the street." i'm seema mody. check out southwest airlines. the company raising its quart erld dividend to 6 cents a share, coming to a 1% yield, and it improved a $1 billion buyback plan. they said strong traffic revenue trends continued into april. the news not helping the stock, though, currently trading down .5%, but the stock has had a great run, up about 77% over the past one year. carl?

>> all right, seema, thank you very much. the donald sterling controversy has sparked lots of controversy off the nba court, but has the drama affected ticket prices for the clippers? jesse lawrence is the ceo of tick iq. great to have you back. >> thank you. >> you've done interesting research looking at the history of prices for a game seven and all kinds of leagues, right? >> yeah, yeah. >> where do the clippers stack up? >> the clippers' game, which could go to game seven, right now it's about 30% higher than it was last year, if you look at the comparable playoff series for last year. and we're giving a good bit of credit to donald sterling for that and the fiasco of, you know, what's happened there. >> yeah. overall, game sevens in the nba don't tend to lead in terms of professional sports? >> not as much. if you think about it, there's so many shots, there's sort of less opportunity for chance as opposed to the nhl, a lucky bounce here or there can be the difference to, you know, game six or game seven. so this year, we're on pace for a record game seven clip between nhl and nba of 13.

the all-time record before was 1994, 12. and if you remember that year, the rangers won the stanley cup. so rangers fans out there have another reason for optimism based on the game seven pattern. >> and they have a history of shelling out, too. you were telling us in the break, the rangers are one of the most expensive tickets out there. the bruins also one of the most expensive. >> that's right. >> and pacers toward the bottom of the list. what makes that up? >> big market versus little market. rangers and bruins, two of the biggest media markets. huge rivalries, as well. flyers, for the bruins. the pacers kind of collapsed at the end of the year, so there was less enthusiasm. the prices, selling well below face price for that series. >> really? >> a lot of teams were in the nba. they're now above face price with, you know, a chance to play for the title for sure. >> yeah, as sort of the postseason solidifies. >> that's right.

>> we talk about the sturming effect. you have a new commissioner who's basic beally managing a crisis. >> right. >> you would think, or a layperson could argue, that that was bad for the league in general. >> sure. >> and the prices would collapse as a result. why hasn't that happened? >> well, i think people are rallying to support the team. i think it's -- you know, it's -- if it ends well, it's a bit of a fairytale. if they were to make a run -- down 3-2 now, and if they would make a run and win the whole thing, that would be a real story of triumph over, you know, the negative stuff that's happened and i think people are getting on that bandwagon. >> and there are a lot of people on the bandwagon of wanting to buy the clippers. what effect do you think any potential sale or any news of an actual potential sale would have on ticket prices? >> well, it depends who buys it. obviously, there's been some rumors floating around about magic. if magic were to buy the clippers, it would be -- i think they would become the preeminent franchise in l.a. because the lakers are on the other end of the -- >> sure. >> -- performance spectrum. >> of course.

>> bringing the showtime, enthusiasm, style to the clippers that they've lacked for a lot of years would be huge. it could have a huge impact. >> dpiefinally, would he had shn the program yesterday. his prediction in the finals is miami and san antonio, again. are people getting bored of the rivalry? >> it wouldn't be the best. clippers would be the best. san antonio, they're slow and steady. the fans show up, they don't pay a ton. so i think certainly the clippers in the west and in the east i think the heat -- the heat are always a big draw, and threepeat opportunity is an opportunity. >> yeah, tough to beat. >> yeah. >> jesse, thank you so much. >> thank you. >> interesting stuff, as always. jesse lawrence of tiqiq. you won't believe how much traffic the online video company actually generates, netflix. that's when "squawk on the street" comes back. ...for the year. hi. sorry.

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what if silicon valley rebuilt the food and drug administration? that's the premise of today's "squawk breakthrough." unlike prescription and over-the-counter drugs, they do not vet vitamins and safety drinks for safety and efficacy before they hit the market. start-up labdoor provides grading to help consumers learn what's really inside their vitamins. neil is the founder and ceo. he joins us this morning from san francisco. neil, good to have you with us. >> thanks for having me. >> at first blush, it looks like year trying to ride the coattails of a market that's already on fire. >> yes, it's grown eight times over the last 20 years and that's made it difficult for the fda and other organizations to keep track of the industry. and so, that's where labdoor comes in. >> you have a degree in chemistry. you ran one of the approval labs for the fda. some might wonder, though, you know, who died and made you king, right? why do you deserve the right to sort of grade these products and how do you do it? >> so what we do is we take every product straight off the

shelves like consumers would buy them, get them into an fda registered lab where we can reverse engineer them and see ingredient purity label accuracy, and then publish those grades and rankings for consumers. so they can either listen to our advice or look at the data and pick for themselves. >> neil, i love the idea. i'm curious about the business behind it. it looks like nutritional supplements are more than a $30 billion market. by some estimates. you make money by linking to products that -- to sites that sell these products and also by giving full reports on the nutritional content of these to nutritionists and others. which part -- which segment do you expect to be the bigger business, the bigger consumer segment or selling deep info to nutritionists and trainers? >> so i think consumer market will always drive the business. we've been very focused on making sure that the -- that we have the best information for consumers so they can really make the best purchasing decision. and i think that retail market really needs to be disrupted. over 90% is still offline, and i

think that's because consumers don't have a great purchasing decision. >> neil, you run an fda-registered lab and you look at some item hes that have been evaluated retroactively by the fda. i'm thinking about monster beverage, 5-hour energy, some of the products, the fda has gone back after complaints and said, wait a second, we need to do investigation investigations. what do you think the risk is if the fda does break into this space that you've created a niche in? >> we can help get more consumer feedback. we can be a great front end for the fda. instead of them looking at 50,000 products or 100,000 products, they can look at the few hundred products that we've said could have potential issues. >> any conflict in grading products but also selling some on your own? >> what we've seen is consumers love that the business model's attached to the value proposition. so if we are the best, most trusted source for this kind of information, people will keep coming back to us and buying

through us. and so, we love the fact that consumers can really make that decision for us. >> what do you think people would find most surprising about their vitamins or energy drinks? what are misconceptions you've been able to fix through nur research? >> we found the average protein powder has twice as much sodium. and also gummy vitamins with less than 40% of the vitamin content, 70% less than the mineral content versus claims, as well. >> wow. >> what about anything, neil, that might be better for you than you expected? i know, obviously, adult gummy vitamins, a lot of people said maybe they're too good to be true, they safety so good, and the supplements with mercury, lead, pesticide, but what could be best for us? >> the fish oil analysis we found positive news. all of the products were tested favorably for low mercury levels and had great epa, dha, omega-3 content, all hyler doctor

recommended. >> is there any way to capitalize on bricks and mortar sales? people will take this around and go to wholesales and buy stuff based on your recommendation. do you miss out on that transaction? >> no, labdoor is available on android so consumer distake that into the store, get the rankings and grades. if they want to make that decision through labdoor, that's great, as well. we want to be as close to the process -- >> but you don't get paid then, right? >> if they buy through our site, we get paid. and over sometime, we'll make partnerships with retailers and getting further into the offline retail process. >> what interaction have you had with the gncs and vitamin shoppes of the world, that would love the idea of the app that would say half of its product aren't as good for consumers as they may be claiming? >> we've actually seen companies like gnc use labdoor as an advertising tool. they've said we're highly rated on labdoor, and that's actually their selling point to bring people into stores. and so, for us, and for them, i think the idea of a huge store

with hundreds of thousands of products, having a site like labdoor helps consumers differentiate and make us smarter, faster purchase. >> i'm definitely thinking of protein powder differently than i did two minutes ago, neil. thank you so much for your time. >> thank you for having me. >> with labdoor out in san francisco. let's send it over to seema mody, get a check on zulily, right? >> yeah, carl. check out zulily, the online retailer on the move, opening at a 52-week low, after its expiration expired. it turned around after a number of traders were short into the event, and are now covering their trades, that according to "street insider." shares are up about 9.3%. >> seema, thank you. netflix's share of peak internet traffic has risen to new highs, according to a new report from sandvine. netflix accounted for 34% of data flowing to consumers during peak hours. more than a third of all internet traffic, last year the number 32%, and that story line,

it's paid priorititization. >> and it says how important netflix is not just as an app or content provider, but as a kingmaker in this new ecosystem where so many forces and tech are looking forward content. we see microsoft opening up the gold subscription which is going to allow more people to access netflix through the xbox. the xbox one. netflix has a lot of power to put the focus on different things. we see them doing it with comcast and the proposed time warner cable transaction. boy. they're important. >> incredible. >> you'll have to imagine this stat will come up with potentially two mega mergers in that space. looking at netflix as a competitor now. >> yeah, absolutely. i don't want to health the hour go by without checking on the ten year one more time. we're below 2.55 earlier in the session, and now 2.53, people are talking what happens if it goes below 2.5.

odd on a day when ppi ran the hottest it has run in about a year and a half. we'll see what cpi does tomorrow. >> art cashin said to watch 2.5, but that's hurting the banks. >> yeah, it does it for us here. "the fast money halftime report" starts live from salt in las vegas. >> announcer: welcome to the "halftime report." high roller edition, live from the salt conference in fabulous las vegas! now, here's your host -- scott wapner! ♪ and welcome to the bellagio hotel where over the next couple of days some of the biggest names in business, politics, and across wall street will gather here to discuss the markets and more at the skybridge alternatives conference. and how is this for a lineup? today and tomorrow we're going to hear from an "a" list group of investors including jamie dinan, jacob gottlieb,