fed. thank you very much. ahead on "squawk alley," sara will be interviewing andy cohen from bravo about "vapdser pump rules" whatever that is. >> maybe ask him about the fed. over to you, carl, for "squawk alley." >> see you soon. it is 8:00 a.m. at facebook headquarters in menlo park, california, 11:00 a.m. here on wall street and "squawk alley" is live. welcome for a wednesday. this morning, ed lee, managing editor at re/code. jon fortt and kayla tausche. the fed the big strofrt day. take some time to talk tech this

morning. for instance, shares of alibaba were trading a little lower earlier today as the first lockup on shares is set to expire after the bell today. about 437 million shares, 18% of shares outstanding, will be eligible for sale. investors hoping to see something like what happened to facebook. back in august of 2012. of course it's now up 260% since that time. but john, others try to argue that coincided with a turn in the ability to hold a good conference call and in the ability to monetize mobile. >> fund misunderstanding of facebook in its potential after it went public, can they figure out this mobile thing. clearly they have. it's not clear that alibaba is facing the same issues. theiry're a company that came t market after a hype and a sobering since how the chinese government is treating it and growth is going to pan out. we'll see. >> it certainly was a bigger

company when it went public than facebook. $200 billion market cap. >> massive. >> more mature of a company. ed, there's still some pretty heavy selling going into that expiration at the open today and first 30 minutes of trade, 11.7 million shares traded hands when going to the negative. certainly there is some negative sentiment going into this. >> there's negative sentiment. of course whenever the lockup ends there's always going to be activity and volume and a lot of people are going to ash troj against that and that's a smart day play for sure but longer term to your point sentiment has cooled because china itself as an economy is switching from an export economy to a consumer economy. that switch hasn't fully happened yet so a lot of infrastructure spending around there, lot of the housing starts out there, have entire towns built that are empty and waiting for that consumer sort of thing to rise. hasn't quite happened yet. that might be affecting a lot of companies in china. >> we're looking at jack ma the day shares began trading. of course he's built somewhat of

a culture, cult personality. >> yes. >> could you argue just for fun that he's encouraged people not to sell or maybe encouraged them to sell, i don't know. >> he's a mystery. he plays it close to the vest. he doesn't telegraph a lot and i think that's part of his strategy, frank willpyp he doesn't want too much out there. he doesn't want people knowing his strategy by any means. he is a long-term vision player that way, like jeff bezos if you think about it. if you want to buy into alibaba you want to buy long term, not the day or the week. >> he knew the hype was strong. looking back, he was talking about oh, when people think you're great, you got to make sure you're that great. when people think you're not so great. he knew that the hype was absolutely strong. he knew he was stressed out about it and he was worried how it was affecting the company. in retrospect it's clear he could see some of this dynamic coming. where does this company settle out, where is it three years from now, more important in the

grand scheme of things than next week. >> at least in the next 12 months the expectations are that it will be able to climb out of this funk, even though some of the consensus numbers have come down. barclays lowered price target but lowered it to $100. deutsch bank 98, credit suisse at 112. even though people say look this is going to have near term sensitivity, can they get over the obstacles, the outlook is good at least in the analyst community. >> still need to find growth areas. india is something they've been looking at and, you know, for smart investors that's what they want to see how that might shape up. their opportunities there, both alibaba and u.s. companies like amazon are looking at. so growth is still name of the game until china kicks in and consumer economy kicks in they will look elsewhere. >> we made the comparison to facebook and speaking of facebook the company announcing a major move into mobile payments yesterday. our julia boorstin is in l.a. to break that down for us. good morning, julia. >> good morning to you, carl. for the very first time facebook messenger users in the u.s. will be able to send money to each other opening up a market for

facebook payments and potentially e-commerce. after starting a message with a friend users tap the money icon on their screen and send cash. all you need to do is link it to your visa or mastercard, or debit card. facebook has no plans to make money on this service but once the social network has all of that debit card info the ecommerce potential is huge. this move into pure to pure payments puts facebook in competition with paypal's benmo along with square and snapchat which partners with square, to allows users to send cash. sun trust's robert peck says this sets up facebook to add the buy button which it's been testing which he estimates could be a $2 billion a year opportunity. and just last week facebook bought shopping search app the find, to use its technology that indexes products across thousands of e-commerce sites. now facebook's move into payments has been anticipated since the company hired paypal

president david marcus to run messaging last summer. aefl very to see when marcus looks to expand beyond the peer to peer payments. >> stocks not far from 80. thanks for that. as if there weren't enough news on facebook hearing yesterday republican senator jeff sessions singled out mark zuckerberg in particular for his stance on hiring foreign workers. take a listen. >> mr. zuckerberg, worth $27 billion, i guess he's 27 years old, i'm not sure. he wants more foreign workers. i would like to think he might want to pay his employees more and maybe not have quite so many billions. >> you've got some thoughts on this guy. >> what? i am so fired up about this. i am channeling my inner santelli. a republican from alabama? the party that's against raising the minimum wage and trying to tell mark zuckerberg how to run if facebook and how much to pay engineers. it's absolutely ridiculous. i mean, facebook is paying so

much, it's helping to raise the overall engineering salaries in the bay area, they paid between $150,000 in average before bonuses and stock-based compensations causing a huge gentrification effect in menlo park where facebook is based. this guy has no idea what he is talking about. i mean invest more in stem education and job retraining which he talked about but doesn't seem to understand and is not creating enough engineers with the mobile skills do that instead of telling zuckerberg. >> we've reached out to sessions. zuckerberg will be 31 in may. >> i think the broader picture here is there's not enough engineering talent, that's a big reason why zuckerberg and others in silicon valley are trying to get more tall tonight come over here. immigration is a way of getting these engineering talent into their offices. >> so the companies would make a different argument where it's not necessarily about hiring

immigrants in this country ser sus u.s. nationals it's about choosing to create the jobs somewhere else. facebook opening its engineering office in london instead of here in the u.s. because the visa policies were loser there. they're creating jobs elsewhere because of this. >> that hurts us. if they can get the coding talent elsewhere across borders and create the same product we lose out in terms of our own domestic economy. i think yes investing in stem education is a key thing something that congress needs to look deeper at if they want to make this criticism. >> apparently want to raise the minimum wage foreni engineers i silicon valleys, facebook one of the only companies not participating in the illegal collusion to keep salaries lower -- >> that was the case where they prevent from poaching each other's engineering. >> why doesn't sessions criticize apple and see how that goes over since maybe they are the ones depressing engineering salaries if anybody. >> finally not the best day for

uber in europe. a german regional court has imposed a national ban barring it from operating commercial services leveling fines of 250,000 euros for violations of the country's local transport laws, at the same time police have raided their offices in paris as part of an investigation into its low-cost uber pop service. this comes as a new law requires drivers and chauffeurs to be licensed and secured. uber called the french raid, quote, a disproportionate action said its revising german operations to fit within the court's exists regulations and stats from the taxi and limb po mo he seen in new york show there are more uber cars in new york city than yellow cabs. little over 14,000 uber cars in new york, about 13,500 taxis and every day a new reminder of how tough it is to disrupt market by market all around the world. >> especially ones that have been heavily regulated to begin with, right. i think the larger narrative

also is that what's hard is that uber started in san francisco and it's not a taxi culture out there. so they had an easier time getting off the ground. as soon as they started going to markets like new york and cities in europe where it is heavily reg glitted taxis are a municipal service they had a harder time. they did not tell the story well enough. i think from a pr standpoint they have not been doing a good job of smoothing the way and what you're seeing all the action taking place. >> this could be good for uber pup. all the headlines about getting blocked out of markets sound bad but this is the company that has the capital and smarts to be able to battle these regulations and the various countries where they want to make inroads. so the fact that there are these barriers up mean others won't get into the market any faster than uber and uber has the battering ram of anybody to break this door down. >> it's like what they're essentially offering is software. they're not hiring drivers, not buying cars, not paying for insurance so it's easy to get

off the ground and i think, you know, that's the other challenge for them is a local competitor could just as easily rise up and, you know, take market share away from them. >> the fact that there are more ubers in new york city than taxis does that tip the scales in their favor at least where it comes to operating here? >> i use it here. when i go to paris, i've used it there. it's easy. say what you want to say about the company itself, company management, it's a service that works fairly well and priced fairly well. >> do you think they enjoy sort of the kicking up dust, the process of it, or -- >> reveling in that but at the same time it's going to hurt them in the long run. >> it will cost them money. >> who loves the local taxi company, that's the other thing that doesn't get talked about like yes, uber has had its culture issues bal cab companies, i mean come on. who knows and loves the owners of the local cab company. >> regulated monopolies yeah, not na en's favorite. >> cramer called it the most unmet needs in history in terms of business models, right. in terms of insular highly

regulated circles of business that were protected for years, just waiting for an app to come and knock them over. >> local governments they want their piece, right. they are used to getting the fees for licensing and they're not getting it with this new service coming in. i think that's -- >> the question is if it's worth $40 billion, right. >> $41 billion. >> exactly. >> how much of the money it has in its coffers are going to pay lawyers. >> probably. >> ed, always good seeing you. >> yes. >> ed lee joining us from re/code. >> a check on the markets, of course, all eyes today are on the fed that statement coming out this afternoon. will the fed or will it not keep the word patient in its statement when it comes to the timing of a potential rate hike? the market is fairly soft ahead of that, dow down about 63 points. that's a third of a percent. s&p down 5. nasdaq down 5 as well. so certainly something that we are watching. but utilities and telecoms, performing the best out of any major sector. those are two of the most rate sensitive sectors that we watch. >> yes, indeed.

also, want to do a couple big tech names, oracle and adobe, oracle rising after in line with analysts, no revenue missed on currency head winsdss. business software maker raised quarterly dividend by 25% to 15 cents a share. on the flip side adobe slipping a bit even though profit and revenue topped expectations. the company did see a less than expected increase in subscribers to its creative cloud and guidance lighter than the street hoped but the number of users 28% higher year over year. >> when we come back a major cyber attack on blue cross may have exposed financial and medical information on more than 11 million people. how can you make sure your data is safe? a top expert from intel security has answers. plus according to elon musk driving your car could one day be against the law. what he's talking about and how it could affect tesla going forward. who said radio is dead andy

cohen is with us to break down his move to sirius xm. dow down 68 points. "squawk alley" is back in a minute. [ male announcer ] your love for trading never stops. so if you get a trade idea about, say, organic food stocks, schwab can help. with a trading specialist just a tap away. what's on your mind, lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward.

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starbucks hope to kick off a nationwide conversation on race with race together campaign announced this week but the social media reaction probably wasn't what the company was looking for to say the least. something it will have to address at its shareholder meeting today. jane wells outside that meeting in seat toll explain. jane? >> hey, kayla. shareholders are starting to arrive and howard schultz will be talking about race together. shareholders meet to vote on a proposal to separate the chairman and ceo jobs, the board recommends a no vote on that. the debate over that compare to the one raging outside this meeting as howard schultz has recommended that baristas start writing race together on coffee companies they hand to customers to try to positively air out a touchy subject. >> if a customer asks you what this is, try and engage in the discussion that we have problems in this country with regard to race and racial inquality and we

believe we're better than this. >> at the original starbucks in seattle most customers were supportive of the idea kind of. >> it's a good step forward. many walk through starbucks and a good platform to be discussed. i don't know how much of a conversation you will have in a short period of time while waiting to get your coffee. >> make you uncomfortable while buying a cup of coffee for one someone to want to engage in a conversation about it? >> not really. depends on if i have the time to engage. >> if you were to walk in -- sorry. >> i would walk out of the store. >> how come. >> because it's just inappropriate. way inappropriate. can't talk to a person about race, any kind of religion, race religion and politics you don't touch them topics. just walk out. >> twitter reaction, vicious snark gee quote. back in my day you had to

eavesdrop on the next table to overhear uncomfortably stupid racial comments at a starbucks. hire's your boiling hot coffee and let me tell you where giulana was write or breaking all starbucks baristas will serve baerjs from atop a high horse. the head of starbucks pr suspended his twitter account because it was vicious. what do shareholders think? do they care? we will have that next hour and schultz will be on "mad money" with cramer. back to you. >> i'm sure that cramer will have comments, jane, for him on that as well as other strategies going on at the company. i have to say, i was a starbucks barista, one of my many high school summer jobs, i cannot imagine a single scenario where it would be appropriate to sort of broach that line of customer service and have that conversation. people are in a hurry, they have their personal barriers up. i can't even imagine a single scenario. >> i would say the only problem

is i wish they would stop talking when ordering coffee because i want to get in and get out. that's who i am. >> kayla and i will be talking about race during the commercial break. i have some thoughts on rep per ragss. >> see. >> entitlement and i think we'll have a good two minutes to get into that. >> service times aside, i think -- i don't see a problem with the company at least being willing to address the obvious debate in the country and 499 other s&p 500s out there protective of their bottom line and not going to risk it. it's a risk. >> it's a good thought. reminds me of that mcdonald's pay with lovin' thing. there's a time and a place for these sorts of things. i'm not sure the minute and a half i have when grabbing my coffee is the time to pour out my soul about the word. >> maybe schultz qualifies where he wants it to happen. >> some of the most pointed criticism -- jane? >> it will be interesting to see what hes says about it on stage after the 24-hour cycle of social media ripping him for the

most part. what he has to say about it, i think the company may have been taken aback by the reaction. >> the most pointed criticism was that in the campaign the photos only had caucasian hands holding up the mugs. we'll see what he says later today. the latest from you when that happens. jane wells in seattle. bravo's andy cohen announcing his next project he'll join us with the details ins just a moment.

welcome back. health care service provider panera blue cross has reportedly been hacked with a breach affecting financial and medical records of as many as 11 million customers. how do you make sure your data is protected? gary davis, chief consumer security with the outfit formerly known as mcafee, now intel security. gary, these health records are extremely valuable. you can commit insurance fraud if you have access to somebody's medical information.

how serious do you see this problem as being? how widespread is it? >> well, you know, it's a big problem. the fact of the matter is, that the data that you get when you do these type of attacks and breaches, is worth ten times that of a credit card. so the bad actor ts if they get access to the data this is data that lasts for a long time. your social security number doesn't change. your address rarely changes. this is the type of data they can use for years and years and years to do things like insurance fraud, identity theft and things like that. >> gary, these things don't change. we keep hearing about these breaches. the problem seems to be getting worse and worse. what's to be done about it? what can a consumer do from finding out maybe i've been breached and try to i don't know change what can be changed, watch your credit report for any ab nor mallties? >> well, doing things like change your password with the insurance company would be one

thing. as you mentioned monitor your credit report and look at your insurance statements. if somebody is going to be conducting fraud or insurance fraud against you, it may show up in some sort of statement and be aware hey, it if you see something, as service or some sort of provision that you didn't ask for that's in there, perhaps that's an example of that. those are a couple things. consumers need to be ever vigilant. this seems like a broken record but it's true the nature of our industry today is that any given day there's going to be something like this and a massive breach or circumstance that will require consumers to be vigilant and being on top of it and engaged in the news and staying informed of what's going on isville going to go a long ways to helping consumers to protect themselves going forward. >> and gary, more times than not, the consumer actually doesn't know it's going on. i'm looking at some of the news around the most recent breach and the company was actually

hacked the initial attack on may 5th and they discovered it about six weeks ago. what's best practice for a company to actually reveal an attack like this and how should consumers be protecting themselves given that, you know, it could be a year before you actually detect anything? >> you know, really depends on the nature of the breach in this case. it's my understanding that they've been working with fbi and other organizations to help understand the forensics that went on, what type of data was exposed, what made this breach particularly unique, is that this is the first time the actual medical records were taken as well. if you look at that, it opens up a different type of dynamic. this is an area where personal exploitations become apparent. if you're a high net worth individual and have something in your medical record that could be of an interest or cause harm if it was to get in the public domain they could use that against you and extract money

from you. i would suspect they're probably being diligent making sure they understood what had taken place, and try to get as much information and be as solid as they could before they brought the breach forward. >> chief consumer security evangelist thanks for joining us. >> you probably know him from "watch what happens live" on bravo but he's moving to sirius radio. andy cohen. the dow down 9 84. can the right treatmentsease? for you is out there. the problem is some of it's in this lab. some of it is in her head. some of it's in this new journal. and the rest of it is in your personal medical history. ibm watson can not only read this data, but understand it. it's trained by doctors. and it's always learning. it can help find hidden correlations

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good morning. i'm sue herera. your news update. officials updating the death count from this morning's museum attack in tunisia. at least 19 people were killed including 17 foreign tourists. the tunisian premier says people from italy, germany po lan and spain were among those killed in the shooting. relief workers surveying the damage from a munster cyclone which hit van what tu. the death count at 11. it could rise. crews are clearing up a pileup involving at least 50 vehicles including several tractor trailers in ontario, canada. police are blaming this morning's accident on poor weather. no life threatening injuries

have been reported. american express planning to team up with seven companies including macy's, at&t and exxon mobil to launch a cross brand loyalty program. that program called plenty would begin this spring and operate like a drug store rewards program. american express already operates similar programs in poland, germany and italy. that's your cnbc news update for this hour. let's get back to "squawk alley." thank you, sue. bravo host andy cohen revealing his next project announcing he's teaming with sirius xm to develop his own channel. let's get to sara eisen and simon hobbs on the floor. >> hey, we're gunning for our reality show. joining us, welcome the show of "watch what happens live" andy cohen the brains behind "real housewives" million dollar listing, my favorite "vanderpump rules." >> the best. >> we should note that cnbc and bravo share a parent company in nbc universal.

it's good to see you. >> great to see you. >> i don't know where to start. part two of "vanderpump rules" finale reunion or maybe we should start with your latest business venture. the radio channel. everyone's going digital. why are you going to old school radio? >> you know, i love radio. i'm a big radio fan and i've been looking for a place where i can expand my kind of unique brand of deep and shallow talk and so, you know, sirius xm seems like a great additional home for me where i can not only -- i've been producing tv for 25 years and i was at bravo for ten years in charge of programming, now the challenge of programming an entire channel around my passion for pop culture seemed like an opportunity that i couldn't pass up and, of course, i'm going to have a significant presence on the channel and listen, howard stern is one of my broadcasting role models so the idea of working under the same roof as

the king of all media was very attractive to me as well. >> my colleague andy thinks you're a genius. i'll let her carry on with the interview. a genius. >> we don't -- we don't mince words at "squawk alley." >> there you go. andy cohen. seriously, what can we expect from this radio channel? it can't be you all the time. you've got to sleep some time. is it going to be reality? what is -- what did you say deep thoughts? >> deep and shallow. i'm very high and low. i'm very all about -- "watch what happens live" is that. i have the same enthusiasm for interviewing a real housewife of orange county as i do when oprah wintery or meryl streep is in the chair and you will see a similar breadth on radio antion serious xm and it's going to be people i love, leaders and pop culture, from writers to actors and musicians and, of course -- i'll be on there and, you know, look, i didn't move to new york

city to sleep, so sleep is not a concern to me. >> many people might agree with you there. i have a question about reality tv. >> yeah. >> it does feel like the golden age of reality television is over. if you've seen over the years what's happened with ratings to programs like "survivor" back to 2000 or "american idol" in the finale what do you say to that? >> i think what you're looking at is indicative of the tv business in general. there's more places to watch, there are more outlets and more ways to watch television, so you know, ratings on a whole are decreasing for everybody. it's indicative of the entire business. but i would argue that the quality as it were and i will use quality in reality tv in the same sentence, the quality is still up there. i love -- i look at the "housewives" still an executive producer a of all the shows and we're at the tail end of the incredible season of "beverly

hills housewives" and about to launch the resurgence of the real housewives of new york with the return of bethenny frankel. we're in a great place. >> but there must be pressure, andy, talk about how you make each series better than the last? what do you say to people, what do you do? >> well, listen, i think -- i can only speak for the shows that i have anything to do with and it's just about servicing the audience and making sure that you build your own brands and you keep giving people what they want and for me, the key to docuseries is the casting. it's about making sure that the casting and the people on the shows is great and you're putting people on that people want to see more of. >> i'm sure it helps to have one of your housewives go to jail during the taping of everything. >> well, i think that's arguable. i mean i don't think that's anything we could have wished for and ta was certainly something beyond our control and

something that happened -- she was charged, teresa, with something that happened before we had ever shot the real housewives of new jersey, but no, if i was kind of writing a recipe for elements that i would want to happen in a show, that wouldn't necessarily be on the list. >> understood. curious about your thoughts, you started to talk about how we have so many different options on television. what about the different options when it comes to actually viewing? we talk a lot here on "squawk alley" about netflix and streaming and hulu. how is that influencing how you come up with programming and how people take in reality tv? >> well, it's like the wild west out there. it's the new frontier. i mean the business is changing every day. and we're just trying to hold on to the viewers that, you know, are so loyal to the shows that they're watching. one of the ways is, "watch what happens live" my own show, the only live show in late night and i think that that's a dvr buster because people feel like wait, this is actually live at 11:00

every night. i want to see what's happening. so live is one element and, you know, other elements are just continuing to make the shows great and make their -- come up with ways that people, you know, to drive people that want to watch those shows live. that's the key. getting them to watch the shows on tv live. >> "watch what happens live," who's your favorite "vanderpump rules" character? >> well, you know, it's hard to say. i think kristen this season was an mvp. wouldn't you say? she was very kind of sinister and a little -- >> i like jax. >> jax is the gift that keeps on giving too. >> he needs a smart woman even though he doesn't think he can get one. we're out of time. thank you for joining us. >> thank you. >> andy cohen, host and producer over at bravo. back to you. >> great stuff. thank a lot. tesla ceo elon musk making a ton of headlines on self-driving cars during a speech yesterday. our own phil lebeau was following it live and he's in

chicago with more. hey, phil. >> thank you very much, carl. those comments came at a tech conference in the silicon valley area, basically what he said is look over the next 10 to 15 years we will see autonomous drive vehicles and perhaps at some point in the future it will be illegal for you to drive a vehiclep. a few hours after he made those he walked them back. the other news involving musk and tesla this week is the announcement that will be coming tomorrow morning. he says it's about a new software update that will end range anxiety. the biggest battery pack with the greatest range fully charged is the model s battery pack that goes 285 miles, that's what we've gotten. the battery energy distribution is likely to be the focus of a conference call that will be held tomorrow morning at noon eastern time. and when it comes to electric vehicle range, a lot of people always ask me, they go, how much can you get on a fully charged vehicle? every electric vehicle is different, but tesla leads the pack and these are only pure electric vehicles that we're looking at here. the epa rates the model s at 270

miles max rain. you see the spark, the bmwi i-3 and nissan leaf. i've had a few say where's the volt. the chevy volt is not a pure electric vehicle. it's a range extended electric vehicle. as you look at shares of tesla over the last week we're putting this up because it was just ain't about a week ago that elon musk said i will have news about ending range anxiety on thursday. we will have that news and be on the conference call. it will be interesting to see what they do in order to end range anxiety, carl, because i think there are a lot of people saying truly end it, you have to really extend the range of the battery pack for the model s. >> hard to imagine this gets done with software alone but leave it to musk to keep us guessing. we'll see what happens. phil lebeau. it's valuations gone wild. numbers like $41 billion for a ride sharing service. are start-ups in for a rude awakening. a look at that in a moment. first rick santelli what are you watching today?

>> well, it's fed day so we have to be watching the fed. we're going to take a more macro clinical view of the fed. and of their six-year strategy to help main street and the country to get through post credit crisis and one particular group in particular. the intermediaries. yes yes, intermediation nation, after the break. the lightest or nothing. the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest, ...baddest, ...safest, ...tightest, ...quickest, ...harshest... ...or nothing. at mercedes-benz, we do things one way or we don't do them at all. the 2015 c-class. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

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coming up stocks down ahead of the fed statement. is a sell-off really in the cards if the word patience comes out? apple enters the dow after the close. will it fall victim to the fate other stocks have had after entering that index? the one stock our traders are all on the same page on. should you run with the crowd or maybe you'll get trampled. we'll talk about that in about 15 minutes. >> sounds good. thanks. in the meantime hop over to the cme group and get the santelli exchange with rick? >> thank, carl. today, of course, is fed day and maybe it's a particularly important one. verbiage and ultimate normalization but in the beginning, what it really boiled down to, the reason that we have the fed at all, the reason the fed was created in 1913, for the most part, was to help americans. okay. so what we have now 320 million americans, what's supposed to happen is, we go through a

credit crisis, the fed looks at what's going on, let's forget whether strategies worked or didn't work. let's be clinical here. they wanted to do something to help 320 million americans. variety of programs to accomplish that. but no, they can't like directly call everybody, send everybody money which may have worked out so much better, what they have to do is they have to go through intermediaries and, you know, when you think about all the policies, whether it's quan tative easing or some of the programs like term structures, with regard to giving money to some of the commercial paper, some of those program worked pretty well. you can't get around the notion of intermediaries and the biggest group that are supposed to funnel the quote/unquote benefits of zero interest rate policy, officially known as zerp, are primary dealers and i'm only naming the biggies, shadow banking and specifically subset of that group which is

hedge funds then, of course, you have the credit markets think about corporate and high grade issuance. whether the credit crisis or now, everything the fed does gets locked up here and very little makes it here too big to fail banks, this is what grew and expanded and maybe helped create and fund the credit crisis and post-crisis kind of the same group. here's where the transmission is broken. let's get more specific as to today. can i tell you what words will come in and out, no. let's take a clinical view. normalization has to occur at some point. and i only see a very few amount of roads after that happens. and all roads are sabts stocks. so much worry about the taper tantrum in interest rates i'm going to keep it simple. if stocks are fairly valued it will be a party. i will be first guy to blow up the balloons. if stocks aren't fairly priced here, and the cost of capital which has been ultracheap made

stocks go too high stocks go down and we all know what happens to interest rates, they go down. i'm talking market rates. so ideally, the biggest trade that's going to happen is counterintuitive is it is not, it's conventional wisdom, it's the flattener, back to you. >> rick santelli in chicago, rick, thanks. up next, could snapchat soon see its value disappear just like its pictures? why some tech valuations could be getting just a little bit too high. "squawk alley" will be back in a moment. [ male announcer ] your love for trading never stops.

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uber $41 billion, snapchat, pinterest $11 billion just to name a few companies but the question is could these startups with evaluations be in line for a rude awakening. kevin o'leary shared his dire outlook on the show yesterday. >> one of these deals will go public and down 50% leaving anybody that puts such a crazy valuation on it while private are going to get slaughtered. i don't know who and when but it's coming to a theater near you. >> joining us from austin from south by southwest ceo of trend hunter and author of "better and faster." thanks for joining us this morning. >> thanks for having me on the show. you heard what kevin said. what do you make of that? >> i think's no question that

will find investors highly disappointed when they go public but we are experiencing history's highest rate of change where some companies can go from 0 to 1, meaning they disrupt an entire industry. if we take the first example listed there, we take uber, sure, uber has a $41 billion valuation and that seems ridiculous today, but what is the value of disrupting the taxicab market? every city on the planet. if i started jeremy's taxicab company i would have to hire people, get cars, all this wonderful stuff. uber could actually add a million drivers tomorrow if something caused the momentum to happen they have the infrastructure and that's difficult to value. >> uber as a company and as a products, you could argue, are becoming ubiquitous. $41 billion is a high number but perhaps that's not the best example. let's go with snapchat, $15 billion, $16 billion valuation. that compares to roughly the market cap of under arthur which had $3 billion in sales last year. how are these ap tolls apples in

the market? >> sure. >> better and faster i get into large innovation creates ripples of opportunities and in times of chaos if you studio that splash you can see patterns of opportunity. looking at snapchat what i would look at is facebook. what is facebook? a giant site that allows you to share and archive pictures of your life with your friends. that creates a series of opportunities. the opposite of that, in fact. so facebook is just for friend even in 2007 let's say, something else had to come along that wasn't just for friends. that was twitter. if facebook is a place where people archive their photos what if i don't want that i need something less permanent that creates an opportunity for snapchat, multibillion dollar company and if everything is on facebook about people's horrible camera phone photos ruining the art of photography, well something needs to bring the art back. that's instagram, billion dollar company. all the things are predictable and instead of looking at snapchat i would see it as a

response of the size of facebook and create your valuation through that. >> you talk about ripples of innovation. you to catch the wave. during the dotcom era there was a wave where there was a possibility to actually benefit from that and then a pretty long period where there weren't a lot of waves to catch. and it was the hard slog of building a product that generated revenue, pretty early, had real customers and made profits. how long until we get to that point in the mobile and cloud era? >> yeah. i think the interesting point you're bringing up there is there is a market, irrational exuberance that goes on and there will be companies that survive and make it through it, maybe uber, out of a last wave, amazon, but also going to be a bunch that see a correction and that's the sort of thing that could start happening when we see kevin o'leary's example, where one or two big companies disappoint and then there's a bit of a correction among the other dotcomes and apps out there. >> it's appropriate you're joinings us on a day where we're waiting for the fed to make a

decision on rates. is there any room in your head for the notion that low rates, zero rates essentially for six years, makes this period of innovation a little suspect? >> well, i think that the market rates are one thing but the other more powerful aspect we're seeing is that we're experiencing history's highest rate of change will tools, features, businesses that are geared up to help the innovator. never before has there been a period where let's say the kid down the street could mock-up a product outoutsource the web design, 3d print the po toe type and sell a million on kick starter before even having the product ready. and so we need to keep in mind that innovation is accelerating at a very fast pace and people investors innovators haven't really gotten their head around how to understand how to be better and faster at that. >> some would say having all of that infrastructure before having a product is part of the problem. we'll continue this conversation at later day. >> all right. sounds good. have a great day. >> ger jeremy, thanks.

his book "better and faster" is available now. >> who's in your final four as america if fills out its march madness brackets we'll see who the commander in chief picked to win it all in just a moment. ♪ building aircraft, the likes of which the world has never seen. this is what we do. ♪ that's the value of performance. northrop grumman.

divergent star ashley judd planning to press charges against people who have been harassing her on twitter. the actress and die hard kentucky fan said she had been threatened with vile sexual and personal attacks on the network after she tweeted that the razorbacks were playing dirty at the game on sunday. it's worth noting twitter has added a feature that allows victims to create a full report of a harassing tweet with just a mouse click. it comes weeks after dick costolo written that memo to employees saying the company sucked in his words at dealing with abuse. >> good for her especially women get targeted in a vile way often on social media. if they're public figures. so good for her. maybe she'll help change the norm even if people don't actually suffer legal ramifications for this. maybe a deterrent. >> maybe some sense there's --

there's a penalty for getting out of line. we'll see. meantime the president releasing his march madness bracket and the commander in chief picking kentucky over villanova in the championship game. obama's made it a tradition to share his picks ahead of the tournament and like many this year he is betting the kentucky will become the first team to go undefeated. rounding out his final four arizona and duke, gave kentucky what was it 41% of chance of taking it home. >> i don't know but i always pick kentucky because my first job out of college was reporting for the lexington herald leader in the uk. >> finding out a lot about our first jobs on "squawk alley." i'm bummed not to see my north carolina tar heels in his final four this year. >> not this time. >> it is estimated more than 70 million tournament brackets will be filled out this year more than the number of ballots cast for obama in the last presidential election and all the stats about lost

productivity and how much it's going to cost companies and you don't care. >> come on. i mean it's -- it's normalized year over year. once you annualize it we're just as productive. >> least productive day the kay after the super bowl. >> also true. >> productivity today as we await the fed. let's get to wapner and the half. ♪ >> the final countdown indeed. let's meet our starting lineup, stephen weiss the managing partner of short hills capital, jon and pete najarian are the co-founders of optionmonster, michael block is chief strategist at rhino trading partners, paul richards head of fx at ubs and joe davis head of ininvestment strategy at vanguard. apple and the dow. as america's most loved stock enters the index after the close, will it fall victim to the curse of the dow or buck that trend. losing the lockup with alibaba