elected. do you think that's true? >> for president? >> in general. >> i don't think that's true. it always seems that way. >> "squawk on the street" begins right now. ♪ >> good monday morning, hope you had a great long weekend, welcome to "squawk on the street", i'm carl quintanilla. first full week of july begins today, earnings season kicks off tomorrow. futures are down after the market hit record highs on thursday after the jobs numbers. 10-year yield creeping up again, this time to 263. we will see fed minutes on wednesday. german industrial production slipping for the third

consecutive month. a nobel prize winning economist says he's worried about the rally and investors could be taking that to heart as the dow pauses after 17 k. >> buying a swiss food ingredients producer for $3 billion. >> apple hiring away from tag heuer. >> and higher in the premarket once again as options on the company shares kick off trading today. first up, wall street hoping for more stock market history this week after the dow hit 17,000 on thursday for first time ever. as for the s&p, now within 15 points of 2,000. earlier on worldwide exchange, nobel prize winning economist stiglitz doesn't believe it signifies an upbeat trend. >> the very strong stock market prices are in a sense a symptom of the weak economy, not a symptom that we're about to have

a strong recovery to our real economy. >> sounding an awful lot like what the bis said last week and we're vulnerable to a 10 to 12% correction and morgan stanley get more neutral on risk even though he was bullish at the beginning of the year. people get a little edgy. >> this coming after a jobs number far better than anticipated now averaging 231,000 over the last six months, significant gains, 6.1% is where we are in unemployment rate. and a lot of talk of course, we reference the 10-year yield at the top of the show. that perhaps the fed will need to move a bit sooner, at least some are talking about that. i know you follow the stuff closely. but it is starting to get out there. maybe they've got -- forget ending qe, maybe they have to raise before the end of the year if the employment rate comes down. >> a number of firms have moved

forward and their prediction on when they are going to raise rates, the chief economist says the end of 2015 instead of early 2016. you can track the fed funds futures market, when the increase is going to come. it moved higher, more than 60% chance by 2015 after that positive jobs report, joe stiglitz, he's an economist, janet yellen of the federal reserve did say that valuations are within historical norms. people chuckle when those comments come out. what do they know about the stock market? >> we referenced the 10-year, but it's the shorter end of the curve that's moving more violently. >> we'll get auctions this week. give us a better tell on how people are feeling. >> 2-year had the biggest jump in yield since back in september. let's bring in two cnbc contributors, richard bernstein

and done luskin. you see more room to run for the stock market, don't you, don? >> i do. almost never agree with joe stiglitz, he's angry that paul krugman gets all of the publicity so he's trying to follow in those footsteps. you have it right. you're smarter than any economists and know what's going on here. it's all about the yellen fed. sure, she said very plainly that interest rates aren't going to be zero by next year. tapering will end in october and they are going to raise interest rates above zero 6 months after that. sounds like march or april to me. for the last three fmocs she said her fed's avowed policy even at maximum employment and stable prices, when a normal fed would be tightening, the yellen fed will still be easy. what more do you need to go? green light, folks. green light. >> rich, the only thing that i

wonder whether this would give the market pause is sentiment. more people are getting involved in this rally, dow 17,000 nice round number, the economy is healing. as sentiment gets more bullish, do you worry we could be reaching a top? >> sara, i would say if sentiment were to get more bullish, i think this remains probably in my career the biggest bull market with the most skepticism. we're five years into a bull market and at no time in the last five years has wall street recommended overwaiting equities in total. pension funds remain very underweight equities, individual investors, nine or ten weeks of outflows. hedge funds are neutrally positioned. so it's hard to find a group of investors that are actually euphoric. that's not there. >> well, so then what's the follow on that, rich? you wait until they get in and then you get out? how close are we to that?

>> it's hard to say, carl, because i would have thought it would have happened by now with what don pointed out, you got a fed clearly at your back and corporate sector which is reasonably lean in producing profits. united states has a lot of competitive advantages now and growing versus a lot of other parts in the world. you would think that people would be very, very optimistic here. but instead all you hear is skept skepticism. i'm somewhat speechless about this. >> are you willing to agree with yellen that we don't fully appreciate the volatility that is to come as tapering continues and the rate hike gets closer? >> look, what i hear yellen saying is she just gave a speech last week saying that it's not the fed's business to try to use monetary policy to deal with bubbles. so what i hear her saying is, hey, everybody, sort of

conservative and warning and rational exuberance, how i show my bona fides. she's going to let this thing run. when a normal fed would be taking the punch bowl away, she'll be pouring whiskey into it. >> i wonder what it all means for treasury yields and interest rates. we did start to see a move after the jobs report. is that going to be the key to whether the rally continued? they aren't volatile. perhaps that's a green light. >> well, sara, it's interesting that people have been very confused what's going on with the 10-year and i really think it's very straight forward. at the beginning of the year, everybody thought the economy would be ripping and the 10-year was at 3%. we had a negative print on first quarter gdp and back to 250. now we're gradually working our way back up in terms of yield as the economy continues to go back to some kind of -- whatever the trend in the economy is, it's moving back in that direction. i think we should expect rates to gradually go up. i think what's not going to

happen is this very apocalyptic outcome of rates going up and economy not strengthening. the odds of that happening are slim and none and slim just walked out the door. >> the economy strengthening and rates going up doesn't mean the market could follow. we could see dislocations. june of 2013 was kind of scary, wasn't it? >> that's exactly right. it depends on earnings and what's going on in the earnings front. my point being, if earnings are not going up and economy is not going to strengthen, the odds of interest rates going up are very low. >> don, what about inflation? are we still not worried at all? >> the thing we ought to be wore riled about with inflation, there's not enough of it. we're suffering from the hangover of the outrate deplags, negative cpi prints in 2008 and 2009. yellen and other central banks of the world are desperately seeking inflation in order to get the price level back up to

the long-term trend price level. do not be afraid of inflation, it's a good thing. do not be afraid of a little overshoot. every bank is aiming for it and they will get it. >> nice way to kick off the week on markets. good to see you both. >> thanks. >> far from a merger monday but we have a deal, archer daniels midland agreeing to buy switzerland based company, wild flavors, about $3 billion, the sixth largest flavor provider. it expect to close the deal by the end of the year. again, we are in the midst of a very robust market as we've talked about many times over the past few months. i would expect that to continue, but doesn't appear a lot of work got done over the weekend but we look for monday announcements which don't occur quite as often. i haven't done the statistics, one of those many firms can do it. maybe they don't feel like

meeting on sundays and wait until monday, the workweek. we expect consolidation to continue and this morning this deal an important one a private one owned by private equity, which is also been looking for its exit through public offers, likes of which many we've seen here. >> it's also a food deal and it continues on the theme, consolidation in the food industry. the company makes capri sun and some ingredients and stevia based ingredients, all natural, organic, that's what in. the consumer has spoken and now there's a scramble to scoop up these companies. >> if they can make it easier to get the straw into the pouch, it's a deal. >> how much of is that stuff do you have all over of you from your kids? i know. >> i haven't had that in a long time. >> is it possible? >> apple hired a senior executive from tag heuer, the

former vp of sales, latest in a series of buyers by apple from the luxury goods sector. as we keep our eye on what we anticipate to be a big deal in the fall. usa today reviews android wear, the new outfit -- wearable from samsung, says it's still too early. getting better but there's still -- there's not the must have product out there that would make wearables a key category. >> apple positioning itself in the luxury sector. this is not the first luxury executive they acquired. and lauren, they've hired the head of that brand to work on special projects, that's where apple is going. >> they've been there. iphones are not cheap either. a lot of that may be subsidized by your carrier, an expensive piece of equipment. apple itself needs to look at one of the best performers this year, first half wins up 17% for

the year. certainly puts it in nice company. >> yeah and tim cook headed to sun valley which we'll talk about a lot in the early part of this week as that kicks off on wednesday. we'll see if more deals come down the pike in tech and media. >> a tale of two ipos and good news for king, the maker of candy crush. marriott international things it's better in the bahamas, find out why. one look at the premarket, some weakness to start and dow finished the best week since april as we crack 17 k. more "squawk on the street" when we return. turbocharged rewardget a $1,000 card with a new volkswagen turbo. so why are we so obsessed with turbo? because there's nothing more exhilarating than a powerful ride. and you can get that in places you might not expect. like the passat. and also in the fun-to-drive jetta. in fact, volkswagen has sold more turbos than any other brand over the last ten years. that is a lot of turbo.

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on qualifying purchases. know better sleep with sleep number. today is the day options go on share of go pro, up more than 75% since going public on june 26th an managed to double at one point to $48 after going public at $24. we've been waiting for signs that the shorts would be out in force, ready to make their stand and this will make it easier for them. but nick woodman has made a billion on top of the ipo and also headed to sun valley this week. >> is it really? >> yes. >> when we refer to sun valley, the annual allen and company conference started many years ago which you get the luminaries, used to be just for media, that has changed to media, technologies and everything converged and you do

sometimes deal come out. disney from many years ago, buffett there and -- >> besos "washington post." >> because of at&t directv, there a mood like we got to get big and do it quickly. >> there's more pressure. the ceos cited the comcast deal as one of the reasons they picked up pace with their negotiations. back to ipos of course as we will watch gopro. are we back -- we've had a bit of a lull after king to a certain extent. but with this deal in particular -- >> this reminds people of twitter. and especially with the options as well, successful ipo. i find it funny in a market that is starved for volatility, volatility at a 7-year low, this stock has plenty of it,en

average of $38 million of shares traded in the five days since the ipo. the options hitting the market should only increase. >> if cramer were here he would remind us of the razor thin allocation. >> exactly. how little of it is out trading and that has been typical of so many of the offerings we've seen in the robust ipo period where they are selling slivers really. so you just created demand and balance when there is that. but with those lockups, many people underestimated the power that would have on downside for twitter when that lockup expired. that was powerful. >> you mentioned king, the maker of candy crush, trading above the price at $22.50. that's up 42%. piper also upgrading to overweight, raising the target to 28 from 19. we'll talk to the analyst behind that call in the next hour.

they are basically looking at the i store and seeing games rank better in the recent past, that makes them feel that the company is going to either meet or slightly beat estimates for q2. impressed by the sustainability of farm heroes and pet rescue. >> there's another one people are excited about, soda saga or something. do you remember? there's the flashback, they had all of those candy creatures. >> we can never forget that day. >> it was sad, they disappeared -- >> some hung around, they were freaking us out a little bit too. >> that was a rough day for some of those mascots. >> i have never played candy crush and since then i have played. but it is so addictive, the ceos sat on our set and told us they have mastered, i now understand. >> have you paid? >> i refuse, can't go there. >> they have an interesting business model and it didn't take that long. it was may when the stock was at

its lows. >> it's interesting, piper says the mobile gaming market and opportunity here is very big and growing. $12 billion and could double to $24 billion by 2017. there are people who pay for the stuff as long as they keep churning out these hits. >> >> when we come back, we'll count down to the opening trade and find out what art is expecting after the historic week an wall street. a lot more "squawk on the street" straight ahead. kid: hey dad, who was that man?

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just about eight minutes before the ball. we're joined by art. good morning to you. >> good morning. >> coming into the week people a little nervous, analysts saying we're due for 10% downside, moving up their projections for the first rate hike. what's your take? >> the week after july 4th has a kind of spotty history. but i think the first couple of days are the weakest of the lot. so i think you want to be a little cautious here. there's a little rethink going on. large, large chunk being temporary jobs, people wondering whether that is a continuation of the supposed impact of the affordable care act and what that will do. will it be enough to begin to turn things around? the other thing is i think we're

going to watch here very carefully the rustle, not one of the we talk about. it has to go from the level it's at, up through 11, to 12, 15 and needs to break out. >> i looked at the chart of this. i was surprised to see the russell 2000 recovered all of its losses from the two-month sell-off of internet and small cap and biotech stocks. that's got to be a bullish signal. >> it was. if it can break out and carry through. okay. don't forget, it was the russell that was divergent and the weakest and russell led the -- followed by the nasdaq in some of that weakness. if the bulls can get the act together and rally through and break through to clear new highs, sure, that will be an important follow-up. >> earnings season, people

trying to brace themselves. the number of preannouncements has been relatively light. and the degree of estimate cuts has been relatively modest. is that a good sign? >> hopefully it is because management doesn't want to get blamed for any negative surprises. we're assuming that they are being as candid as possible. again, you've got to remember, nearly 50% of the earnings of the s&p 500 come from outside the shores of the united states. so we'll have to look and see how other places are doing. europe in particular. >> i'm curious about valuations, we're on the brink of earnings season and looking at the highest valuations for s&p in four years. are they expensive or in the? robert shiller says yes, they are way overextended but it seems to be a debate. >> it is a debate. the real debate is what will be the profit margins? we're at all-time record high profit margins, can we sustain

that and grow it if we can they are reasonably prices. if they revert, they overpriced. >> people trying to explain what's going on with volume, half of the pre-crisis peak and saying high frequencies come out a bit and rise of the etf. is there any sign we're going to get a bounce in volume this summer? >> hopefully you'll get added volume but some of it is structural. growth in etfs mean we're not seeing the big high volumes we're used to. the high frequency guys, that's a little debatable. i do think it's adding to the markets behaving slightly more irrationally than they normally do. but i think some of that is structural. i would hope that volume comes back but i don't think we're going to see it as we saw in precrisis. >> we'll see what happens today. thanks, art cashin.

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on the street", the opening bell in more than a minute's time. we kick off the week after the dow's best week since april, s&p not too far from 2000. earnings season begins tomorrow, sun valley later in the week. my favorite stat of the day. points from its record back from the hayday of the dotcom boom. march of 2000, a little about n bananas when you think about that. >> it is. >> it brings you back to how much stocks moved in such a short period of time during that time which lasted for years. '96, i believe from chairman greenspan and there we are march of 2000, i think march 10th 2000, all time high. >> and march 31st is where we are now. the bear market low for the nas,

1260 and here we are with a comp not too far from 4500. >> also may have been march '09 i think. >> march '09 was the low. s&p 500 looking at the level, it wants to go to 2000 this summer. it's been a persistent rise, record. >> there's the opening bell and s&p at the top of the screen, red filling in more than the green at the open. promoting coleman brand outdoor summer products. >> flashlights and tents. >> over at the nasdaq, ovarian cancer national alliance kicking off its conference in washington, d.c. later this week. bunch of movers to get through this morning. bank of america out with a couple of moves in retail. downgrading bed badge and beyond to under perform talking about risk to guidance for the quarter. traffic challenges and margin pressure, limited financial disclosure. that is the fourth worst s&p

named of the year and interesting to see them throwing in the towel this late in the game. they upgrade williams-sonoma, highlighting the higher end affluent profile, they call it the most attractive store in hard line. >> on thursday we spoke with bob olstein, talking about bed s bath which he likes. he points out the cash flow characteristics of the under lying business and at some point it may be an lbo candidate. >> he got good news on that front today with $2 billion in share buybacks trying to instill confidence in what he calls a long-term growth potential and financial outlook and cash flow generation of the company. >> on the subject of potential capital returns we should look at shares of pet smart, up

sharply on thursday after janna, the large activist firm took a position this morning filed two hours ago. the company says it's considering capital returns of various natures but did not say it is going to do any of them but said it is looking at those or evaluating those various ways to drive shareholder value in terms of returns. that stock adding a bit to what was a big rally of course on thursday. saying it wants to engage with the company on various ways to create value, including returns and potential sale. >> getting an upgrade at jp morgan, increased confidence in the tokyo elect tron merg, goes from 19 to 30. that's going to be the best performer at the s&p on the open. >> the deal has been out there for a while. they just decided to do the

math. >> they looked at the position and entire semiconductor market here and said they were both in pretty good shape and management, vote of confidence for management in both companies remaining focused on driving mean meaningful cost synergies. >> that is a tax inversion, i forget where they end up, luxembourg, one of those places -- but we talk so often about inversions. remember, it's largely a tool when you have a global company that is deriving a lot of its profits overseas because profits here in the u.s., regardless of whether you've inverted get taxed at the u.s. rate. it's all about how much you're generating outside the u.s. that no longer have to worry about bringing back and getting taxed on. that having been one of them and material up. >> more on the way you say. >> there's more talk about them. this morning there's some reports, of course, not

unexpected trying to buy shire, another potential inversion. we're expecting that will be the case. will they be able to win that before their drop dead period under uk takeover law. >> keep your eye on king. it's going to be -- up 6% this morning getting back above the ipo price of 22.50 and the piper upgrade, they take it to an overweight, target $28. people beginning to wonder now, all of those ipo plans that had been shelved in march and april, are those being dusted off? >> boxed, right. >> taken out of the box. >> deferred ipo. >> you have to wonder what they are going to do. if you look and add it up, ipos averaging up 20% on the first day, king was obviously an anomaly, people thought it was popping of the ipo bubble but first day doesn't indicate much. >> i notice adm is not trading

in the green but not that far in the red as we use the proxy of the purchaser as a barometer for the health of the market. >> we focus a lot on that and pointed out so many times that is another confidence builder, how often the stock of the acquiring company goes up. in this case let's call it flat for the day. haven't gotten many details on synergies -- it's a lot of it is in here. a private company is wild flowers, don't forget, you won't see a response in those shares but it does go to the overall tenor of the market, which is not a lot of activity by sponsors meaning the leveraged buyout guys if you will. there have been some but it has been strategically driven and they've been looking for exits both in deals when they can sell an entire company and also through initial public offerings where we've seen so many of them. those come as delevering exercises where the cash goes towards paying down debt.

this market has been responsive to them as well. >> the strategy is interesting, a grain agriculture processor to be buying a food and beverage ingredient maker gaining exposure to overseas and healthier market. interesting to see adm adds the acquirer. >> gopro eking out a small gain here. we'll keep our eye on that one. options of course begin trading today. we have had a number of guests on last week saying they didn't believe the first few days. first for days of the public company were up 10% plus. >> what is the valuation? >> billions, i think it's above $4 billion. >> it depends on what the number is, there are people who have aggressive earnings are per share numbers. >> on camera sales or on media

company strategy? >> i think kind of both. creating the eco system and also benefitting from continued sales of the device it itself. >> bob is on the floor. >> a lot of growth oriented sectors, industrials, financials and energy stocks are lagging a little bit today. not surprising given what we saw hast week. what a perfect day it was last thursday, dow 17,000 on a day with a strong jobs report. did you see the headlines on friday? all of them talking about the stock market up, just at the same time as job report. philadelphia ininquirer, dow jumps, big bold headlines, associated press, that was the lead on friday morning, associating higher stock market with improving economy. that's what it takes to get more people interested in the stock market. i still believe it. know you got jeff talking cautious today and morgan stanley is cautious today.

it's not a hard call in an environment where you're in a slow seasonal part of the season. that's not a tough call. money is still going into the stock market. i watch etf flows, 25 billion from etf.com for june. we're on track potentially for another record year. 2013 was the record, $188 billion came into etf. we are on track to possibly equal that and maybe beat it. still 50/50 at that point. you're saying it's spawn funds. no, it's not. 70% is going into stock funds not bond funds. and that will increase if the trend kmcontinues with a strong economy. going on for a month now but watch what's going on. we need to start moving into investments that protect against inflation, like real estate and commodities, but if you actually wauxed where the fund flows are

going and people are putting money, that's not happening. look what's happening with the s&p 500, 3.2% since june 1st since the talk that the fed behind the curve started. look at the stuff you would think people would be putting into to protect against inflation. they are not doing. the biggest etf out there. it's flat since june 1st. gold is doing better. the biggest etf out there is the dbc, that's under performing the s&p 500 less than half. i know everybody wants to talk about this fed behind the curve and get big on inflation assets but so far i don't see people putting a lot of money in these areas. let's talk about some movers, we had an upgrade at jp morgan paccar, maybe vokz wagon getting involved has been around recently but the journal had a negative outlook and bed, bath

and beyond, they were downgraded over at bank of america, merrill lynch. that very interesting deal to buy wild flavors. there's international flavors the monster in the space. this company has been buying stuff for several years now, their current ceo is going to be retiring in september. but look at the stock price, we were dealing with $60 in the beginning of 2013 and now at 105. it's very difficult barriers to entry and these guys may have been very, very aggressive. >> shattering the bearish myth out there. good to see you. let's go over for what's moving at the open. >> slightly lower on the day after posting three consecutive weeks of gains for the nasdaq composite. we've talked about the s&p 500 and dow tratding at record

levels, what about the nasdaq? the tech heavy index is 12.5% from breaking the all time high and earnings better than expected in the tech sector could be a catalyst for share. that's something to watch. gopro options begin trading today and mobile iron went public here on the nasdaq a couple of weeks ago, deutsche bank initiated coverage giving it a buy rating and silicon motion, shares higher on its updated guidance. in terms of social media, big movers, king digital, one of the best performing stocks after the bullish note from piper. king shares have been staging a come back of about 20% over the past one month. yelp, pan dora, groupon joining in on the social media comeback. a quick work on india. the they have been rally mode in

hopes that the newly elected prime minister will tackle inflation. the india budget will be released later this week. market participants will watch this closely as they are expected to outline measures around taxes and inflation and as well as attracting private investment. that's something to watch looking at india. >> bertha coombs. >> carl, tim evans at city futures says the market seems to have moved in concerned to complacency when it comes to geopolitical risk. for a time it was all about concerns we would see a takeover of the oil production facilities in iraq. that hasn't come to pass as yet. now we've got oil coming back online in libya. the rebels have given up control of two major points closed for the past year. libya has lifted and we're seeing some of that upward

movement, little bit more downward pressure here when it comes to the oil majors but traders still say they don't think it's ready to fall out of bed just yet because these situations are fluid. for now, we're seeing a bit of a pull back. natural gas on the other hand seeing a very big pullback after a run-up over the last couple of weeks, partly, there's not really. of a weather catalyst there. we did see the hurricane arthur last week, did not pose any kind of threat. at this point as far as a tropical storm activity forecast there is nothing on the horizon. the next storm called bertha by the way, if it does come to pass, for the moment that map is totally clear in the caribbean and nothing forming. even though we're getting hot weather in the northeast for the next couple of days, there isn't a huge forecast for hot weather that would generate more energy production. as far as metals, we are seeing the dollar index here at a two-week high. that is putting some pressure a

little bit of profit taking when it comes to gold given the strong numbers that we saw last week as far as a safe haven play, that's pulling back and even copper pulling back more sharply as well. back to you. >> bertha, go easy on us. your fury knows no bounds. bertha coombs. the search for value, a look at bargain hunting in a record setting market. later, meet the co-founder of a company you might consider to be a netflix for legos. we'll be right back. ♪

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♪ >> stocks may be near record highs, which makes it increasingly harder to find bargains out there. dominic chu has been hunting for sales. what have you found. >> walk this way for these bargains, we just looked at big names in the large cap universe and our team of data analysts and researchers here tried to look for ones who have decent relative valuations to where

they've traded historically speaking. we've looked for large cap stocks trading with ratios at the discount to where they typically trade over last five years. three different industry groups the first is ox dental petroleum, they trade about 14 times earnings, which is about 7% where they normally trade at least over the last five years. normally trade at 15 times earnings. that might be one of them. also on the financial side of things, we know they've lagged but a lot of banks are trading at discounts to where they have over the past five years. pnc, they are trading at 12 times earnings and normally trade at 14 times earnings. so you can think of that as trading at a 14% discount to where they normally do. here's one other big one for you on the industrial side of things, a very big company in agriculture equipment, we're talking about deere.

it trades at ten times earnings, normally trades around 14.5 times earnings. that's a steep 31% discount to where it typically trades, at least over the past five years. there are tons of names like this out here. what it comes down to investors is that when you're looking for value picks, often times it's hard to find them when markets are at record highs but if you scan enough and find your own metrics. this is one of them price to earnings but you can see about finding value in today's market, even with stocks, carl, at record highs. >> stock pickers market as we like to say. the form at 15.7, highest since june of '07, the last time shiller was on, the ten-month he likes to look at feels rich to him. >> and of course when it comes to lower multiple stocks, trading below their historical multiple, sometimes there's a reason and sometimes that reason

is incorrect and you have gotten a value. sometimes not. >> if you look at what's working today, the only sectors higher in the s&p 500, utilities and telecom, given last week's monster rally, what we saw was utilities were the only ones that ended lower in the day. so a little bit reversal this morning. >> which was the result of rates going up which was the automatic sell dividend payers. >> which is why you need to look at rates and why treasuries are so important. treasuries and the dollar, which both reversed after that better jobs data and after moving forward bets about the federal reserve. i wrote a piece about the dollar in the second half for cnbc.com. it's going to hit this afternoon. >> going to be a good one. >> going to -- >> make sure to get that. it's finally the breakout that everybody was predicting for the dollar in 2014. we had to wait first half, didn't happen. second hax half increasingly

strategists are saying it will. >> google alerts, right now. >> it will. >> when we come back, imagine you come into work and there's a robot sitting at your desk permanently. the heads of google said tha could be a reality sooner than you think. we'll be right back. when you run a business, you can't settle for slow.

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♪ >> google's laurie page sitting down for an extended fireside chat, page and brin talked about self-driving cars, their ambitions in health and future of work. here's why we might see more part-time work. >> most people if you ask them would you like an extra week of vacation, they raise their hands, 100% of the people. two weeks, or four-day workweek. most people like working but also like to have more time with their family and do their own interests. that would be one to deal with the problem, if you had a

coordinated way to reduce the workweek and if you have slightly less employment, you can adjust and people would still have jobs. >> sara, you like this story and tweeted this early. >> part-time work is a big problem in our economy. we saw that in the latest jobs report, 27 million part-timers and that's obviously a problem when it comes to wages and its it's a problem if the part-timers wants to become full-time workers because they are not counted as unemployed. this vision of a part-time future in which he cites richard branson experimenting at virgin america, i don't know if economists would agree with it. >> what's the robot connection? >> a robot takes your work. it's the whole technology taking over our jobs, increasing productivity. but stripping us of necessary -- >> describing it from the world we currently inhabit where part-time workers want to be working more. he's describing a world -- >> move vacation. >> enough money to support a lifestyle you can go after other

things. >> i read the transcript and said sergei said it's not going to happen soon. >> the ap is using robot to write earnings stories, standard 300 word. they had this x profit and here's what the quarter is about. >> robotic anchors. >> it could be last generation. >> imagine an anchor who never messes up and looks good. i said that's bill griffith. >> i know, you and him. >> betting on candy crush, we'll talk with the piper jaffrey analyst and arne sorenson.

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try alka seltzer reliefchews. they work just as fast and taste better than tums smoothies assorted fruit. mmm. amazing. yeah, i get that a lot. alka seltzer heartburn reliefchews. enjoy the relief. welcome back, the markets, stocks pull back from record highs after last year's jobs rally. goldman's chief economist says the fed could raise rates sooner than expected. >> then marriott ceo sorenson joins us live here to tell us about the company's new caribbean property. what that means for the future

of the brand. king digital making it back to the ipo price thanks to an upgrade at piper. we'll talk to the analyst who made that call. a story that everyone is talking about, goeldsman's chief economist is telling clients he expects the federal reserve to raise interest rates sooner than previously expected. our senior economics reporter joins us. steve, tell ugs the update on janet yellen's plan. >> job growth averaging 272,000 over the past three months. that's more than we've had in the past four years. unemployment rate plunging to 6.1 has wall street wondering, will the fed act sooner than already forecast by the street? one of those is goldman, but only sort of. the significance of the goldman change is this, they have just really joined the consensus. he previously had a dofish call on the fed. looking for the first rate hike in 2016. he dialed forward the first rate

hike and they are pretty much in line with where the cnbc fed survey has been for a very long time now. more interesting are those economists who think the job market is so strong and waging inflation is so close to blowing up that the fed could act later this year or early next year. we think the fed will crack early next year and we continue to look for a 2% funds rate by the end of 2015 with the first rate hike in march at the latest. that's ian shepherdson. economics who think it will move quickly believe wage growth is about to take off, creating wage driven inflation. trouble is it's not even close to showing up in the data. it has been as flat as you can imagine staying at 2%, even while job growth has been strong. janet yellen said publicly, wage growth between 3% and 4%, not inflati inflationary. to be sure, strong job growth

does create a risk of wage driven inflation and risk that the fed could act earlier but much will depend on the running debate we've had for a long time now. labor market slack, how much of it is there and will strong job market bring people back into the labor market who have left. here are some numbers for you. the long term unemployed around 3 million. that's 2 million above average. people working part-time because they can't find full-time work, 7.4%. that's 3 million above average. add the two together, there's 5 million people hanging around who want more work than they currently have. in short, the fed will look at june numbers. welcome to progress and see reasons to keep tapering and a lot of work left to be done in the jobs market and not see much reason to tighten any sooner than the market currently believes. that's my belief right now. >> i know, steve, that the fed and janet yellen made it clear that the unemployment rate is not the only thing that matters. but how low does it have to go before they consider -- at some point you have to see that this labor market is tightening up,

even if they are not seeing wage gains they want. >> i think you're right. look what happened, you had all of these people employed and no move in the average wage, sara, right? what does that tell you? i think janet yellen may see that as a potential victory for her side in that people being drawn back into the workforce keeping wage growth down. >> well, it certainly is a debate. facts for bringing us the fact. >> we'll talk more about the markets and the economy right now. let's get to the widely followed economist, david rosenberg, chief economist and market strategist. just listening in on what steve was saying about the federal reserve, are they risking getting late when it comes to rising inflation and falling unemployment? >> i think that they are deliberately going to be late in terms of inflation this cycle. they've already told us that 2% is no longer a ceiling, 2% uninflation is a floor. janet yellen called.

we had three in a row, it's hard to know if you call that a pattern in terms of inflation data. but she's willing to call that noise. my sense is that when you look at what's happening in the commodity markets now and look at how inflation is spreading through the service sector, whether you want to look at the core service segment of the cpi, inflation, pressures, although they are low, are intensifying and spreading out. this is a fad that is bent on trying to create a moderately higher inflationary environment, they could end up getting more than they think they are going to get at the outset. >> does that mean you're not joining other wall street economists right now in moving forward your projection for when the fed is going to have to raise rates? >> no, i actually think they are going to probably end up raising rates, i think by early next year, sara. so i mean the fact that goldman sachs moved from the first quarter of 2016 to the third quarter of next year, i think

that it's going to be very difficult for the fed, including janet yellen, who we know is a dove, if the employment rate by the end of the year is firmly below 6%, the way it's going it could be closer to 5.5. you're going to have probably look at the momentum in underlying inflation, we could have core inflation at 2.5% by the end of the year. unemployment through 6%. the question would be for any dove, how can you justify zero percent inflation rates. bond vigilanties may come out. they've been in hiding but it could be the bond market pushes the fed ahead of schedule. >> david, two questions, do you think a rate hike might be a q1 story and if so, when does equities psychology markedly change? >> i think the market may go

through a period of guy races only because it's been so long since we had a rate hike. you go back to the summer of 2006. you're talking more than eight years. it's sort of been really erased from our memory. but where is the day that the stock market takes a big spill or goes into a bear market in first half of a fed tightening cycle, that usually happens when the yield curve flattens and the second half and stock market takes it on the chin. if the stock market goes down because of the first rate fall, to me, barring a recession nar call that would be a opportunity in my period. >> i want to take you back to an area where you had a great call many years ago. that was seeing the signs of a housing bust back in '05. what's your view of housing right now. we're starting to see mortgage projects that are a bit esoteric again and lowering of standards, might be a good thing. where do you come down right now where housing is?

>> i would say that -- i don't want to waffle but i'm almost ago nos tick. there's structural head winds in the classic homeownership market. people have memories of being scarred from that 35% home price deflation. i think housing as an investment is not seen as lucrative as it used to be in the past. of course, mortgage aabilivailay and credit scoring is different than the last cycle. there are things in play leaning against the homeownership. but they have been in a bull run and will remain that way for a number of reasons. when you're talking five to six month supply of inventory, conditions are still tight. that puts a floor under home prices. and my sense is that when you look at the demographics and even underlooking at homeownership rates and household formation, i think

that you have to have a very dire view of the economy to think there's a lot of downside to housing from where it is right now. call me agnostic on housing. the job market is firming and will lead to more consumer spending and savings rate have been built up, gives it more fire power and i think capital spending will come back. the reality is that labor input into the economy is running at a 2% annual rate. what's preventing us to 3 to 4% growth is cap they have the real key to take the economy forward. capital spending between now and say this time next year. >> a lot of folks are expecting it. david rosenberg, thanks for joining us. >> let's send it over to dominic chu with a marketplace. >> check out was happening with biodelivery sciences, this is moving higher after the drug developer reported positive

results for severe pain treatment, that resulted in another $10 million milestone payment from endo international which has a licensing agreement with the company. they are up 15% on the news. as for endo international is also up on the day, two companies on health care side doing pretty well in today's trade. back over to you. >> when we come back, the ceo of marriott international, arne sorenson, when "squawk on the street" comes back.

got in big news from marriott, atlantis paradise island joining the marriott hotel portfolio. welcome, arne how long has this been in a works? >> six months in the recent incarnation, we've been looking at atlantis for many years, it is a jewel in the caribbean. >> what more can marriott bring to it? a lot of people who watch our channel are pretty familiar with the area. >> it's all of our channels and customers, atlantis is well

known, many of us have been there and experienced this incredible hotel including water parks and other things. we have a group sales force which will bring more group business to it. with the marriott rewards program we'll see folks in the marriott system who redeem to take their vacations there as well as folks who say i can earn points there and i want to be part of that. the marriott flag is sort of a sign of further approval and kind of a sign of come onto the bahamas to experience it. >> i know you mentioned it serves a variety of different customers but does it signal your shift to the luxury consumer? >> i think it is partly that. it is a shift towards luxury. it is a shift towards lifestyle and leash you'isure. all of these are trends on the way as a whole and part of what they are doing at marriott. not only do we have places for people to stay but we have places they aspire to redeem their points at.

places where they can have a reunique and experience. >> this typical of the type you're doing, viewers make sure, royalty based business managing these properties. there is a capital allocation as part of this deal. $100 million in a mezzanine financing. >> this is still very rare. last year we signed more than a hotel a day, for example, coming into our system. i don't know the precise percentage off the top of my head but i'm sure it was less than 10, probably only in the 2 or 3% range. one great thing about having a strong balance sheet, when it gets recap talized, brookfield owns the property. they came in and refinanced all of the existing debt. we had the ability to play with $100 million loan and make a good return on that and good return through the contract we've seened with them. so it's a great opportunity. >> you mentioned the shift to leisure, is that a comment on the growth expectations for

corporate long term? >> i think corporate travel will continue to be very strong. and corporate group is coming back. sort of the way you would expect after a deep recession like we had in 2008 and 2009. if you look at 20-year trends, what we see is more and more leisure travel. when i was growing up, you know, along, long time ago now, didn't really come from particularly fancy roots, but our experience was often staying with relatives, not camping so much but sort of near that end. and i don't think that was uncommon. i think today travelers say, you know what, i want the atlantis and be able to have a beach experience and stay in a hotel. >> how worried are you about air b and b? >> not worried about it. >> is there an overlap? >> i think they are playing into a place which is cheaper.

they are playing in an often co-hosted environment which is attractive to some people. it is not attractive to other people. they do some things never been a hotel space. an example in new york would be folks going and trying out neighborhoods by using, let me try east village or try becca or someplace else. you can't use a hotel for that experience. we'll see how that goes. you've got important questions around lodging taxes and around life safety issues, fire warnings and those sorts of things. that will all have to get worked out. they built a good presence and well known brand. >> in terms of competition, down there where atlantis is, competition is also coming. obviously there is some but bigger economy competition. do you feel there's enough demand to be met with the capacity? >> i think so. the bahamas has great air lift and the caribbean is a fabulous

destination but there's a big new development going in there. that's one reason we had the opportunity to step in and affiliate atlantis with our autograph collection. they see that competition coming and say all right, let's make sure we're well prepared with it with as strong brand as we can get. >> people on twitter wonder about crowds. i remember pricing, we asked bobby flay why it's so experience to eat down there? it cost me $10 to get an avocado. will that change? >> we'll see. it is an expensive place to stay because there's really high demand. it's obviously a very special place. folks come back and they experience that. bahamas is an expensive place to operate and it would be shocking to many people to know how little money is made on food and beverage. >> what's the room rate for atlantis? >> it will vary based on seasonality, from a few hundred bucks to 600 or 700 bucks. >> within the property there are

different levels of luxury. >> that's right. you could be true luxury in some of the building, the cove and of course the main tower building is a spectacular building. some of the rest are a little less pure luxury. you get a range there. i think that's serving a great purpose. it allows people to stay there based say little bit on even if they've got different levels of wherewithal. >> finally the grown-up slides don't change, they only get better, i assume? >> absolutely. you've got to slide through shows sharks. >> cross the legs, that's the important part, straight down. >> good to see you. >> up next on squawk on the street, ab inside look at the new york city's most expensive real estate listing, $118 million. we'll take you inside that penthouse when we come back. can i get my actual credit report... like, the one the bank sees? [ male voice ] sheesh, i feel like i'm being interrogated over here.

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talk about a real estate recovery, new york city's priceyest new listing is $118 million, yes, you heard that right. it would be a record, $118 million. joining us now is the listing

agent for this truly unique pent house, the star of "million dollar listing", alone with our luxury correspondent robert frank following this one. ryan, 118 million. what would surprise most people who know new york city, this is in battery park city? >> yes, absolutely. >> how did this come about? >> it's the top two floors of the residences at the ritz-carlton in battery park. it's not just a regular home in battery park, the top two floors of the rits with views of the statue of liberty, one world trade, in what's going to be probably the most trafficked area in united states. >> do you have interest? >> yes, already, i just landed late last night i did a world tour with it and met with buyers everywhere from geneva to paris to london because -- >> foreign interests. >> yes, absolutely. >> that's where it's all coming from, right? for the most part we're talking about foreigners, new york magazine last week, two weeks ago did a front page story on

foreign interest in new york real estate as a place to store wealth and also potentially even longer money, i'm sure you're not doing that. >> everything is possible but i think it's really interesting when you look at this property on a global scale. if you look at the top ten global cities, new york city is kind of in the middle. and if you look at luxury housing, over 5,000 square feet. the average price per square foot you'll pay in mat hat an just over $4,000, in hong kong $11,000. >> i remember it was $1,000? >> in new york city. >> look at more real estate recently. you can come with me, i'll show you something. >> thanks so much forgiving us a tour of this place, it's amazing. when you talk about foreign buyers, i wonder if you're talking about a very tiny slice of the market. it's the foreign all cash buyers chasing out normal every day middle class wall street new yorkers. but that's only about 4% of the market when you look at new

developments. when you look at the broader market, is this market still strong? is it still driven by local buyers when you look at the sort of co-op market, still the vast majority of sales in new york? >> there's a couple of different ways to answer that. you look at the fact that in the first quarter of this year, prices were up on average in new york city, about 46% year over year. if you look at it on a global scale, foreign buyers have tapered off a little bit because of the deal in new york city. really rose in 2010 but properties like the one we're offering are few and far between. 16,000 square feet with 2200 square feet of outdoor space spread over four terraces, top two floors of the ritz, there's nothing else like that in the entire world. >> you hear those comparisons to london or hong kong in the past. having been a residents of the city for a long time, it has taken ups and many of its downs as well. would you argue that somehow it's now disconnected from the

nation's economy? >> i don't think there are a lot of people who afford $118 million apartment, if you call that a disconnect, yes. amongst people who are wealthy and that kind of money to spend on real estate, then no. i think it's a good deal. 7600 a foot with views like this is a good deal kpauredded to what you'll pay per foot throughout the rest of the world. >> per square foot, ryan, $7600 per square foot this condo works out to be? >> just over, not even including the exterior. >> what's monthly in tax? >> $25,000 a month. >> and maintenance on top of that? >> $20,000 a month. >> how do you get to 118? there is a reasonable comp the last time? >> this is an interesting offering, it's the top two floors spread out over three apartments. what we found is that a lot of these luxury new buildings, look at one madison, the top was

going into contract by rupert murdoch and do whatever he wants with it. someone who can afford this type of apartment wants to do what they want to do. they'll gut renovate it. the pricing, we look d at the pent house at the woolworth tower, top nine floors, now on market for $110 million. and that is about half of the size of what we're offering. so that's over $12,000 a feet to be in the woolworth building on top of city hall in broadway. >> ever make -- we walk that all the time. >> i'm not sure i would want to pay $100 million for that. >> you are a salesman. the last highest $88 million on central park west. the highest ever. >> almost two years ago. i'll be back here when i break that and we can talk about that. >> confident man. thanks for joining us. see you on bravo's "million dollar listing". >> the ceo of merrill lynch

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gt stock hit a record high of $19.77 last week. right now you can see down towards session lows off by 11.5% in the trade today. back to you. >> thank you so much. more on the markets this morning, the rally being interrupted with the dow and s&p lower for first day in four. they haven't put together a three day losing streak since april if you can believe that. let's bring in marian bartels, joins us here onset after talking to rosenberg and bernstein and other merrill alums. >> thanks for having me. >> does it make sense to get a little bit cautious? >> we don't think so, at least not yet. in january everybody was all in the market. then everybody started to get cautious, concerned about the fed, the continue of the taper and rates were rising. so we saw a lot of shorting happening in the market. and you're starting to see some of the shorts cover but not that much. we still see fund managers sitting on cash. i think you have to get

everybody in. i still think the fireworks continue through the summer. but maybe a little bit more cautious as we go into the fall. >> how much of that is contingent -- continued rise up is contingent on a good earning season? >> the ones that report before earning season are coming in really strong, we're looking for $29 for the quarter. estimate revisions for companies continue to rise. the strongest united states is the strongest in the world. we think earnings support, the markets fairly valued but look at sectors that are relatively cheap. where the earnings are actually growing. we like areas of tech, energy, earnings look to be strong in materials and also we like the industrial sector. because we're really focused on energy and manufacturing coming back to the united states. >> you've liked energy for a while. the s&p 500 is up 200%, you're saying it has room to go

further. what about the stamina, what about the momentum of this rally? it's been so persistent. >> we really believe we're in a new secular bull market. that means we're out of the trading range. we're in an uptrend. when you study all of the secular bear markets that were in trading ranges, they all have to get tested. you normally get a 20 or 30% test then go on to new highs. we see the market rising over the next decade, but you're going to get bear markets but right now we don't have any signals either technically or fundamentally that you're about to enter a bear market. >> what kind of yield on the treasury would make you nervous? >> what's very interesting is when the 10-year treasury yield has been getting up to 3%, everybody is looking for it to go above 3% but it kept going down. i think it's very important if you see the 10-year go above 3%. i think the fed is then telling you they are going to allow rates to rise. >> i want to come back to a comment you made about manufacturing returns to the

country, natural gas boom, we've been hearing about that and there are examples of it but it has not been a huge trend at this point. is merrill expecting that that really will pick up in terms of the pace? >> one of the things we're talking about as a transforming world, one of the things happening in the united states that are really transforming. energy is one of them. texas is producing more energy than the persian gulf. the average american does not know that. i'm sure you know the highest rents in the country are in north dakota and most don't even know where it is on the map. fracking, the technology that has been the innovative driver, is really transforming energy. we think this is a sustainable trend, at least over the next five years. >> how much depends on retail coming back eventually to this market? or does that ever happen? >> retail is back. i don't know where your data is. >> you think mom and pop are interested in stocks? >> not everybody, not all mom and pop. when i'm marketing there are a

number of clients that still remain very cautious. if you look at our overall equity valuation, it's 62%. i think you would find that surprising. when we started at the lows of the bear market, they were at 45%. retail actually was a net buyer last year in the market that actually has been sellers this year. that's what you're focused on. they've benefited from the rally and we think they are taking profits. we don't mind if clients take a little off the table as they've added to the exposure and as the market has gone up. 62% is not that high because our overall allocation we're recommending is 66%. >> so a little more to buy. >> we think there's a little bit more to go. going a little bit cautious into the fall. >> i was going to ask you how to -- but you're not going to go there, no top for this market. >> not yet. >> it has been quite the journey but king digital, the maker of d candy crush, should you be

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the average hedge fund up 2%. they are seeing much bigger gains so what is their strategy. kelly back at hq with more on the answer. >> we're about two weeks out from the hedge fund conference and it's been a very underweming year in general for hedge fund managers with the exception of the couple you mentioned. the average fund was up only 2% in may, the s&p was up double that. june figures for hedge funds aren't yet out. anecdotal evidence suggests they are still lagging. there are exceptions, pershing square, up 25% this year, largely on the botox maker and burger king has done well and canadian life.

another winner is the glenn view funds, up over 11%. robins has scored big with the health care earnings, including stocks like humana, one huge winner appears to be flex electronics. they have done great with savvy stock picks and it has worked for some as markets test and contradict people's assumptions the treasury short and tech high flyers have burned many during the first half. despite improved job numbers, some see the s&p strength and seven year lows as only a temporarily respit se. into doubt we'll here more about the outlook in the upcoming alpha conference held july 16th at the pierre hotel in new york.

>> ak man did not have a good year last year. robbins had a great year last year and following now this year. overall, what amazing me, is that money continues to flow into hedge funds not out of them. >> i couldn't agree more. i was just having that conversation with a hedge fund manager this morning. all time high, close to 3 trillion at this point after two years in which the s&p has done better than most hedge funds. what this person said, it's remarkable, isn't it, what happens is you can still say we're performing well and we're hedged so it sort of underscores that tried but true argument that a hedge fund is there to hedge your overall portfolio and exposure to the market and you'll underperform in good times but perform less badly in bad times. >> we just haven't seen those in a while. kate, thanks for running through the hedge fund performance names for us. it's been a long journey for

folks at king. the stock getting a bit vote of confidence from piper. we have the man himself over at piper jaffrey, michael olson joins us from minneapolis. good to have you with us, good morning, michael. >> good morning. >> you think the quarter is going to be okay based on the rangings on ios. walk us through that analysis, is it as simple as looking at the top 200 games? >> i do think the quarter will be okay. i think when you look at the ranks we're seeing a consequential increase and top 20, that's a good sign given the streets modeling for flattish revenue for the quarter. i think the stock is at a price where it's priced even if we get an in line guidance, that's going to be good enough and we're excited about some of the things coming in the future. >> you say it's increasingly looking like they may not be a one hit wonder.

they are hugely leveraged to the one game, candy crash saga. when will that change? >> that's been the big knock on this one like you say, one hit wonder, 67% of their bookings in q1 came from candy crush. we do think that as we get to late '15 and bond, we'll see less than 50% of bookings from candy crush, as a result of other games that have done extremely well, they've got a game called farm heroes and pet rescue that have stayed in the top ten ranks over the last six months. >> you talk about the prankings, which obviously is a clue as to the game's popularity. how do you then take it to how much money is coming in it or profit from those games itself? >> that's a good point. ranking is one thing but you have to be bringing in some significant bookings as a result of that. what we're seeing with these games is that they are generally not seeing a slippage in the amount they are bringing in and

kind of average bookings per user. what we're seeing specifically with the games outside of candy crush is that the range of bookings per user has been very consistent. so we have confidence in that. the other thing that is important to keep in mind and we have confidence in, a new version of candy crush coming out later this year. that helped to drive some increase or at least some decline in the desell race of candy crush users. >> i know you're optimistic about the growth in the mobile gaming category in itself. what does king digital have that another one can't replicate and come up with the next big hit? >> it's funny. increasingly we've been seeing two guys in a garage are being pushed out of this market. in other words, you used to see all of these games come out of nowhere and do really well. and have very small development budgets, what we're seeing now, it's really taking millions, if not tens of millions of dollars

to develop a good game. the cross promotion between tens if not hundreds of millions of daily active users for these games is powerful. also, the marketing, king is going to spend more than $400 million on marketing this year. those are all things that are kinds of allowing the big to get bigger. >> we'll see how it goes when the quarter comes. obviously the memory of that ipo day still rings in some investors minds. thanks again, upgrading king over at piper today. >> up next, disrupting the cloud. tw twilio's ceo will be live to tell us all about it when we come back. ♪

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tools they need to create a customized telecom space. twilio's founder jeff lawson joins us now. tell us about what this is for those who aren't familiar. telecom in the cloud. >> thank you, sara. twilio is a software and cloud based communications platform that allows developers and their companies to incorporate communications into the applications and work flows that they build. and so companies like uber and air b and b create a great experience communicating with customers while you use their products and enterprises like home depot or coca-cola are august meanting or replacing with software running in the cloud. >> are you taking business from cisco? >> we're completing against the incumbent industry here. global i.t. spending is about $4 trillion. and 8% of that is enterprise

software, 4% is the data center. telecommunications is 44% of global i.t. spending. so you think about the disruption that service had for software and infrastructure, the same thing is happening in the world of communications. >> your background is interesting, formerly with amazon. do you work with amazon now? and i wonder what inspired about creating twilio. >> we're a partner of amazon's and use much of that infrastructure. really my background as a software person and engineer and also time spent at amazon really helped me to understand as we were starting twilio, the power that flexible and agil cloud, the power that can have to give companies flexibility in how they stands up and scale and maintain infrastructure in many parts of their enterprise. and that led us to doing the same thing that sales force is

doing for enterprise software or amazon is doing for infrastructure service, twilio is doing for communications as a service. >> all right, so you go in one of these big corporations and taking a look at their spending broadly speaking. what's your core competitor of others? >> we're not selling boxes. we're not selling you lines. we are not limiting the scaleability or the functionality of what you can build and that's the legacy way in which communications solutions have been sold. what we offer is a flexible set of building blocks that companies can use to build everything from alerts and notifications to the next generation call center but all bought and paid for and pay as you go manner without up front capital expenditures and the tie-in that costly box pros vid with the multi-year, multi-million dollar process of putting them in place and contrast, twilio has this in a

cloud delivered manner to scale as you need, experiment when you need and apply agility to building communications that meet the exact needs of the problem that you face with your customers. you are not bound to a predefined solution that the incumbents would sell you fly's a healthy athlete for ipos cloud based s. that the direction you're focused on? >> we're focused on building a great company. >> is it more of a consulting arrangement then, jeff, or a vender providing a service -- i'm trying to understand in terms of revenues. how's that going to play out over time? long-term contracts with the corporation or -- explain that to me. >> we are a product company. we don't do professional services. we have a large ecosystem of developers, system integrators and isvs who build on top of twilio.

we don't do that ourselves and our revenue derived by the customers use of our platform. and so, as they use more of our platform, as they roll out new use cases and enterprise, they will end up paying us more and what's great about the model is acquire the customer and we let them begin their development and begin their building at a prototype stage and then scale with them all the way through a global deployment and twilio works with over 1,200 carriers in over 200 countries. >> we'll keep an eye on you. thank you very much for coming on. >> thank you. when we come back, how marijuana crops legal and not so legal could be responsible for sucking screams in drought-plagued california dry. jane wells has that story in a moment. [ female announcer ] there's a gap out there.

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welcome back. blackberry shares in focus. up another 6% this morning over optimism regarding the company's future. that stock you can see there off session highs up about 6%. the stock absolutely on fire over the past month. up nearly 50% so at least the optimism and the strong bull run for blackberry shares continues, sarah, in today's trade.

>> it is amazing to watch the stock come back. washington state issuing the first retail marijuana licenses today, six months after stores opened in colorado but the state with the largest marijuana economy is california, most of it remains illegal. jane wells reports from los angeles about a new hurdle that pot is facing. jane, water. >> reporter: yep. sarah, you know, in california only medical marijuana is legal but the industry legal or otherwise is facing a problem bigger than law enforcement. mother nature. in california's humbolt county, marijuana sustains the economy but it's not sustainable. pot is a water hog. >> we're looking at potentially streams going dry, streams that harbor endangered fish species like salmon, steelhead. >> reporter: scott bauer from the state's fish and wildlife department shows pot production doubled since 2009, most of it

illegal. the yellow pins designate known grows in the trees tapping into streams already running low due to drought. the average pot plant needs about 6 gallons of water a day and the sheriff's worried the fight over water might be violent. >> you will see people actually, i believe, having some conflict over water rights. you know? who has a right to this water. who doesn't? >> it's a ruthless market. >> reporter: hezekiah allen is with the growers association saying the marijuana growing members storing what water they can. but not everyone in the pot biz is green. >> there's a lot of environmental and violent crimes committed right and i think the best way to do away, protect the watersheds to do with the criminal activity is to create an incluzive, regulated market to bring the responsible practitioners and responsible actors into the fold. >> reporter: legalizing and regulating doesn't seem likely in the current environment despite potential damage to the environment. last year, two dozen streams that salmon use in the region

went dry. this year should be worse. yet, few seem want to push back hard against the one thriving business here. >> because most of the incomes of property taxes, income taxes, everything comes from cannabis. >> reporter: now, this is happening as the price of marijuana is falling. and the concern is that others are now starting to leave growing, chipper ri says he knows people going something for legal and lucrative, trucking in water. back to you. >> the picture shakes out. jane wells, thanks very much. a water shortage because of pot. >> for many years people talked about water as an investment, an investment class. certainly. >> a shortage before the marijuana industry started booming. >> exactly. not always bcome to bare and something to keep in mind. >> watching the markets on this monday morning after a pretty strong week last week. pulling back a bit. the dow still at that 17,000 level. briefly went below. no major economic news. this week watching the minutes

from the fed's last meeting on wednesday and earnings. wouldn't you say? >> starting to get them. we'll be focused. >> with that, over to you, carl. >> thanks so much. good morning. almost 8:00 a.m. at apple headquarters in california. 11:00 a.m. here on wall street. "squawk alley" is live. ♪ ♪ dow's down on a monday morning. of course, after the best week since april. last week. joining us this morning, all hour, ceo of the daily mail north america and with us, the

co-founder and ceo of indigo-go. good to have you back. good morning to you. >> thanks for having me. >> more evidence the i-watch coming soon. they hired the sales director of tag haur to promote it. this move comes as the wear goes on sale today. reviewed in "usa today" this morning. good review but the overall thought is still early and probably too early in the game, john. >> hiring a designer, right, to undergeek everybody. the watches are too geeky or complex or bulky. and apple flanks them with high design and they're sbe gags with the desktop, with the phone. the features commodityizecommod >> this is going to be expensive. >> compare ios and android, ios is more expense i.