>> you think jeb? >> i think he does. >> maybe i should back hillary, that will mess it up. maybe i should back her. >> you'll be back? >> i hope so. >> promise not to do any other tv until you come back? >> montgomery ribs and report back. >> no other tv, no other shows, especially in the morning. join us tomorrow. "squawk on the street" is next. good monday morning. welcome to "squawk on the street." i'm carl quintanilla with simon hobbs, cramer, faber are off today. we kick off the last full week of the quarter. futures not too far from friday's close. a lot of housing data this week. of course, we'll keep our eye on dow, 17,000. ten years, a shade under 2.6. europe mixed as manufacturering pmis slipped for a second consecutive month. china's did show expansion for

the first time this year. road map begins with the markets searching for fresh highs. dow closing in on 17k after logging its first six-day winning streak since december. last week's winning sector, utilities, where we've got action today, lead higher again? >> general electric overcoming the latest hurdles in its bid in france. >> lululemon's founder, new allies in his fight to shake up the retailer's board. more drama more lulu. stocks looking to make more history. dow's in 53 points of 17,000. blue chips and s&p in the midst of the six-session winning streak after hitting highs. nasdaq closing at its highest level in 14 years. s&p so far this year, up 6.2. i was reminded by s&p capital last week, last summer it was up 7%. everybody sort of knowing we'll close out q2. what kind of stage does it set

for the middle of the year? >> look the news headlines, out this morning, bullish actist. m and a, utility deal, also existing home sales at 10:00 a.m. to watch. economists are looking for a gain there, even though housing's been dealing with issues like limited supply, more expensive homes and slightly higher interest rates. hopefully that will tick up on housing. >> i don't know what it means but volt tilt is at historic lows. friday was the 45th day in a row that the market failed to move by more than one 1%? you haven't had that for 20 years almost. >> right. >> i don't know what that means wlsh it's about the fed, whether it's come place enty, risk ahead, but remarkble. a broken indicator according to art cashen? it doesn't matter. >> the vix. >> it is this pattern of small gains, but a slow march higher. we haven't seen a correction, 10%, from the highs since back 2011 after the downgrade and the european crisis. >> we finally got volume friday,

but a lot due to quadruple witching. see if we get that amped up. for a closer look at markets, george walker, ceo of asset management firm, ringing the opening bell this morning. welcome. great to see you. >> thank you. great to be here. >> are you confounded by the activity or lack of certain types of activity this year? >> certainly the volatility numbers are remarkably low, unsustainable. nobody will be surprised when it rises over time. compete's improving, improving slowly, steadily. and i think there's good reason markets have behaved the way that they have over the year. >> do you think what's happening with corporate earnings? we did get a good number from fedex, the unofficial start to earnings seasons. everyone looks to alcoa. expecting a positive quarter to drive continued bull runs in the stock market? >> we do think companies are in a good position.

we think that their balance sheets are strong. m&a activity is reasonable. earnings are solid. we expect earnings to continue to grow. we don't necessarily expect the same sorts of multiple expansion to drive the market as it really has over the past 24 months, but we expect on basis of continued earnings growth to see a steady march forward in equities. >> asset manager, to say this market's based on fundamentals, that's what you should say. you have, of course, sir a remarkable access to a lot of people behind the scenes as to what they are doing. how confident are investors that you talk to, serious money, people, they spend a lot of time and effort getting it right, how confident are they where the market is or do you see them turning and getting more worried? >> i think -- i divide it between two markets.

i think directionally, fixed income markets, because of the qe activity, are not necessarily equilibrium levels. so where you see ten-year, it's not necessarily where a bottom up analysis would lead you to believe it should be. >> it's not a bubble? it's not a bubble. a bubble is more extreme. but 250 ten-year is cheap and that's had a big impact on markets. it's had an impact on certainly credit markets but on equity markets as well. i think if you look, though, given where rates are, when you look at where rates are, where companies are, earnings are, these equity levels are not surprising. and -- i think real money investors, as you said, are comfortable where markets are on one hand, not complacent at all. the fact that the vix is low, that doesn't equal complacency.

>> you've got to be in it. >> you absolutely have to be in it. people are looking to other places to find returns. you see large pools of capital, pension funds, increasingly looking places like alternatives, which are becoming more important for individual investors, individual investors as well. looking for perhaps less liquid places, looking to skill-based management and different areas than they have historically. >> in terms of the list of worries, we have inflation, rising rates. >> we do. >> there's gas prices there's europe, numbers today aren't that hot. >> yeah. >> yavarious yen crosses. >> sign up property. also right now what's happening in the world, in the middle east. >> that is first? >> in instability. it's not first in terms of what's likely to drive markets today, tomorrow, certainly it's not first in terms of what's going to drive near-term corporate earnings. i think it's perhaps first in what we should be focused on for

our kids in what matters over the course of the next 20 years but it's not -- it's other near-term economic issues are going to drive near-term markets. >> i think that speaks to something, the wall of worry has been with us throughout the bull market run. there are a number of articles, every single day, about the problems in the global economy, the geopolitical risk you, name it. does that speak to the sentiment, the fact that perhaps we're not getting a correction because we don't have this irrational exuberance, we don't have overwhelming bullishness because there are a lot of problems. >> certainly over -- we've rang the bell last 5 1/2 years ago when our firm became a private independent employee-controlled firm and it felt very different at that point in time certainly than it does today. i think markets are here, one, because of what central banks globally have done to interest rates and, two, companies and frankly the consumer, is in a materially better place.

>> how about the ways in which you're manage the firm? didn't i see you bought 20% stake in blue harbor anningivist investor a lot of money has flown to activist investor. is the way the premise of which you're look at people's money changing? is the proposition to your clients changing? you will be more activists? what are you saying? >> we, as a firm, have always been an aggressive shareholder and believe that's important. not crossing the line into activist but certainly aggressive advocate for our investors. in terms of the acquisition of 20% stake in blue harbor, that was done on behalf of clients with client capital, not firm capital. that's essentially clients who have been looking for an opportunity to participate in

nontraditional investment. buying 20% stakes in the gps of high-quality money management firms has been an attractive place to invest over the course of the past few years. >> how does it feel to be ringing this bell again, five years later? the biggest change since then? >> it feels great. it's an exciting period for our firm. the firm has done well over the past 5 1/2 years. we've -- the last year, senior most 150 folks, we lost 3, one after 51 years, one after 427 the folks ringing the bell are the same folks sitting in the same seats with different markets and happy clients given all that's happened over the last 5 1/2 years. >> get your way to the balcony. in the meantime, general electric's attempt to buy alstom's energy businesses has won the backing of the board and the french government it self,

which is taking a stake in alsto inch what cost is this to ge? mary thompson back at hq with more. >> good morning. after a two-month wait, ge wibs the bidding war for alstom's power business. changes made to ge's official offer means additional annual earnings from the acquisition are going to be a penny or two less than forecast. the deal needs to be approved by france's works council and shareholders it's the largest acquisition and the largest in the firm's history. first announced, ge offered to buy the power business outright for $17 billion. but after the french government expressed outrage they hadn't been contacted about the deal, a bidding war opened with siemens and ge forced to change the structure of its initial offer. ge's bid basically is 16 -- ge e's bid 16.9 billion. changed from the original. it will form three joint

ventures with alstom, in nukes, renewables and grid. french government has taken a 20% stake in alstom, becoming its largest shareholder and ge will sell its signaling business to alstom to bolster its transportation business for $825 million. expected of four to six cents in the first year and six to eight cents in year two will be less. it raises questions how intrusive the french government might be when it comes to hiring and expansion for the joint ventures ge, underperformed the deal since when ml took over in september 2000, a big step in lessening its dependence on a finance arm that nearly took it down during the financial crisis. what ge predicts over 65%, the company's made a big step with the power business. ge has been shrisking its

finance business and sending the consumer finance business for $950. >> general electric has a history of working with the french government. a successful -- they might not have publicized it -- a successful aero joint venture and they're big players in the french economy, one of the reasons they're there. >> that's right. they mentioned that during this two-month pr campaign that they took to in trying to get the french government to accept the deal. also, of course, they had to agree to create 1,000 jobs that they bought the power business, which they will be doing over the next three years. at ge said, it's a long-term player in france and that's one of the reasons the french government should agree to the deal, which they did. >> i was at a dinner, he said, good evening, or as we say, ge,

bon jour. >> getting good at french. >> the personal journey for him. >> mary, thanks. we'll hear from you later on. lululemon's founder said to be considering a shakeup and strategic options regarding the retailer. investors like the news. is the reaction justified? dow going for seven straight. haven't done that since march last year.

♪ shares of lululemon rising in premarket action the. the founder is reportedly working with goldman and other strategic options for lululemon. cnbc's courtney reagan following this one. chip wilson, stirring the pot again. >> that's right. a little nameste with the ceo, classifying the tension due to investors by saying, quote, our parent are fighting and it's awkward. chip wilson has differing view points with board members. according to reports, he may be

gearing up for a battle with the retailer, the "wall street journal" says the lulu founder is at least talking to goldman sachs about a host of options, including a proxy fight or teaming up with a private equity firm on a buyout. neither have given us a response as of yet. wilson who stepped down last year owns 28% stake in lululemon. earlier he voted against two board members including the chairman who replaced him. all members of the board, however, did keep their seats based on the vote count. the board, who has set the yoga wear retailer's direction is too focused on short-term results though those leave much to be desired, too. lululemon continues to struggle with weak performance since last year's massive recall of the black yoga pants that were too sheer. same-store sales are slowing. the stock's lost a third of its value which does make it a let's expensive target.

wilson is known as being outspoken, blaming the women's bodies for the too sheer problem. it's been talked abouts a takeover target. wilson holes the company near and dear to his heart. he'd be very picky about what company he would allow to take over his brand. >> i saw a report he might sell his stake. >> that's a possibility. do i think that's a viable option, knowing his past history with the company, no. i think he's probably just frustrated and wants to show the current company that he's willing to do something very drastic to show you upset he is with the direction they're taking. >> what does he want? any idea what direction he wants to take this company? that the current management is not? >> wilson's been very big about the culture of lululemon, cultivating this special time of consumer, special type of shopper. really they are very loyal. i think he's a little worried

about the fact that they have alienated some of the loyal customers over the past couple of months with the debacle with pants and other issues they had with style, trend, missing out on some of the key yoga trends that perhaps they should have been up on. he thinks it's a culture thing, whatever is it, things aren't going well for lululemon right now. >> my favorite, the ceo asked about all of this a few weeks ago and said our parents are fighting and it's awkward. >> awkward comment, to say the least as well. >> courtney reagan doing the lululemon story. wall street veteran art cashin joins us, what's on his mind, where he sees resistance on the dow. one more look at premarket. back in a minute. ♪

less than eight minutes portfolio the opening bell. art cashin director of floor operations with ubs. forget dow 17,000. it's 17200 the key level. >> that's overly technical. 17,000 is a great psychological number and it looks good on baseball caps and things like that, but if you do the actual counts, it's about 17200 in that range, where resistance should show up. also in the s&p, right nearby

1969 to 1974, somewhere in that range. so we'll get to test them soon. >> expect bullishness to continue through the session today? positive economic data out of china on manufacturing overnight, m&a continues to happen. >> the good news out of china didn't do china too much good. >> that was odd. >> well, that -- >> seven-month high more manufacturing. >> looking at property values. tough week. the week after the june option expiration is traditional down, it's been down 21 out of the last 24 years. so we've got a little bit of a technical uphill battle there. the bulls have had all of the momentum so far. see if they can continue it. >> talking about the remarkable meltup, the fact you haven't had a 1% move for 45 days, haven't seen that for almost 20 years. what does that tell you? what -- because nothing seems to matter. >> well, i think that's been one of the great frustrations of the

hedge funds and others who have tried to catch a turn, anyway. and that is usually when you see those very small incremental moves, you begin to get the feeling that the market's getting tired here, it's only testing, because it really can't break out. it can't make things go. but when you do it for 45 days in a row, then you're stuck with a bad short position. >> we led last week with utilities up over 4%. what does that say? >> again, people looking for safety, and this desperate search for yield. what the central banks of the world have done to you is you can't get any return on your money. if you're foolish enough to have saved any money, you're being penalized for it, so you've got to put to work somewhere. >> the ipo window, people say it's opening again after the rough march and april. >> yeah. looks like it's beginning to get busy, not quite crowded yet. crowded is the thing viewers

have to watch out for. crowded in march, that's when things topped out for a bit. >> gold, which is higher for the month, more than 6%, something to worry about, is that an inflation trade? >> it's something to be watched. first of all, from the standpoint of geopolitics, watch gold, the yield on the ten-year, and you've got to watch oil, in particular. and that will tell you whether these things in iraq are starting to get out of hand. but goal, on the other hand, got a boost from yellen. >> yeah. >> when she dismissed the inflationary data as noise. and that said to everybody, the tolerance level for inflation is higher than we thought. >> credibility on the line, i think the expression you used. >> yes, we did. some people have begun to say that may wind up shortening her turn because as things begin to move -- she came in with a bad hand. she's already under pressure for them increasing inequality by the wrong assets going up. so now she has trouble on

inflation. she's going to have real difficulty. >> the blind quirle tie is back. >> yes, it is. hope he's lucky again today. >> art cashin. opening bell a few minutes away.

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cnbc squawk on the street. live from the financial capital of the world. opening bell in little more than 60 seconds. additional news on lulu. >> that's right. we just got a statement from lululemon, this is in response to reports that founder chip wilson may be exploring strategic options to his stake. the statement says lululemon board of directors and management team are focus on further strengthening the company and relentlessly innovating to drive global expansion and create value for lululemon shareholders. without directly speaking to or addressing chip wilson. back to you. >> thank you very much. someone jumped the gun on the opening bell. 20 seconds to go until 9:30.

it is already ringing. furrowed brows around that. meantime, neuberger berman, celebrating 75th anniversary. talked to george walker top of the show. nasdaq, new york city member and a look at the s&p at the top of the screen as well. as the dow shoots for seven straight. we will, even with the moderate loss at the open, keep our eyes on dow 17,000. 144 trading days from 16k to 17k. >> that follows the lead from 15k to 16k, seven months. steady trajectory higher. since march 2009, up 159%, bull market. >> on the back of an envelope if you keep writing at that pace you get 6% gain to january. a further 6% gain, 1,000, 1,000, 1,000.

>> see if you can keep it up. >> in theory. don't quote me. >> not in practice. keep your ion utilities, wisconsin energy, which you've not mentioned yet, buying integrys, 71.47 a share, 17% premium. about $9 billion if you assume debt. create a utility of about $4 million, gas and electric customers. shares of both customers have done well, 12% year-to-date. people looking for yield and going straight to the sector. >> the volume of m&a approach wag you had in 2007, begging the question, a lead indicator of what might come? >> it would be, but others are arguing you could have two or three years of this m&a activity. that's a possibility. though it does, m&a bursts do signal a major market correction at some point. >> all right. oracle, adding fuel to that fire, buying micros system, assembles web connected cash registers for retailers in the

hospitality industry. their biggest acquisition since sun microin 2010. oracle's earnings not that hot. they need to go on the deal war path fork a company that's done several multibillion -- >> they have the fire power if they need it. >> 39 billion in cash. >> looking at comeback in small caps and technology, we talked about the route, but the last few weeks best performers netflix, tesla, tripadvisor. stocks that were beat up heavily, this rally's all-inclusive, including high flying momentum stocks. >> sees limited upside on a valuation, from a valuation standpoint, not a fundamental call, they added it to the buy list last september and since then up 23% versus 20% for the

s&p, nordstrom. the other big call, pacific press, downgrade of amd and nvidia, to underperform. that's an interesting call. a great year to own some semi names and they say even with the rebound in corporate demand, excess inventory starting to bubble up and making them nervous. >> they've been to asia and they see concerns in asia down the supply line with pc excess inventory, that's a point after a struong run. >> analysts talking about the rebound in pc sales and demand, which is a totally different story. >> yeah. google news that broke friday, buying drop cam, google's nest unit, for half a billion. paid in cash, as we continue to talk about the internet of things and web connected devices for your home. coming off of the apple conference, that's going to make some news. we talked to the ceo a few weeks

ago, this was already in the ether. it's going -- raises questions about privacy. >> google has the program meeting this wednesday. >> right. >> which is important for wearable devices on all fronts, whether apple, sampson -- >> who is in the lead on the smart home? apple or dole? nest beefing it up. >> hardware terms, google, because of the acquisitions. >> most would agree with that. >> next battle. >> royal watching as well. up 3% year-over-year. on your beat, simon, and a lot of beats, people wonder what point does this affect consumer spending? >> airlines. >> yes. >> talk of the session certainly in europe today is the -- how many airlines have hedged out this level. you've got international under more pressure than west texas in this country. >> the rule is $10 price spike is half a percent of gdp,

whether economists don't subscribe to that view. we haven't seen anything extreme like that but worth watching. june is supposed to be a month of relief into summer driving season. we haven't seen that because of the events. >> right. interesting, also, to watch the supreme court today. we're going to hear from hampton pearson in a moment. always a possibility -- >> this is the big one. >> yes. will we hear a decision on aereo, sending live television over internet for less than what cable companies charge. they give every customer a tiny antenna, work around the rules. good discussion on "squawk box" about defending what they decide, how they decide it, what affect does that have on overall innovation in the country. >> true. >> overall patent production, ability for inventors to get paid for new devices. it could come one of theree day.

>> what will happen to aereo? >> there's no plan b, the ceo, that was a bad investment. >> or maybe no the. >> if it goes the other way, you have to see how many cord cutters there will be in the country. >> we haven't talked world cup. we'll talk next hour not just the tie with portugal, but -- >> i watched that. >> the one game. >> the way in which -- i guess the cup affects markets historically, is that right? >> i believe so. the day after you lose in a nation, erratic trading, which you might expect in you watch in europe because they're so late, the games -- take you way into the early hours. >> it's a sentiment thing. irrational behavior, when sentiment is so strong, people upset about the loss, they irrationally sell stocks. >> man. that was rough. as we mentioned, hampton pearson

joins us on the phone from inside the courthouse. hampton? >> reporter: carl, this is a court that has traditionally seemingly saved the best for last. 11 cases undecided. most anticipated ruling is an in a case hobby lobby, think is whether or not for-profit business owners with strong religious beliefs can refuse to comply with rules requiring health care plan to cover birth control for employees. another case i heard you talking about moments ago, aereo tv versus abc and other broadcast networks, very important copyright patent inc. fringement case. you know, the broadcasters are worry because aereo broadcasts local feeds via internet without paying transmission fees. the interesting thing to watch in this ruling is what does the court say specifically about the aereo tv technology itself

versus also being concerned about any ruling that they craft impacting the cloud in the future. that's the nub of what the oral argument. another case nlrb versus canning, the president's power to make recess appointment when the senate's not session. of course a big controversy a couple years ago about president obama's naming folks to the nlrb. a short run, not an impact depending how the court rules but long term, if the challengers win you could have problem for future presidents as far as constitutional authority to make major appointments while the senate is in recess. another case of interest involves public sector unions charging agency fees, this is harris versus flynn, involves public employee union in ill swil whether or not home health care workers not union members should have to pay union dues,

it's a big case for organized labor because it engulfs the organized labor making the argument they bargain for everybody and those not paying union dues shouldn't be along on a free ride, if you will. so lots of cases still to be decided. we'll have decisions today, wednesday, thursday. and if this court wants to run out the clock, we could be here a week from monday as well. back to you. >> see if we talk to you after 10:00. hampton pearson from inside the supreme court. dow's down 33. bob pisani's here with what's moving on the floor. >> not 17,000 yet for the dow but not far away. 1,000-point gains aren't what they used to be, given how high the dow is. put up the dow. last year january, passed 13,000, then 14,000 way back in march. 15,000 october. we finally passed 16,000, went up and below it a few times but it was february, passed the 16,000 decisively.

part of the reason a steady climb upward, this fabulous rotation that keeps going on the market leaders, sector leaders. every time you get a move, like health care, then it falls back, technology moves up, becomes a leader, falls back. this month, energy and financial stocks very strong. once again, their taking up the slack as other names strong like tech earlier or even consumer staples fall back or not as strong as om some other sectors. a great rotation keeps the market advancing all of the time. let's talk about a couple of movers here. coco, reached memorandum of understanding, up 20%, with the department of education on a transition plan. fmc, chemical company, gave guidance that were below analysts' expectations, down 3%. interesting story on yield. questions about the alternative to high yield funds?

there aren't. half a dozen stocks including these four, decent yields, most 2%, ge 3.2% yield. their point not so much yields but they have yield above the s&p 500 plus growth potential. in other words, own stocks with yield and growth potential rather than high yield funds. most high yield funds are below 5% yield, a lot of risk for 5% or 4.8%, where year at now. this argument at "barron's" makes some sense. did you see nordic american offshare? i talked about this two weeks ago when they went public as an ipo. in the north sea, the big story, yield on the energy stocks. 11%, almost for nordic american, that's why people are interested in a lot of the energy stocks. speaking of yield, energy ipos coming, an ipo tsunami in the next week or two. 18 this week, pricing, including two holdovers from last week. we're going to have kathleen

smith from renaissance capital 10:10 eastern, talking about the main question on everybody's mind, the ipo market, is it in a bubble right now? lot of money coming into ipos but lots of concerns. the wave we're seeing, simon, too much for the market right now. we'll be discussing that in the next 45 minutes. >> thank you, bob pisani on the floor. kick it up to the nasdaq and see how things are looking with seema mody. >> low or on the day. nasdaq gained 1% over the past week. seeing this resurgence in tech shares, that in part contributing to the nasdaq's outperformance after what was a volatile couple of months where we saw reset in valuation of high flying tech stocks. tech m&a providing a lift to the index. sentiment in general speaking of deals, oracle buying micros system for 5. 3 billion, giving oracle a stronger footing in the tech

space. avago pieing plx. discuss wag that means about corporate confidence and future deal flow. earnings a focal point for investors. micron tech, that stock on fire, up 50% over the past six months. the company reporting earnings after the bell, we've been seeing this resurgence in the stock thanks to stabilization and pricing, strong demand for memory products. beth, bath, beyond, nike, accenture. nike, watching the discentnary space. not doing a lot in 2014. see if this sector will help lead the market higher in the second half of the year. >> bed bath & beyond, reporting later in the week. thank you very much. seeing a strengthening yen and treasury prices. over to chicago, the latest on

the bond pick. rick santelli. >> always a couple of things to count on, considering zero interest rate policy. equities err on the side of strength and treasury prices seem to be counterintuive to the upside. there's the intraday chart. see what sara's referring to, down a basis point, almost two, 2.61. we were at 2.59. if you open the chart up to may 1st, you can see the 2.57, 2.58 a crucial level. we trade below that yield intraday, prices move higher, it's going to make a difference. february 3rd low, a huge area for technical analysis, all year. open the chart up one more month, go back to may 1st. you can see, all of the congestion between this 2.57, 2.55. friday and thursday, you got up into the zones, maybe inflation last week, whatever it was, it doesn't stick.

now, if we look at what's going on with regard to bunds versus tens, this continues to hoover at 15-year wide. if we look at dollar index, year date it's fighting for unchanged. euro currency holding better than many thought and the dollar has gone comatose. the best chart, after steve liesman's question and a bit of a hissy fit that didn't last long in treasuries, this is crb index, inflation gauge. hovering at highest level since september 2012, what, 21-month high? sara, back to you. >> thanks very much. rick santelli. comatose, i believe. >> when we come back, live report from iraq on the crisis in the country. a look how oil prices are moving this morning. later, we'll talk wit zynga co-founder tom bollich, mixing

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welcome back to squa"squawk the street". watching energy prices, back off a bit. brent in last few minutes coming under 114 a barrel. wti right now, 106.28. traders are saying this is profit taking here. remember, the crisis in iraq continuing to deepen we don't have the sense that iraqi military's going to be able to keep the sunni militants at bay. still, prices are coming off, but that is because the iraqi supply has not been impacted at this point. that is when traders think we could see a spike, if something like that were to occur. gas prices up two cents in the last two weeks. you guys were talking about the trickle down impact on the economy. an economist at deutsche bank telling me for every one cent price hike at the pump, that accounts for another $1 billion

in energy consumption that may not be spent elsewhere in the economy. for every 1 cent that gas prices go up, it got a significant impact. update on the crisis in iraq. nbc news correspondent is in northern iraq with the latest. good morning. >> reporter: good morning. it's a situation that continues to develop both politically as well as on the ground. now the probably more important development is the arrive of secretary of state john kerry, he came to baghdad and met with officials including the prime minister, nuri al maliki. in addition to him he met with the top sunni leaders, politicians, in the country as well as shia, other shia members of al maliki's bloc. the situation on the ground continues to deteriorate in the northwest part of the country. isis fighters managed to continue to take territory, very important territory, along the jordanian, syrian, iraqi

borders. why this is important, a major cause of concern for officials, because they believe it will facilitate even more fighters and weapons being brought into the battlefield here inside iraq. according to several people we've been speaking to close to isis, think have a single goal in mind, to take the fight to baghdad. but for the time being emphasis from the leadership we've been speaking to here, also in the kurdish north, on a political solution. prime minister nuri al maliki has to step down from power or include a pluralistic government that represents the sunni arab minority in the northwest. so far it does not seem they're making headway on that front. >> thanks so much. when we come back, soccer meets the markets. is the world cup an indicator for stocks? a theory and despite that painful tie, he'll join us to talk about it.

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could help your business didavoid hours of delaynd test caused by slow internet from the phone company? that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip. fly to florida. win an award. close a deal. hire an intern. and still have time to spare. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business. built for business. >> reporter: world cup continues to see record viewership, there's also a stock market tie-in with soccer, according to

our next guest. mark hulbert, editor of the hulbert financial digest. good morning to you, mark. what's the tie-? >> good morning. >> how does it work? if a team done do very well, during the world cup, then you get a -- what happens to the stock market nationally in that country the next day? >> believe it or not the stock market on average does significantly worse than average, after a team is eliminated in the elimination stages of the world cup. you mentioned in the tease that this was a theory of mine. i want to give credit where credit's due. it's an academic study wharton and the ute of north carolina. they looked at over 1100 world cup matches and found -- it doesn't happen in every single case -- but on average when a country's eliminated the mood in the country gets so despondent they do things like

indiscriminate selling and the market does worse than average on days immediately after those losses. >> are you seeing it in this tournament to far? >> when i wrote a column about it far the website last week, it was after spain had the humiliating loss, indeed their market went doesn't more than twice as much as the european market the next day. i don't want to make it look like this is a guarantee in every single case, but nonetheless, it's a statistically significant result that came in over 1,000 matches the researchers looked at. >> i thought it was interesting how you noted the winner, there's only one winner at the end, doesn't necessarily do better but it's safer, is that true? >> well, that is an asymmetry, the researchers noted, and it's worth looking at what the consequences of that. it turns out when a winner wins, it doesn't mean that the market does any better. so there's an asymmetry. it's interesting, one way to play this, because there will be teams losing at any given point

around the world, and that will have a depressing effect on the market and there's no corresponding positive effect it depresses the average stock market return of the entire world market during the time of the world cup. this was also a statistically significant result. >> i guess because elimination is final. to say from the data as to what happens when you get a draw? down 30 points on the dow. nice to see you. >> on supreme court watch. existing homes on the way. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past.

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welcome back to "squawk on the street." i'm diana olick. exist eing home sales in may upo a rate of 4.9 million. street looking for 2%. sales down 5% year-over-year but april's numbers revised up to 4.66 million. this is the second straight month of sales gains. realtors are saying the sales slowdown is effectively over but seeing despaisparities regional. sales up in the midwest 8.7% month-to-month, that could be the lag from the bad winter. remember, signed contracts from

march and april that close in may. sales in the west barely up, 0.9%, month to month, and down 11.4% year-over-year. that was less affected by the winter. we'll have to see how it plays out over the summer. median existing price 213,400, up 5.1% year-over-year. so we are seeing those prices start to moderate. this is actually the slowest price gain year-over-year since march of 2012. inventory rising, that could be why we're seeing price moderation, up 6%, year-over-year to 2.8 million homes for sale now, 5. 6 month supply at the current case. single family, needs to rise to get more inventory on the market. a big slowdown in distressed sales, 11%, the lowest percent since the realtors began tracking this when the crash began. also seeing a slowdown in short seas. only 3% of distressed sales because people are worried about that tax issue that they would

have to pay in doing short sales. all cash, though, 32% of the market. first-time home buyers are not coming back, 27%, the lowest on record was 26%. we're hovering above that low and we're not seeing any gains for the first-time buyers. realtors hoping price moderations will bring first-time buyers back in but so far not so much. >> a lot of good information right there. thank you for that. diana olick joining us on the existing numbers. stocks lower by 15 points, slightly off lows. the record breaking rally in the mark as we approach dow 17,000, is that going to lead us across the line? let's bring in brian belske. good to have you back. >> good morning. >> housing, so much noise lately, those numbers aren't bad, but owens corning saying bad things about roofing. how vulnerable are we in that sector? >> the most consistent growth that we've seen, carl, in housing has come from the

midwest. i thought it was interesting how we're starting to see a slight uptick in permits. remember, north america, everywhere, had a crappy winter. we're finally going outside. we're starting to see activity. but in terms of the economy, seeing the most consistent growth, it's from the midwest than doesn't surprise us. from a longer-term perspective, housing recovery will come in waves first wave cheap money, then investments, right? next wave's going to be paced by employment. so once we start to see wage growth, stronger employment gains if a longer-term perspective, that's a 15, 16 type event. >> a fascinating article over the weekend that said, do we have a problem with housing and first-time buyers as a result of student debt, which is a ballooning issue for many they can't afford to get on the property ladder. if they don't get on at the bottom you can't push everyone else along up. >> that's a great point.

good morning. >> good morning. >> key is financial stocks, right? because when you start to talk to clients about financials there's so much fear regarding financials. if you think about it, aside from the rally between march and may 2009, financials have not participated with this move want does that mean for housing? regulations are so tight, loan standards are very, very high, as the economy continues to improve, that will lessen, regulations will lessen, so, too, will the lending standards and that should help. that doesn't answer the student debt problem but in terms of the overall debt levels if and when the economy improves, lending standards will loosen. >> interesting. you think that there is good news to come for the financials? you don't see this as the new normal when it comes to banks, regulation? >> new normal, that scare me, the new normal stuff. >> a permanent shift. >> no such thing as a new normal. think about this, think about financials right now, sara, as

health care was three years ago. what were we talking about health care? the most restrictive fda environment ever, right? what's happened since? the fundamentals are sound, they have new drugs. if you look at financials have overcorrected, we're still managing our businesses like we're in a recession, can't hire anybody, can't spend any money. that's really, really bullish for the financial sector. with all 0 the cash on the balance sheets what are financials good at? buying other banks, buying back stock, paying dividends. we haven't seen that yet. >> they're still getting fined. look at -- >> look at b of a recalculate huge numbers. >> it's not encouraging but those are two stocks one's not an american bank and we know issues with b of a, what know what's driving the growth longer term, it's not housing issue. it's the wealth management franchise. >> rod smith joins us as well, river front group, chief investment strategist, former strategist for wachovia.

good morning. >> good morning. >> are you in brian's camp that we're in a secular bull and going to be seeing gains for years to come? >> it's fascinating you even ask that question. this has been the bull market of my lifetime and i've been doing this 30 years but the least number of people have believed and enjoyed. yes, we are in a secular bull market. secular bull market started deep depression, low valuations and that's where we were five years ago. i think the point about the economic cycle is that while this united states a slow recovery, it not generating any kind of excesses. the chances are that the economic cycle is going to be very long, somewhat slow. that's going to keep interest rates low. if you're an investor, the risk is in the long end of the bond market not the stock market. of course you have to be ready for pullbacks and corrects. >> right. >> we are definitely positioned,

fully invested in stocks, underweight in long duration bond. >> there's confidence there in the rally from both of you. rod, we've got through housing stocks in terms of the groupings, talked about financials. what about consumer discretionary? they've been the group left out in the rally, only one negative for the first half of 2014. you expect that to turn around in the second half? i know we've got key earnings like nike and bed bath & beyond later this week. >> i think consumer discretionary sector is one of those sectors that tends to be really leading in the early stages of an economic cycle and then turns to lag as the cycle starts to pick up. we're not overweight at the moment. it's always a group cow can be selective in. but i think that the area that you want to be focused, at least from our point of view, the areas to be focusing on, the worrying side are stocks that look like bonds. we're worried about utilities, some telecom stocks from a

longer-term perspective if interest rates rise. worried about small and medium size stocks. short term looks fine but valuation are stretched. on the other side, simon can weigh in, but what we see europe as an economy where earnings are 60% of previous peak where u.s. earnings are 120% of previous peak. if the europe can get even moderate growth going, i think there's an opportunitilarilaan. >> that's a question of when there is a tradeable correction where people who aren't in can get in. thank you so much. as the dow wavers near 17,000, one stock that has lagged is general electric. as the company nears completion, of course, of its deal for alstom in france. mary thompson with a potential

of of ge. 's bid. >> following two months of press conferences, meetings, bids and concessions. ge waits for approve from france's works council and alstom shareholders. the original offer going under changes. one that became intently focused on saving and securing jobs in the country. the end result, ge may not reap all profits it expect when it made its initial bid to buy outright, announcing, ge said the deal will be accretive in the first year annual earnings will ab-i penny or two less than expected. ge agreed to form 50/50 joint ventures with nukes, renewables and grid rather than buy outright. buying a 20% stake in alstom will become the french firm's

large ef shareholder. ge selling the signaling business to alstom to shore up its transportation unit, alstoms, that is. ge expects to bring $1.2 billion if savings from the gas turbine business. as the price remains unchanged at 16.9 billion. once completed, ge takes a big step, profits from industrials expected to exceed 65% of the firm's total earnings one the alstom deal is complete. today, announcing selling its northern european finance business for $950 million. back to you. >> continuing to go back to industrial roots, mary thompson. at this hour, monitoring the supreme court. this year's term coming to a close this week. rulings on the most important cases argued since january handed down today and over the next eight days. everybody of course waiting for the big aereo decision, the

future of cable television in the balance. but also, big important cases on cell phone privacy, collective bargaining and executive powers. the highly anticipated go pro ipo is one, tally 16 companies planning to go public on u.s. exchanges. we haven't seen that many since before the financial crisis. crunching the numbers, next. spokesperson: the volkswagen passat is heads above the competition, but we're not in the business of naming names. the fact is, it comes standard with an engine that's been called the benchmark of its class. really, guys, i thought... it also has more rear legroom than other midsize sedans. and the volkswagen passat has a lower starting price than...

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♪ over 130 ipos price sod far this year. that's a 64% increase on last year. but how are they faring? let's send it over to bob pisani with a plus one this morning. >> thank you, simon. ipo tsunami this week, 18 of them, that's a lot. what does it mean? let's talk to kathleen smith, principal at renaissance capital. 18 this week, kathleen, a lot for the market to absorb. are we at some top in the ipo market right now? >> 18 is an incredible week in that we haven't seen a week like that in a june week like that since year 2000. talking about high levels of issuance but if you poe back to

2000, the number of deals and the dollars raised are so much more still than what we're seeing now. >> we'll have -- if we have almost 130 so far this year in the first half. we'll do 250, 260 this year, that's a lot. but your point it's not much compared to the last time we had a real bubble in '99-2000. >> go back to those years weep did 500. >> 500, way as much back then? in yes. terms of the dollars raised $100 billion in each year. and that's almost twice as much as we're seeing now. >> another reason, you're one of the people that think we're not in a bubble for ipos. another point you make, the amount of the returns, particularly after the first day, are not as frothy as they were back in '99 or 2000. >> so far this year, the average ipo priced, there have been 134 done, they've priced 6% below the midpoint of the range.

and we're seeing first day pop this year of 14%. you know, really average is 13 to 15. if you go back to '99-2000 first day pops in each of the years well over 50%. >> 50%. talking about magnitudes of order more when there was a bubble. >> yes. >> mod rest returns. look how we do this year. healthy returns so far by sector, health care, tech, energy, all had returns about 20%. you made a very good point about technology. all of the gains, see the 22% gain, all on the first day of the technology stocks, that's disappointing. >> technology, in particular. other sectors seeing post-ipo follow through. in tech, i think that's probably why the technical der isn calen robust. all of the gains have been on the first day. >> why is that happening? >> sole of it is that the deals are small relative to the overall market capitalization and tend to be promoted well by

the venture community. so, truly, investors are interested in growth companies, but investors after a reset that we just went through are looking for growth with earnings. a nervousness in the market. >> take a look at ipos this week. 18 of them. i want to focus on three main ones, of course. gopro out there, that's a big one. you had a very interesting point, and these guys spent a lot of money time analyzing ipos, half proceeds going to insiders, the other half to the company. >> that is unusual for a tech company. we think that gopro's going to attract a lot of interest among investorsen it's an exciting surfer turned entrepreneur-backed company. the company went from in 2011, 235 million in sales to finishing 2013 a billion, representing about 1 million cameras a quarter. so i think investors are going

to like it, figure out what the valuation is. >> service master, michael's. service master owns the term termite systems as well. michael's, arts and craft company. both leverage buyouts. your thoughts. >> truly are leverage buyouts. these two companies an enormous amount of debt. post-ipo they have to earn their way through to pay down the debt. interesting businesses but the growth rates are 2% to 4%. so we are going to have to say, we cannot have a lick chiccup t out. investors have to be selective about the price they pay. >> energy, some biotech, as well as technology. before i let you go, alibaba, talking about this for a while. when did you think it's going to price? is it going to suck the oxygen out of the ipo market? >> well, we expect earliest for

alibaba to price in august, could start road show end of july. but that could be pushed back, depends on regulators. going to be a big one. >> kathleen smith, august, talking about for alibaba. >> big and familiar names coming up. next on the show, the top state for business in 2014. why the competition between neighbors is getting fiercer. there's a hint. oracle, taking its biggest acquisition since 2010, why the cloud is still king. peace of mind is important when you're running a successful business.

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take a look at the energy

sector this monday morning, pushing higher as the broader market edges down. dominic back at hq with more on that. >> good morning. energy stocks are doing well in today's session. relatively flat session overall for the market. financials are best performing. energy three times better in terms of daily performance today. leading the way higher big names in the energy space, chesapeake energy on the natural gas side doing very well today as well as a lot of the refiners. look at murphy oil, all doing well. and again, a lot of exploration and production tied to the price of oil an cross the board, energy doing well. remember, also a sector that continues to hoover near record highs with the next of the broader market. nice day for today so far for the energy stocks. back to you. >> thank you very much. we should mention a $pa billion deal, oracle buying micros system, jon fortt is here. a sizable acquisition even for

oracle. >> it's very big. sun microsystem, this is micros system, sun around $7 billion. this is 5. i was saying to mark herd about, you know, three four weeks ago, you used to be on the cadence of doing a huge deal every couple years. what happened? do another big one? here is -- >> what did he say when you said that? >> he didn't spill any beans in that case. but you know, what's particularly interesting about this is the hospitality space and restaurant space, going through big changes in technology. point of sale terminals and we see interesting things happening with those, with mobile, with cloud. >> micros sells cash registers. >> they've come out with tablets. this is about those pieces of hardware on cruise ships, restaurants, hotels. also thing booking systems.

competing in software. databases underlying these, often oracle, sometimes microsoft. as they move to cloud, oracle has a chance to displace competitors all the way back. >> a thought from left field, this has been long rumored this might take place, do you think the priceline's acquisition of open table -- and they are interested they said for the payment systems -- may have spurred action here? >> i think it's possible. i think that, you look at grub hub, all of these different types of companies looking for an opening with the revolution that we see in cloud and mobile, looking for an opening into restaurants, into transactions, now a lot of the folks are going to run straight into oracle trying to do that. we'll see how quickly oracle can integrate the company but they are masters at that. they go right in, cut where they need to cut, get these rolling with the company. >> the other thing that is striking you were talking about

sandisk, seeing well-established old school companies have to pivot into the cloud and more deals. >> what sandisk did, move into enterprise flash more. you see companies moving into askras ent areas when they've had strength. microsoft might be off the game dealing with a new ceo. cisco's had its challenges. ibm had its challenges. oracle making an aggressive move, trying to get close tort end customer experience in restaurants. look at micros' client list, buffalo wild wings, ihop, starbucks, four seasons, hilton, big businesses that people use. >> isn't there a problem that a lot of the businesses are franchises? if you owned a hotel chain or a fast-food restaurant and had outlettize understand why oracle

wants a broader enterprise software system, but you can't do that on a franchise basis the same way, can you? there isn't that big a picture. >> i'm not an expert on how that works but if you've got to get supply from the mother ship, there's an oracle database underlying that. if you end up with a cloud version of that software at your location, if oracle can supply that all the way back, all sorts of extra dollars, profitable dollars, that they could pick up displacing microsoft server and putting in oracle database along the line. >> oracle has bought 100 companies in the last decade, amazing. >> they they and cisco the most skilled acquirers in tech, go in, not dither on a cut, move forward. >> valuable perspective. jon fortt. see you later in the next hour. cnbc is counting down our eighth annual america top states

for business. scott cohn is in the top state with a preview and a friend. scott, suspense is killing us. >> sara, so, who is going to be america's top state for business this year? we're not going to tell you yet but we are tweeting about it. we're hearing from a lot of you on twitter at #topstates and we want to keep hearing from you. this is a serious issue, issue of competitiveness among the states. every year we tweak our metrics to capture all of the issues out there. one of the things we looked at closefully technology and innovation category is agriculture. the critical issues of competitiveness there, it's important, it's a huge industry, $7 billion a year in federal grant money, cutting edge stuff, competition between the states is intense. talking genetics, biotech, gps-guided planting. >> the precision of the

satellite connected to the seed tracker is so good that they can just save so much money, be so much more accurate. these inknow vation, new economy factors are affecting agriculture. >> that's robert atkinson of the information technology and innovation foundation. we've got a lot more about this particular issue and all kinds of things about competitiveness at our special website topstates.cnbc.com. a story right now about the issue of agriculture, which fits into technology and innovation. we'll give the first diabolical hint. he may be a hin hint, we checked into the habitat and it's a wide area. topstates.cnbc.com. twitter #topstates. we count them down tomorrow. >> that is a real owl? is that a real owl?

>> yes, it's a real owl. i won't ask how many licks it takes to get to the center of a tootsie pop. >> scott cohn at a mystery location, mystery state. >> it's hot out there for retail founder lululemon. american apparel both in public spats with their ousted founders. wield in from yale yuft university next on cnbc. ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off.

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comcast business. built for business. an hour into trading, some stories we're talking about. existing home sales for may, rising more than expected up 4.9%, according to the national association of realtors, the biggest monthly increase since august 2011. integrys the biggest gainer on the s&p, up 14%, after agreeing to be acquired by wisconsin energy in a cash and stock deal $9 billion, including debt. speaking of 0 energy, chevron and exxon mobil, stocks hitting new all-time highs. secretary of state kerry arrives in iraq, unfreezing relations with egypt, meeting with iraqi prime minister al

maliki this morning. in northern iraq for us. >> reporter: secretary of state holding meetings not only with the iraqi prime minister and members of the shia political bloc of the country but meeting with the senior sunni politicians and trying to get a political processup started. that political process that the u.s. wants under way, they want it to be more pluralistic, more inclusive and representative of the country's various ethic groups representative of those ethnic groups but that seems to be a very difficult selling -- starting point for the prime minister. the country recently had elections, his bloc won the most seats in parliament. they are allowed to choose the next prime minister and coalition. but there are a lot of hurdles to that. more importantly, the time frame to get this government in place is actually about 65 to 75 days. the u.s. wants to try to accelerate that as quickly as

possible. but there is some criticism coming from iran. the ayatollah in iran has been very critical about u.s. intervention saying he does not want to see the u.s.ent convenient, whether it is militarily or politically in iraq's affairs but no doubt the embattled prime minister needs a lot of help. he need a lot of military help and that's why president obama announced they're sending 300 military advisers to shore up the iraqi army. will it be enough to change what's happening on the ground? so far it does not seem to be having an impact and is going to be an uphill battle. isis fighters are taking more territory every day. they now control the border between syria and iraq. they've controlled that border for the past 48 hours. a lot of people are afraid that means more weapons, fighters will be able to come across the battlefield and join the fight here in iraq. that's a very difficult challenge for prime minister maliki, not only to form a government but at the same time reclaim some of the territory

he's lost. >> obviously something traders here are watching, too. thank you for that. let's head over to dominic chu. >> shares of meritor taking a hit in the trade after the company agreed to settle antitrust lawsuit with a larger rival for a smaller amount of money than analysts expected. the suit alleged eaton used unfair rebates to gain market share for than transmissions. paying $500 million versus 1.4 billion. shares are up 2% on the day's news. big news in truck manufacturing and transmissions. now to two big board fights in retail this morning. lululemon and american apparel. want insight here on management and founders from jeff sonnefeld. good to see you as always. >> good to be with you. >> obviously different

companies, very different scenarios here but a lot of common threads too. big personals, two founders in the world of retail. what do you make of it? >> well, it's overwhelming, you know, in the aftermath of the george zimmer battle with men's warehouse with his own board, you wonder in the fashion world what's going on. companies both founders are at war with their own companies and it's exactly 27%. they both own, they're both the largest owners of the companies to the same percentage. you sort of wonder what is it about these personality infused businesses? you can find it in media and entertainment as well but retail world, fashion world seems especially prone to what i've classified as people who think there is on earth one person indispense ibl, they know who that is and leave with the feet-first exit. >> both putting up a fight. lululemon for a moment, chip wilson, in talks apparently with

goldman sachs, what do you think is his best option here? should he wage a proxy fight for more control over this board? >> no, you know, we've seen that after the bad results, the stock which already plunged by two-thirds since the start of the year, gone down another 15% in a blip this morning over energy, the old dead cow bounce if somebody's interested in seeing activity here, i wouldn't put a great deal of stock into this stock. goldman has a long financial relationship, taken the company public. i'm not sure they've committed to this deal. perhaps they will. but you can see he just lost his proxy battle last week, to try to remove a very sensible chairman of the board and another director. they've got a fine guy as ceo. they have the founder of staples of the board, for example. sensible people, top execs from

american express. >> i guess, i'm wondering first of all, i came in this morning and looking how the stock prices moved i was astounded how much shareholder could be destroyed by a pair of pants being too sheer now they've become almost maniacal and believe they are the business. it may be the decisions that you make in, for example, fashion, destroy and create a huge amount of value to a far greater extent then they would in statements and you may need people that have flare, get the story right for the customer to a far greater extent. labor that's why people people in fashion and media executives tend to be well paid. it's a different industry, isn't it? >> perhaps well paid. it's an insight -- this is not diminish what tom stenburg did

at staples. if anything, as a board member, he would have been simple threat ex-to what could be seen as injustice. if tom feels this way, this is the right move weep give what we call idysin kratic efforts. it wasn't the comments made about women not fitting his size. faking fun of the l word, lululemon them not able to see. he's been offensive in a number of ways but also, companies seem to act on their values when they also see the numbers match it. the stock price plumbs we see the company decides to act. they lost 67 million on the product, by the way. >> what ends up happening, when founders put up this fight against the board to gain more

control and shift directions? >> they put up a battle, they rarely win. the founder of chock full of nuts, he ran his company for 62 years, including the last two years flat on his back at the hospital out of commission with his physician as coo full time. that's rare. in that case they didn't win. look at founder of kentucky fried chicken harlin sanders lost, found or of holiday inns lost. they are not going to win. once you decide your private dream has become owned by public owners. it's unacceptable especially for a public company. >> thanks for joining us on these two shakeups. hampton pearson has news from the supreme court. do we have a decision on aereo? >> no decision on aereo, simon.

but the supreme court giving a big win for the environmental protection agency. upholding most of the rights of the epa to regulate greenhouse gas emissions from stationary sources nationwide. two-part decision. the court upholding right of the epa to regulate greenhouse gas emissions from major factories like cold fired power plants, manufacturing plants, if you will, but curtailing right of the epa, if you will, to as far as permitting authority goes to tailor requirements to smaller plants. this is from the opinion of antonin scalia, rights the headline, quote, it bears mention epa is getting almost everything it wants in this case, it sought to regulate resources that it said responsible for 86% of all greenhouse gases emit from stationary sources nation wide. epa will regulate sources responsible for 83% of the

emissions. near unanimous supreme court affirming authority of the epa to regulate most greenhouse gas emissions from major stationary sources. >> thank you, hampton pearson, outside the supreme court. coming up on the show, the march to dow 17,000. we're off this morning but why it matters, the sector that missed out on the rally. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life.

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viagra. talk to you doctor. get to the cme group. rick santelli with the santelli exchange. >> sara, good morning. i'd like to welcome our special

guest, david marsh this morning. thank you for taking the time, david. >> my pleasure. >> listen, you're with omfif, the official monetary and financial institutions forum and one of the resent papers i was lucky enough to read you talk about how central banks today aren't like the central banks of the past. why don't you elaborate on that concept? >> there is an interesting circumstance lairty here because the central banks have been lowering interest rates all over the world. they've been pumping massive amounts of liquidity into the market to repair the recession. what has happened is they are earning much less money now on their reserves. so what are they doing? they're not buying any longer the old traditional assets to quite the same extent they were before, that is bonds. they have been moving into equities something we see not just in the exotic central banks in asia, but also in europe as

well to get higher returns on their investments. >> well, you know in the paper the numbers are really quite staggering. correct me if i'm wrong, you talked about 400 public sector institutions in 162 countries with positions, totalling, get this, 29.1 trillion. now, my guess, based on the paper, that includes everything from gold to stocks, does it not? >> that is right. of course, that's the overall universe of public sector institutions so that includes everything from say the norwegian pension fund and the bank of japan and the people's bank of china through to the smallest entity you've never heard of in africa or latin america. and don't get me wrong, they're not all invested in stocks but more and more becoming like your average private sector equity or bond investor, driven to seek higher returns because of the need to make up for some of the

rewards that they've had to forgo because of low interest rates on traditional bond holding. they are chasing yield. they are not that much different from you and me. >> well, if this is the case, how is this going to end? in other words, if we acknowledge the strategy has a possibility to work, these central banks are taking positions, ultimately want the private investing community to take so they have temporary ownership. but, it seems to me, temporary's turning into permanent and the last 30 seconds, is that the risk? how does it turn out? >> i think on the whole central banks are conservative, there's one or two exsenceptions. they need to be more transparent. they need more comparable data, something we can work to produce. i don't think they'll produce a crash but could be producing overheating in some of the asset markets. >> well, david, thank you. our three minutes is up. a very interesting paper.

i'd like to have you back as you get updates and as we get closer to normalization on central bank behavior. >> one day. >> thank you. back to you. >> thanks so you. strange world wein. rick santelli. coming, "shark tank" for pot. green and green, meaning in colorado. of course, we are there. that's next on "squawk on the street." she's still the one for you. and cialis for daily use helps you be ready anytime the moment is right. cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache.

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comcast business. built for business. ♪ cashing in on cannabis in colorado. nearly 200 investors gathering in denver to hear pitches from marijuana start-ups looking to get in on the green rush. our josh lipton is there. morning, josh. >> morning, carl. yeah, we're here at the arc view group's investor summit in denver where they are expecting a big crowd here today. now, why all the excitement? well, it's because industry sources estimate that this $1.5 billion legal marijuana market, that could actually quadruple by 2018. so investors, they're gathering here today because they want to talk to start-ups who are

looking to make money in this budding industry. duma winshu is here. his background is in video games, but he's co-founder of a start-up called ebu which has already raised $2 million. they're excited about his idea of personalized pot. yes, carl, you can now tailor and customize how you want to feel. >> when you go to a bar right now, it's binary. you have one choice. would you like to have a drink or not? get drunk or be sober? with cannabis, we have the opportunity to set someone on a path so they can have an array of different experiences when they try our product. you can select what you're interested in doing and enhance that using cannabis. >> i think investors are really excited about ebu because they have a team that is coming from another industry where they've -- other industries where they've already been very successful in other industries, and now they're bringing their talents to the cannabis industry.

>> reporter: now, coming up later on "squawk alley," the co-founder of online gaming giant zynga will be here talking about his marijuana start-up. and we're going to be here talking to arc view investors throughout the day here in denver. so stay tuned. guys, back to you. >> all right, josh lipton in denver. thanks a lot. people snicker all the time, but this is what happens when you create an industry out of nothing. money starts flowing in. >> you'll have start-ups. how would you personalize your pot is the question. >> i think she's aiming it at you. >> any interest, sara? >> i don't know, i just find the whole thing interesting. >> it's amazing. it's what we used to call drug dealing. >> yes. and now it's a business. the dow is down 37. back in a minute. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters.

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call it an e-hug. it's the new all-electric

harley-davidson that you might have heard about. our very own morgan brennan was up well before the crack of down this morning in order to get a sneak peek, morgan. good morning. >> good morning. it's called project live wire, and it's harley-davidson's first electric motorcycle, but it's not available for sale. this is a prototype. the company is taking on a multicity tour to see how customers react. we did a test ride this morning, very smooth and fast. it can accelerate to 60 in under 4 seconds, but you'll notice none of that roaring sound that harley once tried to trademark. this represents a big shift in strategy for the company which was hit hard by the downturn with sales still only at about 60% of their 2006 peak. the company is trying to expand beyond its core customer which is largely male, largely white baby boomers to appeal to a younger, more global demographic. harley's coo and president matt levititch was designed with up-and-coming riders with u.s.

markets and china and india in mind. >> someone in new york city that wants to zip around, have the nimbleness that this electric bike delivers, but in cities all over the world. as we see urbanization being a trend and obviously appealing to millennials, live wire is right in the sweet spot of that. >> he says live wire still likely years from coming onto the market. one reason the company is not disclosing the cost, asking price will depend on the evolution of lithium ion batteries which are still so expensive to manufacture and right now only offer a limited battery life, in this case, only about 53 miles per charge. the new 2015 models are also geared toward this noncore customers. analysts are watching sales of those bikes very carefully. guys, back to you. >> morgan, let me ask you one question very simply, did you like it? >> i did like it. but i've ridden on the back of a lot of bikes. i don't actually have a license, but this was a really smooth, pretty bike. i would like to zip around on it.