your champagne. >> no, but i have seen victoria falls. >> from a helicopter. >> not on a helicopter. i went on a paraglider with a lawn mower in the back. >> did you stay in that hotel in south africa? >> yeah, i did. >> really nice. >> yeah. i've been up there. >> on a hand glooidser. >> yeah. with a lawn more on the back. >> "squawk on the street" begins right now. ♪ >> good morning. welcome to "squawk on the street." i'm david faber right here with jim cramer. we're live from the new york stock exchange. carl quintanilla has the day off. let's give you a look at futures at this 9:00 hour as you can see we are headed for what appears to be a lower open. how about that ten-year note yield. give your money to spain for ten years you get 2.54. give your money to italy for ten years, 2.716. uncle sam, 2.6. 3.1 is what you'll get -- willing to lend your money to

the u.s. government. >> growth. >> yeah. >> by the way, japan ten-year yields 0.602 in case you wanted to check in. europe, let's take a look there. you can see. let's call it more or less a down more than up. you know, japan was not -- not a lot of news going on. china stocks decent gains, japan's stocks seemed to take a breather following a multiweek run. you can see for europe sort of a mixed bag this morning. up small to a certain extent slow, quiet night. tech, food, beverage, media, retail, health care, all out performing, autos, telecommunications and energy, under performing. let's get to our road map this morning, our start with markets, records and some big round numbers. we hit s&p 2,000, dow 17,000. well why all the talk about fear and volatility given those numbers. ackman, well, he -- ackman has rejected allergan said his and valeant's bid too low, calls out

their competitors, unsustainable business model and anemic growth. allergan says no thanks to the latest valeant bid. the head of ebay departs for men lo park. what will that mean for e-commerce, facebook and ebay. the kind of hat trick wall street likes. the dow, s&p 500 and the dow transports all closing at record highs. as stocks rallied for a fourth consecutive day. the blue chips within 57 points of 17,000 and, of course, as you know, jim, i like to focus on the s&p as do all those who manage money. even though we talk a lot about the dow. 17,000 has a nice ring to it. >> i think it's somewhat important in terms of are we getting more parse snags you're starting to see the investment manager stocks doing better and that implies at a certain point people will come in. i know that the skeptical at home are saying people coming in now. but a lot of people have been negative for a long time and a

lot of people had a lot of fear. you could say complacency has died down but died down is volatile. volatility scares people. >> you were making a number of different points around deals, whether it was tyson being willing to pay almost 17 years worth of trailing ebitda for maker of ballpark franks or the valuation of uber and the private market at 17 or $18 billion. >> yeah. >> or whether it was merck's willingness to step up and take risk with our big number for a company that still has phase two sort of painting a picture that at least i responded to by saying okay, something is going on here we should be worried about. >> great lawyer pointing out to me, i was called the i dentic banker. he's a research guy. i only mention that because they had a product pieline at identices that had fda problems

recently. people had written them off. it was wrong to write them off. merck, j&j, and avi. >> can't be wrong. what i'm saying these are smart companies with great research directors or tremendous understanding of where the protein move is going. i had maybe public enemy number one for chipotle. they make bovine growth and they make antibiotics. so when you hear that, you know, we don't want livestock with antibiotics, well, they do that. what are they about? >> right. >> protecting the protein food chain and they said this is the most important thing in the world right now in terms of food. so maybe hillshire, maybe tyson are saying, the stock market doesn't know. this quote from donnie smith yesterday, good brands like hillshire and ballpark and jimmy dean don't come around very

often. they hadn't come around. they weren't for sale. it was hostile. >> getting back to the market here because the point i was trying to make, of course, is you say well maybe there shouldn't be complacency. >> they should be -- on the part of the bulls. >> and yet we've been waiting for m&a a long time. i don't want to be hypocritical and say now that it's coming it's a sign in the top of the market. >> it's a sign the government is not in the way. remember the government? >> yeah. >> do you ever hear people talk about the government. rise above what? rise above -- >> not lately. been refreshing the longer we can go. >> i think the government what is causes confidence or lack of confidence. i don't think it's this kind of, you know, nebulous is there demand. there was always a debate going on among the left and the right and you heard it on our channel all the time, demand, what can you do. i think the government was focused on us. focussed on business and, you know, let's say medley, let's

use a pejorative term. the government was changing taxes, capital gains change, income tax was going to be. the government hasn't been playing a role in a long time and that's built a lot of confidence among people to say you know what, i want to make my move right now. they're keeping rates low. i don't have any government intervention. justice department doesn't seem to be that involved. maybe, do you ever hear anti-trust saying i don't know if it's right to tyson is buying hillshire. >> no. the one that we may be focused on is going to be sprint and t-mobile if and when that gets announced six to eight weeks from now. we have a feeling the government will say no, thank you. they may be able to prevail. we'll see. and we have yet to see how the government is going to feel about this consolidation amongst the video providers, whether comcast and time warner or at&t and directv. although we expect the two deals will be approved. >> yesterday there was a tremendous buyer of call options in clorox. a huge buyer of the -- >> oh. >> 105, the -- >> really? >> june and july.

15,000, july 105s. that guy goes to jail if it turns out to be one guy and we get a bid. i couldn't find the soul who said that doesn't make sense. everyone -- people say proctor. guys, proctor, the government always -- already nixed that deal years ago. i mean clorox, you know what, they have a salad dressing business. that could merge with kraft. fresh step, belongs with kingsford [ inaudible ] on its own looks good. upgrades coal gate, maybe coal gate will make a move and no one said to me that's ridiculous. it's a 0% grower and clorox is not any good other than a bond equivalent. everyone had a thesis clorox. instant thesis. >> let's move on to allergan and news we got. a board has rejected a takeover bid from valeant, 1.83 shares of valeant and $72 a share in cash, that up substantially from the

original bid made by valeant and its teammate bill ackman, the activist investor. the maker of botox says the proposal substantially undervalues it, creates significant risks and uncertainties for the companies' shareholders. nothing new there. what is somewhat new they're going back to the ap lists of all people and saying, hey, when we started all of this, the initial bid, the average analyst price target was 131. >> right. >> now current average analyst price targets for allergan as a standalone company are 179. typically when you get a bid all the analysts raise their targets. >> right. >> we know that. using that to their advantage. they have not gone back on anything -- they the reason come again with another attack on valeant's currency per se, any more than they did a few weeks back when they finally did get a little bit nastier on that. but the key question here, i maintained, is what allergan is going to be able to do between now and when its shareholders have their voices heard a few months from now. perhaps as late as november.

when that special meeting will actually be held that is going to be called for by ackman and its partner valeant. >> allergan went all the way down to 80 because there was a particular formulation that people were saying could be under attack. generic. a generic attack on one of their key drugs. when that attack was blunted and by the way, pia, this terrific ceo of allergan, told you over and over again, came on "mad money" and said listen this is not an issue. this patent issue is a fawkes issue. many analysts downgraded it at that point. they've been fighting that ever since. meanwhile, allergan has spent a tremendous amount of money on research to do great eye work but also to explore how many good things can come from botox. when we hear botox people think, brazilian super models. it's a wonder drug. one of the thing kabat has found uses for to make it so botox

muscle relax in places where people didn't think there could be good muscle relax. >> migraines. >> and allergan kept -- is continually rolling out new formulations. why are they able to do that? the best research department of any major pharma. what gets caught and cut immediately? you know, look, valeant can say all we're going to do is take the research department down as a percentage of what revenues to merck is. would anyone mind that? don't we revere saint merck? >> yeah. >> take it down to where pfizer is. no one is going to say that's criminal. i mean allergan is up against the wall here because they did spend too much, so to speak, on r&d. by the way, i could tell you, a lot of companies spent a lot on r&d and not worth while, this is the difference. pyott really developed new drugs. >> maintain what they're able to come up with beyond saying that analysts value us at $179 on the stand alone basis above the current stock price. see the enormous spread if you go home and do the math.

don't count the cdr they threw in for dar pin. they've got to get momentum on their side at valeant, getting this thing working the right way in their stock price and momentum they tried to re-establish last week by ditching that referendum which was frankly silly. >> yeah. >> and moving to a real opportunity to try to make some progress. >> explain to me, because you know this better than anyone, could allergan turn around and buy al ker miss? could they turn around and make a cash bid for isis or for seattle genetics? >> it would have to be cash because if they do anything with a good amount of stock it would require a shareholder vote which their shareholders conceivably would turn down in the face of the valeant bid. >> yeah. that would be a way that i would derail valeant. >> listen, money is cheap and we know the companies are willing to spend. you can't rule anything out on a potential buyer for allergan too. >> makes sense to me. >> we have a lot more things to talk about. what is athena's health ceo

saying about his thousand dollar stock call. what he told cramer. also ahead, goldman sachs' chief u.s. equity strategist david kostin, what he makes of the market's record run. we'll talk about ebay's paypal chief heading to facebook. we have a lot more coming on "squawk on the street." take a look at futures, we seem to be set up for a lower open. the open doesn't mean that much necessarily. we're back after this. i have bayer aspirin. i'm not having a heart attack, it's my back. i mean bayer back & body. it works great for pain. bayer back & body provides effective relief for your tough pain. better? yeah...thanks for the tip!

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♪ is there anything that's inaccurate in the presentation? because one of the things that where he says this declining earnings estimates declining revenues seems out of sync with the $1,000 price target. >> oh, yeah. >> okay. first of all, i was trying to be facetious. >> wanted to be sure. >> of course. >> you would be an insider buyer not a seller. >> trying to be a sexy funny deferrer. >> that's important. >> i acknowledge to the gods of capitalism ceos are not in charge of saying what their companies should be worth. >> the gods of capitalism were invoked. a sound effect for that? >> look, i think john bush was trying to -- whether he was initially facetious or not got caught up, said point blank he was being funny. okay. he was -- you know, about his

$1,000 price target. about einhorn and the attack on athena which is where i was trying to get bush to say what was inaccurate. and the answer was nothing. but what -- >> what does that mean? >> well, i mean -- >> a guy has a huge presentation in which he criticizes the company in a lot 6 of different areas and the ceo said nothing was inaccurate. >> you have declining revenues and earnings. they are a cloud company. but what i -- obviously what i was trying to get at, i think, was it's entirely possible that einhorn is right, it's a very good company which what is einhorn said at the begin of the his presentation but it's overvalued and the world changed and we decided to value companies on earnings per share. there have not been the expected amount of takeovers that used to happen in the software as a service company. the idea that athena is done on the cloud it is. it's not like epic which is mentioned in his excellent book frankly, which is the king of

hospitals and the epic is an embedded client serve model. a model that is not cloud. all i'm saying is that athena, what he made a case for, is his actual product and i made a case that said the product is being valued too high in the public markets. >> we got about a minute before we want to get to break so we can get to mad dash. the move by david marcus joining facebook, the gentleman that ran the paypal division at ebay. the fight between carl icahn and ebay, won by ebay, they agreed to david dorman joining the board, but the central thee sifs icahn's original argument was separate out paypal. it will do better outside of this company. it then devolved into an interesting conversation about the role of directors particularly in silicon valley where there seem to be so pane potential conflicts. back to this idea i couldn't help but think about it as i'm sure so many others did, when you saw mr. marcus is exiting to

join facebook as vice president of messaging products. >> i was shocked. first of all, i sent you an e-mail immediately saying, maybe it was right to separate because maybe this plan was frustrated. paypal is really important. second, there's always been a question about when are you going to monetize, when is facebook going to monetize. my travel trust owns facebook. facebook is hiring the guy who figured out how to monetize maybe the most important newer product when it comes to financial services. this guy is basically a financial service genius going to a company where people have always said, when is facebook going to monetize some of their assets. well the answer is, you hire a guy like marcus and you say, here's the keys. figure it out. >> right. >> that's what he does and why the stock is up. also the accidental release of the snap chaths product sling shot. >> everybody says accidental. what happens if it wasn't accidental. i think facebook should be up more. a big seller constantly in the

marketplace. has that seller gone away? i don't know. every time the stock lifts the bid is drilled. will the bid be drilled again? probably. >> up next mr. cramer's mad dash as we count down to the opening bell. take a look at futures one more time. more "squawk on the street" right here from the nyse coming up. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account.

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place you talk about a lot and i would argue, jim, those who follow you and have followed you for years, the coverage of this area and revolution, has been extraordinary. >> you're very kind. >> and insightful. i would love to spend more time than we get. yesterday aubrie mcclendon his new company that is not public but raised so much money it's almost mind numbing. >> people throwing money at aubr aubrie. >> spending it big. spent $4 billion yesterday announced transaction -- >> these are incredible. ban back in unika which he felt that his chesapeake had more oil. i visited him in utica. turned out to be nat gas. case by case, county by county. this permian acquisition he is paying $2.5 billion to acquire denver based enduring resources, 63,000 net acres, $16,000 -- 16,000 barrels a day. he is overpaying unless he knows more than we do. >> the man when it came to

natural gas and the are revolution that's taken place, george mitchell the father of praccing but still. >> he missed it by about a year and a half. finally came true. what he said over and over again, aubrie is a genius at leaseholds. not a genius about the oil and gas business. he'll not -- i know he watches. i'm not slighting him. i'm saying he's been the best at getting the land and you let schlumberger, halliburton, find the oil. there's a term you will hear over and over again from me that i haven't used, cracking the code. every shale has a different kind of poresitty. different kind of levels. the permian has been cracked. we found out how to unlock permian oils. that's what aubrie is banking on. i think it's going to be he doesn't overpay. >> what is the play or at least people should be focused on at home. >> pioneer -- >> this is not trading publicly. >> pioneer, sheffield, pioneer

is the permian. sheffield came on the ceo and said jim, this is the second biggest after saudi arabia. and i said, could you just say that again. you're telling me that the em merits -- much bigger than the emirates. that's what aubrie is betting on. eog is there too. simmer rex is there. now pioneer, if you valued what aubrie just did, pioneer is like here. what can i tell you. sheffield is going to be right. aubrie has a knack for finding things that look expensive and turn out to be cheap. pioneer. >> a lot more "squawk on the street" coming up right after this. i always say be the man with the plan

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>> david, that meeting will start in few minutes. just a few minutes ago we heard from ceo mary barra and she was talking about a number of issues including the ignition switch recall issue and changing the culture at general motors. here's what she had to say. >> our message has been clear there's really as i said two clear things that we need to do as we come out of this, do the right thing for those who were harmed and everything within -- and i am committing along with a leadership team and our power to make sure we create the right organization, the right processes, support the employee that this never happens again. >> as you take a look at shares of general motors this year, down 10%, one of the issues that's weighing on this stock is how much the ignition recall switch issue will cost this company eventually, including the compensation of victims, the compensation fund is being set up right now. mary barra says it's too early to know the exact cost to the company. >> we won't know until the actual compensation program has

been run, but at that point we will make an estimate. at the end of the quarter. >> and again, the gm annual meeting about to begin in just a few minutes. we'll listen in an be back with a little bit more later on. david, back to you. >> thank you very much, phil lebeau. of course talking gm which we've been talking a lot lately. >> this as i'm reading in a publication, google's nest unit. honeywell striking by with a thermostat being introduced today working with apple. apple has been saying they're going to do stuff at home. this is a bloomberg story. credit them. thermostat war heats up as honeywell aims at going. i had dave cody on. my next door neighbor. >> and the ceo of honeywell. he said this was the -- he was flabbergasted that google spent so much money on nest. now he's going to do something about it with apple. apple's making the right move, teaming up with honeywell. >> to the larger point being there is disruption going on in

these old tech, seemingly old tech -- >> wi-fi thermostat. i don't know. i set my thermostat at 68. i would like to change it right now if i could. >> what would you change it to? >> 71. why run it. >> absolutely right. you're hearing that opening bell. of course right here at the nyse. the s&p 500 getting itself together at hq, more red on boorts than green. here at the big board the prime minister of au val ya tony abbott did the -- australia tony abbott. promoting strengthening trade between the u.s. and australia. >> magnum hunter launched a bid for one of his big oil companies going after one of his companies. >> and over at the nasdaq, vapor corp, electronic cigarette and vaporizer. says they're a vaporizer company. >> vapor i know well. this is to me a very complicated issue.

is vapor causing people to smoke more or is vapor a way to get off tobacco, same amount of nicotine as the patch. the fact that this is controversial is ridiculous. i don't know anyone using the vapor as a gateway to get to lung cancer. i think people are using vapor as a way to get off tobacco and it's a i think very valuable product in that sense. >> you're having a look at the prime minister of australia getting a little bit of a tour of our building here. >> more of a businessman than they had in australia for a while. >> he has a business background. not without his share of controversy. >> but he's fun. >> usually don't think of -- you know -- >> taking a look at some of the stories from yesterday that extend towards today as well. we began talking about how much it was that tyson foods paid for hillshire. the stock took a hit yesterday. it is following through today with another loss as you take a look at tyson shares down almost

another 3% this after a fairly -- loss yesterday. >> that shows me everyone thinks there's so much froth, that shows there's some discipline. can't pay anything and expect us to stay long in your stock. i thought this was good. >> i talked about the power of sealed bids something the journal seized on in their story. they work well by the way. >> journal works while watching you. sealed bids. >> yes. >> look, there's a price that's too much. i mean xwoshgs to the supermarket. i went to the super market to look again on sunday. pain i was missing something about hillshire. maybe they are the most natural and organic maker of sausage. >> what did you find when you went on your hunt at the supermarket? >> i found oscar mayer. >> you did. >> dominant. >> how about hebrew national. >> higher calling. conagra worth more if you want to go there. >> still a lot of nitrates in

that stuff. >> jimmy dean, i did not see them making jimmy dean sausage when i was there. it was packaged. >> bea aerospace, excuse me, be aerospace, is splitting itself. we heard that company was contemplating this potential move. back in may. so not that long ago. this morning we get the press release announcing the company is intending to create two separate what it calls industry leading companies. also raises its full year financial guidance for this year as well. you will now get the world's leading manufacturer of aircraft cabinet interior products and the world's leading provider of aerospace fasteners -- that's one part of it. >> right. >> and then another part is more on sort of value added service provider of equipment design development manufacturing for direct sales business which will include the company's commercial aerospace and jet segments. >> there has been a lot of

chatter that rockwell collins might be interested. that's off the table. >> an expectation as a result of the announcement somebody might come in. nobody has. now there are some private rulings from the irs, private letter rulings that may allow even if there was interest for one of the businesses where they could still sell one and spin one without any tax ramifications. >> i didn't know that. >> people are talking about that. they talk about that with agelent as well, another name that comes up. >> bea is a remarkable company. it owns seating in almost every major airplane. it owns the kitchen galley. it's a remarkably good company. that's why i thought someone was going to consolidate and take all that and you know, watch some of these companies that didn't do it because i think people are very worried, you know i'm a fan of honeywell. i think they're doing a remarkable job. honeywell owns the cook pit which is the much higher value added. why step down the chain. but people want to have a piece of what's in boeing and they wants to have a piece of what's

in air bus because the orders are incredible. >> yesterday, we saw the market react to carl icahn's position in family dollar. we kind of saw it post-market on. i think it was friday. today the stock is down. want to give you a little more reporting. you know, dollar general was up sharply yesterday. >> what was that, david? >> really -- >> i thought that was froth. that was froth. >> the idea being that with peltz, paulson and now icahn, and fdo shares they're going to get this company to agree to go to the table and hammer out a deal with dollar general. nine to ten months ago, there might have been a little something going on, but there have been no conversations between these two companies since then. and, of course, as i pointed out a number of times yesterday, dollar general has been busy buying back its own stock. >> and they want organic growth. >> seems to be an expectation with those guys in the stock it's inevitable these two companies will eventually come together, though i cannot speak for dollar general and what their posture is on

consolidation. >> the guy couldn't be more abject about the idea that's not the way for them to go. now i have felt that walmart is a candidate to consolidate this industry as a quick way to not be walmart. hey, by the way, walmart.com -- >> i don't believe walmart is interested. >> walmart should be interested. walmart has to make a move here into smaller format. >> can't they do what it? >> you want a quick way to do it. this is the quick way. familiar dollar run by walmart would be a story you want to go to. they could lower the prices and be in a price war. a lot of what happened with family dollar, they went very private label, but frankly i don't mean -- howard levine, nice man, their private label looks horrible. >> private label looks horrible. >> you can tell it's private label. >> still looking for a coo at that company an looking for a long time, family dollar. >> family dollar is a second-rate operator versus dollar tree and dollar general. but that's one of the reasons it's so attractive. the margins have been falling.

you have to believe someone comes in. the walmart thing, walmart will say stop it, jim. you should never mention that. i am saying walmart because of the departure of the dotcom guy because of what i regard as being turmoil at walmart, if i were advising walmart would say guys, maybe you ought to break form -- >> turmoil? >> you don't regard that as turmoil? >> i don't know. >> you are the age of aquarius if you think -- no longer the age of walmart. >> gm is turmoil. >> gm is indeed turmoil. they are exhibit a for turmoil. although i thought they got a good ruling when they decided to consolidate the cases in a new york court. >> want to move to best buy quickly before we get to the floor. best buy increasing its dividend by 12%. that stock is up by about 1%. may not make sense to look at shares radio shack. >> it does.

there was a bump in best buy when circuit city went under. radio shack is a competitor. there was a big bump in bed, bath & beyond when linens and things went under. keep in mind that best buy, which i kind of like here, is a winner if radio shack -- >> disappears. >> disappears. >> a lot of people work -- >> stock price has disappeared. i can remember not that long ago some of those rumors and i said they were not true about it going private but it kept showing up. this is a number of years ago. >> when you go to radio shack it's a little debilitating, don't you think? >> they tried to spruce up the stores. >> radio shack, went to a boston radio shack and the woman on the phone you -- hey, listen, don't bother me. >> it is not easy to reinvent your company. >> no. >> ebay which we, of course, spoke about is down 1.7% this morning op the news that david marcus is departing while facebook shares are up over 2.5%. >> facebook has -- >> part of that may be the slingshot. >> my trust owns facebook. that's -- the big seller must not be in the marketplace

because the seller has been relentless, comes in between 11 and 2, destroys the stock every day. let's watch between 11:00 and 2:00, facebook. familiar pattern of someone coming in and anileating the stock. >> so interesting. >> by the way, speaking of things in retail, david things are happening so fast. chico's which used to be one of the great growth retailers. suddenly up for sale. francesca, that had been a great growth retailer, horrendous numbers last night. the retail is so hit or miss. it's incredible. each day there's someone in retail that does something that just astounds me. and francesca's was awful and chico's, that's all that company is worth, wow. wow. it's so hard. five below reported great numbers. stock up 2 gives back the gain. kohl's well, thought we had a turn in kohl's. no turn. lulu reports on thursday. barclay's, rbc, saying use this as weakness to buy. skechers tells me that yoga is

still very hot. i don't know. do i want to go in and buy lulu. it is hard to make a determination if you do play lulu do it in calls. get stopped at the 40 level if you want to play lulu. >> all right. you heard it here. >> yeah. >> let's get to dominic chu on the floor, a little more on what is moving this morning. >> well, i mean kafdavid what w have a situation where we're running up to this resistance level. see the record high or close to record high for the stock market right now. backing off a bit. this is the same pat were we've been seeing over the past week or week and a half with markets. trying to find a reason to go higher and the path of least resistance is there yet we're still waiting to see if there is a downside move. what we want to note over the course of the past few weeks we've seen some notable moves better or higher in some of these more cyclical or economically sensitive names. think about industrials or financials or retail stocks, those consumer discretionary

ones, they have been the best performing sectors over the course of just the past few weeks. the month to date. so as people are starting to see more upside or perhaps new record highs in the stocks, they want to be exposed to those companies that have the most exposure to the ups and downs of the economy. presumably to the up side, the industrials, the big banks and consumer discretionary, the retail type stocks. one of the other things a lot of traders are watching is this idea that we have seen a bottoming out at least short term medium term of some of the sectors or parts of the business that were hit the hardest over the course of the past few months. we're talking about first of all the small cap stocks, russell 2,000 index. we did see the sharp move lower diverging with the rest of the market and now it's starting to show signs of life over the past few weeks of major or at least minor bottoming out. you can see on the right-hand side of your screen moving up towards and joining the rest of the market, at least for now. also the biotech stocks. still a sector everybody wants to focus on. not just, david, because of all

the m&a news like with merck and i dentics out there, but because as a group these stocks show at least sentiment about the risk appetite for the market and see on the right-hand side of your screen this gradual move up towards the right-hand side of your screen to the upside. that's the important part. david, as we see these stocks right here trying to at least stay flat or maybe slightly lower for the day, one of the things we want to pay attention to is whether or not we can see some at least small time momentum built up in the sectors hit the worst. there are encouraging signs for the bulls throughout. >> thanks, dom. >> dom i should add, fabulous -- the ac supply came out. >> home depot supply. >> congress piconstruction pickg up. february 609, march 659 million. april, 893 million. and they're talking about 11%

growth in construction and industrial which is totally -- totally dovetails with what dom was saying. meanwhile these biotech companies are all on fire again. >> i was just looking at -- >> you're seeing -- >> gilley ador biogen. >> or amgen. >> not really amgen that much. >> they're starting to show signs of life as dom pointed out. >> what's happened, that merck bid. just made people say i have to cover my short. >> coming up, we're going to have an exclusive with goldman sachs' chief u.s. equity strategist david costen in light of the market's record run. you will want to hear his price target on the s&p. later on squawk alley, kevin o'leary back with his unique perspective on investing. keep it here. .

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shares of netflix up about 2.5% this morning. the company having resolved a brief but nasty dispute with verizon and potentially other providers as well of broadband service over outing them when it was their service netflix claimed was causing disruptions in the ability of the at home consumer to actually get their netflix to work. >> right. buffering the enemy of netflix, right. if you have anybody that kind of slows it down, it's obvious that that's bad. evercorp out with a positive, saying international is going well. netflix is on a roll again and i know that -- reed hastings of split of chairman and ceo kind of a distraction put past them, but netflix is going to go back into what are the subscriber numbers, germany, what are they

france, download for "orange is night black" back into the uber mode i call it, meaning i like netflix, i'm going to buy netflix. i like uber, i want in on the uber deal at $18 billion. these are situations that are unique in that we love a product we buy the stock and it's been right. notice tesla has not been participating in a similar fashion of late. >> no. i would also note, netflix market value is roughly $26 billion. it is really not that far off from cbs at about $34.5 billion. you get the point. and i do wonder whether time warner at $60 billion with hbo, doing that vice deal by the way, buying potentially a piece of vice, a fast-growing well provider to hbo, but also they have a big youtube following, time warner going to change its name after the time spinoff and if they were going to maybe it becomes hbo. i don't know. >> look, hbo is remarkable.

there's a huge amount of money being made by time warner. the time warner/cbs, viacom disney, remarkable stocks. people say i missed it. you haven't missed it. these do a lot of great things. i think netflix is reasonably valued given the fact of the international opportunity. >> you do? >> i do. >> up next it is going to be time for stop trading with jim. "squawk on the street" is coming back after this. we're moving our company to new york state. the numbers are impressive. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years.

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see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business. built for business. ♪ ♪ time for cramer and stop trading. >> very thoughtful piece this morning, jeffreys puts out. domino's pizza, a global technology company selling pizza. this has been the use of facebook, it's been the use of the app, up to 50% of sales now. when you have an app, no one screws up. you put the order in, they do it, don't need another person answering the phone. i think this piece is smart. the stock has been stalled since frankly patty doyle came on and basically said you know what, i like business, but it's not on fire. he is an underpromiser and

serial overdeliver by dominos. one i don't agree but point it out because it's going to work. coming out today and saying advanced micro devices earnings recovery driven by diversified growth, $4 name, people will love it. here's what i'm worried about. a fabulous article in the new york times about colorado and potential moratorium against fracking. this would impact a stock that i think is one of the greatest stocks in oil, noble energy. symbol nbl. they own the niah bar ra, fabulous in colorado. those who believe in oil need this moratorium stock. the governor has not come out as strongly as people thought against the environmentalists here. this is the beginning of the challenge against fracking. this is the beginning. now noble has fabulous assets off of israel. they have the great field that woodside petroleum, i would love

to ask the australia prime minister, that was incredible that woodside walked away from that. geopolitically that was the answer to the russian natural gas going to central europe. watch this moratorium. if this succeeds, it's the beginning of the end of fracking with the exception of texas, oklahoma, and north dakota. you heard pritt me. >> in other words, states where there are true constituencies for environmental reasons. >> everybody who has a big -- >> would include colorado with a great deal of outdoor enthusiasts and the like. >> behind the scenes, i talk a with a lot of people, they're scared about this thing. >> scared about colorado in particular. >> something on the ballot, the environmentalists -- >> have they done a good enough job of articulating why people should not be concerned about fracking? >> no. as a matter of fact they have done a terrible job. >> lot of people worried about ground water, the stuff on top an what's in the mixture that gets injected down there. >> epa didn't agree with the

environmental -- with the challenges in wyoming. epa found the problems in the marcellus were linked to sloppy operation. there could be a juggernaut in the same way tom stier has put a lot of money in to stop keystone and basically saying we can stop the heavy duty crude oil import. this would be the job killer if you got fracking off, if you hurt fracking, that -- >> although as you pointed out, texas, north dakota -- >> oklahoma. >> oklahoma. i mean they do account for a great deal of oil production. >> 22%. it's been great. but colorado now obviously what people are talking about is some sort of off the ballot work on local you can say yes, you can say no. a new york-like ban on fracking -- new york has that. the southern tier where the employment is high -- >> the governor has yet to make

a decision. >> like keystone. >> making a decision by not making a decision. >> you don't play hamlet. you're going to get -- king richard iii -- my horse my horse no fracking without a horse. be careful if this wins, it's the beginning of the rollback against fracking and, therefore, the gypping of the end of the big gains we have in energy self-sufficiency. >> what do we got coming up on mad tonight some. >> a company that hardly ever talks. >> warren buffet still a big holder there if am i remembering that correctly. >> i don't know. one of the finest companies ever, happens to be a local company from where i live. >> maybe that was moody's i'm thinking of. >> burlington reported a good number, second good number in a row. francesca bad. as i say over and over again to our viewers, retail has gotten too hard. >> dunn and bradstreet. >> of course. >> look at b and b before you did business with someone to see if they were solvent. never lost their way, but --

>> what are they doing now? >> credit check. bunch of other things. look, i have to tell you, i think it's kind of interesting because it's always been rumored to be either a takeover -- >> always. >> very often. >> you don't come on my show about to get taken over. >> that's a good point. >> we'll see you tonight on "mad money" and see you back here tomorrow morning at 9:00 a.m. coming up an exclusive with goldman sachs chief u.s. equity strategist davids kostin going to be right here at post nine. "squawk on the street" is coming right back. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected.

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welcome back to "squawk on the street." start with breaking news. wholesale train data hitting the wires as we speak. to jim, tgm institutional services with all the key tails in chicago. >> remember a month ago we had a solid beat on this number and another solid beat. wholesale inventories at 1.1 from an expected 0.5. remember of the two wholesale inventory what we look at here because it's a gauge of how wholesalers feel about the economy going forward. this is a pretty solid beat. the sales number revised last time from 1.4 to 1.6.

a bit of a surprise because it was a fat number. stock market had very little reaction. ticked down a tick which i don't understand. bond stayed about steady, came in about 2.64 in the ten-year. back to you, simon. >> thank you very much for that. let's check on where we are with the stock market. stocks lower, of course, after we hit a record for both the s&p and dow. the dow is within almost -- where are we, like 85 points from dow 17,000. let's bring in david kostin, chief u.s. equity strategist with goldman sachs. good morning. >> how are you today? >> i'm interested that we're so close to dow 17,000. how do you feel? >> well, i focus mostly on the s&p 500. >> sure. >> and i would say that the valuation of the market is consistent with what we expect in the economic cycle. look out over the next couple years, we're looking at 2100 at the end of 2015 and 2,200 at the end of 2016. the valuation of the market is at the higher end of a range of

fair value and it's pretty consistent with what we've seen in economic data, broadly speaking getting better. >> let me take those targets that you have there and break down what that means. so for the next 12 months, these are my calculations, back of an ep vel lope and i find this sobering david for the next 12 months you think the s&p will rise 2.5% for the next 18 months, 8%, and for the next 2.5 years, your target is for a gain of 13%. that seems very modest for all the hot air that we hear around the park at the moment. >> well the market is trading right now around fair value. typical stock is around 17 times forward earnings which is historically speaking a high p/e multiple. market broadly speaking a little over 16 times. from a valuation perspective we have a reasonably valued market. therefore, the driver to a higher market would be earnings. well, where the source of earnings growth is not margins.

margins have been flat for four years. four years margins stuck around 9%. therefore, your growth in earnings will be a function of sales. and sales, of course, are a function of the economy. so basically, if you want to think about the nominal growth of the economy that's the general trajectory of the market you ought to be thinking about. >> going back to those targets that you have, there is an acceleration in the second half of next year, albeit modest in the second half of next year. not now. >> if you think it broadly speaking as trajectory the market has generally been moving in the path of a higher. we've had a big p/e expansion. the key message not looking for an expansion in p/e multiple from the current levels. >> i was just wondering what the low rate environment so far means for u.s. stocks. still want to be looking for the dividend payers for the income payers, the buyback stocks? >> i think the -- a scarce asset in the market right now is income. something related to income oriented. so companies that are returning

cash to shareholders could be through buybacks, dividends, still attractive to me as an investment strategy. one of the most unique aspects of this market today is the narrowness of the expected outlook. you have a pretty common view of what the economic activity will accelerate to say 3.5% this quarter, growing more than 3%. a general view as to the growth in sales, a general view on where rates are rising, likely rising towards say 3, 3.5% at the end of this year. a narrowness. the return in the market, the dis pergs, the separation of returns very, very close. the valuation dispersion. everything is basically in a tight cluster and that suggests again there's less stock picking opportunities. more challenging environment. >> not a stock picker's market? >> we've been looking for some individual themes to try to identify pockets of opportunity. more risk in portfolios. if you're a hedge fund manager think about adding more leverage to a portfolio. long only, other themes like

stocks with weaker balance sheets as a way to get if you will leverage in that direction. >> the override, again it comes back to the overriding view they are all correlated. you can look for that but it won't make much difference. >> it's been -- certainly more difficult stock selection, yes. >> what is the journey then. if you only believe that market will rise 2.5% to repeat for the next 12 months, are we going to have a lot of volatility on the way, will there be major corrections? how do you think that will play out? >> i believe it's more of a beta story, the idea of the market rising as opposed to major rotations inside of the market. >> so what -- >> so some of the strategies we're thinking about as i mentioned would be companies returning cash to shareholders would be a strategy. we look at halliburton as an example of a stock we like. the analysts at goldman sachs -- >> northrop grum mond. >> cisco would be another example. companies basically -- some of the characteristics we're looking for. a more difficult stock selection environment. we're trying to be selective in

stock. >> and you like risk. i'm wondering covering of the papers, go daddy ipo, $750 million. a lot of big anticipated technology ipos. when your clients ask you if they should be getting into them what do you say? >> if we think about where there is value opportunities in the market, broadly speaking we want more value oriented than growth at this juncture given the high starting point of valuation. technology is of the sectors in the market is the most attractively valued part of the market. that's a big area. on the other extreme consumer staples on a valuation metrics are very, very expensive. that would be where we would -- >> separate the technology component from the ipos that we're seeing with these sky high valuations. >> so again the technology is an area of focus. >> okay. >> one last question before you go, david. if there is going to be an inflection point anywhere it seems to be that the federal reserve will talk up the possibility of interest rate rises and some say maybe they'll want to do that to inject volatility into the market and

maybe that will happen in the middle of next week. if they do start talking up the interest rate rises what will happen to the stock market do you think? >> if we look at what are potential issues or risks you would look forward in the market the rest of this year earnings for the second quarter, which will come in early part middle of july to early august. one issue. the midterm elections coming up in november. would be another sense of potential volatility. the potential risk of inflation and the idea of the timing of when the federal reserve may have to raise or choose to raise interest rates and the goldman sachs view not until early 2016. quite a long ways from here. a lot of slack in the economy. >> your chief economist says you've reached the state -- >> the view is there's still slack in the economy right now. >> the employment sector. >> right. >> david, great to see you. >> thanks very much. >> as always thank you for coming in. david kostin, chief u.s. equity strategist with goldman sachs. >> let's dig deeper into the

market. >> sara, big reception for rece ptis soaring five times its normal trading value after the company reported its multiple sclerosis drug showed positive results a faze two study, stock up more than $10 and change. a huge move. >> thanks very much. this morning, if it feels like deja vu all over again that's because it is. allergan once again rejecting valeant. this after the company significantly increased you may recall the cash component of its latest bid for allergan. it now being.83 shares and $72 a share in cash. allergan coming out with language saying there's a look at the actual -- and the cdr, don't forget it. still talking 44% of ownership in the combined company given what is still a great deal of stock in the overall consideration as i said, cash has come up considerably. for its part this morning,

allergan yet again rejects much of it being the same language that was used the last time. a slide presentation. accompanying the rejection this morning with various points being made by allergan that more or less say we don't believe that this in any way, shape, or form fully values the opportunity that we have ahead of nous terms of creating shareholder value. they point out that analysts have raised their price targets to an average of $179 a share on what they call a standalone basis. that may be a bit of a species claim given analysts typically ratchet those up after the initial takeover proposal is received. you can see what we're talking about. worth about $131 a share at the time or right before valeant's initial bid for the company. at this point, we can expect it's going to be potentially a long summer in which, of course, valeant and bill ackman and guest yesterday on "squawk box" will continue to press their case, try to build some momentum

behind their case for why, in fact, allergan shareholders should look positively on this and perhaps begin to pressure allergan's management to sit down at the negotiating table. if that doesn't work we have the prospect of a special meeting that could be called let's call it in november. still some time, of course, for allergan to do something else to try to create value. the question being is it enough for it simply to sit there and say we are not -- we are worth a lot more than what you're offering. we question the currency you're offering, we question your business model and not interested. it's going to be difficult, it would seem to me, to make that argument over and over again on allergan's part but we have to keep a close eye on valeant's stock price and don't forget valeant will be reporting at least one quarter of earnings if not two before shareholders have their say here. >> the drama continues. digging in their heels for now. >> good way to put it. >> up next on the show, radio

shack struggling as the losses mount. best buy boosting its dividend. what's the real story ahead of the retail sales report. should you be buying these stocks or staying away. rand paul joins us live with his latest tax proposal. corporate taxes overseas. you won't want to miss that. "squawk on the street" will be back. ♪ do you know what this means? the greater the curvature, the bigger the difference. [sci-fi tractor beam sound] ...sucked me right in... it's beautiful. gotta admit one thing... ...can't beat the view. ♪ introducing the world's first curved ultra high definition television from samsung. ♪ ♪fame, makes a man take things over♪

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lots of retailers making headlines this morning. best buy raising its dividend while radio shack out with weak earnings again and head of walmart.com resigned. here to make sense of all of it joe feldman assistant director of research at tellsy advisory group. interesting to hear the best buy dividend hike in light of what we saw weak results out of radio shack. you see a tale of different retailers between the two. >> best buy is executing on its turnaround, made a lot of progress, cut costs, stabilize sales somewhat and i think it's reflective of the fact that they're feeling good about the cash flow of the business and they're rewarding investors for being in the stock. radio shack on the other hand continues to struggle and struggling to get traffic into the stores and they're losing relevance. they've lost a lot of relevance over the years. >> is it too late to implement a turnaround at radio shack and

stop the bleeding? >> it's hard to say it's too late, but -- and obviously this company has been around since, you know, the '20s, but it's going to take a lot. what's the need to go to a radio shack? you have to ask yourself that and i think they're asking themselves that every day. it has to be more than selling mobile stuff. and when mobile phones and mobile, you know, devices aren't selling like they aren't right now it's really been a tough time for radio shack. >> same-store sales falling 14% amid decline in traffic. i wonder if they can take anything from what best buy has done and the turnaround they're putting in place to make it work? >> they can try on the cost side i'm sure there's always room to save there, but best buy they've gotten their prices down to be what amazon is selling and everybody on the web. if you're in the store and look around and they've taken away the shopping element of shop

on-line in the store and going and buy it on-line. and radio shack doesn't really have that right now. i think that's going to be tough for them. >> the overarching theme you alluded to it is the rise in on-line shopping, change in shopper habit, rise in mobile. i got back from beddenville with a walmart shareholder meeting a lot of talk about the transformation walmart has to make bridging the gap between the biggest brick and mortar store and growing on-line. walmart.com ceo stepped down by neil ash head of e-commerce was there out in force. they have an ambitious strategy. can a huge ship like walmart really turn it around and tap into the digital world fast enough to keep up with the amazons? >> we think they can. i actually do think walmart can out amazon amazon ultimately. >> why do you think that? that's interesting. >> when you have this installed store base and if you can effectively leverage those stores to either -- for buying on-line and picking up at the store or shipping from the store

or maybe more efficient to ship from a warehouse, amazon's trying to get closer to the customer. amazon has been opening distribution centers trying to find ways to get that same day experience that walmart can deliver. you know, on items that walmart doesn't need to deliver same day, well, you can shop on-line. and the pricing is very competitive. same prices. and again, it's the access. it's the ease. and that whole omni channel and the digital strategy we think can work for walmart over the longer term. as you mentioned neil ash is a terrific leader there. >> i just got to come back at you. i mean people have to get in their cars to pick the stuff up from walmart defeats the purpose of having it delivered to your doorstep. they have a long way to go, don't they, to meet amazon's ability to compete on convenience and ease when it comes to actually getting stuff to your doorstep. >> correct. that's a fair statement. you know, but a lot of the majority of americans are driving to and from work every day and it's an easy -- if they can make it an easy pick-up

point on the way home or the way to the office or at lunch time, that actually resolves a big part of the issue. the ex pens to ship same day is not cheap. i don't think fedex and ups are going to be offering free shipping all the time. the costs are only going to increase. and i think that you have to have this omni channel strategy not everything needses to be picked up same day, some of it can be shipped in a day or two, which amazon is very effective with that. i think walmart can be competitive in this arena. >> i wonder also, they certainly have their edge of every day low prices if they can undercut prices. to wrap it up, heading into a retail sales report, walmart, the struggling low income consumer which has faced a lot of headwinds, still a tale of two income groups when it comes to retail and how does that add up for the month of may? >> i think you're going to see more of the same with that. i think that the higher end, the mid to higher end continues to do better and we're seeing that. the inkling of hope has been

that some of the dollar stores like a dollar general said they started to see a little better trade at that low income consumer. we need to see more spending power for that low income consumer to help drive the engine of the economy. >> thanks for joining us, joe, on all of the retail stories in the news today. >> low-cost carrier jetblue is going upscale. really upscale. offering lie flat seats and customized amenity kit kits. inside jetblue's premium class next on cnbc. peace of mind is important when you're running a successful business. so we provide it services you can rely on.

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a down day for industrials. done and brown street. seeing profit taking here. yesterday one of the dow's leading gainers one of the biggest losers today p boeing and ryder systems round out the top five decliners. simen. >> >> my word, dunn and brad street has changed, thanks. jetblue upscale with its brand new answer to first class. morgan brennan life at jfk airport testing out jetblue mint. morg morgan, good morning. >> good morning, simon. we are standing inside of one of jetblue's new air bus a-321s equipped with the first ever premium service, mint. jetblue will begin flying these planes between new york and los angeles this weekend and as you can see behind me there's an in flight simulation under way to test drive these swanky ameni amenities that include 16 lie

flat seats with adjustable firmness and even cappuccino. the first time jetblue has rolled out a second tier of service targeting the sought after business traveler. starting at 599 it's less expensive than bigger competitors like delta and united but the key to success actually lies back here in the redesigned core which has been overhauled with thinner seats to pack more passengers without sacrificing leg room. this plane is 23 feet longer than the largest plane in jetblue's existing fleet so despite the extra space, dedicated to mint, there is still nine more seats than before. and it costs the same amount to fly these new planes. that means higher margins and the promise of bigger profits. so even if mint doesn't take off, jetblue can turn a profit as long as it can sell these seats. sara, back to you. >> and i like the way that you phrased that, morgan, because

for a lot of investors, the jury is still out on jetblue. it's a marginal business at the moment, arguably damaged between the full cost carriers getting more profitable and offering more luxury and those ultralow-cost carriers. half the management team has been kicked out and even the ceo may well be on the ropes. it's interesting the way that you phrase it about profitability and capacity there. >> yeah. and one of the things jetblue is going after is those folks that are maybe a lower-end business traveler or a higher-end leisure traveler that don't want to spend $2,000 on a flight to los angeles but don't want to sit in economy. they're going for that demographic. >> before we let you go, is it true four of the cease seats ha their own door? they're effectively mini bedrooms at the front? >> they're calling them suites molded after emirates flights. >> singapore -- >> they're getting ready to show us some food. >> very sara eisen.

thank you. >> i was going to say simon hobbs. >> morgan brennan there on the new mint. >> jet blow doblue does have th snacks. >> really? >> even the producer who is rarely roused agrees and nods. >> you can't get the chips on any other flight. wonder what food will be like on mint. >> if you want to know the tag line is eat like a new yorker and tapis -- >> one of the upscale new york restaurants catering. >> lovely to have you back. look at you in your element. >> we've got another more serious story here. the federal aviation administration granting the first mer permission for commercial drone flights over land. bp and drone maker air environment are being allowed to conduct aerial surveys of pipelines, roads and equipment at prudhoe bay alaska. the first flight took place on sunday. straight ahead on the show the state of retail, traditional names like radio shack, best buy

and gap struggling to change with the times. is there hope for brick and mortars? we'll talk to a ceo who owns and operates nearly 400 different shopping centers around the united states. see what he's seeing in retail. we're back after a quick break. i spent my entire childhood seeing the world in reverse, and i loved every minute of it. but then you grow up and there's no going back.

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recalls? >> no surprises. this was a rather quick meeting lasted 40 minutes, eight comments and questions from people in attendance. none of the people here speaking at the meeting were family members of the victims of accidents involving recalled vehicles. before the meeting even began, mary barra had a chance to talk with reporters who were here and highlights of what she had to say. the company is committed to culture change, already been in contact with some employees, expects that to continue. there are no more employee dismissals expected to be linked to the defective ignition switches and the victim compensation fund that is going to be overseen by ken feinberg, those details need to be determined. here's mary barra. >> as for the compensation program we announced we are relying on the expertise of kenneth feinberg whose experience in designing and administering complex compensation programs is unmatched. the program he will administer underscores our commitment to do

the right thing and to treat accident victims and their families with compassion, decency and fairness. >> by the way, general motors expects to begin taking claims for that fund starting on august 1st. between now and then, ken feinberg will be talking with attorneys for the victims' families as well as with executives of general motors coming over the criteria for that fund and once established the expectation about 90% of the cases involving victims in these defective cars will ultimately be settled through this fund. there are obviously going to be some who will still go to court and not go through the fund. as you look at shares of general motors, it's down fractionally today. the big story is whether or not we see the stock start to catch up with the rest of the market as gm tries to get past this entire issue involving recalls. back to you. >> thanks very much. phil lebeau. radio shack reported a much larger than expected quarterly loss this morning due to a drop in consumer lec ron nick sales.

the company continuing to face stiff competition from the likes of amazon.com, walmart, even best buy. best buy on the other hand did raise its quarterly dividend 12% this morning, 19 cents a share, trying to signal a stronger cash position, growing financial confidence. with may retail sales data coming thursday, what is the state of retail? who better to ask than dan hor wits, the ceo of ddr which owns and operate 4s 00 shopping centers around the pus. fies to see you. >> nice to see you. >> you have been engaged if proactive lease termination which best i can tell you trying to figure out who is underperforming or may underperform as a retailer and who can we replace them with who won't. how do you go about trying to figure that out? >> it's certainly more of an art that science and a negotiation you have with your tenants on a regular ongoing basis. where they're losing money they want to leave and we may want the space back. where they're making money we

may want the space back anyway. it's a long conversation but what we're trying to do is take advantage of the historic opportunity we have right now where the supply/demand dynamic is very much in favor of the landlord. i don't want to wait and we don't want to waits as a company for a time when tenants come back to us and something else going on in the economy. we have some new supply which we don't have any of right now, so we think it's a good conversation to have with our ten naptss. should close stores that aren't performing, tenants should take it back and release it and make money. >> makes sense to try to do that. i'm not sure what you face in terms of the other side of the conversation when they're potentially making money and saying we would like to have this negotiation about terminating your lease. >> it's a tough conversation but again, we have a large book of business with a lot of retail sores a lot of trading and give and take that goes on. but really no retailer should close a store that's making money. and we don't want retailers to close stores that are making money. but again, you have --

>> broader trends, what's working broadly speaking and what's not? >> the best thing that's working right now is branded ready to wear goods at a valued price. the american consumer today wants value. it doesn't mean cheap. it means a good price for what they're getting. and they want branded goods off price. seems to be what's clicking. you'll see some of the electronic numbers. radio shack aside. best buy doing very well. bed, bath & beyond divisions three divisions long are doing well. we have new divisions like ul ta cosmetics and pets and things of that nature, in spite of having choppy individual quarters does not make a rend and their business is very solid. >> how promotional are these guys right now. we're in may. not exactly holiday season but it is sale time. again how much are they getting hit on margins. >> the margin pressure really all depends on what you plant. if you take large markdowns an plan to take markdowns you'll do fine. bring goods in at the high and mark it down to the low and you sell them. you're fine.

if you're over inventoried you have a problem. that's an issue a number of retailers have and a number are taking larger markdowns as a result. if your inventory is right, markdowns shouldn't hurt you quite as much. >> dan, you mentioned no new supply. many would say well, of course, there's no new supply. fewer people are going to the mall. this argument being made in retail we've reached some sort of seminole change in behavior where people are using their phones, using amazon, and simply not visiting your malls. a, is it true and b, are you worried about it? >> true in some cases. if you look at the dynamics across quality portfolios, occupancy levels are up, rents are up, sales up, margins are up for retailers. seems like nobody is going to those shopping centers. i'm not sure how the numbers correspond to that. the internet is an interesting phenomenon for us, it's been terrific in the sense our retailers are figuring out how

to shop on-line, pick up in store, xwroerdsly competitive, that is go to be the wave of the future. it's a great channel to redistribute goods from the store to the consumer directly, from the warehouse to the consumer directly. so, you know, our retailers are in the business to distribute goods to the consumer and the internet is another one of those channels. amazon they do a terrific job, but i wouldn't necessarily call them a retailer as much as i call them a distributor. they're not buying goods, they're not sourcing goods, they're not producing. >> well they do source and buy. they do. >> source and buy but not in the way ready to wear and fashion. someone said you want to put amazon into your shopping center my first question would be, what would they put in the store. >> everything. that's why they don't have a store. >> exactly right. >> can you name a name for who's growing the fastest? >> the specialty grocers in general, whether whole foods and trader joe's and people like that, that's a terrific business right now and that continues to grow and we think that's going to overtake the traditional

grossers on the long term. >> daniel her wits. thanks for being with us. >> thank you. up next on "squawk on the street" why one harvard business school professor thinks companies are making a huge and critical mistake when it comes to social media. he'll explain when "squawk on the street" comes back. she keeps you on your toes. you wouldn't have it any other way. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines,

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welcome back to "squawk on the street." not a great day for biotechs but the pharmaceuticals bucking the trend, the stock soaring for the second session. today the fda allowing it to resume the development of one of its hepatitis c drugs lifting a clinical hold imposed a year ago. yesterday it soared with a number of help c names after merck's acquisition of rival i dentices. investors thinking it might be

the next takeover target, trading up 2.25 just about. sara? >> 53%. what a surge. thank you. social media has increasingly become important to the success of big business. we know that. our next guest thinks many companies are making critical mistakes when it comes to their social media strategist. he's a harvard business school professor and a you thor of "a social strategy how we profit from social media." i'm going to ask you how investors can profit but first businesses making key mistakes when it comes to social media, what did you find some. >> sure. most companies start off by thinking well their strategy on twitter should be or facebook, and often advise people to go back to the core of their competitive advantages and should really start from that which may or may not imply using some of these platforms for succe success. some of the best examples of companies that leverage really well are american express or nike, nike, for example, built

its own proprietary platform to connect with facebook and twitter but has a lot of nike users on the platforms themselves an done phenomenally well because these users -- >> as a marketing tool or as a means to sell these consumer products? >> best. it's both an acquisition tool and retention tool so loot of these people i don't know if you've seen on your facebook, will actually post status updates this is how far i've run, what i achieved, challenge each other to various tasks and competitions and as a consequence, they'll market the company to many other people. and it's also great retention tool. >> when you think of business like an nike, am mentix, which the best platform to grow business? is it a facebook, twitter, linkedin? >> i think it's the best ones i've seen are a combination of both. they have their own platform they build, american express has built quite a few of those platforms, and then they actually share, allow people to share out of that platform on

twitter and facebook. >> the basic message is you shouldn't be using it like radio or television? you don't broadcast at people. they want to do something and something among themselves with it some. >> you clearly read my book. that's what i was saying. >> there have been a lot of reviews. >> wonder if one of the problems you have people in charge of these big companies are not young people like your lecturing team and it's the young people leading the technology, the facebook and twitter and they will understand how better to revolutionize and use what's going on than somebody who's the marketing chief of a head of a large blue chip. >> i found you need a combination of the three. the young people who really understand the technology and really know how to drive it and you need also the senior executives to give you the buy-in. it's when the combination works together -- >> if you're teaching this course are the big blue chips queuing up at the door saying who have you got for me. >> that is true. a lot of our student goss off and work with these companies. american express, a lot of our graduates are driving a lot of changes there.

>> interesting. >> certainly useful for the companies. what about the social media companies as companies themselves an specifically as public companies? do you think wall street gets it in terms of how they value these sp. >> i think by now there's a lot of understanding what's going on. i think they come under intense scrutiny and i think they price fairly well actually. i think people look at fundamentals quite well and you see that in the uber versus twitter -- >> what about 19 billion for whatsapp. >> snifs thinking -- i was thinking about that, right. what uber is doing, they're trying to make a market that has been regulated for a long time -- >> talking about ubber. >> i was asking about whatsapp. >> i want to hear about uber, continue. >> both very close valuations. so we can talk about both. so starting with uber, you know, an average -- on an average day uber makes about $50 on a single cab. overall that's about $20,000 a year.

imagine they had say 100,000 cars out in the street, that's a billion dollars. would you pay $17 billion -- >> pay 17 times revenues? >> well, 17 -- no, that's -- >> pretty high multiple. >> 8.5 billion multiple. it's not insane. i mean some people for facebook makes 8 billion and valued at 160. >> it's growing very quickly. >> growing. >> opportunity for uber to grow well beyond what is the core business at this point? does seem there are a lot of investors who believe when you look at these models they can change and there's a lot more power in them conceivably than just all right, we're renting taxi cabs. >> even the taxicab business is not bad. i've seen a lot of models that say they would not sustain the pricing without moving to other. i think there is a lot of opportunity overseas and when you see how people use uber overseas, it actually gets much more traction. >> a high margin business pointed out by our colleague andrew sorkin. >> interesting you brought up a

question of whatsapp. it's facebook's big bet on india. if facebook is going to grow and continue to grow, the market, they can't go to china so the only place they can go and really grow is in indiap. india has 1 billion people of which something like a hundred million on the web, will continue to go grow. if you can get the indian market you're talking gigantic numbers there. that's what they're betting on. >> we could go all day throwing names at you. good to get a taste certainly, should read the book, "a social strategy how we profit from social media." thank you for joining us on "squawk on the street." >> thank you for having me. >> inside the mansion that music super star rihanna rented for $65,000 a month. yes, that's right. we'll be right back.

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with more. good morning, diana. >> good morning, simon. this is madison oaks. it began in the '80s as apartment units but at the very last moments of the housing boom, it was converted to condos. condos. about 50 of those 250 units sold. then, of course, the housing market came crashing down. now, investors want to turn these condos back into rental apartments. they purchased 80% of them and they claim that they have the legal right to buy out the remaining condo owners, even if it means dramatic financial losses for those owners. >> these people just taking advantage and they don't really care how it affects other people. they don't care that, you know, they are ripping people's homes away from them because it's just business to them. >> reporter: jackie schafer is already underwater on her mortgage but she is making the pages and she wants to stay. like the other homeowners gathered here, selling to investors would mean huge financial losses and in some cases, ruined credit.

so, they are taking the investors to court, but the investors claim they have the law on their side. florida state law used to require 100% of condo owners to approve terminating the condo agreement, but that was amended in 2007. ironically, a move designed to protect homeowners from natural disasters, like hurricanes. not the man made disaster of the housing crash. investors say they have the condo agreement on their side which overrides any state laws. now the investors declined to be interviewed for our story but they did issue a statement to cnbc. it said, "the steps we are taking at madison oaks will add value to the property, provide desirable rental homes for the market and improve the neighborhood while adding to the county's tax base." madison oaks is not alone. around 30,000 condo -- apartment units in the tampa area were converted to condos during the housing boom and we are hearing had many stories like this, just here and across the state of florida. now the condo owners did learn today that a judge will hear

their case a. so sarah, to be continued. >> yeah, a lot of frustration for those owners. interesting trend piece on real estate. diana olick, as the always, thank you. send it over no to you jon fortt with a look at what's coming up on squawk alley and 140 characters or less, john. >> sarah, crunching through hoover's valuation, facebook hire's paypal's top dog and the clippers no longer an easy sale. "squawk alley" is up next. we asked people a question,

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pop singer rihanna showed everything at a recent fashion event in new york, that sheer dress. but our own robert frank has seen part of her life that nobody else has. robert, you have seen everything. huh? >> yeah. almost, sarah. you know, when it comes to her west coast real estate, rihanna likes it rent rather than buy. her rental pad, until recently, was this mansion in pacific palisades, 11,000 square feet, seven bedrooms, eight baths, a pool, a spa. she rent it had for $65,000 a month and we got into her bedroom suite. it's got its own sitting room, fireplace, soaking tub. on tonight's secret lives of the super rich, we take you inside with its broker. let's take a look.

nch>> you have a great sitting a over right here. you have your double-sided fireplace, again. you have your huge scale. >> next up, rihanna's walk-in closet. >> look at these closets. it's just a massive size. >> wow. >> they are built out. you know, you have a tv. it's perfect for, you know, all the clothes that you guys have. you have a his and hers, which is great. >> and just steps away from her pillow, the pop star's backyard oasis. now, of course the reason that he is showing that house is that rihanna's moved out. it's now on the market for $14.9 million. that's because she recently moved and is now renting a place in hollywood hills for a mere $65,000, a little smaller, only 10,000 square feet, but it does have its own deejay booth and professional stage lighting system, guys. she can do a little practicing at her new digs. >> frankly, who doesn't do their

weekend. >> exactly. >> so presumably, if you can get rihanna to come and stay there whether she actually paid $65,000 or not, it bhooss the price of the property. that's got to be the gain, hasn't it? >> especially the west coast. clearly some marketing value in having a celebrity there. this was a nice house, but it -- frankly speaking for l.a. standards, it wasn't a great house, but still pretty cool to see her bedroom, some of those pools, pretty cool place. >> is that unusual to rent, to pay $65,000 to rent instead of just owning a place when you have that kind of money? >> tax free. >> throwing that money down the toilet every month? >> strikes us as an amazing price, what's happening in the bay cities, new york, l.a., san francisco is that these very high-end rentals, as much as for $1 million a year, huge demand because some people have very mobile lives, like rihanna, she's not in town that much. >> also -- also -- >> a big business and increasingly popular. >> you know a lot of people

would argue that they can make more money putting whatever liquidity they have into the stock market on margin. >> which i'm sure is rihanna's investment. >> people advising her, certainly the trend last year, why you saw margin levels high robert, the real trick with these things, actually get into the apartments or the houses when the star is there? >> okay. we will do that next. we will work on that for the next season, simon. >> how much can i rent the closet for, robert? >> the closet was huge. i mean, it's bigger than a lot of people's apartments in new york. that alone is like 10 grand. plus, it was her's. >> looking forward to seek the show "secret lives of the super rich" all new episode. >> 10 eastern. >> tonight. >> thanks, robert. >> all right, guys. now over to andrew for "squawk alley." >> hey there, good morning, guys it is 8 a.m. at facebook headquarters in menlo park, california. 11 a.m. here on wall street. and squawk alley is live"squaw"

welcome to squawk alley. carl quintanilla is off today. i'm andrew sorkin. check trading. green arrows, across the board. sorry, red arrows across the board. whoops. look at that dow off 12 points. not gonna call this horrible horrible. s & p 7500 off 2 points, nasdaq marginally as well. an up and down day, apple and twitter seeing green so far. radioshack, grub hub and

pandora, san dix and glue is litt -- zoo lily making moves to the down side. with we have a lot to talk about this morning. start with facebook, because it is going on the offensive. the social network grabbing paypal president david marcus to run its messenger unit. seems like the street likes the move. ebay moves to the downside. facebook trading higher. should tell you more because the social network accidentally released its new app shot, slingshot, on the app store. slingshot has been pulled but the app still supposed to be facebook's answer to snapchat, complete with disappearing messages. i'm going to start with you, kevin, from a management perspective, i guess is probably the question. do you think that facebook -- investing perspective, do you think facebook is really going to get into financial services, that what this move, bringing this guy from paypal is all about? >> i