inappropriate activities. it's thursday may 7th 2015 and squawk box begins right now. ♪ good morning and welcome to squawk box here on cnbc. i'm sitting in for becky quick, joe kernen and andrew ross sorkin, they are here. let's get you up to speed on the markets. we're going to have a negative open at this point. dow would open lower by 95 points. s&p 500 lower by nearly 11 and nasdaq lower by 24 points as we continue to wonder about what is happening in the bond market. this huge move and rise of government yields around the world where everybody assumed they were staying low for so long and it's just upset all

kinds of things. >> it occurs to me that we didn't know how good we had it. our rates were kept low by a weakness in the european economy but we were having this great year in 2015. we had the best of both worlds. rates will stay low. >> yet the economy was growing. >> we were doing great. now we get a .2% read and europe is doing better so their rates are going up based on what they're doing. >> so do ours. >> ours go up so we go from 17-on-the ten year to a 2.3 and all these numbers are so low. they cracked me up with germany. 75 basis points. oh my god it's 75 basis points. >> but they have been negative. >> are you changing your bet on when ms. yellen is going to -- >> i don't think so. >> does it matter?

>> to her i don't think it does. >> as it became less likely they were going to raise in june or september our ten year yield went up almost 30 or 40%. >> anyway. >> it doesn't matter. that's what people worry about when the market starts setting interest rates and the fed loses control of the situation. >> you think this is the sign that they lost control. >> it does raise the question have central banks in the world lost credibility. when you know the ecb is going to buy everything in sight. >> these are tremors. you don't know. it starts slow and starts getting bigger. you don't know but you're open about the big one. >> in a few months we could be look back at this and laughing. >> the market was selling off when oil was going down.

>> now there's a lot of supply. >> now looks like the market is selling off because oil is going up. >> it is. >> we thought it was deflation nary signal. >> but it didn't help retail. >> not yet but we may never see it because now it's coming back. >> we have been saying it's been tough sledding in 2015. we're going to be below for the year again. we're right around the front line where we haven't made any money. >> why do you think yields are rising? >> i think yields are rising because of europe -- they were so low anyway weren't they totally oversold anyway? >> but if you know the ecb is going to buy everything. everything, they're buying everything they possibly can. >> the ecb, that's like a -- no it's like a big pond and a couplel of ripples in the big

pond. did you see bill gross? his new janice fund that he's trying to -- one week down 2.4% in one week and they don even know how he lost money because he was short the german bond. >> he thought that was a great trade. >> but how do you -- and then i used to sell these things called zero coupon treasuries and what they do is you buy them at -- >> look at that chart. that's amazing. >> you buy them at 200 and they mature at a thousand and 20 years down the road you don't get current coupons. in the last couple of weeks some of these zero coupon investments lost 20%. >> i was going to say if you are leveraged a move like that is devastating. even if you're at low levels. >> bill gross came out with his call on -- >> he still lost. >> but i'm saying his call was like -- that was it. but i'm saying he didn't catch

it then. he caught it before. >> you knew we were going to you know your boy. >> my boy. >> you knew you were going to hear from him on the pay trido notes -- patriots. what time is it? 3:40 in the morning and he's trashing the paytriotspatriots. >> i do want to talk about brady but not right this second. >> brady bunch. >> some guy that has some kind of -- plays a sport and the ball has no air in it or something. >> model wife? >> yeah. we have to get you caught up this morning, two economic reports of note. two weekly jobless claims and then march consumer credit later this afternoon and in earnings central today alibaba is the big morning headliner. analysts are looking for the chinese e-commerce giant to post earnings of 40 cents a share. that would be at $2.8 billion and then a cnbc alert this

morning, lumber liquidators is halting sales of all the chinese flooring immediately. there's criminal charges exposed last week concerning the foreign sourcing. they have been under fire since early march when 60 minutes aired the big report saying the chinese lamb nant flooring contained high levels of it. >> i don't know if i've seen a lumber ly inquiry dayiquidatorsliquidators. >> you pour it in your hair. >> but what's the other straightening thing that people do in new york? >> well they have brand names. brazilian blowout. >> in global news voting in the u.k. in that election is now underway and the results could have consequences for u.s.

investors. wilfred frost joins us from london. good morning. >> good morning, joe. polls have been open for about four hours in the closest general election in decades here in the u.k. the last set of polls we saw last night had the leader of the conservative party, the prime minister, david cameron, neck and neck with the leader of the opposition ed miliband's labor party but both are only polling in and around the mid 30%. neither therefore likely to command a majority in the house of parliament behind me when we get the results. that means we're going to need coalitions and deals and even though david cameron is likely to win the most seats it might be easier for ed to form a coalition. the third biggest party is the scottish nationalist party that don't just stand for the succession of scottland away from the united kingdom but they're to the left of our

political spectrum. if 2010 is anything to go by then that period of coalition forming could give the market jitters. the ftse sold off around 3% in the five days between polling and the government being formed after the last election. polls will remain open for another ten hours. this time tomorrow we'll know the make up of seats in the house of parliament but probably not know who is going to form the next government for days or even weeks. >> all right mr. frost. thank you so much. the outcome of this could mean that we could see a referendum on whether or not the u.k. stays within the european union. >> is our constitution, did we like copy wright that or something? couldn't -- couldn't all these countries do it the right way? can you imagine if we were here -- if bernie sanders gets 4% and you have to form a coalition -- >> horrendous.

>> why can't they -- wouldn't you let them borrow our system of government because it's the best one. >> many people in greece told me they wish we would go to the system where you knew once somebody won they have the position forever. how about the fact that the government can fall. >> we watched it all happened and then we designed the right way. >> then how do you find out about the candidate? >> it goes on for six months and that's it. >> it's weird and all our problems would involved. got to get the corporations out of -- >> it's not the corporations. >> it would solve everything joe. solve income inequality. >> it just might make things a little better. >> let's check out this morning's stocks to watch. tesla with smaller than expected

loss on better than expected sales and the auto maker is backing it's full year delivery target. we'll talk to an analyst. zynga shares getting a boost topping wall street's mark. the farmville game creator announcing more job cuts as it tries to turn around the business. activism beating estimates on the top and bottom line and the video game maker is raising it's full year. >> congratulations for that. 21st century fox earnings topped estimates. revenues also in line. company's president says in his words a vast majority of customers want a bundle of channels. just for you. rather than to cherry pick networks. >> i read the quote. i continue to think that a low price bundle will attract more people than premium price individual pick and choose. it's going to be a slow process. >> a a slow process and i do

believe there's going to be a bundle of some sort. i just think it's going to be a very slim bundle or different pockets. >> but what if it costs more than the 800 channel bundle. >> if you want what you want and push these guys hard enough they only have 3 million people taking it instead of 80 million -- >> they're going to want more money. >> you'll have to pay up. yesterday we talked about how each long-term deal that the networks are making for the individual sport to carry it just up and up and up. multiples of what used to cost $100 million costs $2 billion now in some cases. >> and you're saying that as they do that that's going to add to the cost of buying each individual network. >> you're going to pay one way or another. >> if you want espn you'll pay

one way or another. it's not clear to me that right now there's certain channels being subsidized by lots of people never watching them. so some of those channels fall by the wayside. >> you won't even notice though. there's a lot of channels i never stop at. >> i agree but then the weather channel, mtv, vh-1 nick having a hard time right now. >> but it's a content problem. sponge bob got long in the tooth. >> and then we'll go to the next headline but when you think about the nickelodeon problem it's a function of netflix and on demand kids. it has nothing to do with the content. the content on nickelodeon is as good as anything else. it's not on demand. there is nickelodeon on demand. so it's not that it doesn't exist. >> that's not what pays the advertising bill. >> but there's alternatives and netflix has bought up so much children's programming they made it available that way.

>> gets up before dawn every day and swims. >> i know we have to do this. so there's an article in vanity fair. we should talk about this. i don't know what to make of that article. >> why not? it's about success. >> no i love him. i want to know who -- in the piece, there's people speculating that he is on a feeding tube and can't speak or anything and on the other side he's dictating to somebody and has the spokesman saying he wakes up at 5:30 in the morning and getting a hair cut and watching sports and you can't figure out who is telling the truth. >> i didn't know that background. >> it's very complicated. >> i'm not surprised by the fact that he wants to hold on as long as possible. he's so famous for holding on during that fire. >> you're reading this article which is a fascinating article but i read it and i couldn't tell -- you have one side --

then there's these two women he lives with. >> your buddy sends you a copy. i don't get it free. can you talk to him -- >> i got an early copy. >> you get an early copy. >> it's fascinating. >> back when he was '84 or '85 and consolidating his grip if you're 84 and you're able to move everyone out of the way and stay until 91 i'm already giving him the benefit. now he's 90. >> imagine in the singulairty happens he might make it. who else was it? liz smith said that everything was fine all the way through her 80s but once you get in your 90s people don't take you as seriously. barbara walters won't go to lunch with her anymore or something like that. but she is 92 and saying now people aren't taking me -- if we could only wish to be relevant all through the 80s.

like these guys. i want to be doing one armed push ups. >> i hope he is doing one armed push ups. >> and watching now. >> by the way it's very possible that he's watching now. crudes climb continuing. wti now up close to 25% over the last two months. prices have been rising every week since mid march. every single week since mid march. here to tell us where prices are head headed. that's the question. where are they. >> he may not have agreed to come on. >> no but he has been right that things were going to come back. i don't know if you thought they were going to come back this quickly though. >> no it's a bit of an issue that they have come back so quickly. you guys were talking about yields rising. i think that this has been -- the rise we've seen is because of signs of tightening in the u.s. oil market but also

currencies as well. we saw the u.s. dollar peak on the 13th of march. that was a 12 year high. four days later we saw a six year low for crude prices for wti so that's not a consequence that that has happened and as we now see that dollar weakening we're seeing crude prices rebound. that said i think this is a transitory thing. we'll see weakness come back into the euro and we'll see weakness come back into crude prices as well because we're still 1.5 billion barrels over supply on a global basis here. >> so you're calling a top right now. >> i don't know if i'm calling the top right this second but within a few dollars, you know. markets generally run further than you expect so the trouble is that prices now above 60 even getting above 70 on brent if we see that.

that's going to incentivize production to come online. there's 5,000 wells in the u.s. drilled and uncompleted. if those come back to market as there is the financial incentive to do so that could bring hundreds of thousands of barrels back to the market at a time when we're still at an imbalance. all these prices are doing is encouraging that imbalance to last for a much longer period. >> i thought the tipping point was a $65 price point. nobody is going back online until we get back to $65 in which case i would think it would be hard to get back to $65 at this point knowing the amount of supply that would come on. >> well we're getting kind of close to that level right now. you people that have hedges in place. that are continuing to pump on the expectation that the forward curve is correct and that we will get to that price in three months time. so they're just hunkering down and holding out that we'll get there and the fact that we saw our first inventory draw for

crude oil stocks yesterday for the first time in 17 weeks is giving some sort of expectation that the market is balancing when in reality it really isn't. we saw imports drop last week about a million barrels a day and that's why we saw the large draw down in stocks. so we're still a wash with crude here and we need that fall back again. >> okay matt. we will look for the pull back as the summer gets underway here. thank you so much. >> thanks. coming up, wow, did you see what dan said? >> what did he say? >> i'll make a full screen of it. it's deep. >> is he naughty or nice? >> it's -- i'm not going to characterize it one way or another. >> if i had to bet. >> good tease. >> and shares of tesla could be ready to kick into overdrive. an analyst will tell us why, next. but first as we head to break,

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it's a stock that is hotly debated on wall street. check out the range of analyst price targets. everything from $400 to $150 per

share. collin is with us. he has a neutral rating on the stock and price target of 2020. good to have you here. >> thank you for having me on. >> the conference call was almost completely focused on the battery launch rather than the cars. was that the right thing to do? what is that reflective of? do you care about the batteries? >> it's a new opportunity and there's a lot of hype on it and a lot of excitement and they're one of the first to market with a product so i don't blame them for highlighting it and obviously the questions around it because it's so knew and everyone is trying to understand and get their arms around the long-term. there's a lot of questions there. >> is it a car company or battery company? >> today it's a car company and there's a nice option to grow this business but even when we look at our 2020 estimate at 10% of battery storage, maybe that goes up maybe adding capacity for battery but today is the vast majority of the revenue is coming from cars and will be

that way for the next five years. >> i saw analysis last night and the company broke out what it cost them for the strong dollar but he did a simple analysis versus how many they sold last time. how much they lost. how many they sold this time and how much they lost and the amount lost per car was up like 50% or something. but probably not accurate to do that apples to apples description. part of the reason -- >> they're down too. >> gross margins are up sequentially and they even highlight -- >> down a year ago or something? >> the issue they have is that margins are impacted by px so their pricing recovery will be on a lag. so by q-3 or q-4 they'll recover

that. they make it in the u.s. and ship it to europe. so it's understandable. >> it's weird because you think about the potential for tesla which seems enormous. it's a $29 billion company which people say is overvalued. some people. >> when you're only doing 10,000 cars a quarter. >> i guess. but there's bio tech companies that have one drug or a couple of drugs valued at 50, 60 70 beside. 29 billion with elon musk and his car company and the potential for the future. i don't know what to think of that. it doesn't seem that expensive. >> you have to realize the auto industry is very competitive. for drug companies the opportunity margins are much, much better. >> no one makes a tesla car like that except for tesla. they don even care about gas prices or the environment. they're buying tesla and willing to pay a premium just to have

the car. >> over the next five years you'll see a lot of luckslyxury brands. >> you really are neutral. i can't get either way with you. >> in the near term as they ramp more products, the molddel x will hit and gen 3 will hit. we're look agent the opportunity to get battery costs down. some of their targets on battery costs are questionable. so long-term there's concerns. near term i think you'll have some volume ramp and height. >> ran up last night and now it's down today. up a couple of dollars after hours. >> it's a volatile name. my guess will probably trade up today. there will probably be more momentum. they're quite bullish. >> yeah but they had demand for 38,000. they kanlt meet that capacity.

what's amazing is they're not that economical to buy. if i buy them as a homeowner it takes a dozen years before it pays me back? the technology could change dramatically. people are excited about the battery just like they're excited about the car. >> yeah, the residential for certain applications it doesn't have a pay back. that's clearly a concern but we're really really early days and that's the concern right now they can't get these to market and there's a small niche of consumers willing to buy these batteries. one to be off the grid and green and it does have applications as power back up as well. >> great to see you. coming up, we're going to ask about the u.k. election the cord cutting trend, ripple effects of unbundling and tom brady himself and deflate gate. but first a look at yesterday's s&p 500 winners and losers. we're back in a moment. ♪

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good morning and welcome back to squawk box. becky is off today. it's been a busy week for the dow and for dow component mcdonald's. unveiling the turn around plan which includes testing new products and we're getting word on one of those pilot offerings.

no say it's not true kale. >> yeah. >> wow that could attract some people i know. at nine southern california restaurants. that wasn't kale. that was seaweed. >> very salty. >> yeah. >> meantime do you remember this guy? he is coming back. the hamburglar returning to mcdonald's after a 13 year absence. we saw that creepy burger king dude. did you see him in pacquiao's entourage? >> i did not. >> right after jimmy kimmel. or maybe he was in mayweathers. i'm not sure. but some weird burger king king. >> he could have been the reason they won or they lost. >> it was surreal. the ladies with the signs. the whole thing, it was surreal. >> it was an event, wasn't it?

>> it portends the ends of days when i see something like that. when we're that frivolous about something like that and we have isis. >> haven't we seen that sort of event before in boxing. >> we have. you feel like you need a shower and then it takes five years before you're stupid enough to believe it again to buy into the next big event. >> i'm sure you'll be at the next one too. >> no i wasn't at that one. >> did you know you were on camera the whole time. >> i did not know. >> normally i would say bring a handkerchief and blow your nose. >> i use my handkerchief. >> no, i'm kidding. but it's bob --

>> you have a very retentive memory. >> brady and kevin from underarmour. >> they were on camera the whole time. you were in the same line-up there. >> and charlie rose was there as well. >> i saw him posing. anyway. we're going to do a couple of stories real quick. >> get into the general election. much more important story. >> we will. >> i think we're allowed right now -- we have to warn our u.k. broadcast -- >> because this is blocked out in the u.k. right now. this conversation about to be blocked. like china. >> i want to know what you're talking about. >> headlines front and center right now this super bowl was months ago but deflate gate has come back to life. the nfl concluding it's likely the patriot's personnel did deflate footballs in the afc championship game. it's more probable and probable

is important in this it's more probable than not that quarterback tom brady was at least generally aware of the inappropriate activities involving the deflated footballs. the patriot's owner is disappointed in the findings but the team will accept the report's conclusion and any discipline. the nfl has not decided what action it will take. >> the headlines are great in the local papers. they're so funny. >> here we go. what else we got. >> daily news. >> great balls of liar. >> yeah. >> obviously we have a dog in the fight in new york city. obviously we have the giants and they're both rivals obviously. more probable than not. i have a problem with that language. that's 51%. >> that's like we think but, you know the statement that kraft put out was right which is to say how can you punish us or

come out with a statement if you have no hard evidence. didn't they interview all the people including the ball boys and all the stuff that happened and they had nobody that admitted to doing it? it makes no sense to me. >> basically. i don't know how you suspend someone hard like there's people that say there has to be pain here and i don't know how you do that on a more likely than not. on a more likely than not scenario scenario. >> probable. >> not certain tnchts way we do it in this country in terms of law, in a civil case all you need is a preponderance of evidence but in a criminal case you need absolute certainty. so i don't know which one you go with. >> this was neither by the way. this was just internal investigation. >> does the public care? if you're backing tom brady. >> only patriots haters.

>> but is kevin plank upset today? is this bad for his business? he's in with the whole family too. he has gisele going. >> nike stuck with tiger, right? there's worse -- supposedly they probably weren't the only team that has done something. peyton manning wanted to be able to control his own balls. >> mr. advertising what do you say about that? >> you're here joining us sir martin the well healed ceo. i'm with you 100%. i think you're underpaid from what i've seen. >> as we were discussing, pay for performance. >> normally we have had arguments about other things. >> only hilary. that's all. >> hilary obama. about the left about progressive politics. >> joe, the only thing that we

have talked about is who is likely to win. that's all. >> but got who you wanted to win. >> we never talked about who i wanted. >> you picked hilary last time. >> i said i think hilary will win. >> i had to buy you lunch because of palmobama. we didn't talk about wishes or desires. i don't think i should say who i want to win. >> are you wondering about being in the income inequality discussion. you're the highest paid ceo in the united kingdom. if i have invested in a company for 30 years, started it from 0. from 0 market cap to 20 billion pounds market cap, 30 billion, u.s., if that's wrong, mea mea culpa. >> but is that enough? is that fair? >> what i have done is built a company and if we have 180,000

people in the company. there are let's say average -- >> how many yachts can you really water ski behind really. >> i asked it jokingly. he asked it seriously. >> i have invested in the company. i kept all the shares in the company over the 30 years except for one exception when i had the divorce settlement. i believe in investing in the company. i believe in entrepreneurial risk. >> and the compensation you're getting though is not the stake you have in the company. this is additional compensation on an annualized basis. >> for performance. top tier performance against our peers and i retain the stock. the amusing thing is we have been doing this since the early 90s. everybody is catching up. five year performance plans. eps based.

roi based. and you keep the stock for a longer period of time. >> around the world now probably in the u.k. as well and here the day that hillary clinton announced her candidacy the first thing she said was ceo compensation and then i'm going to topple the 1% so there is a party, i'm not going to mention any names, that believes that wealth is a 0 sum game and that your 40 million pounds is coming out of the mouths of poor and -- not that you're building wealth out of nothing. >> you're taking it. >> it's a 0 sum game and if you have it somebody else doesn't have it. that's what they think. there's only so much to go around. >> in the newspapers this morning or yesterday, we were asked a number of business people were asked what they would like to see from the political party in the u.k. and one of the things that i put in the little -- not manifesto but the ideas we trotted out was an acceptance that business does

build wealth does build employment. >> jobs. gdp. >> i am very proud of the fact that something like half a million people dependent on it. >> i like you much more today. i do. >> finally made it. >> and when you're walking around either this city or london i would be walking tall and proud and say it loud and say it proud and i'd go buy myself a nice dinner. >> i believe in highest common multiples. >> look at the philanthropy that guys that build wealth. they don't keep it. >> they give it away. >> charities are much better at dis dollars than the government is. >> there's a more interesting point emerging. some of the models we're seeing developing in terms of companies and the way they go about things and creation of employment and reducing employment is more interesting actually and we've seen this in relation action for example, to 3-g and the models

in pharmaceuticals and we saw this over the weekend. an interesting debate as to whether these models are long-term growth models or short-term generational models. i've been at this 30 years. >> no, but let me ask you a separate question. the next two or three people below you. talk about team effort. team sport. what's the differential between them and you? >> there is a differential but they -- we have a group of about 20 people who participate in the plans you're referring to and they have benefitted cig any significantly as well. >> what's the multiple of your least paid employ? >> very high. that's where the income inequality, high pay units focus on. >> they do. >> but remember that can go up as well as down. it can go both ways. there's an easy way for this to

be solved. >> we didn't get to talk about all the stuff but this is an important issue. >> we're not going to talk about the british election. >> let's talk quickly. we should. >> just quickly about that because you say either is -- >> it's today by the way. >> either way there are issues. if conservatives, form a government, it could get very messy because the conservatives won't get a majority. we'll have a referendum and considerable uncertainty. we're starting to see that build up. if labour wins labour has an antibig business approach. >> for sure. >> will that be bad for big business? so either way and the third thing is we still have a very big deficit in the u.k. and people have forgotten about that and whoever gets into power will have to deal with the deficit.

not dissimilar to here in some respects. >> will you come on back for a long time? >> i will come on for a long time. can we talk about cricket too. >> yeah. >> we never even got his view on deflate gate really. is kevin plank upset do you think? would you be? >> if we ask him about football he's going to talk about soccer. we have to go. >> still to come the head of porsche north america joins us from the auto makers new headquaters. plus phillip morris and exclusive with tim geithner. stay tuned. squawk box will be right back.

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go ahead. >> no there aren't very many that are actually psycho paths. we get all of the press but there are a lot of ceos that are careless in how they treat other people and that could change and improve their bottom line a lot. >> and you say that characters does improve the bottom line. walk us through what that means. >> how you treat other people is a reflection of your character. we asked 8,500 of the employees of these 84s to rate the

character habits of the ceos and the highest was those that kept their promises and owned up to their own mistakes. two of the head and two of the heart kind of dimensions. if they brought five times to the bottom line as did the weak character leaders and they enjoyed a 26% bump in work force engagement levels and lower overall corporate risk profile. >> you say character is a habit that can be learned. that cuts against the grain of a lot of people that think certain people are born with a certain type of character. when you say it can be learned, how so? >> everyone is born or is hard wired to want to treat other people well and to connect with other people. but you acquire your ways of relating and dealing with other people.

you have to show empathy to others when they make mistakes. broader society. that hard scale and soft scale balance that i think fred's research really highlighted for me, at least. >> i hate you bet talking about yourself. but can you give an example of something you admitted a mistake or you thought telling it to employees would be useful? >> well you know i hate to say it but i make a lot of mistakes and, in large part running a big organization is about running what doesn't go well and trying to learn early where you're off track and get on track. so we're constantly trying to admit our mistakes early when they're small. maybe the toughest things we do in this regard are around people. where you made a decision around a person who is in a particular job and it's not working out,

it's actually not nice to not engage in that discussion. those are hard, personally. if you do it the right way, you do it with empathy and you're concerned aboutthe individual getting on with their life. you know it usually works out well for them and for you. so there are lots of examples but the toughest are around people it be honest with you. >> we're running on the bottom of the screen return on character.com. what are the questions like? >> well there are two quizzes on there. the first is simply a short quiz of ten questions at helping you assess your own character and you will almost undoubtedly come out with a very high score because we all, all of the 84 ceos of our study rated themselves at the virtual level. but the other one predicts how others might see you and that is probably more useful. called the reputation predictor. >> gentlemen, thank you come

forring onforing on this morning. u.s. equity futures are trading sharply lower this morning. we'll talk more about the markets, the bond market in particular, coming up next. aulshares of the ecommerce giant dropping 30% over the last six months. we'll have the numbers and instant analysis. stay tuned, "squawk box" will be right back live from the heart of midtown manhattan.

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a cnbc exclusive interview. tim geithner. market alert. red arrows in u.s. equity futures and we'll talk oil. the tenure at the highest level since december and janet

yellen's warning on stock valuations and what the rest of the year could mean for stock prices. the ceo of philip morris international is here. his take on the future of big tobacco, health risks and the booming business of ecigs. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" right here on cnbc first in business worldwide. becky quick is off today. we got a market alert because there are red arrows in the u.s. equity futures at this hour in a very big way, you're looking at the dow look like it will open up 25 points and the s&p 500 off about 11 points. and all of that in part a function of the bond market. the yield on the ten-year treasury is at the highest level since december. much more on the markets coming up in a moment but, first, michelle has a run down of

today's other top stories. weekly jobless claims hit the tape at 8:30 a.m. eastern time and forecasters expect first-time filings of $275,000. we're also going to get march consumer credit later this afternoon. in technology news a linkedin land grab. the city council denying google about 70% of the land that it requested for its new silicon valley headquarters. granting much to linkedin. one of its selling points was that it would reduce mountain views dependence on google. google was awarded enough land to build one of the four buildings it proposed. the british are voting today in what is expected to be the closest election in the uk in decades. if you haven't been following british politics here's what you need to know. the opposition labor party have been in a dead heat in opinion polls for months. if neither wins an overall majority, talks will begin

tomorrow with smaller parties in a race for coalition government. the ftse is lower by 1.5%. the pound is lower against the dollar, but still in the tight trading range that we have seen over the last three months. fed chair janet yellen speaking to christine laguard and asked her a question and it's causing somewhat of a stir with her take on the stock market yesterday. >> i guess i would highlight that equity market valuations at this point generally are quite high. now, they're not so high when you compare the returns on equities to the returns on safe assets, like bonds, which are also very low. but, there are potential dangers there. >> okay. nothing too earth shattering there, i don't think. here with us on set, head of u.s. equity and quantitative strategy at bank of america, merrill lynch and cnbc

contributor and i'll start with i'm sorry, i have to start with peter just because, i mean, you've been waiting a while and we never know whether this is the start of something or whether it is just interesting to talk about for 24 hours. but, the markets are now flat for the year pacically.e basically. the equity markets. some of the weird things that we always pointed out and i'm talking about how low our yields were given our unemployment rate and given what gdp was supposed to be this year. they were supposed to be higher but being held down by europe. now, suddenly so strange. suddenly we're not sure that we're growing very quickly in this country and suddenly the tenure sup to a multi-month high in terms of yield. this is probably something we should have expected but it happened fast. >> right. so the u.s. tenure has been collateral damage from what has been going on in the european bond market over the last few weeks. that rubberbound band has been stretched way too far.

the other thing here is that inflation is beginning to creep into people's minds. not high inflation, but higher invasion. we had a bottoming in commodity prices and seeing increases in wage pressures as evidence by the employment cost index last week. plus, in euro zone we had money supply growth out last week that was a multi-year high with private loan growth. oil is part of the commodity story. so that is a factor that not many people going into this year were calculating. so now you have soil growth inflationary pressures beginning to tick higher interest rates now doing what they're doing and a fed that's completely stuck with oh, inflationary pressures i may have to respond to but economic growth is weak what can i do? >> can you believe that we sat there and didn't run the markets up to $20,000 on the dow? $40 oil threatening to break lower. zero interest rates. supposedly we're going to have a 3% gdp. and under 6% in unemployment and

still ringing our hands that are looking for wrong. the oil would sell-off when market went down. maybe we look back at the salad days. suddenly growth is not as good in this country and suddenly rates are up. is that going to be a problem or will we look beyond this? >> i think it depends on how quickly rates move up. so far it's been bad. but if you think about the taper tantrum as a case study. 100-basis point move in the tenure and the market sold off a little bit, but then got back on track. but you saw massive change in leadership and here is where i think the risk is. everyone has been piled into safe stocks like utilities and high yield tobacco. high-yield bond-like stocks and that's where we'll see the pain. they're not really that safe. >> talking about stocks. we just want to break in for a sec. alibaba out with earnings. revenues topped expectations and you see the stock pop right there. and the company, this is

important, announcing that its current coo daniel zain is going to become ceo on may 10th. you might remember this stock has had a tough time recently and lots of questions about whether they'll be able to keep up the kind of growth rates they had historically, in particular they were trying to take out a lot of the pirated and counterfeit goods off of you know out of their system. >> good on the one hand. >> but the worry was that was going to take down the revenue. by the way, analysts worried about that were right. now, the good news is it increased. their business in the marketplace we call gmv increased by 40%. that's basically, more than half of what it used to be once you take some of that kind of stuff back. >> what aboutthe new ceo? >> what does that mean? i think that's an important question. what isdoes the new ceo mean? >> we do have a programming note we should tell you because the incoming ceo daniel zhang will

be on "squawk on the street" at 9:00 a.m. eastern time. it's also a little strange that we were waiting for interest rates to go up when the fed started raising interest rates. once it was clear it wasn't going to be june and might not even be september. that's when interest rates on the ten year when it looked like they weren't going to act. does that mean that they're starting to be irrelevant or where they aren't actually the ones that the market is dictating where rates go at this point? would that be a problem for yellen? >> the ten-year yield has tightened 25 basis points. >> what if they lose control of where yields go? >> that's why we're seeing some of the steepening because the bond market could be sniffing out the bottoming of these inflation numbers and they think that yellen will drag her feet responding to that and the long end of the curve will tighten for her. >> will we come close to three

by doing so well in the second third and fourth quarter? then there would be a good reason for rates to be going higher? >> our view is that the economy does firm up towards the end of the year. a lot of what we saw in the first quarter was transitory. right? the board strikes. >> for four straight years. >> for four straight years it is a bad quarter, but temporary. our view is that the fed tightened in september, but the risk is it happens a little bit later. if the fed tightens that could be a really big positive for the s&p 500. >> i agree, but they might not now. >> that's the big fear they can't get out. >> let's say the fed doesn't tighten, but the long end rises. that is a great time to buy financials. here's the argument. the best time to buy financials is when the yield curve is steepening and zero interest rates on the short end. one can argue that the fed is using. i think there is something to play play in either scenario. where i worry in this market,

consumer stocks. i think they're overextended and wage inflation rather hurts rather than helps consumer stocks. these are some of the most labor intensive companies like the s&p. the restaurants and the retailers, massive margin squeeze when wages go up. >> sure. back to the yellen comments. when we heard irrational exuberance from alan greenspan, it was the signal he was coming. right? just because janet yellen says valuations could be high it's not in her dna to say and that's the signal that rate hikes are definitely coming right? >> she'll never raise rates because she thinks that things are extended in markets. she's going to really focus on the job's market the inflation data and what the markets do what they do in response. >> i would argue if the market were to sell-off sharply, that would affect them and prevent them from doing things. >> when qe was on o, the yellen put was at the money. right now out of the money.

how far out of the money is that yellen put if the markets start to fall in response to higher rates. >> i don't even know what you're talking about. people that tell me i do but people don't invest in options. how does this even monger the other day saying you print money long enough and you just think all you get are the benefits from it. why not keep it at zero forever? there are no free lunches. how do we get taught a lesson? you always think about dire scenarios. how does this really if it were to turn out badly, how does it turn out badly? inflation or just they can't get out? >> higher inflation and the bond market takes away the printing press and says time-out, game over. you guys can't continue to act like this. >> you're still at under 2% and you got nothing. >> exactly. that's why the move in the bond market. there >> 2% on gdp. >> still haven't ignited a

strong economy and you've done everything you possibly can. >> that's why these moves in the bond market have to be the main focus right now and granted hates are historically low. not only, obviously, by fixed income investors but those that have fed off the trough of low interest rates. >> other people santelli and people like that who say when you don't let the market clear and the pain you're trying the fed takes away you know the pain for everyone and make it easy. they do it over a six-year period. yeah, you don't have it happen quickly and where you flush, but it's just it never really recovers fully like it should have and it's tepid and built the foundation, the foundation is not built on anything solid. are you worried that's true? >> i don't think we should ignore the fact that a lot of what's going on right now might be a positioning unwind. the reason i say that. we started the year everybody thought the rates would move higher and they didn't and

investors got crushed. this year nobody thought rates would move higher and they did. i think that one of the best ways, one of the best ways to make money this year was simply by selling the ten most overweighted stocks in your average mutual fund. a lot of what we've seen in the market over the last couple of years has been positioning unwinding, i think. >> that would include apple, andrew. we'll see. that's another thing. you put apple in right at the top. nice move s&p. but, you know it's already up like 10,000%. now put it in when it's worth $1 trillion. thank you. >> thanks, guys. we should tell you about news right now, lumber liquidators is halting sales of flooring and doing so immediately. scott joins us with more on it. scott? >> good morning, andrew. remember, just last week the company said that it was scaling back its purchases of chinese laminant flooring. this goes beyond that. the order went out yesterday, we were told according to a

source, to all 350 some stores. pull the laminate flooring and they're halting sales effective immediately. after that "60 minutes" report at the beginning of march indicating that it had high levels of fur maldehyde which is a known carcinogen. according to the company's disclosures last week that federal authorities and state authorities are bearing down on the company. the company has been told to expect criminal charges from the justice department. state officials here in california have been testing the product of lumber liqueidators and others and say there are issues with furormaldehyde but it will come at a cost to the company. this is a company as it reported last week whose margins are under pressure. the costs are going to increase even more now. they already set aside $10 million to deal with the justice

department investigation. now this. but, apparently the company now bowing to pressure bowing to what it has said is customer demand which it said it always would do and pulling that controversial chinese flooring effective immediately. >> okay thank you, scott, for that. appreciate it very, very much. interesting story. in the meantime coming up when we return we'll go behind the wheel with porsche. the ceo will join us live from the company's new u.s. headquarters in atlanta, next. at 7:30 eastern time. a cnbc exclusive interview. you don't want to miss this. former treasury secretary tim geithner. plus the ceo of philip morris international will join us later to talk about tobacco and the growing electronic cigarette business. we're back in a moment.

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gorgeous facility that you have here. >> the new home of porsche in north america and we have been investing a lot of time efforts to make this vision this dream to become reality. we have invested $100 million. largest investment of porsche outside of germany. very proud to present it here today. look at this year. >> the facility is gorgeous. we can't show people this facility because it's behind us. but the test track will get so much attention here. how many porsche owners do you expect to come here and test my skills here? >> we estimate 30,000 guests every year here. it's all about the experience. >> and you love that sound. we provide customers, car enthusiasts come here and to experience our brands of products in a way never done before. they will drive and practice at driving skills on a test track here. they will be able also to come here to have meetings. a very nice experience together.

>> the drift pad here is what we showed people earlier. he's out on it right now. sean your test driver is down there. you had a chance to go out there with some of the board members yesterday. what did they say as they were out here testing it out? >> it's the first time that we have the entire board of porsche here in the united states and when i saw this they were blown away. they didn't leave the track. had to take them away and have meeting and say, no no let's drive a little bit together. >> you spent a little extra time here. your sales this year up 17% in this market. when you look at the luxury sports car market here in the u.s., a lot of people were worried as tesla started increasing their sales that it would be tougher to sell. but you're actually increasing your share within that market. where are those fires coming from? are there previous porsche owners? are they coming from other brands? >> we have a strong loyalty for the brands. 60%, 70% of our customers coming

back. we have a lot of new customers. bringing a lot of new customers from everywhere. and especially when you talk about experience. we are not only manufacturing products in germany, we are now manufacturing experiences. this is a perfect way to attract new customers here. >> i noticed a number of charging stations downstairs. do you expect people to do many of the electronic vehicle drives out here? at the end of the day, this is still about the experience when you see the shifting of the gears and you're out there in a 911? >> the first sports car manufacturer to implement hybrid technology in high-performance cars. so plug in hybrid and we are the only one this market to offer three cars on the road today. and, you know i mean we have been perceived only as a performance car company and i think didn't get as much credit in fuel efficiency. it's about performance, agility,

intelligent performance and what we are showing here. you can drive with a plug-in hybrid car on this track and get as much as these guys doing it right now. >> the beauty of this is if you want to pay a few hundred dollars for the day's experience, come on down here. if you're in the area or fly down to atlanta. >> you're in new york take the plane two hours and three minutes away from the terminal. take you there in two minutes you're on the test track having a thrill and a lot of fun. beautiful facil tae. going to be here all day long guys. we're going out there on the track next. how do you like that joe? >> i like it. >> if you come down without your own car you can get in a gt3 and drive it phil? >> yes, yes, you can. you can bring your own car or come down here and say to them, hey, i'd like to see the latest and try it out. >> are those mostly seven-speed

people are driving around? >> i know you wanted to ask me about manual shift and manual transmission. you're a big fan. but we have all the cars you can drive and start with you can test drive the whole motor range and we are making sure that you will have fun when you come here. i'll wait for you. >> hey, joe, just for you. we're going to move inside. look at this. we'll end the day with this. just for you. >> he's drooling. >> that's cool. >> that is cool. >> that's a gt2, i think. awesome. >> thank you, phil. and thank you to your guest. >> that's awesome. >> it's cool. porsche is in a sweet spot because it's you don't have any options. if you can afford $85,000 or

$90,000. they're in a sweet spot. just a little bit more than a loaded suv. a loaded suv is $60,000 or $65,000. coming up our exclusive interview with tim geithner first, though, utilities on the worst performing s&p sector this year. some stocks may heat up with the summer weather. we'll tell you which one, next. time now for today's aflac trivia question. who is the only three-time winner of the pga tour players championship? the answer when cnbc "squawk box" continues. and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just one day. ahh! so he had your back? yep. in just one day, we approve and pay. one day pay, only from aflac. [duck snoring]

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now the answer to today's aflac trivia question. who is the only three-time winner of the pga tour players championship? the answer. jack nicklaus. utilities are the worst perform oing sector in the s&p so far. as summer heats up so do utility stocks. morgan brenner joins us with more. >> utilities are down 8% so far in 2015 because investors are rotating out of this more defensive rate sensitive stock. but it turns out summer can be really good to these stocks especially when it's a hot one,

which is what drives up demand for power. so over the past decade we had eight of the hottest summers on record and farmers almanac expects another very hot one this year. crunched the numbers and found that for each of those eight summers, may through august utilities were the second best performer behind energy. they rup 75% of the time with an average return of 2.7%. now, in terms of what does the best? ppl core which traded positive 88% of the time averaging a 7% return. ppl just released earnings this morning. a beat on the top and bottom line. also dominion resources which gained all but one of those summers on average, 5%. also next era energy that one also gaining 5% on average. now, for the summer an analyst at sanford said this summer's better than expected earnings growth and low energy prices are

all going to contribute to another season of outperformance. or he expects them to contribute to another season of outperformance. guys back out over to you. >> thank you morgan. coming up that cnbc exclusive interview with tim geithner and his take on where the economy is headed in the next few minutes when we return. you, my friend recognize when a trend has reached critical mass.

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welcome back to "squawk box." a special cnbc exclusive interview for you this morning. let's get right to steve liesman at the nasdaq with our guest for the hour. steve? >> thanks very much michelle. i'm here with former treasury secretary tim geithner author of the recently paper back released book "stress test." it's the same book. nothing new in there except it's been out now for a year. tim, you wrote this book in part as an effort to try to convince people what you did during the financial crisis was the right

course of action. do you think you've changed any minds at all in the last year? >> not to convince. just to give people a chance to sit in our shoes and look at those terrible choices we faced and try to get a better feel for why we did what we did. i think if you look at the world today, you know, it's worth noting noting, people thought that we would have a great depression. people thought we might have hyperinflation. people thought we might turn into greece and the american economy is doing relatively well making steady progress. still a very tough economy for lots of people. if we look at the rest of the world, look at how countries view us, they view what we did with a huge amount of admiration and i think even with all our challenges, we are a lucky country and we prefer our challenges for relative to anybody else's i think. >> i think that's right on the policy level but not the public level. the extent to which you might have changed views the tea party forged response to what

happened. seems to be stronger than ever. and you see people who live on public pensions, so it seems like the reaction. the vizeralsceral reaction still seems to be as strong as ever. >> i think there's still, a tremendous loss of confidence in public institutions and in government. and i think americans still have a, again, even with the broader improvement in the economy, still have lost a lot of faith in the capacity of government to do things to make a meaningful difference in their lives. that will probably have the crisis and the challenges that existed before the crisis. it will take a lot of time to grow out of that. >> it's relevant for the future. the next time we get to a financial crisis let's hope it never happens, again. >> it will happen again. >> it will happen again. >> it won't be like this. >> i cannot imagine at this moment a treasury secretary going to the congress and saying give me several 00

million dollars to bail out the financial system. that will not happen. >> it will happen ultimately. in the end, in the end, the only way you protect people from the effects of classic panics like we had in '08 it to have the central bank and the government step in and take risk the markets can't take. that's the only way you protect people from the mass unemployment. it will happen. the question will it happen soon enough to avoid catastrophic damage. >> let's talk about some other things that have been done to make it so it doesn't happen again. dodd frank being one of them. a higher capital ratio. do you feel like enough progress was made both while you were in office and subsequently after leaving office to secure the financial system from another financial crisis? >> i think the system is a much more resilient, much stronger much more stronger system today than it was in the decade before the crisis. absolutely. significantly because these reforms put a huge amount more capital into the system put in

place much tougher rules and risk taking. those are applied much more broadly across the financial system. they have the prospect. they are strong enough to have the prospect, if they're not eroded to buy this country a relatively long period of financial stability. not permanent. not forever because over time what happens is markets will find their way around those constraints. and they'll get eroded. but, a much more stronger much more stable system today. >> the enduring criticism of dodd frank went too far. when you look at the underperformance of the u.s. economy right now. 2% economy that should be in the 3s or 4s because it should be snapping back from the recession more quickly. bank lending is often always one of them and dodd frank being a reason. do you think it went too far? >> i don't think there is any evidence of that. in the pockets of the financial system like in the mortgage market where credit is too tight. and in the mortgage market it might be too tight after being

too easy too long in part because of the design of regulation. but i think across the american economy, across the financial system, i think there's no evidence to support the proposition that the economy is slower today because the system has more capital. in fact, you say the opposite. the reason why we designed the stress test and the strategy that we did to bring it into the financial so quickly so the financials could provide the oxygen growing, recovery economy needed to help businesses expand, invest and higher fuel back into the workforce. >> so we're about nine years after the financial crisis. and in the last stress test the government still had to approve that dividends and the capital distributions and the share buy backs of the banks. would you have thought by now, first of all was that envisioned as part of the original dodd frank and is it time for the government to ease back a little bit in terms of how it has the banks under its supervision? >> they'll have to find that balance over time. what we try to do and what we

aachieved was to make sure that the system built in enough capital so that it could survive a pretty bad storm in the future. now we're relying on the tax payer for a purpose. doesn't go away it's a problem for all seasons. you have to make sure that you sustain that protection that protection, those safeguards over a long period of time. >> switch gears. when you were in office you repeated that the strong dollar is good for the economy. in answering this next question i'd like to remind you, you left office and now free to talk. the strong dollar. appreciation of the dollar it eased off a little bit, but uniformally economists have lowered their gdp forecast as a result of the strength of the dollar. do you still think a strong dollar is in the best interest of the united states? >> i don't, i never talked about markets then and i still don't talk about markets today. i think the american economy if

you look beneath the surface is a much more resilient economy now and it's doing really relatively well. i think a stronger economy than it was before the crisis. and, again, compared to any of the measured economies around the world today, the u.s. is doing better. and, again, i think our performance in many way is the envy of many countries. so you know it's going to require some better government ahead and we're going to have to rediscover the capacity to legislate and to govern and the politics are some threat to that improvement. but i think underlying everything you see today is a gradually improving, gradually healing, stronger american economy. >> one of the things that's out there fed chair janet yellen yesterday said stock market valuations seem to be high. as the former president of the new york federal reserve bank one of the things that comes up, is that the place of the federal reserve to discuss stock market

valuations or is that not her job and not something that the fed should be doing? >> you know these things about markets, steve. it's very hard to know what markets reflect any given point in time. and it's very hard to know except in retrospect when market prices valuations are defying gravity. just a very hard judgment to make. but she knows that. she's a very thoughtful smart person. >> why do you think she's out there making those kind of comments. if it's hard to know. what is the intent of that? what is the purpose? >> i couldn't speculate on that. >> you think it's appropriate? >> look i'm not going to comment on the choices that she's making. i could say that i think she's doing an excellent job and tremendously thoughtful person. >> you spent most of your life unlike what most people think in public service. you didn't work at goldman but now you're working at an investment bank at an asset management company. what has that transition been

like? >> i love my work. i felt so lucky i got to do what i did. i had great colleagues and i couldn't do it forever. i've been spending a lot of time traveling with my wife fly fishing and trying to learn a new craft. >> is it substantially different from working in government? >> oh, yeah it's pretty different. mostly in a good way. no politics. you're closer to being able to decide what you think is the good thing and without the constraint of politics. >> thank you for joining us. >> good to see you, steve, thank you. >> michelle joe and andrew. back to you guys at what is that? 51st street. uptown. >> 51st street. >> yeah. sure. know that much at this hour. good stuff, steve, thanks so much. thanks to tim geithner and steve liesman. he will join us with charleyie evans. the ceo of philip morris international joins us to talk

about the tobacco business and the growing markt for electronic cigarettes. plus shares of alibaba trading higher. the company's earnings beat the street and naming a new ceo and current coo and dan zhang is that man and take the chief executive job next week. on "squawk on the street" at 9:00 eastern.

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welcome back to "squawk box." the futures are well off their lows for the morning. basically cut their losses in half. but, we're going to have to watch throughout the session. keying off of interest rates and keying what happens off of oil and commodities and getting interesting with some of these markets moving in volatile fashion, especially over in europe. some of the bonds over there. and our ten-year here. at this point, the s&p is down five and the dow down 48. nasdaq off about 8. philip morris international, which makes marlboro and several other cigarette brands had its shareholder meeting yesterday. ceo stopping by to talk about reduced risk products. andre calantzopoulos is here.

i think it's your first time on the show. you called them reduced risk. how is that different than ecigs and how much do ecigs represent a challenge to your business or a part of your business? >> well we started the journey about ten years ago, actually. and we'll have three objectives. one is to develop a portfolio of products which ecigarettes one and we also have products containing tobacco and other nicotine generating aerosells and the second is to have a very robust infrastructure to reduce the risk combustion. evapor part of the portfolio, but offering amongst others in order to meet the needs of consumers for the future. >> when you look at the portfolio over the next five to

ten years. what percentage of these reduced risks or vaping or ecigs or whatever you want to describe them as. what will the portfolio look like? >> my personal objection is that they surpass combustible products as soon as possible. i would say a lot of frameworks we see around the world from these products maybe 10%, 15% in five to ten years is not something unreasonable. but, of course, bigger, better. >> how much of a shift in your core capacity does that represent going from growing sourcing tobacco real product as opposed to manufacturing electronic product? >> well i think we have to prepare for this because part of our products that reduces products are containing electronics and we're learning very much how to do it. we have a pilot factory today to produce these products. and, roughly, the way to look at it is until we get scale and

experience, they cost double for the same capacity as conventional cigarettes. >> you must know numbers. what is the united states down to now in percentage? it's -- >> in terms of what? >> smoking cigarettes? any idea? approximately. compared to spain or france. >> it's lower. >> i see a lot of red marlbor packs in france and it's not like here. i mean people smoke in europe. >> despite the huge labels on the side. >> only slightly? i thought we were down here. >> 20%, 22%. >> what do you make of the consumer advocates who argued that we shouldn't, that the same type of restrictions in advertising on cigarettes should be on ecigs and vaping and that vaping could become a gateway to regular cigarettes or just as unhealthy. >> well, i think, first of all,

and it's important, we need some form of regulation that governs all these problems because all these questions are raised. i think regulation is necessary because even if there are reduced risks to these products. not zero risk and they also contain nicotine. i think, however, that the objective, if they are proven to be reduced risk is to convert existing smokers into this product. so you need some regular. >> what about esmokers though? do you want a new generation smoking or vaping? >> convert to 1.3 billion existing smokers. if new smokers start with this product if they decide to start with nicotine products i think that's a good thing to start with this product. but my objective is to get growth for the business from the existing smokers. >> want to go back to my previous question. i almost feel like you could be a kodak moment right? people go from taking pictures on paper to going digital. and kodak totally missed that. >> yes. >> do you consider yourself to

be in the same position at this point? >> i think we started this. we started this ten years ago. >> but the barriers to entry on electronic cigarettes are -- >> i think well prepared to face this. this is a transformation from the industry and we're very well to prepared the process. i think it's rare that you start the transformation. >> only 1.3 billion people smoke now globally? >> yeah. >> that's a lot of people. >> that's a lot of people. >> that's china. >> let me ask you about another way of smoking which is to say the legalization of pot in the united states. is this a business you would ever get into? >> no. that's not the in plans. >> not in the plans. >> well, we have sufficient controversy in our own industry. we don't need more. >> fully legal in the united states. >> i think all the business in the existing part with the products and i think we're very good prospects of existing business. actually the industry leader and we're growing a share every

year. so, i don't think we need additional businesses for the moment. i think our organization has to remain focused. >> are there any sort of the traditional rivals that are going to get into the pot business? >> that i cannot tell you. but if we go back to the reduced risk products i don't consider that only existing competitors will be the competitors in the future. >> i just don't know what nicotine. nicotine is a stimulant. >> it is a stimulant. >> you have a background in systems. >> i do. right. but i don't -- >> using the systems biology and risk assessment. >> i don't know why you want to create the need to satisfy something that really doesn't help help. i would rather do it with cannabis cannabis. with nicotine you get nothing. >> you can legally drive. >> i don't know. i have never smoked pot. come on. you never exhaled. never inhaled. >> do you smoke cigarettes? >> yes. now i use the new product.

>> which one? >> the new product we just launched in reduced risk. >> you smoke red marlboro. >> marlboro lights? >> i never used the cigarettes, again. >> what is the biggest selling brand now? marlboro lights or red? >> still in latin america. we don't use the cowboy advertising. >> would you let your kids smoke or would you let your kids vape? >> look i explain to my kids that smoking is not a good thing. but if one day they decide i think they should start with the products and not conventional cigarettes. >> would you let your kids read "new york times"? >> happily and proudly. >> i guess they have to be -- >> you know a fascinating conversation. >> they do have to be indoctrinated. a way to start that process. coming up this morning's big premarket movers. your list of stocks to watch is next.

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let's take a look at a couple stocks to watch. same-store sales growth cooled in the last quarter. that is sharp. the retailer also announced plans to debut a new chain of smaller, more value-focused shops next year. ann taylor reportedly in talks to sell itself to golden gate capital and reuters puts a price target at about $2 billion. taser downgraded for market perform to outperform at oppenheim oppenheimer. the firm saying that the shares are fully valued after the stock met and exceeded its prior price target. okay coming up. he's seen as one of the most dubbish members of the central bank. charlie evans is going to join us in a cnbc exclusive to talk rate hikes about the economy.

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just exactly when will the fed hike rates? an exclusive interview with

chicago fed president charles evans and why he thinks the fed should wait until 2016 to raise rates. his take on the economy, job growth and where rates should be is just minutes away. alibaba in focus today. quarterly results beat expectations and the company hiring a new ceo. we'll break down the move by the ecommerce giant and find out if the stock is a buy right now. futures down as the job report looms. we'll break down investor sentiment and talk where to put your money now with chief market strategist lizann saunders. live from the most powerful city in the world, new york. this is "squawk box." welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with andrew ross sorkin. we're now 90 minutes away from the opening bell.

and the futures are down improved a little bit more. now down 31. 32 points on the dow down about 3 on the s&p. and the nasdaq down 4. let's look at the ten-year note. a lot of trading is keying off what's happening in the ten-year, which is moderated and it was up earlier, the yield by saying the bonds are down earlier. 2.21. we have a size about 2.28 in the session. the market seems to you know calm down a little. stock market calms down a little when yields come back down and don't become too violent in terms of which way they're moving. there is the european markets, which are still responding to some of the weakness we saw yesterday. all the way back to the mid-8 mid-800s. here are the stories that investors will talk about today. former treasury secretary tim geithner said the financial crisis will happen again at some point. but interview earlier this morning, he told steve liesman, it won't be like what happened in 2008 because measures

because measures that have been taken after the fallout. two economic moments of note. march consumer credit is later this afternoon. and in corporate news watch shares of tesla today. beat wall street estimates on the top and bottom lines and sticking to its prior forecast for deliveries and sales. andrew? alibaba beating the street estimates with latest earnings in revenue and also announced it would get a new chief executive officer. by the way, you noticed it and we were all sort of had our heads spinning. they listed $97 billion in revenue -- >> no no not revenue. gmv. gross merchandise value. >> that's just the, that's the cost of the, the value of the good soul. that's not actually -- >> it can look confusing. >> $97 billion. >> the numbers around this company are exceedingly larger and we have the currency

conversion, too. t sometimes it's easier to look at the release. needless to say, look at the stock. it is up quite sharply in early trading today. looks like a gain of about 10% because it did beat on the bottom line by about 6 cents per share. revenue also beating street estimates. they did, as andrew mentioned, get a new chief executive officer daniel zhang. it's something of a surprise. something of a surprise because johnline lou had taken over two years ago and an expectation that he would be in the job a little bit longer. they were getting to the issue of executive transition when i came up to do thigsegment. no doubt, something that analysts are asking about. the focus for the company are going to be on mobile. pan increasing share of its business is done on mobile devices. mobile transactions up 157%. it's now 51% of the company's overall transaction volume.

that's the first time that it's a majority in the company's entire history. mobile revenue up 352% monthly active users, up 77%. the issue is the monization rate. it's 1.97%. so, it's still fairly low. that's the issue. how do margins look for this company as it does business more business on mobile that of course makes less money. cfo maggie wu talking about how the company was committed to having margins in the high 50s in the core business going forward. the margin came down to 49% in this quarter. that is something that the company will definitely be watching. and i should note, andrew, that maggie, the cfo, also did talk about the fact that jack mu reported some comments about a hiring freeze. that took the stock down for the last five days. she said look this is something we've done in the past. focusing on efficiency. we will still have onboarding of

all the people we hired and no new net hires. something they did in 2012. >> the stock dropped because they were holding the line on unemployment. usually it's the opposite. >> when you ahavehave a company. >> we're not hiring because we need to double down on what we have and maybe we've been spending too much money and issuing too much stock as compensation. that gives you a little bit of a pause. jack mu did send an e-mail saying he wants the company to get to a trillion dollar by 2017. very high hopes for this company, even amid this executive transition. >> we should mention the new ceo will be on "squawk on the street". >> they better keep growing. with a $200 billion market cap and $2 billion in revenue. >> you heard it here first. joe wants it to keep growing. >> how do i, you don't maybe $2 billion in a quarter but the $200 billion market cap seems, what's that times sales then?

>> it's a huge multiple joe. revenue is growing 45%. >> at least 20 times sales. >> how many companies have you seen with negative revenue growth in the quarter, though? 45% revenue growth. i'm not justifying it. >> $2 billion in a quarter with the $200 billion market cap is a little bit, hopefully those are the real numbers, too. they're a little strange. can we count on them for sure? >> the company is trading here in the u.s. and it files with the sec. so, that's where we'll leave it. >> we'll see the ceo in just about an hour. interest rates and job data. fed chair janet yelle. this morning the ten-year note hit the highest level since december. futures are under pressure. but improving. joining us now is lizann saunders. we are no where, no wheresville

in 2015 in equities. do we end up with a gain for the year? will it be single digits double digits or flat or down? >> we may be able to eke out a gain although a path similar to one we've been on. up until a couple days ago, you went 28 days without the market being up two days in a row. when you look at the percentage of days when the market is up or down more than 1% that is up to a level that we haven't seen to 2011. hamster on a wheel, whatever analogy you want to use is probably par for the course. i think we could have more frequency of the pull backs we saw last october as we moved towards policy normalization. we could still eke out a gain but not as easy a year. >> what is happening in the bond market here and abroad? and is it troubling or is it not unexpected? >> well, there is a connection between here and abroad. in fact if you look at long

term at the correlation between u.s. short rates and u.s. long rates. they used to be very very high and then it's dropped to recently getting to zero correlation. but the correlation between u.s. long rates and g-7 long rates has actually gone up quite a bit. no question moves in the global bond market particularly in places like germany has an impact on oours. now, whether you can argue that german yields where the ten-year got almost to negative territory shot on the down side. let's remember every time the fed embarked that's the point in time where yields went up. when they were in between rounds of qe that's when yields went down. the pattern we're seeing overseas is not different than what we see here. we have a disconnection between their yields and ours. >> should we look at the absolute level because germany was at zero and goes at three quarters earlier. 35 basis points. you could say, that's nothing. goes from zero to 75. when it moves 75 basis points

if it was at 6 and moved to 675, that could get a lot of people on the wrong side of a trade and, you know that could put companies out of business when it moves that quickly. is it the same down here at zero? >> i think it is. joe, you know this not really a level of anything. whether it's level of earnings or level of gdp or rate of change and inflection points and the repidity with which you come off reflection points that at least in the near term. i don't think a rising is a doom and gloom for the economy in the medium to longer term but that rate of change that can cause some volatility in the short term. >> liz ann when it's all said and done and we look back on this ten years from now. will the story be wow, the fed really was nimble and really they responded in a really correct fashion to everything that was thrown at them back in 2008, 2010 2015 or will it be that, wow, they never could get

out and things really you know they stayed at zero way too long and look what happened. that's what caused it. what story do you think we'll be talking about? >> i think it could be a little bit of a combination of both. i think we'll look back at what the fed did and policymakers did during the financial crisis and the immediate aftermath is a very good thing. whether they could elegantly from six plus years at 0% interest rates and $4.5 trillion balance sheet, i think that's more questionable. let's remember in the past almost every recession and/or fls crisis has been preceded by one could argue too tight monetary policy or monetary policy mistake and i think it's naive to think it's not going to be the case this time. it may be more in the normal course of things. i'm not a fed basher and i think consistently we'll look back and say, thumbs up to what they did during the crisis. >> when they raise this year? >> i think they do. but maybe one and pause. i don't think this tightening

cycle looks like it did in the '03 to '07 period where it was 25 basis points and every single meeting, perfect stair step pattern. i think they would like to get off the zero bound and then they may pause and look for market reaction and make sure things settle down. >> okay. i guess we have to go. >> okay thanks liz ann. chicago fed president charles evans joins us in the next half hour. he's on set. >> i think so. >> going to join us too. >> that's exciting. cnbc learned that lumber liquidators is halting sale of its all chinese laminate flooring immediately. dozens of lawsuit over the safety of the products as well as looming criminal charges disclosed by the company last week concerning its foreign sourcing. the directive went out to the company stores yesterday to pull the product. a public announcement could come as soon as this morning. coming up choice hotels launching a major brand overhaul. the owner of brand like

econolaunl looking to get millennials to check in. the company's ceo will join us right after the break to explain. here are the futures coming off the lows we saw earlier. the dow would now open lower by only 22 points and down as much as 95 before. we'll be right back.

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welcome back to "squawk box." mixed quarter earnings beat by a penny while revenues came up short. see what the stock is doing there. priceline earnings and revenues topping estimates, but its outlook is weak. the company blames a strong dollar. green mountain cutting full-year forecast brewers have slowed in part because of high prices for the new system. poor reviews and confusion about whether the new machine could still brew certain brands. i don't have one. >> i have one. >> i do not. >> you know where dunkin' works. this is so great. so easy. >> i'm not going to tell you the kind of machine i have. it's an espresso one. >> you don't like regular coffee. >> isn't it next to the pasta maker? you have a pasta maker, don't

you? >> no. i mean the chef makes the pasta. i don't know how they make it. i don't know how the team does it. but they do a terrific job every evening for the family. don't believe a word of this. >> it's true. >> it's not true. we are here with choice hotels out this morning with first quarter results beating on the top line and missing on the bottom. the company reporting a rise of inocpancy and joining us now to talk numbers and new branding new branding pushes. steve joyce. the ceo of choice hotels international. good morning. >> good morning. >> i do go to some of his hotels. >> staying in the hamptons is not the same as hampton inn. >> i've been to a comfort inn. come on. >> steve didn't know about your documentary. i stayed when i was visiting a

prison down in kentucky. his cousin. >> we all have family members. >> tell us what's happening in the hotel business and, in particular, given that i think you have a better pulse of the consumer and what's going to happen this summer. >> so, things are actually great. we had a tremendous quarter. our revenues were up 10% per available room. the highest in the industry by about 100 to 150 basis points. we're pretty happy with that. and then secondly it is a signal that, you know that the american public is back and traveling in big numbers. the 99% that we feel that we service and, plus we're hoping to get you, as well. out there traveling. they're feeling very good about their jobs. they're going back to employment in good numbers. those are our folks that are going back to work. they are going back on the road and we're taking a summer survey, but we've already seen the preliminary results. summer is going to be big. >> the revenue increase per room because you were able to raise the price. >> actually about half and half.

we don't have mini bars and we don't charge people for wi-fi or parking or breakfast. >> all those things you pay extra for. so, but, no it was actually nicely split. so, demand growth is still strong. going strong. about 300 basis points and pricing was up about 370. you're still getting great prices out there but demand is growing and the hotels are doing really well. >> when people talk about the economy slowing, you're not seeing it at all. >> we're not seeing it. remember, the hotel business is about supply and demand as well as employment for us. so, all those signals are really good for us. and, so -- so we're thinking we got a good run through '17, '18. >> really? good. >> i tell my folks if you're not having fun at this point you ought to get out of the business because this is as good as it gets. >> totally different business model for guys on the road. clean place to sleep where it's nice. maybe a pool for the kids or something.

>> a consistency in the amenities. you know what is going to be for breakfast. >> we have an incredible new marketing and advertising campaign. new branding and we got the clash singing "should i stay or should i go." it's all fun. >> you have the clash? >> it's good. people are going to hear it forever. we have probably the largest marketing campaign we ever had online. >> how much are you paying for it? >> north of 50. >> $50 million. >> we had to go back and forth to get the song. great reunion people commercial. 85% of the american public say it's better in person but they text. we're going to tell people you want to go to the union or send text? you want to go blow candles out with her or an ink card. our view is we connect people to people and this is where we're doing it. >> what percentage of the travelers are staying with you are just straight up consumers on vacation versus business?

>> we're two-thirds, one-thirds. >> two-thirds leisure and one-thirds business. we're folk osing on them and so we're changing our loyalty program and a bunch of other things. that's actually up even bigger. so that's up about 10% in demand here year over year. we have a lot of focus on it but it is a big leisure company, so summer is our big time. >> and what online site is driving most of your traffic? >> it's our site. >> going direct to you. >> so o, the bulk of our business comes directly through expedia. >> orbitz. >> we signed with trip adviser. that's our newest. expedia and orbitz. if you combine those together, 10% to 12% of our business. a nice part. the nice thing about those guys is they are coming down in price and that's really helpful to all of our hotels. so, everything is working. >> what do you make of trip

adviser, by the way? >> it's the biggest site in the inindustry. people value it. our own verified reviews on our site as well. some people that aren't going, but a lot of people go to trip adviser and then trip adviser will have a very effective booking machine. >> people go on when they have a little problem. they go on and they write, they're more likely to go on when they had a bad experience than a good experience. >> actually not. 80% of our reviews are positive. 20% of them are not. and, so we're really big on our general management. you better talk to that customer and resolve it in 24 hours or we'll resolve it for you. yeah, you get one or two customers that are playing games, but the bulk of the people, you know, look. i always say, we have over half a million rooms. we have 400,000 some people in those rooms. somebody is not going to get what they expected. that's not the point. the point is you want to have a high batting average and when

you don't deliver it then you have to recover. we worked hard on that and i think we're doing a good job. >> thanks for coming in. >> good to see you. >> good luck on the option. >> i don't think i'm in. coming up the results of the nfl's deflate gate investigation being felt in las vegas. details after the break. and then chicago fed president charlie evans joins us for an exclusive interview and ask him about the job's picture, state of the economy and when the fed is likely to make that first rate hike. when will it be? will they stay or will they go?

some stocks to watch this morning. apache posting a smaller than expected loss and that company taking a write down on lower commodity prices. also a smaller market cap name elizabeth arden. sales of nonarden brand of fraig fragrance dropping 18% during the last quarter. deflate gate has come back to life. patriots personnel purposely deflated footballs in the afc championship game and broke rules in doing so.

reports say that it's probable and more probable than not that quarterback tom brady was in the report's words generally aware of the inappropriate activity. robert kraft said he's disappointed in the findings but says the team will accept the team's conclusions and any discipline that is imposed by the league. the nfl has not decided what action it might or might not take-in the meantime las vegas sports books are taking the patriots' season opening game off the board. new england was a 6.5 favorite against pittsburgh. but sports book managers are now going to wait to see whether mr. brady is going to be there and whether the nfl suspends tom brady before updating that betting line. need to know. >> do you think they should have put this report out before the draft? >> you're going to do the report, right? >> but do you think it was about the timing? >> i don't know -- >> they could take a draft pick.

anyway coming up jobs data that could move markets and then an exclusive interview with charles evans. find out why he says raising rates would be better in 2016 especially in the wake of weak first quarter economic data. as we head to a break, look at u.s. equity futures. it's a lot of red arrows but not n nearly as bad as it was this morning.

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all right, we are seconds away from jobless claims. ahead of that let's show you what is going on with the futures. sharply lower this morning, but come well off the lows. dow jones industrial average open by 19 points, concern it was 95 earlier. shares with the ten-year yield as we talking about what has been the sell-off in bonds in the big rise. 2.21% for the ten-year and the german bond, look at this one-year chart. it is pretty dramatic. rick santelli you have the numbers. rick? >> yes, 265,000. that's up 3,000 from an unauthored, unrevised, unchanged, 262 that was at

15-year low last week. 265 doesn't really alter the comp, of course. continuing claims 2.228 million. that is a bit lower than the 2.256 million. and, of course it opens up all the conversation we will have about 24 hours from now as we handicap, of course the job's report. i fully expect we're going to keep having decent job growth and then an unproductive economy. you're not going to get the growth but you will hire more people to have basically less output. it's not a prescription of good growth, but i think the political class is happy. gives them ground cover. back to you. >> all right, thank you so much rick santelli. steve? you can introduce steve, as well. he will be introducing a very special guest who we have on the set with us this morning. >> straight from chicago. he could have stayed there and done it right next to rick. thanks for joining us charlie

evans, evans. numbers weak in the first quarter. any sign that things are coming back and is your expectation that the second quarter ends up being a bounce back? >> i think we are expecting a bounce back first quarter was weak at only up 0.2 and we think that was transitory because consumer was a little weaker but we think things can improve. so looking forward to a better second quarter number that would be more consistent with the stronger growth outlook that i and so many other people have. like 2.5% to 3% this year. >> that's this year. in order to get back what you lost in the first quarter, you have to have a pretty robust second quarter, don't you? to get the average of the first half up to some level that would be consistent with i suppose, that confidence that inflation is moving back to 2% of progress in the jobs market. >> i think that second quarter number is going to be important. the monthly numbers are going to be important, too. but we said that we're data dependent at this point. we'll look at the data and see

how they roll out and begin the renormalization process. if the first quarter was transitory, then you would expect the second quarter to be better if it was due to weather, you should expect a bounce back. more than your average amount. if it was the high dollar then maybe that can't, you know be taken off quite as much. but i hope we see a number like 3% if we really are moving up. >> you said recently that 2016 you think is the best early 2016 is the most likely time for a rate hike. could you be convinced otherwise with stronger second quarter data and third quarter data? >> well it's tricky. i said that when somebody asked me the question you know when you know, when appropriate monetary policy what is the appropriate time? i think optimal policy would push it into 2016. i think that would be consistent with having more confidence and inflation will pick up and go to 2%, go to 2% relatively soon over the next one to two years

and i think there are uncertainty reasons, too, to sort of make you say why should we be in a rush to do this. a combination is helping the economy move up and if inflation were to pick up more strongly than i'm expecting. we know how to deal with that. we can increase rates. >> the way this recovery is played out it seems like right on the cusp of taking hold like every year. the end of every year it's like wow, next year is going to be great. it's weird the first quarter. ates it's always something. this time you talked about weather or the dollar. is that really just the, you've been unlucky or we've been unlucky with it or still a hangover from the depth of the recession or is it partly being being that low-interest rates don't require companies to do what they need to do. they allow them to do other things instead of investing for the future. >> those are a lot of good points. the hangover point is an

interesting one because we know coming out of the recession, the financial crisis that there is a lot of debt deleveraging that needed to take place. households have done a lot to improve their situation and their debt is down and they saved more. employment is up and incomes are up and so demand can be higher. >> but found out about it in hindsight because the fed all along has been way above where it actually came in. so, if you knew it was -- >> i think the point is that because the fundamentals were still increasing the fundamentals, we've been more exposed to negative events that have appeared to have happened and caused the first half to be weaker for a number of years. now, every year we're getting better and more resilient. that's why i'm looking for the second quarter, second half to be better and that should improve things. >> why do you think rates in the long end have moved so sharply over the last several days when we can show people the ten-year of the united states and then the ten-year of the german bond. i know the level isn't high but the move is quite sharp.

why do you think that is happening? >> well you know to be completely fair about all of this, if you ask me why rates have come down so much over the last six months and longer i would say i can't say i can't understand that. term premium were down and demand for safe haven assets and a lot of funding came over in the u.s. and it was at the time that europe was still trying to figure out how much combination they would put in place and they got that now and now i think investors are probably looking at europe and kind of wondering, well, maybe things are better off and they're trying to see through what the ecb is going to do. that's why in the u.s. for the fed i said that i thought it was very important for us to be very clear. we're going to work as hard as we can to hit our mandates, maximum employment and to get inflation up to 2% and that has taken a long time. but i think everybody knows that we're serious about it and that's why rates have been so low. to the extent that the ecb pounds that message that they're going to work to get inflation

up towards their target that is reinforced. >> are you concerned about the velocity or repidity of move and some destabilizing effect even though the levels aren't high? >> i think they still have a ways to go in europe. so, i can't begin to guess how the yields will work their way out. they could retrace, they could -- but i'm confident that the ecb will continue with their chosen path for some time. that should reinforce the go-to combination. >> sticking with markets. fed chair janet yellen yesterday said stock market valuations are quite high. there's some controversy as to whether or not the federal reserve should be talking about market valuations and what the intent of that is. is that your belief and are stock market valuations high and is it appropriate for the federal reserve to making those kind of comments? >> i think you have to understand, we have come under a lot of criticism for our interest rate policies people have said that low-interest rates could lead to financial instability risk. i think it's incumbent upon us

to talk about financial stability, financial instability risks that we might be facing and so in that context, it's quite natural that policy makers and the chair of the federal reserve will make some comments about leverage. how that's working its way through the economy. how that might be imparting some risk or not to the financial sector. i believe she said the financial stability risk is moderate on the basis of everything that we looked at and i think that's the larger take away everybody ought to get used to us talking about -- >> are stock market valuations high in your opinion? >> stock market is high, there's no doubt about it. i'm not in the business of evaluating whether or not it's really high. that's not my expertise. i'm looking at the economy. >> do you worry if interest rates do go up bond prices will go down and this whole world that is living on fixed income is going to freak out? people who thought that bonds unto themselves were somehow this remarkable safe haven will

realize they're not and what they will do? >> i'm not sure i quite follow. >> do you understand what i'm saying? >> when yellen said the fed begins to hike, you could have a substantial or sharp, i think the word she used jump in rates. >> certainly seeing movements in rates over the last couple years. >> but holders of bonds would see a decline in their portfolio. the average retailer investor. >> even buy a cd. >> but clearly, people have bought them. >> a whole world. >> have done nothing. she called them safe. >> mostly institutional. but the question is are they really safe or not safe? >> i think the average retailer investor has a buy and hold strategy. you ahave an asset allocation and, so you see capital gains and capital losses. >> one last time the fact that is it possible that that keeping rates low, you think it's going to be stimulative to the economy. but is it in your view and is it

possible that it causes corporations to not, they do buybacks and they do mergers and acquisitions and they act differently than they would if they were more normal. is it possible it's a damper on economic activity rather than a stimulant stimulant, a net damper or that's just impossible? >> you know i think it really comes down to where real interest rates are. i think right now, you know financing costs are low and auto sales could be supported. >> and savers have had no spendable income and that has to be a damper on the economy, too. >> is it possible? >> i think it's definitely a trade off and what bernanke has said and what other fed officials have said is that net benefit to the economy. you are slamming you are slamming savers there's no doubt about it. >> cost of borrowing is lower. people can go out and buy more things that can stimulate, that may also production and more income. >> charlie we have to go but here's the thing. tomorrow we're going to get a

number. if you get back to the trend we were at 250 plus couple months in a row, that return to second quarter growth that we saw. june hike rate off the table? >> we are going to each meeting and talking about what the policy rate should be. at the end of every meeting it is possible to begin the renormalization process. now, i'm looking for 200 plus payroll employment over the next many months. growth above trend and that should be supportive of it. i have 2.5% outlook for real gdps. >> thank you for joining us. >> they asked me to lead it. evans says stock prices are high is going to be the lead for that. is that okay? >> i also said i don't know. >> i'm kidding. >> joe, it's tradition not to ask the subject of the appropriate leads. >> is that okay? >> the stock prices are sky high. anyway, thank you. great to see you. coming up.

>> he's like, oh, no. alibaba naming a new ceo reporting better than expected quarterly results. find out whether it's time to buy or not with this ecommerce giant, next. we'll introduce you to golf board and speak to pro surfer and extreme sports pioneer laird hamilton about how this device can change the golf course forever. who would have thought, surfing and golfing combined. we'll be right back. man: you run a business. could be any kind of business.

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welcome back to "squawk box." the futures a little better better than it used to be. dow looked like it would open up ten points and the s&p 500 off over a little over 3 points. joe? time for the players championship down in florida today. where pros are teeing off and while they may walk the course one company that wants to shake up the way the rest of us get around. this device says here contraption, i thought contraption is not a good word. it's called a golf board. a cross between a motorized skateboard and carry your clubs in front. hoping this will get millennials revved up about the game. golf port president jeff dahl and also with us from l.a. pro surfer laird hamilton. i didn't think of it this way, jeff, is that it's fun to drive this thing, too. so it's not just the functionality of getting your

ball and playing around quicker, but actually sort of cool to drive it. >> it's the number one factor that people who play say when they come off the course on the 18th hole. that was the most fun i ever had on a golf course. it's very engaging both mentally and physically. helps speed up the pace of play and easier on the turf and it really helps, as you said to bring younger people into the game. >> 30%, 40% faster and you think, well a golf cart is fast. but you share a golf cart and anybody that plays knows that you're constantly i'll leave it here for you, you go over to your ball and then you have to drive around a bunker. if it was an individual mobility you could play much quicker. just go to your own ball. >> not only that but many of the courses that have golf boards allow you to go closer to the greens and tee boxes, which increases. >> it is light and it doesn't seem like you could get closer to bunker and greens than you can with a cart too, and not hurt the turf right? >> yes you can. >> i got a question. i got a question for laird,

though. i'm a horrible golfer. when i do play golf all i want to do is talk when i'm in the cart because that's my big chance. i'm just saying now i'm out on my own. >> you can see from the video -- >> all those conversations, laird, are those conversations still going to happen? >> well, yeah, they're going to happen but you're going to be riding alongside your friend and you're going to have to be focused on the terrain and not necessarily be thinking about how bad that last shot was. we are finding that good players actually play a lot better. and it's just it's just a better way to be on the course and it's a way to get people who don't want to play to play and a way to get good players to play better and it's a way to make talkers maybe talk less. you're trying to you know confuse your guy out there and make him play a worse game. >> i was wondering why you had a surfer and then i see the video. and it's very obvious it's very much a surfing move around the hips and the waist. how much do these cost and what

kind of opportunity is this for you? >> they cost about $6,500 each. >> we sell primarily to golf courses directly through a repnetwork of about 50 reps and we think the market opportunity is somewhere for this year at least the market opportunity is in the $250 million range. >> you're only selling in the u.s.? >> to start with yes. we're getting all the infra infrastructure. >> crazy golf in china. >> absolutely. we're putting all the infrastructure and golf pieces in place here in north america. >> laird, i got on a paddle board and i realized how completely uncoordinated i actually am. i lost a pair of very expensive sun sunglasses. you don't need to be to have surfing skills to do this the first time. i mean you can pick it up quicker than surfing, tell me. >> well, you're not in the water, first of all. you're not going to lose your sunglasses. you might run them over. there is a handlebar and we

brought this down to be real accessible for anyone with no board riding experience. so it's not about, you know, having to be an athlead to ride this. we find a lot of people who have never been on a board, a great introdukz to the feeling of riding a board and i think it's something that everybody enjoys. it's a human nature kind of thing that we like to this feeling of -- this motion. >> i can imagine in a beautiful setting in hawaii or something, that would be a great way to spend, instead of spending five hours, maybe you spend two and half, three hours. i don't think it's going to replace everything people do on golf and there are times when i don't care if anyone plays golf. i don't care if millennials play. it makes it more crowded. stay home. i'm not, i don't care if everybody in the world plays. anyway, jeff and laird, thank you. good luck. >> thank you guys. >> wish we could get a squawk -- >> version? >> no just give us one to try.

>> it's not far to walk back. >> i want to take it out and play on a course and try it. >> we can do that. >> bring some cameras. a reminder the final round of the players championship will be on nbc this weekend starting at 2:00 p.m. and everybody is going to be watching to see if this speith kid how he wilma nuver around the players. dent be surprised if he still has the same game. great for viewership. when we return jim cramer from the floor of the new york stock exchange. the network that monitors her health. the secure cloud services that store her genetic data

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down at the new york stock exchange jim cramer joins us. saw some of your tweets jim, you noticed not a whole lot of bids this morning for bonds anywhere in the world. it has stabilized. can central banks stabilize a market like that? would we know if they did? >> i don't think we would. i think they are stealthy. i do think that if europe is coming back as strongly as some ceos tell me i don't know why you would think german bonds stop here. i think rates are way too low.

particularly versus our rates. >> i think it's funny we accidentally found something to worry about, when we were supposedly growing at 3%. we had 0% interest rates and $40 oil. it's like oh oh. now if you get $60 or $70 oil, suddenly we're not growing and european rates are headed up. that's what the other side of the trade is. that's not so great. >> remember their markets had an unbelievable year anticipating this. our markets have done nothing thinking we are going to have that slowdown. it would have been a great call had janet yellen told us to get long europe in the beginning of the year and sell biotech. i'm going to turn off my commission brokerage to her. >> right. you're right because it's may and we are nowhere this year. maybe that's why we've been turning around because the market knew this day was coming anyway. maybe we've done some of the churning. >> i think so.

rates have backed up a lot in this country. i think had yellen told us to get out of the zero coupon that would have been a home run call. she is not giving us the calls we want. what was your view on tesla? >> 20% a week on 20 year zeros. >> she didn't give us that call either. i don't know. she is not the kind of strategist i'm looking for. >> thanks. when we return analyst reaction to alibaba beating the news on the ceo. still not good enough. red arrows getting worse again. here's former treasury secretary on the state of the economy. >> people saw that we were going to have a great depression. people thought we might have hyperinflation. people thought we might turn into greece. the american economy is doing relatively well. still a tough economy for lots of people but if you look at

the rest of the world, look how countries view us. they view what we did with a huge amount of admiration. even with all our challenges, we are a lucky country. over 20 million kids everyday in our country lack access to healthy food. for the first time american kids are slated to live a shorter life span than their parents.

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alibaba results beating the streets. joining us rob sanderson. thanks for joining us. the stock is moving higher in premarket trading. is it earnings results better than expected or they have a new ceo? >> there's a lot of concern coming out of the december quarter with the drop in modification. this is a new issue. not a lot of history. management was cautioning the street not to expect a sharp rebound in monetization. they beat everybody's fears in terms of rebounding and that's the key metric. >> monetization rate is 1.97%. that's the percentage of money you make on the goods sold correct? are you satisfied with that number? >> that's i think you are quoting the mobile monetization rate. blended is under 3% between 2.5% and 3%. the street was 2.06%.

it was quite a significant. while mayor mix shift is higher in mobile and not the lower take rate. the blend in and composition are very positive. >> on that point, are you concerned now mobile transactions are taking up more and more yet the monetization rate is lower? >> no. the monetization rate and mobile increased significantly year over year. that is a healthy sign. >> all right. rob, thanks for joining us. appreciate it. >> no problem. >> just the population in china plays onto the valuation. >> $500 million profit. >> china is a huge growth opportunity. join us tomorrow. "squawk on the street" coming up next.

good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and dave faber. alibaba beating expectations naming its future leading. whole foods walter robb will join us. both stocks moving double digits in the premarket. in the meantime we are watching a global sell-off in bonds this morning. recovering