price -- >> what are you doing? >> put this story in just to show this. that was a joke. i'm not an obnoxious driver. anyway gasses forecast to fall 42% from a year ago between september and april and that's when most americans do their driving. anyway, thanks for joining us. i don't know who is going to be here to tomorrow but make sure it doesn't matter. i'll be here. join us tomorrow. maybe you will be here. "squawk on the street" is next. ♪ >> good wednesday morning. welcome to "squawk on the street." i'm carl tintquintanilla. what a morning, earnings season unofficially begins tonight. the reviews of the a lt watch are out. futures steady but asia had a nice breakout session overnight. the saudis maintaining output in march. mortgage apps are strong.

met this morning a $70 billion merger. royal dutch shell buying bg group. will this finally trigger energy? >> tesla upgrades the model s with a starting price of $74,900. more features a larger battery has tesla shares moving higher in the premarket. it is earning season. alcoa set to report tonight. apple watch review season. we're going to preview both in just a minute. first up royal dutch shell striking a me da deal to buy bg group. shell says the combination would add 25% to its proven oil and gas reserves and make it the world's largest producer of liquefied national gas. here's what shell's ceo told cnbc europe about the deal this morning. >> this is not a bat on the oil price. this deal works in a whole range of oil and gas prices. of course we still believe in the longer run in a few year's time we will see the long-term

fundamentals we assert itself. we will see higher oil prices than what we see at the moment. of course, this deal will look not just very good it will look fantastic. >> jim after kinder two of the biggest ever energy deals have been announced since last summer. >> kinder his stock has done quite well. it's been a very big win. royal dutch. here's my feeling on this. he's been on "mad money." sensible man. clearly overpaid for this asset in a lot of trouble, bg. they were trying to meet deliverables for natural gas. andrew gould is the chairman of the company and former ceo of slummer -- i think that shell oef paid.

i don't want to say dramatically overpaid because i think they could have bought this thing for far less. no one else was going to come in. this is a liquefied natural gas. the only thing that i really like about the deal is that i don't know if bg could develop 500 barrels a day of brazilian properties. that makes sense. i think this stock, if you wanted to sell calls against it they did clear the dividend. i think that's important because a lot of people felt that royal dutch was going the cut the dividend. instead they see the dividend out for a up kofl years. the stock is not being annihilated. >> $25 billion into 2020. >> the companies have to have this vision and they do have cash flow and there's a lot of -- there's absolutely a lot of overlap. world dutch can do a lot. in the sense of buying the stock it could work its way higher over the next seven years. >> yeah. >> got to take a long term. i'll take a 2022 perspective. >> the spread is quite narrow. >> isn't that interesting? >> given the price paid that seems to rule out the idea of the very small group of potential other buyers here. >> exxon. >> it's not going to happen.

>> exxon plus 50% premium. i swear, if they had done 35% premium, maybe bg could have held out for a couple of months. >> what's interesting is we've been waiting given the fallen oil prices for consolidation to take place but more from a distressed point of view that there would be deals to be had. >> none of -- nothing we've seen so far indicates the stress in the price the buyers are willing to pay. >> this is stress in the ball of natural gas. >> companies are getting significant multiples. in this case it's 8% dilutive to shell on an nav. even with synergies i'm seeing some of the research notes here. they are said to be buying growth. it's about deporter oil. >> they had the highest -- when i talked to ben, i that have this incredibly high cast base. i mean this stuff, they were doing this stuff in canada that was presuming that oil was easily going to go to like $270. honestly, those properties were -- they are insane what

they're trying to develop in canada. this is cheaper. it's natural gas. there is going to be a natural gas shortage in asia but no natural gas shortage in this country. our natural gas will probably go under $2 because we have so much of it. is it a good deal? i don't know. it would have been a good deal if they had bought it for 40% premium premium. >> typically when you do that you've got to come with a decent price. just to check off thing. they're talking about a close in early 2016. quite some time. you're going to need brazil antitrust, you're going to need china. those are always -- can be question marks in these kind of things. $1.2 billion break fee for those looking at spread here and thinking, can somebody come in over the top? that's typical but it's a big number. given your analysis and others it's hard to imagine anybody is going to pay more than what shell is willing to pay here. >> if someone does they're a bigger sucker. geez, this is a gigantic national gas buy. >> the late '90s where oil

prices were -- >> canada as well. >> is that a distress scenario or is there going to be go big mega caps? >> the bg was not -- they had problems in shipping the natural gas because they had assets in places that are funky. egypt, they have problem. >> waiting, if you look at waiting they did a deal with 35. noble deal worked big. every up with of these -- sears, yo that was chip. chip johnson did an amazing job. all of those deals say, listen we don't have to sell. this stock market loves deals in the hole. no one has to sell that i've seen. no great assets great, either. >> noble cutting 10% of the workforce. >> they do have the gigantic asset off the coast of israel that's been hard because of the labor problems. that's ind ofkind of why i liked noble. those deals are working. they can want for as much stock as they want in this country and the deals work.

why sell? >> if you can keep yourself alive by selling equity even if you dilute yourself you live to fight at day or the deals we've seen have been big premiums. >> huge. >> by the way, it takes global m and a year to date to $938 billion. this dime last year $864 billion. well ahead of the pace last year globally. >> like i said shell is not going to go down a lot because they had high -- they were able to grow the production and they weren't able to do that before. that was really really important. they raise their -- the amount of deliverable oil that they have. they raise it. that's why the stock is not getting hammered. and the givedividends being declared. i think a lot of companies they made acquisitions, stocks would go higher. this wasn't one of those. >> right. >> speaking of would be acquisitions maybe one day tesla shares ariseing in the premarket. upgrade of model s vehicle. the new base called the 70d will

feature all wheel drive, a larger battery pack of 70 kilowatt hours. greater range of 240 miles, previously 208. starting price, $74,900. that's about $5,000 more than the previous base model. stock is up about 4% earlier. >> the stock, a lot of people the shorts press their bet in this one and -- you can argue this does not produce any more earnings per share than before but there was -- when you talk to -- i talked to them and they said listen we had no range anxiety because ours goes 19 to 21 miles, electric back. this -- anything that answers range anxiety is going to send the stock up whether it should or not. it will send the stock up. >> stock has been up a little bit lately. up yesterday, too. >> yes. >> well below the highs. >> the fact is they -- and i don't like the stock here. i like the car. they did announce real numbers on friday and people -- even though the numbers were good

the fact is they're starting to look more and more like the car company and less and less like kind of a drama. less drama, more car. >> drama story. meanwhile, heading into earning season in what some analysts are expecting to be the worst earning season since 2009 amid concerns the stronger dollar is going to weigh on profits, the season unofficially begins with alcoa reporting after the closing bell tonight. family dollar reported a quarterly operating profit of 74 cents with comp sales weaker than expected up .5. retailer sees the merger with dollar tree closing by the end of next month. we look to "usa today" for zy geist for mood and their headline is" let the earnings train wrecks begin." >> i cut that out to use. i was doing that too. this is interesting because it has the oils on the left. every one of them can now be thought of as a takeover play. this is -- immediately takeover play. and then it has vertex i think

they're having a terrific quarter, some new drugs. amazon does a great quarter. i think the company is right. mattel, there's a lot of new stuff coming out that's good. first solar is going to do a terrific spinoff. every one of these, i picked it up because i like them all. i'm not kidding. wow, that's my buy list. terrific ipg could be taken over. wind stream i don't like them but they've got a good yield. they put together an excellent buy list i just didn't know they were worried. >> you're not calling it loss season the way ast today is. >> no. >> not earning season loss season. >> to, the train wreck. the train wreck. the only train wreck is fracked oil coming through your town. the only train wreck i know. >> there are not going to be a lot of losses. maybe a lack of growth but to what extent has the market been allowing for that? >> none of the companies are going to have the shortfalls. those are the ones with the

gigantic exposure to europe. >> no i don't read that. >> do you read the sports section? >> no. i read the new york post sports section. >> but this is just the companies that are going to disappoint are the companies that are tech companies that have gigantic business in europe. i kept looking to see those. it's not going to be simmer x. >> that sounds like apple. it's one reason stock gen takes it to a hold today. >> they're going to make a splash i guess. we wouldn't talk about them for any other stock unless they mentioned, apple, right if? >> ouch. >> it had to do with their balance sheet. >> it did. for quite some time. stock gen. >> they came on and did an interview. it was like, wow they did an interview. >> i remember that. >> remember that? >> wow. they're speaking. so now they're speaking about apple and i guess everyone has to short apple because of stock gen.

stick a sock gen. >> i'm not sure we're going to do this segment any longer after the break. >> great. >> we will let you go on and on about the watch. >> they could be right. you might want to call the top in apple. kind of like the stock here. good buy back good dividend a bunch of new products. i don't know. people have seen that watch. most people are -- they've seen it. >> yes. yes. and they're about to get a better look at it. we'll talk about what stock gen's argument was. and the reviews on the am watch today as they countdown to the devices release date. one more look at the premarket. despite the miss yesterday on that lee-day win streak still on track for a second straight winning week which hasn't happened in a couple of months.

you heard cramer refer to the downgrade of apple over at socgen today to hold from buy. currency headwinds are toed a versusry sales. they remain kerpd that apple will struggle to replicate the success of the launch when they upgrade the portfolio in september. their point broadly is don't get

hypnotized by all the apple watch drama. it's still about the phones. the share of high memory foebs are coming down. share of 6 and 6 plus are coming down. why would that happen? >> samsung has a competitive phone. you can argue that the expectations for the watch have gotten well ahead of themselves if if don't sell a lot that weekend and people are going to come in and downgrade so they're trying to get ahead of that. again, this is why am i so skeptical about it? it's because analysts keep wanting to make calls on apple. they want to call tops and get you to trade it. my goal is to get people to not trade it. why do i spoof this? the guy could be right for a couple of points. the worst thing he's been able to do is say sell apple and buy achle apple. no one has been able to do that well. sell apple 59terrific, other than a hedge fund who is going to be

able to do that? >> right. >> it's a hedge fund call. >> although some have seized on the analysis that they provide about -- obviously 6 pfrs of6% of sales overall is the iphone. if there seems to be significant sales of the 5 at what might be a lower average selling price at some point and that could hit, you noeksknow overall. >> tomorrow if john ledger from t-mobile said, listen i'm going to give you a watch if you go and buy our apple phone, they will sell. >> yeah. >> it's an idea. john will weigh in on that. >> it's an idea but it would be expensive. >> they have unlimited firepower. so does sprint. >> unlimited firepower? what does that mean? they don't have unlimited amounts of money. >> they can create money. haven't you seen what the fed will let you do? >> sprint has created plenty of it. have you seen the spreadsheet? >> let me take you back to the watch beverly hills we get too far. the "new york times," quote, it took three days three long-days

often confusing and frustrating days for me to fall for the apple watch. but once i fell i fell hard. it's an extense of the iphone and like the smartphone it starts to change your habits over time. smartwatchers are still unproven but apple has made a pretty strong case for them. it's not adoration. >> that's good because you don't have all the apps written for it and you don't -- didn't realize europe you were going to use your iphone or tulhe things you use it but i do think you're going to want it. you're going to want it because you like the apple eco system. if you like the eco system you're going to want the watch. remember, a lot of people under the age of 25 don't wear watches. they might take this watch. >> we're going to find out. obviously a lot of discussion about how it is an extension of the phone in that like the phone in '07 when it first came out there was a huge education

process that needed to happen. people didn't know what swipe was and in this case they're going to need to learn how to work this crown and that's going to take time. >> younger people are far more versed at knowing how to use these devices. i have to be educated constantly by my kids about how to use the device and when i realize what i can use it for, then i find it more and more indispensable. younger people will know how to use this watch and manipulate it quickly. i'm still trying to figure out, daylight savings times are one of the worst days of my life because you've got to move this thing and pull this thing out. sometimes it comes out. >> are you ready for this to remind you to stand up every so often the way it does? >> yes. >> time to stand all. >> yes. actually i do it a little faster because i always want to feel like -- i don't like to be late to things. like my father. this watch is the bright -- i don't know. you wear it. you wear it because it's a bright light. i got it. what do you have? i would rather have an apple. i think it's going to be a big

fashion component. i remember when i bought my daughter her second -- her second ipod because the first one was pink and the second one was blue and it was a fashion accessory. that may just turn out to be a fabulous fashion accessory that also happens to tell time. >> wow, that sounds like a watch. extraordinary. >> you are a fossil. >> i don't wear a fossil. >> you're a fossil. >> you wear a fossil? >> youno. what do i wear? a lot more "squawk on the street" from post nine in a minute. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images

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time for "mad dash." seven minutes before the opening bell. that's a lifetime. >> it's hump day. >> say again? >> ump day. >> it is hump day. mike mike mike. why not. if i had my apple watch it would tell me, stand up. >> it would tell you what the "mad dash" is ahead of time. >> what is it? we're going to start with lions gate? >> do you hunger for "hunger games," if you do you might hunger for the 10 million shares the chairman filed last night after they lowered guidance. that's a terrific piece coming at you. >> to a large extent controls lionsgate. he owns a lot of the stock. >> 10 million shares. ebitda ebitda, david, it's a head and shoulders pattern reverse, it's an rht, reverse head and shoulders. >> good deal of talk for the

need of consolidation amongst the contact advisers like this one. >> we haven't seen it. >> why selling the 10 million shares? >> remember they did that little deal with malone odd kind of an odd one off deal but nothing has come of it at this point. >> one of the things that i don't like about this era, i've got good things i like. there's a lot of stock for sale. guys are falling stock. oil companies are filing. a lot of insider selling. theres a lot of secondary selling after deals come public. be careful is what i'm saying. i'm adding an issue, be careful. >> what else have we got? >> david, rite-aid. >> rite-aid. >> remember jerrod and tom where he pharmacists at ride aid andte-aid and i do love them. ms. gill yesterday from jpmorgan says that don't -- don't think that wall green might not buy them. walgreens can buy them. they report tomorrow by the way. the numbers are a little difficult to understand. buying this envision rx and all

i can say is that rite-aid is a heavily speculated stock. don't be surprised at the end of the day if they don't move at all. while the numbers are good they have a lot of takeover --ic you buy it for earnings turn and, not for takeover. >> to give you credit where it's due you've been a buyer here for a long time. much more on the turn around than the m and a opportunity. >> i happen to like the fine drugstore chain. i like the chains. actual name is merlot. >> it is. >> i'm a cab guy. i'm a cab guy but merlot runs cvs. merlot pulled out cigarettes. it's a vice no vice stock. i do think that by the way, walgreens when they report again, that will be coop fusing because of an acquisition. there's a lot of confusion in the drugstore stocks but people like them. cvs is the best by the way. >> you think cvs is the best? >> amazing company. >> walgreens, a lot of chatter. they would like to get back into

pbms. >> i know. gres larson sold it. that was greg larson. i think they stole catamaran u and a. >> do you? >> i think they stole it. it was good. do you use the self checkout in cvs? >> i hate it. >> don't you hate it? >> i don't want to use the plastic bag. if you don't use the plastic bag the thing freaks out at you. >> i like the person come over? >> what's the point of that? >> talk to merlot about that. opening bell in a few minutes. stay with us on "squawk on the street."

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening deal in 45 seconds and a lot going on on this wednesday as we wait earnings season tonight. very large energy deal on the table. asia nikkei 15-year high as the bank of japan maintains policy. europe surpassing some records. >> china up every day. no real good news in china. but we're the only laggers because we didn't meet and everybody thinks look we're going to tighten these places

are sill still loosening so therefore go buy their stocks. that's what's happening. i wish there was more to it. >> nikkei 15-year high. hang seng, highest since 2008. there's the opening bell. look at the s&p at the top of this screen. down here at the big board this morning it's pay democrats com software provider of payroll and hr software. at thes in pdc energy independent oil and natural gas company. this morning, jim, again, we refer to "usa today," they put on the record these rumors about twitter. rumors that twitter has hired goldman sachs to spend off google and at least one other company. >> by the way, that is a rumor, we should say. >> absolutely. >> i think it was a daily mail. >> telegraph. >> telegraph, thank you. >> didn't just call his friends at goldman. honestly clearly they would hire goldman one expects given their ceo ran technology banking. go ahead, jim.

>> i think google is under such scrutiny. we love twitter. every day we come in and there's a new innovation at twitter. the idea that you're buying -- google is under so much pressure from regulators it is highly doubtful that they can do this without just the regulators say enough. some of them are saying it jim cramer, on twitter, wait a second, the market share of twitter. it's not about that. it's about stopping google because google is too powerful. the europeans think google is too powerful. >> europeans are in particular anything you want to do in terms of m and a. no idea whether it's true. >> ibm in the press release mentions twitter like they're trying to affiliate with twitter because twitter is cool. >> they are. they're using it in unstructured data from twitter and they can help the company understand what is being said about it. >> definitely not going to do it. again, i find the idea looking apple. i'm not put out there that apple should have bought them. that verizon should have bought

him. but now, you know it's like didn't happen and i think you own it because the fact that they are going to get a lot more ads. that's why you own it. >> twitter is not insignificant at this point. >> that's why -- >> so it would be extraordinarily diluted for many buyers. >> look there are situations where companies are buying things higher price. southeast asia 500 million mobile customers. just bought trust wave. if it's cyber security people will overpay. >> right. >> by the way, twitter is about $2 from a new 52-week high which would take it back to levels just as it was backing off of 70 pluses. remember those days? >> i know. i'm going on "mad money" did a breakout piece. don't buy it because you think google is going to buy it. lightning could strike but google is the company that's so worried about the fdc, they're so worried about europe and people don't realize they really are worried. they kind of weren't focused on

it. like the way microsoft, when steve ballmer ran microsoft. i think the justice department us then't like you. if those guys were good they would be making big money. no, they don't play for big money. that's the point. that's what chase -- that's what jpmorgan learned. bank ofern america learned. justice department does not play for money. worst enemy if you're one of these guys. they're playing for like -- >> well, they do have unlimited funds with which to pursue you. >> there's 50 states. they can sue you in 50 states. you can't fight them and that's what everyone learned. this is ftc i'm talking about. i think people underrate the people who are on the other side. the guy at justice, if he were really any good he would be a paul weiss. he can go to paul weiss after he's at justice. while he's doing -- he's he's at justice he's doing justice. you may not like it's but it's not dave justice, it's real

justice. also awfully close to a 52-week high is lululemon. up to a buy. >> you've got to -- lulu okay. get this. if you were on that conference call it was really interesting because the conference call you had the usual nonsense about the stink pants and how that's going. then you've got this guy stuart comes op. he used to be the cfo of j. crew. he's so polished that you think these guys are no longer just drifting at the wind which is what you felt after christine day left. it's like there's no more just kind of like, hey, listen we love the pants and women love the pants. this guy is the real deal cfo. that's precisely why sterne agee updated it. no one understands what he's saying because he's got a trick accent accent. hazelton comes on, listen, this is what we're going to do and here are the numbers. it was like an adult got on the

lulu call and you could see that people had to upgrade. that's how good. mickey drexer must miss that but he's from j. crew and he's got the j. crew polish ask what i'm saying. he's real. he's real. >> right. j. crew of course owned by private equity but they typically do have very strong -- >> hazelton is the reason why this stock is going higher. that guy is good. >> all right. close to the lowest close of the year is cummins engine today. you mentioned the context of buy to hold. >> we were talking about the top of the show. cummins engine we referenced "usa today." larry cramer, i work for you. if cummins had been here instead of voccen materials which is going to have a dynamite quarter because of the potholes. i had materials, you know how many times has your axle broken already? they should have put cummins in and i like cummins very much.

but vokken is not going to have t. shortfall. you can't drive anywhere in the country because of the potholes and martin marietta materials. they have the stuff to fill the potholes. there's always three guys -- >> we had a piece on this network yesterday. >> two guys filling in potholes in china they would have 437 guys. >> they would. they have beautiful roads. they have no litter. >> the eighth army would be doing the hot poles. >> we've got falling apart infra infrastructure all over the place and i don't think we funded the highway trust fund much. maybe we did a stop gap. i forget. >> they have two trucks a lie with the hoe and oversees a guy with a oh. >> and they have trains wizzing by at 200 miles an hour but you can't breathe the air in china. i'm with you. >> we're doing the contrast together. >> you should go back and read

some of mal's stuff about the eighth army when they would build bridges overnight. impressive. that's the only thing impressive about that oppressive regime. >> somewhat impressive lately is the move in macy's. >> wasn't that something? it's a breakout. >> but you know there's a lot of talk again about this whole people love to talk about that whether it's mcdonald's, you split into your operating company and create a reit. >> i would note in a note from morgan stanley they say cfo karen woget has looked at potential real estate. it's been up many times but never arrived at a financially attractive scenario for four reasons. the only way it works is if the reit burdens the opco significant operating expenses macy's would lose real estate i.e. closing stores. the real estate market improved dramatically over the last five

years. five years ago it was difficult for macy's to sell a store. today they received offers to buy stores and plans relocation. >> i think you can rule that out. >> again, this is a rumor driven market. macy's cfo is fabulous. macy's is breaking out. it's kept -- it's well behind kohl's in terms of how the stock has done. it's well behind dillard's. it's behind nordstrom because the last xwaur people didn't care for. >> also goes to an point, activists -- not that one won't show up at macy's but they will come with their various proposal proposals, management has thought about these things. as rare as the indents were management goes, oh, i never thought about that. usually they have thought about everything and they decided for various reasons in this case those highlighted by the cfo at macy's, we're to the doing this we're not doing that because of this. >> tjx, unbelievable stock.

ross stores is amazing stock. dollar general. macy's is in a difficult spot in terms of the additional dollar where you get from gasoline. going to the dollar generals dollar trees. >> not far behind is alcoa more than 2% ahead of earning tonight. >> the stock has just been hammered. it really is amazing how well the dollar stores have been. ross stores i don't know if you ever shopped at ross stores. nice tjx here. go to the tjx? >> yes. >> it's nice. good prices. >> it's fun. >> i put a pair of slacks there for 22 bucks that i saw at $40. >> well-done. >> going with slacks not trousers anymore? >> i switched. these were more chino. >> what is the difference between slacks and trousers? >> my father said trouser my mom says slacks. >> it's probably what they called them. >> raised in retail. >> that's right. >> dow is up almost 58 points. s&p, 2082.

get to pisani on the floor. >> china is having another rally. basically asia is not doing much. europe is mixed. hang seng is up almost 4%. hang seng is up almost 6% this month. shanghai is up fractionally. shanghai after being up 17% last quarter, i don't know what's going on. of course all sorts of talk of future stimulus. talk they're moving money out of property and moving more money into the stock market. there's been a lot of domestic move into the stock market from domestic investors in china. very interesting time over there. here in the united states, i call it an old-fashioned risk on day here. consumer discretionary. energy is up despite the fact that oil is to the downside. all the oil stocks are on the upside. maybe the deal is helping. health care on the upside. nice mixed group. world dutch sell buying bg

group. they're going to get cash. significant amount of shell shares. .44 b shares in shell. you see bg group up 31%. i also saw whirlpool is down almost 3% when i was coming on to the floor. i think this is because electrolux made comments that their north american appliance business is going to be lower than anticipated. the results for the quarter. that's impacting the group. electrolux being integrated into ge. elsewhere we've been talking t the earnings recession. late yesterday bank of america became i think the first major firm to call for a negative -- negative year on the s&p earnings. we talked about two negative quarters. they're talking about a full year negative. we all know why. 50% drop in crude. dollar is up 20% since june. weather issues out there. bank of america along with other bulls think this is going to fade in the later part of the year and the numbers will start getting better in the fourth quarter. that's a long long way to go however, we've got a lot between

now and the fourth quarter to deal with. they might be right about february being an outlier month. did you see the family dollar results? they were crummy. 73 cents. i think the estimate was 80 cents for family dollar. positive comments for march. howard levine ceo, this is what he had to say here. the number here our sales trends in march rebounded nicely reflecting both improved traffic trends and the benefits of an earlier easter. i think that's why this stock is up because of the positive comments. no real news on the merger. dollar tree merger will close at the end of may. they're not giving guidance at all until after the merger. we don't have much in terms of what the numb lers will look like in the next quarter. alcoa starts the earning season tonight. we have this enormous sand box to play with before by asked him what happens when alcoa doesn't beat on earnings? since 2005 the s&p, they beat on earnings 16 times since 2005. the s&p has been up 75% of the

time for the quarter for average return of 4.4%. that was very impressive i thought. then we asked what happens when they don't beat. and that's happened 23 times since 2005. you see there in the box. the s&p is up 65% of the time but not much here. in fact, on average it's down. so there does seem to be a bit of a correlation. it's not obvious why when alcoa does beat, the s&p does tend to do better. this is for the quarter as a whole there. there you see alcoa which simply got destroyed frankly in the month of march on global growth concerns and very difficult time still without -- with aluminum pricing. dow is up 76 points. guys, back to you. >> we're going to be on the lookout for fed minutes later on today. let's get to rick santelli in chicago. good morning, rick. >> good morning, carl. as i look at the treasury curve i don't see any major yield curve implications today. i do see this ongoing tight range although yesterday after some hedges came off in a deal,

we did see a lot of volatility in the 30-year which underscores the ongoing issues of scarcity liquidity, and how markets move in the fixed income space. especially high quulity collateral like treasury, even boons. so you see the up with and two-day chart there for tens. the two-day chart shows you the failure to be able to get back into the 190s. open the chart up to beginning of march, it jumps out at you. anybody who looks at that chart is looking 185, maybe 195, that's most likely going to continue to be the range. look for a lot of fill-in around that 186 to 190 level. now, keep in mind as we look at the next chart, 24-hour chart of boons that this the second time that we flirted with 16 basis points. we did it on the first of the month and did it today. it's bouncing along. yield curve is negative in terms of yield but i can show you we'll have it soon a four-year instrument in eurozone traded minus 20.5 basis points.

a new record. it just keeps pushing further and further into negative territory, especially the short and mid range part of the curve. if you look at that chart now, basically for the last month or so what you see is a euro/dollar rang nl just like treasuries but bigger. 105 to 110 on a closing basis. many traders in the options markets, whether it's straddles or collars, look for breakouts they say should you purge either side of those on a closing basis. carl quintanilla, back to you. >> rick thank you very much. rick santelli. watching oil as well, which is in the red today. jackie? >> good morning to you, carl. that's right. selling pressure on both sides of the atlantic this morning. a couple of factors here. the first would be we ran out the last couple of days pretty significantly. so selling the strength here is definitely part of this. but also we got a rot from the api last night that we saw 12 plus million barrel build in inventories. it will be interesting to see if

they mirror that strength. it's not what analysts and traders were expecting. they were calling eight monster build. seeing some of the fundamentals come back into the market here. remember, the strength we have seen over the last couple of days was geopolitical risk premium coming back on the table. there's a push and pull happening at the moment right now. we are expecting to see a little bit of a build from the doe at 10:30. estimates are around the 3 million barrel rang nl. if we get a monster build probably going lower from here but technically staying over that $50 level is fairly significant. back to you. >> jackie thanks a lot. when we come back google execive laszlo back with eye opening thoughts about what it takes to get a job at the search giant if tomorrow interview with the managing director at the imf, christine lagarde. we'll get her take on the greek bailout talks as meeting with putin this week. dow is up almost 87 points. don't go away.

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yahoo! is said to be planning a big reorganization that could end tumblrs run at yahoo!. he spoke to david car at the move asking them which executive in the company he would like to report to. information also says tumblr will not meet the goal of $100 million this year. yahoo! paid over a million dollars in 2013. the report suggests it's not gone well. >> geez my -- i just moved my blog -- "real money" blog over there. tumblr -- that's surprising to me. interesting to mentionia hoop p everyone keeps trying to figure out who twitter is engaged with. and the one that does is just surfacing now is yahoo! because they have all of this cash. i caution people that this notion of what yahoo! is going to do is so un -- thought tumblr

was doing well. yahoo! is a little bit more difficult to gain than people think. if you think that yahoo! is talking to twitter you will be the last to find out what's really going on. >> does it feed the notion that mayer is -- i don't want to say flailing but certainly reaching out for acquisitions, for eyeballs in ways that are not focusses? >> they need to make a transformational acquisition with all the cash. >> i don't think they're going to do that. return an enormous amount of cash to shareholders. they continue do. >> they can't just be an atm machine. >> the question is what is that core business produce? ebitda, how much cost saves are being put through. pressures by jeff smith for better or worse. >> i don't know. the whole group, if you don't have fabulous fabulous mobile inquiry, i mean, this is the google problem. you're up against google. i can't stress to people how --

google is very much like microsoft at the top of when it was powerful. >> all right. but if i take that and then apply it to the performance of the stock price i'm probably not going to be a buyer of google. >> my trust in google has been very disappointing. very. >> if you really believe it equates to microsoft. >> you have to hope during the next conference call, not only interested in the stock beactually like it to -- here are some things that can make it go higher. it's a transition. they went from we thought not caring about the stock to suddenly caring. if they would actually do something at it then it gets propelled. >> yahoo! sthars are up today because alibaba shares are up today. >> there you go. we'll get stock trading with jim in a moment. dow is up 90 points.

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fbr is still out. it's about underarmour. if i were of underarmour, kevin plank, i would call tim cook and say let's do a deal for my fitness people and your watch and give them a discount if they belong to map my fitness. win win for everybody. kevin plank, go ahead. i know you watch the show and i

love you and i know your mom watches the show. make it happen. >> surpassing adidas in europe. >> underarmour in the chicago store, people -- nike p's wheelhouse. because of the jordan. i have to tell you i think underarmour is on fire. remember, nike is going performance athletic. that's a great call. they can have that. underarmour is going fitness and that's i think in the end a bigger market. map my fitness is hunl. that's going to dovetail with the apple watch and we will not be thinking about that it just tells time. >> what's on "mad" tonight? >> private company we're going to talk to. we've got -- i tell you. i have something on the activists that -- and not activist, the drug side. that david, you're going to love. interesting guy. we are -- we are talking about the kinds of activism. they're not all created equally. >> you and i have talked about that in the past. >> i look forward to seeing what you've got to say. >> yeah. >> see you tonight, jim.

6:00 p.m. eastern time. >> 6:00 p.m. it's on a brighton 6:00 p.m. and apple watch. that's one thing they left out. it tells time. >> simon hobbs here with what's coming up at 10:00. >> feel are making money in energy. it's a 52% premium on bg. we'll have aing loo at m and a with the big oil majors. we will have real apple watch's the set and two reviewers, one who thinks you should buy, one who says just don't bother. fed titan bill dudley is about to give a second key note panel of the week. find out why he's explicitly targeting the economy, but also what you might call the bubble in the bond market. hour two of "squawk on the street."

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for as the world keeps on searching for healthier... we're here to make healthier happen. optum. healthier is here. good wednesday morning. welcome back to "squawk on the street." i'm carl quint anynil quintanilla. we have big-time energy m&a on deck and oil inventories in half an hour. >> after making headline on

monday new york fed president bill dudley is speaking at this hour in new york. we will bring you the headlines from that. hear fra fed governor jerome powell has to say about challenges for monetary policy. >> tesla is upgradeing the model s hoping to stay ahead of the car market. we'll have all the details. >> breaking down mega oil deal. find out what shell's takeover of bg means for other big oil stocks. >> coming up later on reviews for the apple watch are out. we're going to talk to the "wall street journal's" joannea sterne. we will have the apple watch live here onset. >> let's start with the fed though. new york fed president bull dudley will be speaking at aechbt event here in new york. at this hour, just two days after he said the pace of interest rate increases is likely to be quote, shallow. new language there. steve liesman is live in new york with more. a lot of fed talk today, steve. >> good morning, sarah. business difficult day here. dudley just beginning to speak right now but federal reserve governor jay powell speaking at

a counsel on foreign relations, he agreed with the nrk fed president bill dudley that rate hikes should be gradual. he added a new reason, the fed should go slow to give the economy time to recover its lost potential. many economists believe the financial crisis slashed the economy's ability to produce by as much as a 1/2 to a full percent sage point. powell also said though june the june meeting, it's a live meeting as far as interest rate hikes are concerned. >> they will be for the first time a discussion about whether we should raise the target range at the june meeting. we said we wouldn't do that in all likelihood at the april meeting but we would at the june meeting. for every meeting thereafter there will be that conversation on the current path. >> powell added that he would be prepared to hike rates at the current level of inflation. that echoed janet yellen as long as he had confidence i nation was moving back to the fed's 2% target.

we still have to wait longer guys for the memoir of ben bernanke memoir to be published in october me here it is. it's going to be called" the courage to act, a memoir of crisis and its aftermath" by ben bernanke. a press release today said quote, my colleagues at the federal reserve, this is quoting ben bernanke policymakers and staff a like mustard the moral courage to do what was to do necessary often in the face of bitter criticism and condemnation. simon, i am sure you cannot wait to get ahold of that book and read it. >> i think it will be a very interesting conversation that comes from that. steve, keep us abreast of what dudley actually says. of course, a lot of us are still reeling from what he said on monday in many senses. steve liesman there as we watch that conversation. the markets are up 74 points on the dow so far as we await, of course, importantly the minutes from the last fed meeting at 2:00 this afternoon. and of course corporate earnings. we start the unofficial earning

season with alcoa this afternoon. what should investors be looking for as we move through the rest of the week? joining us now is annika and mike ryan joins us chief investment strategist at ubs. good morning to you both. >> good morning. >> good morning. >> mike, let me kick off with you. we're about to embark on the worst earnings season in six years. expecting earnings, according to s&p, to be down 2.8%. the data has been fairly tepid. is it fair to say mike, that the only reason we're hanging on in here flat for the year to far is because we now think that the fed will only hike in september? >> now, i'm not sure it's all about that simon. first of all, i do think the important report we had last week and some of the softer data suggests the fed is going to be very measured in terms of the pace of rate hikes. that's part of it. i think what you're going to see is despite the fact that q-1 earnings are going to be much softer than we've seen in the past and probably the first down quarter we've seen, what you're

going to see is a lot is transitory factors and related to the decline in energy prices a lot is related to strength in dollar. those tepd to be the type of factors investors look through as they look at the corporate earningsibility beyond transitory issues. >> that would suggest that's reason we haven't fallen more that we're going to rally from here correct? >> yeah but i would say again as you look at the second half of the year i think the earnings outlook looks brighter. we're looking for the full year for earnings to be up about 4%. importantly the market is increasingly going to price what we see in 2016. in our forecast right now for earnings to be about 11% next year. mostly related to headline issues and tronstoryansitory factors. overall we'll see the next two years. >> despite the fact the economy is apparently so bad that we can't even go from zero to 25 basis points? >> first of all i'm not convinced the economy is that bad. i think what you heard in the fed consistently is they're going to be incredibly pragmatic

in their approach cautious in terms of the way they apply monetary policy because they don't want to undermine all the effort that's gone into disciplining the recovery. while we've had soft data we've had soft periods before. we've had periods of weaker data data. we have to look through those because i think if you look each six-month period we've seen is better economic growth broader expansion or deeper expansion. >> annika, can you help us as to why the fed is so scared the raise interest rates from zero to 25 basis points? we're going to look at what dudley says in t panel but monday he said there were two things they were targeting. one was the economy and, secondly was the bond market. they didn't want yields to rise dramatically. you could paraphrase that and saying they're scared there's a bubble in the bond market and terrified fi might deplate it and have a temper tantrum. >> i do have a comment. and the terminology you used was scared. and i wouldn't necessarily say

that scared is the appropriate language. i would say that they're very cautious. in fact, we have to think about the fed did not have this weak nonfarm payrolls number when they were contemplateing what they would do. of course we saw a downshift in in economic projections. we saw a downshift in inflation. and their year end fed funds target. when we look at what we think will likely or what we want to be in these minutes, will be more rationale about whether they see these factors as temporary. we've already heard about the strong dollar. what impact they think it will play. whether or not they saw weather as a problem, as well as the drop in oil prices. or whether or not they think this is a permanent slowdown. we of course think that these are one-off factors and if you look at private final sales to domestic mucher erpurchasers, that

indicator at this time where seasonal adjustment processes can get out of hand is a far better indicator of the underlying strength of economic activity and that's been growing at a far healthier clip. >> annika we talked about this issue before but i think it's worth bringing up again today because for the first time ever a country actually sold debt ten-year debt and investors paid for the privilege to own it. switzerland actually issued debt in a bond sale today. the yield was negative 0.55. it's had negative rates for a while. this was the first sale. can you explain the significance of that and just put it in a global context what that means for the u.s. and for our markets. >> yes. so what you're pointing to is. whether or not real interest rates, real negative interest rights overall will have some impact. and of course we're still looking at a very low rate environment. even if the fed was to move we

still are looking for a flatter yield curve which of course would beg to question whether or not the impact we'll see on bonds. you also opened the door to a question on whether or not international developments will play some role in economic activity. and we're starting to see glimpses of improvement despite some of the other countries that may be having problems even if germany we're starting to see some of the confidence indexes move. as our global economist states, so goes germany, so goes the rest of europe. >> whoa let's hope so. wow, that would be a break from the recent past. mike, let me ask you, finally. you're bullish on earnings for the second half of the year. i assume you're there for relatively bullish on what the stock market does. what area of the market performs best, do you think heading towards the new year?

>> simon, focused in two areas. in terms of our sector approach we really want to be in the areas that we think have cyclical momentum at this part of the expansion process. so it tends to be more consumer discretionary. it still is technology. it's selected industrials. but also we want to be positioned in the small cap area. we think given the fact that we see better earnings in mall caps and less vulnerability to currency translations small caps are better positioned going through the balance of this year. >> mike ryan and annika thank you. >> thank you. shell announcing a $70 billion acquisition deal to buy bg group today. is the company betting on a major recovery in oil prices? what does it mean for the rest of the sector? joining us now to discuss this top story, michael houston, senior oil analyst at cmc markets. michael, many people think this just opens up a new wave of consolidation in the oil industry. any reason to think otherwise? >> well, yeah hello, sarah. i'm no t really convinced.

i think this is more than just about oil. this is also about diversify diversification diversification. just over a year a i go the ceo of shell looked to streamline royal dutch shell and gear it away from big oil and diversify and to liquefy natural gas and petra chemicals. this acquisition of bg group is part of that transformation in the oil company. so i think the decline in the oil prices has precipitated that pre -- precipitated the takeover of bg group. if you look at bg group share price, compared to where it was last year it was around about 14 pounds. it's fallen precipitously. i think he saw a great example or great opportunity to actually diversify shell into the liquefied natural gas market which hopefully, for them will be a very lucrative market fog forward. >> it is notable though this is

the first big deal since the 50% plus plunged in the price of oil and the price of brent crude oil. did they over pay? is it necessary to pay 50% premium to bg's closing price? >> i certainly think there is a -- i think there is a perception that they've overpaid. certainly if you look at royal dutch shares shell's share price, it's down quis significantly today. but i think overall i think as long as -- i think as long as revenues and the gas price does. fall any further, i think that's the big if at the moment because what we're seeing at the moment is shell predicting oil prices around about $67 a barrel for 2016 and $85 a barrel for 2017. it is very much predicated on oil prices and gas prices not falling any further from the current levels. that's certainly by no means certain. so i guess the jury is out. shareholders are by no means convinced on that.

but certainly bg group shareholders are very pleased given the fact the shares are up 35% on the day. >> of course. yeah, we should be clear that the 50% premium is over the last nine months. it's that average. but a lot of people in this country, michael, may not bother to look outside the united states. that's not their primary concern, unless they say that sort of premium at 50% coming through. now, there are certain companies in europe that are standing out today as potential acquire rees in an environment where exxonmobil has said that it might be open to a dlarnlg deal and clearly the dollar would work in its favor. gout in portugal. london in sweden. if you could choose any of those which do you think is the most likely takeover target? >> i think certainly for me simon, it's going to be talo oil. share price is down 60% over the last 12 months. now, there may well be a reason for that. but certainly i think in the context of picking up an asset

fairly cheap the stock market cap of 3 billion pounds. you certainly wouldn't be betting the farm on acquiring talo oil. >> all right. thanks very much for joining us on the deal of the day, michael houston, cmc markets, chief market analysts on further consolidation in the oil industry. the apple watch reviews are in and we have one live here in post nine this morning. we'll find out if the new gadget should be on your shopping list when we get a firsthand look in just a moment.

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with preorders for the new apple watch to set off friday the first reviews are finally in. the "wall street journal" says the apple watch will make you look good and "usa today's" ed is in line to buy one. let's dig deeper. joining us at post 9 wearing her watch is "wall street journal's" personal technology columnist joanna sterne and "usa today's" tech journalist. joanna, you're playing with yours as you speak. >> yeah, i'm not going to listen to anything you say. this is how it works. >> your general take is it's great but wait for the next one? is that fair? >> i think that's fair. i think that's usually fair of most generation apple products and certainly something like a watch. this thing looks really nice for now but when i look at it i see how much better it's going to get in terms of hardware and

software also has a little bit of a ways to go. >> ed joy anna's colleague jeff fowler at the journal if you can tolerate single day battery life half-baked apps and inevitable obsolescence you can wear the future on your wrist. why is that wrong? >> it's not wrong. you know what, i want one anyway. it's kind of like the first iphone. how many of us wanted the first iphone? it was a great product but when you look at it now through the prism of history it's obviously not what the iphone became from generation to generation. i think we're going to see the same thing with the watch. that said i think it's already ahead -- i said it's second to none to the other smartwatches out there which maybe isn't saying a lot. i haven't found a smartwatch to date that i was willing to buy. this thing looks like a really nice watch and that can't be minimized. this is something you wear. you're not ashamed to be out in public being seen wearing this thing. >> joanna, quoting four youes poo. we buy it because we want to look our best. and that's what apple does. are you focused mostly on the

look of it the jewelry aspect of fashion aspect as opposed to what it actually can do for our lives, the purpose aspect? >> kind of both there. i think one of the big things apple is trying to do here is sell a luxury item to people that we just want to wear something that makes us look cool, that actually enhances our status. but i think the other thing they want to do here to make us look good is also make our bodies look better to make us healthier. so a lot of the things we taught about in my piece is in a fitness gadget and how it's better than fit bits out there. yes, it's way more expensive but it gives you more accurate data and because you want to wear it all day long. it actually serves its purpose. >> ed, a lot of discussion about battery life, especially when this thing was still on the drawing board. how good is it? >> well, like most things like your phone, you're going to have to charge it nightly. apple is saying about 18 hours, day and a half. in my test that's actually seems about right. i did charge it every night but by the time i charged it well into the evening i still had,

you know 30% battery give or take. so -- but you do have to charge it offen a daily basis or at least every day and a half. >> i'm going to chime in tr and say one thing that definitely does hit the battery life more if you're using this as a fitness tracker. exercise kills the battery on here. days where i went to 45-minute spinning class it was dying by 8:00 or 9:00 p.m. >> not a problem for me there. >> you don't do 45 minutes. joy anna i'm not clear where you would never buy one because it will always become outdated or you think this is first one and therefore you'll wait. >> yeah. i mean i'm personally going to buy one. i'm going to -- >> you are? >> a cheaper version. >> you said when said should i buy one in the article, you said no. >> when people look at this sand say should i buy one, is it going to fix my life and do all of these great things for me? i think you should wait. i think you not buy this first one to the. consumer. are people going to buy it of course. also the buying the $350 version to see if it fits that their

life. >> it occupies a particular place in this country, doesn't it? at social engagements. the question is up of the 320 million people here buy one in the knowledge they may have to replace it two or three years down the line. more importantly, it's the gift that you buy for somebody who already has everything but the latest version of the watch. >> i think you're right. i think you're right in those senses. i think the big question becomes how often will we have to update this, right? with the iphone we update every two years. it makes sense. here we updateing our watch every two years? i don't think so. when i look at this i like at the side of this and i say this thing is definitely getting thinger, right? apple has made everything thinner, always. it's made the battery life slightly better right? but it always makes these hardware improvements. >> watches don't always get slimmer. brightly is a huge watch and sells very well. >> right. but when you look at this on your wrist you say this is a thick computer sitting on my wrist, right? i think that is where one of the big hardware improvements comes.

i think battery life is another place where the big hardware improvements come. and performance, i said it a little bit in the video review i did, it does get sluggish. that is something apple needs to work on on the software and hardware end. >> would you rather own this than a samsung xweer? >> i would. >> i would also say absolutely to that. >> not a contest? why not? >> this is something i say i wanted but i agree with joanna it's not -- we have to remember it is a watch. you know, it's not essential like your phone is essential. it's awfully nice to have. >> did you guys use any of the third-party apps? did you use uber or twitter? >> question. i hailed an uber. it worked fine. the interface was a little bit confusing but i did get my ride so that worked out. i also used apple pay, which actually worked remarkably well. i used it at mcdonald's and i used it at whole foods and it works better than your phone because you're just hitting a

couple of buttons, putting it right to the register and it worked very very well. >> on that i will point out you can use apple pay without your phone nearby. back to that fitness angle, i went for a two-mile run on saturday morning, ran, had my blue tooth headset in, no phone, stopped at whole foods, got my coffee water, paid for it. >> that's huge. >> you can do some things without the phone. i think that's actually really interesting. that was for me one of the breaking points where i said this thing is freeing from the phone. >> we're going to see what opening weekend is like in a little while. thanks so much for your time. >> thank you. still ahead on "squawk on the street," big changes coming to the tesla model s. find out how tesla plans to make its sedan compete with the heavy hitters in the luxury car market.

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♪ straight ahead on the program you can see oil prices are down today but they're up about 6% during the course of the week. what does shell deal with bg mean for oil prices and shareholders? more on that on "squawk on the street." take a deeeeep breath in. . . and . . . exhale. . . aflac! and a gentle wavelike motion...

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i'm courtney reagan. the south carolina police officer caught on camera shooting 50 yaermd walter scott in the back will remain in jail after being charge with murder. a judge ordered slayer to be held without bail. scott's family is planning to file a civil rights lawsuit. protests are expected today in south carolina. greek prime minister met with russian prime minister putin in moscow to discuss bilateral relations. putin says tsipra hinted that they could lift their embargo in greece. secretary of defense ash carter met with the japanese prime minister shinzo abe today as he kicked off the asian tour. he welcomed progress towards the first update in u.s./japan defense cooperation guideline sips 1997. air traffic controllers went on strike in france today

prompting the cancellation offlights across the country. it involves conditions of raising the retirement age from 67 to 69 years. further strikes are planned. that's the cnbc update for this hour. back to you. welcome back to "squawk on the street." i'm jackie deangeles reporting from the ney max. department of energy out with weekly inventory report on crude oil. we have a build here. 10.9 million barrels. it wasn't as robust as what we saw from the api last night this still is a very big build north of the 3 million barrels that a lot of analysts and traders were expecting. in fact, we did see more bearish action in terms of the price in reaction to this. we were down about 2.3% just before this number came out. down more than that now. trading just around that $53 barrel mark. it seems that this market is coming back to the reality that it is very well over supplied. you take into account this

inventory number and what we heard from saudi arabia that it is at record production levels. 10.3 million barrels a day in march and you realize that we have a situation where there's a lot of oil tout there. number one where is it going to go? and how are we going to get this production to start to slow? the only caveat to that guys is the geopolitical instability out there. that's what's bouncing us around right now. back to you. >> yeah or just watching it fall. 5237. in the meantime of course a big deal today. royal dutch shell agreeing to buy bg group for $70 billion. it's the biggest deal in the sector in 17 years. since exxon bought mobile the ceo of shell appeared earlier on cnbc europe to explain why they are paying a 52% premium on bg stock over the last nine months. >> this is not a bet on the oil price. this deal works in a whole range of oil and gas prices sprices.

we believe in a few years time we will see long term fundamentals assert itself. we will see higher oil prices than at the. then this deal will look fantastic. >> let's bring in tamar, nasdaq energy analyst. welcome to the program. good morning. >> good morning. thanks for having me. >> what are you making of this huge deal here? what is the patent? what can you tell investors about when next they should look? >> i think it shows that oil majors are having an increasingly difficult time we growing their reserves organically. they're looking to take advantage of cheap access to the capital markets to fuel purchases. i think it's a little bit too early to tell whether this is a har harbonjer. it's's a distressed asset commodity price environment but more broadly executives have been saying they've been gun-shy about making acquisitions.

they want to buy it and put a damper on deals in terms of this year, maybe it will be something more of a phenomenon in 2016. >> it is worth pointing out, actually if you look into the detail of the deal that they're emphasizing the cost cutting, emphasizing increased share buybacks. it's not a -- it's not as aggressive as it would sound on the face of it. >> that's correct. i mean i can't comment on the deal specifically or the companies involved. >> sure. >> more generally, the ability to cut cost and grow reserves is something that's increasingly important in the industry right now, effort majors that have a -- more challenged time to do that. >> you know this deal had a strategic element to it. obviously it was about natgas. creating a natural gas giant after the lng. what do you think is going to drive some of the other deals in the sector? this consolidation that people are expecting, is it going to be led by shell assets, natural gas, what is the hot asset that

people are after in terms of growth? >> well, yeah, you make a good point that the assets in question in this deal are not really a north american. they're not about north american shale. in general that's been seen as swing producer. swing cost of supply. that will probably be the most attractive deal going forward. but we saw going back last month that whiting petroleum was unable to consummate a deal to sell itself. it's still unclear in the market. north america is attractive but there are other assets out there enter nationally that are interesting as well. >> tamar, weigh in on the oil price. what you're hearing and where you think we're going to go from here because we had a real good bounce that clearly as we speak we're now eroding. >> yeah the market is really skit tish. i think it's going to stay a range bound for the duration of the year just trading on any new story or data point that's out there, fundamentals are not really in question.

we know that counts are coming down butrigs are getting more pro dubtive and the cost of supply and services are going down so basically you can get the same rate of returns with $60 oil price as you can in $120120 $20 poiloil price. >> i imagine you don't feel comfortable about giving people advice on whether they should buy oil futures, etfs or oil services etfs but they clearly are and people are concerned about that huge move people attempt to pick up it here in the billions roll in. just give me some color on what people say to you. >> sure. well, i'm certainly not qualified to offer investment advice. >> i understand that. >> -- on oil but i think that we have to be really careful because we're in a new pricing paradigm right now which people don't really know how it's going to play out. so we have a lot of supply and although there have been cutbacks in spending it's

unclear how the economics of that supply are shifting because it's a new environment. it's different from the deep water environment that we were in or other sources of supply. so i think that people have to be really careful when they're looking out. it's not necessarily that the path of least resistance for oil prices is higher as it had been in the past. >> tamar, it's good to meet you. >> thank you for having me. >> have a great day. when we come back google's senior vp of people operations joins "squawk alley" live he's going to take us inside google's hiring process and how to find the best candidates. tune in tomorrow. the managing director of the imf christine lagarde will join sarah for a one-on-one. dow is off the highs. up 50 points. we'll be right back. what if there were only one kind of dog? then it would be easy to know everything about that one breed.

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♪ we are off the highs of the session so far this morning. have aing loo at consumer discretionary though trading higher. dom at hq. >> those discretionary stocks are competing with health care and others as the best performing sectors so far today as we do come off the best levels of the session. shares of online streaming services company netflix. you can see they're also macy's

under armour dollar tree up by 2% or more at least they were as we kind of head towards this little leg lower. discretionary stocks cyclical sector is leading the way higher. maybe at least some good news for some goals out there. back over to you. >> thanks for pointing it out. consumer names up today, dom. bill dudley is speaking right now, that is a live shot in new york city. he's been attributing the weak first quarter data to temporary factors like the weather. he said that a june rate hike is still possible but he also said, quote, the bar is probably a little bit higher for a june interest rate increase given the recent weak data. nothing is having a real material affect on terms of market direction although we have lost some of the gains. dow dropped into negative territory. for more reaction to all of this fed talk let's bring in michael hanson bank of america, merrill lynch economist. it does seem to be the message of the fed right now that we're

itching to raise interest rates but don't get too excited or too worried about it because it's going to be measured. it's going to be quote, shallow, and nothing very quick. is that the right take away? >> i think that at this point. i think that the fed has come to the conclusion that conditions are going to be good enough that they can do liftoff. that if give enough guidance to the market, enough forewarning, there won't be that big of a reaction. given the chad chul nature of the recovery they're going to go show. you had yellen say that as well as dudley moore recently. and so their view is start soon but take our time. >> they also said though and dudley just said this in his discussion, that it's a big uncertainty how markets will react to the first interest rate hike. is the federal reserve too worried about market reaction in order to make this move of liftoff? is that why there's so much talk leading up to it? >> i don't think they want to create unnecessary volatility. they don't want to be a source of uncertainty themselves. you had governor powell speak

earlier today and he said basically the fed is not going to get overly worried about market volatility. they're going to do what they think is right for the economy. that's the base view. they have to acknowledge, as dudley said, one of the ways in which fed policy affects the economy is through the markets. so they want to make sure the markets are more or less on the same page. that's why we're getting a lot of talk and guidance from the fed right now. >> michael, if you will give me permission i would disagree with you. i don't think they will deliver the right interest rate for the economy because they're so scared exactly what will happen in the markets. you know we are at emergency zero levels and we've been there now for six years. he just said there is tremendous uncertainty as to how the markets react. we must consider their reaction in deciding the rate of increase. on monday he specifically to the point, michael, said we are targeting two things. one is the economy. the second thing we're targeting in addition to the economy and separately is the bond market. take a listen, if you would. >> if financial market conditions do not tighten much

in response to higher short-term rates, then we have to move faster. in contrast if financial conditions tighten unduly like we saw during the taper tantrum, then this would likely cause us to go much more slowly or even pause for a while. >> you see, michael, i and a these who paraphrase that as we've created a bubble in the bond mart along with the ecb and we're scared to death that we might deflate it and therefore we may i've there interest rates that are not appropriate actually, absolute level for this economy because of the position we found ourselves in. am i completely mad? >> there's two parts of uncertainty there. maybe even three. so dudley is acknowledge that they don't fully know the transmission mechanism, rate hike sporthort rates. the dollar credit spreads you know, stock market prices you name it. it's not just targeting bond prices. in the second part of that question is why are bond prices low if the fed is still hiking? if it's because the global outlook is weak the fed is

likely going to take that into account. the final part is even if bond prices don't go up that much is the economy more sensitive to the bond market or more sensitive financial conditions that second part of that transmission from fed policy to the markets to the economy is something you haven't heard fed officials talk a lot about. it's clearly a source of uncertainty for them and it's one of the things they're trying to calibrate. what they don't want is a bond market to over reabout as they're trying to figure out this chain of calibration of how to get from policy normalization to having the affect on the economy they want. but the data are suggesting that -- labor market is doing better and that's why they're thinking about hiking rates now. >> michael, as we wade through if fed speak this week dudley for two times this week. who is speaking for the chair? do we really know? >> i think dudley is reasonably cloe tote chair. powell this morning suggested he was very much align with yellen and the core of the committee. i think that there's a number of fed officials that we can pay attention to. i think yellen, fisher and

dudley are the key members to pay attention to. i would say that lacker and some of the hawks are really not onboard with the committee as whole. >> see what the data tells us. michael, thanks for joining us this morning on the dudley headlines. michael hanson, dow has lost the gains. down three points. let's get to the cme group in chicago, rick santelli and get the santelli exchange. good morning. >> good morning. if it's alcoa in the afternoon it's rebecca corbin in the morning. rebecca, thank you for taking the time today. >> thank you very having me. >> based on quarter over quarter, is there any one area that somewhat surprised you with regard to the answers versus last quarter? >> sure. so we've been tracking sentiment on sectors and oil and gas actually saw a shift in bearish sentiment. still down beat but 42% bears last quarter to 28% this quarter. i think this morning's news is a little bit of a shocker. >> it is but we did have the highest close of the year and i have to say i'm impressed if they traded what they wrote down

in terms of the surveys. they made a few bucks. what about cash positions? quarter over quarter, decrease, increase? >> 78% either stayed the same or increased cash position which is not surprising. >> well, you know once again tina, we've all heard it there is no alternative. that seems to constantly show up. what i find interesting is if we look at the sustainability of this marketplace, what do we learn? >> you know when we look at sustainability in terms of the markets investors last quarter said 70% they were in favor of the markets being sustainable down to now 58%. we've seen two consecutive quarters of drops. i think we're coming off of very highs. i investors are looking at this quarter and there is some worst than kenconsensus expectations built? >> i love reading this because you get a flavor of not only domestically but globally. if there is no alternative but the sustainability and sentiment are coming down a bit, strategy doesn't seem to be changing. is this going to have a nasty

ending? >> well, we've seen a shift from large cap multinationals to small caps. russell up 4%. russell is largely predominantly domestic stocks. so i do think that there's been a shift. i think that's somewhat overlooked. strong u.s. dollar is good fordow mess tick only stocks. >> absolutely. you can buy a whole lot more stuff. all right. when it comes to what's happening in the marketplace there's no common denom mater that affects everybody no matter where you are than across the capital which of course is affected by central banks. when do you respondents think the fed is going to raise rates? >> it's anybody's guess and it keeps on shifting every time yellen comes on. now it's the third quarter with 46%. >> spot on with the rest of the world. which is what the fed has advertised. let's see what the minutes say. may be the most important thing of up a approximately bullishness by region. you already pointed to the type of equity strategies seem to be biased more towards domestic but what does h last chart tell us? >> the u.s. is still strong. what we've seen is an emergence

of eurozone and india. last quarter was the first first i started hearing a lot of ceo commentary on the positivity going on in india. >> well, i always thought when it comes to qe in europe like in the united states investors are going to be quote/unquote bullish by that because their equity positions improve but they're not bullish the fundamentals. in your final thought wrap it up. >> europeans are positive in terms of their sentiment. we haven't seen anything come to fruition yet. >> it's always a pleasure. i look forward to seeing you next quarter. simon hobbs, shaken by not stirred, back to you. >> rick thank you very much. up next on the program, tesla seeing a big jump in its stock over the past week. up more than 10% to $26 billion after record-breaking sales and now news that the company is upgrading the model s. what next is in the road for tesla that after this.

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10.9 million barrels that was the build on crude inventories and with that oil is down 4%. it's probably a good reason we lost what was close to a triple digit gain on the dow.

the 13th weekly increase in inventory and, of course, that's a record. >> you have to wonder how much storage capacity they have left with all of these about builds in inventory. >> they were in the 70s not long ago. >> where does it peak? tesla meantime shares up about a 1.5% upping its game when it comes to the luxury car market. upgrading its model s, boosting its range, power and price tag. phil lebeau live in chicago with details on this announcement. phil? >> sara you're getting a little more with the base level model s and paying a little bit more if you enter or buy a model s at the entry level. the 60 kilowatt battery pack that's going away being replaced by what they're calling the model s 70 d, a 70 kilowatt per hour battery pack. it's going to have greater range. the range 240 miles, about 32 miles more than with the previous entry level model s, dual motor all-wheel drive, not rear wheel drive, all-wheel

drive, $70,000, 5,000 more than the current entry level model s. people are saying why would tesla do this? a couple things going on here. they're offering autopilot and super charging hardware with this vehicle. the autopilot software in the latest software will be available. three new colors for the new model s. but keep in mind there will not be an insane mode. you only get that with the p-85d. a lot texting an e-mailing where's the p-85d insane mode in the entry level model. you're not going to have it. for tesla this is an important year. look at their quarterly sales. 10,030 were sold in the first quarter of this year about a 55% increase compared to the first quarter of last year. the remainder of this year is going to be critical for tesla as they move towards their goal of selling 55,000 vehicles this year. by the way, the new 70d version they will take orders for it immediately and expect that

production will begin over the next couple months. the entry level for the model s, 75k. >> you have to pay up even more to get the insane mode. thanks phil lebeau for now from chicago. let's send it over to jon fortt with a look at what is coming up next on "squawk alley." good morning, john. >> good morning. you think we're talking about the apple watch? maybe. the reviewer who wrote the most skeptical, critical review i've seen thus far this morning coming up on "squawk alley." also rumors about twitter, how much stock should you place in them. and how to get hired at google. their head of people will be here with us to talk about their culture. all that and more coming up on "squawk alley." before i had the shooting, burning, pins-and-needles of diabetic nerve pain, these feet... ...served my country... ...carried the weight of a family... ...and walked a daughter down the

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keeping an eye on the major stock market indices the dow has lost much of its 100 point rally although it dipped into negative territory, higher by 20 points. one thing that traders are talking about down here was the big build in crude inventory as we got that at 10:30 and saw the market sell off and saw a sharp reaction in the price of wti crude oil down almost 4%. >> in the meantime fed minutes at 2:00 probably upside surprises there because yellen was dovish at the news conference and since then the data has been softer.

let's hand it over to "squawk alley." take it away carl. >> good morning. 8:00 a.m. at apple headquarters in cupertino, 11:00 a.m. on wall street, "squawk alley" is live. ♪ ♪ ♪ now the time has come no place to run ♪ ♪ ♪ but i have my fun ♪ ♪ i've been put aside ♪ welcome to "squawk alley" for a wednesday. joining us this morning jon steinberg ceo of the daily mail north america. good morning to you. >> good to be here. >> jon fortt and kayla tausche at post nine. watching the markets well off the highs. the dow up almost triple digits but up about ten. big story in tech is the review of the apple watch out this morning and among them c-net scott stein says the watch