♪ welcome to "squawk alley" for a monday. ceo of the daily mail north america, good morning, john. kayl kaylee touch live in boston. we'll hear more from in just a few moments. john fort also here, first up this morning, group of luxury goods makers suing alibaba claiming the giant knowingly made it possible for counterfeiters to illegally sell products. gucci is among one of the big names. counterfeits have long been a problem for alibaba with the ceo calling them quote a cancer for the complaint.

it has no basis. shares of alibaba getting smacked a bit on the news. the notion is nothing new or novel would you say, john? >> there keeps coming out more information about how they are come police it. and we've known for some time now the teamall, which is the one that host the retailers with if you host with them as they offer burrberry, we'll yank out the counterfeiters. there's too much going on for alibaba to throw its hands up and say we're not involved at all. >> it's kind of hard to buy that this is a difficult technological problem. unlike video, unlike music where people are posting it and you pirate it on maybe a site or through a method that's not trackable, counterfeiters are trying to appear to be the real thing. if you see somebody advertising 1,000 units of a gucci purse and it's not gucci advertising it, chances are, you know, how hard is that? >> how much is the fact that

it's a chinese company right, so little we know about their controls, they laws, their corporate structure. does that make it easier to follow suit in this case? >> ting makes a different culture problem. alibaba is a product of the chinese culture which has had a different attitude about counterfeiting than we have had in the western world, if it completely abandon the sellers, who maybe are selling some counterfeit goods, goods that aren't, they open up a door for somebody else to come in and take that element of the chinese market that's still very much in demand from the chinese customer. at the same time, chinese government is coming out and saying, alibaba, this is very bad. you have counterfeit, come on. chinese government i think has been come police isn'tsent in ts

>> pressure from revenue growth. the question is will they put up 25 or 40% revenue growth this year? now 20% year over year which is not where you want to be in a company this early in its public life cycle. can they take the tough medicine of yanking out the counterfeiters and throttle back revenue growth a little bit? it seems like right now, they're so hungry for the revenue, so hungry to put up the numbers they're not going to address the problem. >> guys, we're getting a letter crossing just now from carl icon, open letter to tim cook. might want to keep your eye on apple shares over the next few minutes. dear tim, we applaud you and the rest of management for the performance and growth. truly impressive. he says after reflecting upon apple's tremendous success, we believe apple shares are worth $240 today. apple is poised to enter and in our view dominate two new categories, television next year, and the automobile by 2020. as i recall, i think carl did say he would have something on apple in the coming days, not too long ago, this was clearly

it. we'll see if investors respond, jon. >> yeah, is this really a tim cook or to everybody else? >> yeah, it's open for a reason. >> use snapchat if you want to the just talk to tim or send him an e-mail. okay, tim, the stock is supposed to be 240 bucks a share, in case you were wondering. he's like i agree, it's undervalued, yeah. >> i assume he's pushing for more of a stock buyback. isn't that basically the intimation that if the stock is cheap, tim, you should buy more, i think it's so undervalued at the current price. >> yeah, applying a pe of 18, adding 24 of net cash, considering our forecast seems reasonable given the recent history in fiscal 17. and of course this belief that they're going to get heavy into tv. its been a long wage on. >> speculative, the tv thing, there's been hints here and there, for icahn to say they're going to dominate, these categories that could be a half a decade, decade off until they're really material, even

remotely. >> apple just updated their capital return policy a few weeks ago, i mean, it's interesting theater, it's important, certainly because carl icahn's moves are followed by many. just made that lift investment a few days ago. >> we should point out, he also adds, we believe the watch, apple pay, home health beats, and further innovation into existing product lines represent a tremendous opportunity that on their own, justify a valuation that at the least affects a market multiple. this has been obviously a key selling point. big part is undervalued relative to the rest of the market and to the rest of tech. >> does this count as blindside or sell side? >> i think it's -- >> that's a good question. >> i think this is buy side research. ubs has a note saying that apple iphone retention rates are down a little bit. meaning the number of people that stay as opposed to switching, dropped 84 to 78%. not a big deal. also the watch at only 8% tax

rate. i think that's low. i think the watch will have a tax rate of plus 20%. there are all sorts of signals that underestimate it a bit but double the current stock prices is pretty aggressive. >> we'll keep our eye on this long letter. this is, looks like at least 1,000, 2,000-word long letter. we'll keep an eye on that. again, carl icahn writing an open letter to tim cook. he encouraged graduates to get off the sidelines to the graduating class at george washington university yesterday, take a listen. >> the sidelines are not where you want to live your life. the world needs you in the arena. no matter what you do next, the world needs your energy. your passion. your impatience with progress. don't shrink from risk. and tune out those critics and

cynics. >> the speech wasn't all serious. cook took time to make a few jokes along the way. >> they asked know make a standard announcement, you've heard this before, about silencing your phones. so, those of you with an iphone, just place it in silent mode, if you don't have an iphone, please pass it to the center aisle. apple has a world class recycling program. >> interesting. i mean great speech. as we said this morning with kramer, his public persona continues to evolve over time, yeah? >> and the public persona is about excellence and precision excellence and over the weekend, it came out that apple bought coherent navigation which special ietzed in high intensity gps, it is much more precise than normal. even in mapping, they could buy a normal mapquest or something like that, they're going something which is super stin gent.

one line i want to pull out. because of this, we encourage both accelerated and larger mugt sharing purchases. how to allocate capital going further. >> not enough to be the biggest dividend payer in america? >> maybe wait a few months, they just announced the updated capital return policy, and he's like, come on, more. but, and no surprise. we know -- also interesting about tim cook though, in the past, apple tended to talk about change agents in the world, within the context of apple and apple's branding. tim cook has been more stepping out with apple as a leader in the global technology space, in the corporate world, sending a message about what others ought to be doing. if you look at the executives, he's brought on board, lisa jackson, angela errands, denise youngsmith, the look of apple's leadership team, much different than it was five years ago. >> absolutely. and the shares by the way, just a shade below 129.5.

we have our first look at steve jobs new movie by danny boyle, the upcoming biopick starring michael fastbender. they ran the trailers last night, take a listen. >> the musicians play the instruments, i play the orchestra. i sat in a garage and evented the future, because artists lead and hacks ask for a show of hands. >> i love this you don't care how much money a person makes, you care what they make, but what you make isn't supposed to be the best part of you. >> universal pictures, i think we might be able to do better than the ashton kutcher version. >> sounds exactly like steve jobs, to my ear. looks nothing like him, but sounds exactly like him. >> i thought you were going to say sounds exactly like the social network. looks like the social network part two, it's shot and the style is the same. >> fastbender's voice in this is what struck me immediately. wait a second, is this audio from steve jobs? then i heard it, no, that's

fastbender sounding exactly like him. if he put that same energy and work into the mannerisms of steve jobs, it's going to be fantastic. >> he better sound like him, because he looks absolutely nothing like him. if they didn't get the voice right, they'd have a real problem. >> finally, according to the wall street journal, google will launch buy buttons. company sponsored search results december displayed on a shop on google heading. you'll be taken into another google page to complete the purchase. they'll be provided and sold by retailers. one of them, macy's, which is noted to be in talks to take part in the launch. we talked the amazon button. is this as fornt google. >> it's interesting coming on the heels of facebook instant articles. here we have an e commerce equivalent. it's very dangerous to players who might jump in too far. google by the way gets to capture not only what you're looking at buying and what you purchased, how your size changes

over time, you know, whether you're a summer or a winter, based on what colors you choose. i'm not sure i want google collecting that data. i'm not interested, but it's good for google if it works. >> i'm surprise the the stock is down. the conversions on mobile, they don't necessarily buy it. this should allow google to demonstrate actual purchase. cpa, they'll be able to show they bought something. very much on the heels of what facebook did last week. these companies are basically saying the mobile experience is so different, we need to host more of the experience to make it actually work. facebook, for articles, google for purchases, very positive sign for google being able to fix the click thing in mobile. >> the danger and opportunity though here is that you've got these big companies taking control of the last mile of content and of commerce. think about it, the one-hour delivery, you have the instant articles, you've got amazon getting into third-party resellers, handling the logistics. >> delivering via subway in new york city. >> yes. at a certain point, they're just sort of like handing something

over to this big company -- >> and the publishers are? >> yeah. and the question is who gets the margin? who gets the differentiate when big companies are controlling that last bit of hype to the consumer in that ratio? >> i'm glad that google did this. i've been afraid that the eu regulations would make google do nothing. they realize they have to do this to grow the top line and they'll take more governmental risks, moving more and more downstream. >> good to see you. welcome back from france. jon steinberg joining us today. let's check on the markets, closing high on the s&p, the dow settled back after hitting a high for itself. shares of yel. slipping after getting downgraded to neutral. the firm says the buyout already priced in there. and then shares of gopro in the green after being upgraded to perform at opi. the company has no notable near term head winds and entering into east asia should deliver growth. although they're still skeptical

about the replacement cycle. when we come back, the u.s. no longer apple's top market. one says it'll happen sooner than you think. he's with us to make his case. plus this five-star fidelity fund beaten 97% of its peers over five years with holdings and things like apple, amazon, and facebook. the man who runs it with join us live. security expert saying he hacked a commercial airlines briefly controlling the plane. we'll look to see if his story checks out when "squawk alley" continues in a moment. [ male announcer ] your love for trading never stops. so if you get a trade idea about, say, organic food stocks, schwab can help. with a trading specialist just a tap away. what's on your mind, lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move, wherever you are. and start working on your next big idea. ♪

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a consumer expert claims he hacked into an airplane's computer, briefly i should say, taking control of the engines causing a movement in the plane. we are live in washington with the full story. >> good morning, john, chris roberts is back in the news today after news reports over the weekend that he told the fbi, allegedly he had been able to hack into a aifonics while a passenger on the plane using the entertainment system, those computers that are available to all of us riding in the back of the plane. now he's made the claim before that he has been able to monitor the aifonics systems, but whether or not he actually caused the plane to deviate from its flight path, that would be a big new development in the stories. really unclear as of right now whether that actually happened or not. i interviewed chris roberts

about a month ago in san francisco. he was out there for a cyber security conference. he had been talking about the research he'd been doing into airplane aifonics and electronic systems for the entertainment of the passenger. he could do this in theory. i asked if it was possible for a terrorist to bring down an airplane, here's what he told me. >> it would be tough. the hacks themselves are not easy to do. you have to circumvent three different systems and there's technology involved and you have to do a lot of work. it took us a long time to do the research, is it possible? yes. probable, hard to say. i think anybody with enough motivation and financing behind them would be able to do something. >> that's scary. >> that it is. be nice if they fixed it. >> we asked law enforcement what they said, and their statement this morning is there is no credible information to suggest an airplane's flight control system can be accessed or manipulated from its in-flight entertainment, nevertheless, attempting to tamper with the

flight control systems of aircraft is illegal, and any such attempts will be taken seriously by law enforcement. now guys, chris robert's story is a little unusual because he was on his way to the cyber security conference last month when he was actually detained by law enforcement on an airplane after tweeting about the possibility of hacking into these systems. law enforcement detained him, confiscated some of his electronics and he's actually been banned now from flying on united airlines flights. united told me last month that they didn't have any indication that it was actually possible to do this kind of hacking, nonetheless, they don't want chris robert's flying on their flights anymore. and also, guys, i should say that our phil labo here kwhoz an exert. ourlines says that the manufacturers say it is extraordinary unlikely that you could actually do this, nonetheless, nobody is saying it's 100% impossible. >> thanks. of course they would say that, right? they're not going to say yeah, we've been aware that if you

hack into the system, you could probably take control of the plane, but nobody's done it yet. >> look, it's one thing to say, it absolutely can't happen, and it's another thing to say, but this guy is totally dangerous and we're not going to let him on our flights. which is it? possible or not possible? there seems to be gray area here. it seems to be because it's complicated and people may be unsure whether it's possible or not. >> thanks, let's hope those security folks are working overtime at the airlines. meanwhile, it's important for cable and internet in this country. and kayla caught up with one of the biggest names in the business, at&t chairman and ceo, randall stephenson, she's live at jpmorgan tnt conference in boston with more on that, kayla. >> hey jon, thanks so much, we are live in boston, tnt conference. everybody from viacomm to yahoo who is the keynote tomorrow, talking about this confluence of issues in this space. this morning we caught up with

ceo of at&t, randall stephenson, of course the biggest, the biggest priority facing that company is whether it can close its $48 billion merger with directorv, announced a year ago today. it does believe it can. raised $17.5 billion in debt to close it, it does remain to see where washington will weigh in, despite a delay announced last week, stephenson told us he's optimistic. >> we think the deal gets done. the conversations have been productive. what's happened right now is you know, there was a stay request for the title ii rules that was filed last week by the the industry. and the judge put a pretty tight time horizon on the fcc to respond to that. that's going to take their attention over the next week or two. i think that's due on friday. there's not going to be a lot done over the next week, and anything other than title ii, but we feel like this thing will

progress. >> so net neutrality and the fight over that appears to be what is holding up the deal. stephenson says the company will remain critical of the fcc's decision to regulate the internet under title ii, but he notes that still a lot of the gray area over this regulation is up in the air. >> we do think that there is general willingness and a part of congress to pass legislation, that's probably a more sustainable path to get net neutrality without dumping it into title ii. then don't forget, there's going to be a new fcc probably 18 months, 20 months from now. 3-2 vote to them changing. to us, the more sustainable path is more legislative path. >> stephenson said the company is on track to invest $18 billion and building on its wireless network. that spending is down from $22 billion last year, but john, once it does close, that deal with directv, a lot of resources at the company will be freed up.

remains to be seen how they will pursue an over the top product. partnerships with the turnen group and hulu will be strategic in that effort, but we still, john, haven't seen that at&t over the top product on the market yet, we will see, back to you. >> all right, thanks kayla. yeah, sounds like somebody might be doing lobbying some time soon, i don't know, we'll see. coming up, apple's biggest market is still in the usa, but it may not stay that way for long, so says one top analyst. where you should keep an eye out a little later on this hour. "squawk alley" is back in a minute.

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her daughter's heart beat once again. we're helping organizations transform the way they work so they can transform the lives of the people they serve. in case you missed it this morning, phone chargers became more fashionable. kate spade creating a collection of backs that will charge user's iphones. it'll include everything from

backpacks to clutches expects to debut in september. wall street journal says the items will cost between retail between 100 and $600. i guess you place the bag itself on a plate that charges, that's how you plug it in, then you've got the power to go during the course of the day. >> i go everywhere with a battery, extended battery that i keep in my backpack, maybe that's just a clumsy way of doing it if you have it fashionably built into your purse. i'm not a kate spade guy, so, i'm clearly not the target for this. >> not yet anyway. >> who knows. all right. let's bring in simon hobbs to count you down to the close in uk and across europe, simon. >> hey john, it's difficult for europe to make gains on the market at the moment. germany's doing okay, but overall, there was increasing concern about where we're going with greece, incidentally, both brian custer ls and anthoniens just denied -- brussels and

athens just denied that a deal was coming through. one of the senior members over the weekend, yves mersch, they don't want anything to do with the program. therefore they can't demand money from that existing program. just let me show you how the timetable is for greece. there's an ecb meeting on wednesday that presumably they'll discuss collateral and probably do nothing. there is some talk that they might aim for settlement by the eve summit thursday, friday, but the word there from brusz is also -- brussels is don't expect anything. according to an internal document from the imf from last week that was leaked, they don't have the cash clearly to pay that, the last one as you'll be aware, they played borrowing peter to pay paul through the sdr. the finance minister says they will be able to pay pensions at the end of the week. we're clearly now stacking up in a period where they don't have

the money to pay the bills coming through. something is going to give at long last one way other the other. it is a top gainer in europe today, the british engineering maker rumors to have deals in the pipeline, not least perhaps from the university. i said some of those exporters were doing well, automotives have done well, let by the truck maker on analyst upgrade. volkswagen in positive territory. and vhp spun out its base metals, nickel, alum numb and coal operation. this is the australian quote. valued at about $9 billion. about a third below where people thought it might be. but they've been able to make gains on the back of that, back to you. when we come back, the u.s. is apple's top market. maybe not for long. top analyst will tell us how the big market could generate $150 billion a year. s&p by the way, just sat with them, tenth of a point of an

all-time interday high, we'll be right back. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.

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good morning everyone, i'm sue herera, here's your cnbc update at this hour. john kerry meeting with u.s. troops in south korea. he told them that the u.s. will continue to do whatever is necessary to protect itself from cyber attacks. adding that he believes that

north korea was behind the hacking of sony pictures last year. about 170 people have been arrested and a restaurant has been closed after a shootout among rival motorcycle gangs left nine bikers dead and 18 more wounded. waco police saying the twin peaks restaurant has been ordered closed for safety concerns. the flagship of the navy's famed seventh fleet in japan it on its way home after seven years. sailors dressed in their whites lined the decks of the uss george washington as it left the u.s. naval base south of tokyo. george washington will be replaced by the uss ronald reagan later this fall. cozumel is climbing to have the first underwater bar. there you have it. guests pay for the experience of breathing mint or citrus scented oxygen while wearing a helmet underwater. the name of the bar, the oxygen bar, of course. what else would it be called? all right. that's your cnbc news update this hour. who knows, let's go back to

"squawk alley." news you can use, get you a quick market alert here this morning, record high now for the s&p 500, we are of a 21, 2705, that is an all-time closing and interday high on the s&p. we'll see what happens as the session goes on. china quickly becoming a major growth engine for apple. sales topping $30 billion last year, our next guest says china could become the top market sooner than we think. the senior technology analyst at fdr capital markets joins with us, dan, good to see you. second biggest market. number one by 17? >> yeah. i mean ultimately, we believe this is $150 billion market opportunity. next et, we see apple being the number one market really in china. and to some extent, it's really now about iphone 6, the next leg of growth, and right now the

street's only modelling in 70 billion of what we believe is $150 billion market opportunity for china. >> whatever happened to the whole narrative you were going to have to go in as a low-cost provider, it would be for china so to speak. the six is selling there, it's a premium product. >> like hot cakes. that's the whole thesis here, china is not going to be the market given what we see on the low end, to some extent, it's the opposite. just based on market share gains, this is something the street's underestimating, and ultimately we believe is going to be the fuel in the tank for apple in terms of china, incrementally, we think an extra $2 to eps over the next few years. >> facebook is trying to get into china unsuccessfully thus far, microsoft is trying to get china figured out. we heard about alibaba's counterfeit problems there. what has apple got son right in china that it is searching ahead where all the other companies are trying to figure out the culture disconnect, and are

there potential head winds for them to run into? if they get too popular, might they get knocked down? >> there's head winds. they have done a good job navigating, toe in the water, not jumping right away in. in terms of the retail space, how they built it out there. in the next few years, tim cook can become fluent in mandarin. it's a company that understands the chinese market. and that's really where we're in the first inning of this whole thing playing out. and that's really the key. can apple get to a trillion? china's front and center of the growth story for apple, and it's really about the 150 billion streets modelling 70 billion, that's the upside. i think we see over the next few quarters and the next few years and the developer conference will be key there too. >> are there key partnerships that apple needs to develop in china in order to have the kind of momentum you talk about? i mean, do they need to work through a channel. as they're getting their stores up and running like alibaba, do they need to corporate ten cents

products into the ios ecosystem to make it work? >> i think that's something they'll need to do in terms of this partnering. they can't do it all alone. that's partially why we expect, you know, not just cook going over there, you know, i'd say six to eight times a year, but it's really about them becoming a partner for the chinese. apple understands, this is the market for them, obviously the u.s. and europe as well. but this is the apple growth story. we saw penetration over 15% to 37 to 40% over the next two years, that's really why they're so focussed on this chinese market. >> stealing from, stealing share from samsung? from somebody else? >> samsung, you think about it, it's, you've got 25, 30% market share in the top two guys. very fragmented. this is really a lame grab opportunity for apple. it's what they do the best, and that's really why this is the next step for the apple story. we could talk about the developer conference, larger ipad, everything we expect,

china is key to an apple stock going higher and to continue to see this growth. >> worried about google? google's still in china? >> google is definitely a worry out there, especially as we just think about the conversigence o technology. apple has been one step ahead here -- >> but google has done nothing in china and doesn't seem to be on the verge of doing much, is that a problem? >> i think that is a missed opportunity when we think about the chinese market. i think there is some tech companies as we seen on the enterprise, cisco, microsoft, there's been frustration there. apple's got telephone right. everyone figuring out what's their secret recipe in the lab, why they've been successful, and i think that speaks to apple brand and cook has just done a phenomenal job. >> dan, good see you. we'll see how this takes shapes. smart phones, taiwan bringing zen stateside. the zen phone 2 model making its u.s. debut this afternoon after

shaking up asian markets with its affordable price tag. we spoke to johnny this morning on why he chose intel for the smart phone's application processer, take a listen. >> intel has always been very, very strong in terms of design the cpu, right? so i think in terms of the architecture, i still believe they have the best architecture and also the best process technology. and also, a lot of people have a miscommon understanding that more cord is always better. but actually, the truth is the architecture is far more important. even the latest iphone 6, the cpu 88, code name cyclone, still have only two cores. >> johnny shih, this is the man who single handedly started the netbook market, turned the laptop market on his head. also about asus's success nor southeast asia.

>> our first zen phone in taiwan, we went from, for collective porters, we went from having the market presence to being the dominant market leader, even until now. and then off to india, we sold over 35,000 within one day, and then in southeast asia, we got into the top three best sellers in malaysia, vietnam, and indonesia. >> keep your eye on this guy, carl. they announced pricing in a couple of hours. around $250, unlocked, dual similar card, you can put two similars in, travel internationally, it's got a micro sd inside the phone. 13 megapixel camera in back. the macro, better than the iphone 6. i tested it myself. it'll be interesting to see thousand affects the android

market and phones. this runs android 5.0, johnny is out to disrupt markets. the guy's an engineer. he designed a lot of the stuff in this phone himself and was showing it to me. >> eventually one is going to stick. it's going to be interesting to see which one. this is a good candidate. this five-star fund that has beaten 97% of its peers in the past five years withholdings things like apple, amazon, and google. gavin baiker will join us live. dow, s&p, the nasdaq within a percent, rick santelli, what are you watching today? >> i'm watching 222 on ten-year note yields. they're surging again. so we're going to talk about the surge in yields and whether central banks are fighting the wrong war based on that surge. after the break. it's more than a network and the cloud. it's reliable uptime. and multi-layered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions,

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time to sell apple, hedge funds are out even as iphone comes out, they'll duke it out. mohamed is here on why risk is rising in europe. and it is graduation time, what advice would the traders give their younger selves? wait until you hear the pearls of wisdom. that's all coming up on the halftime report, see you then, john. >> thanks, melissa. welcome back, parking can be a hassle, but thankfully there are plenty of new apps to help you out. kate rogers got a look at one of them.

she's live in chicago ahead of the iconic conference with a closer look, kate. >> reporter: if you're sick of getting parking tickets, you're going to to want look at chicago-based startup, spot hero, they're looking to change the way we park. mark warren and friends founded their company, spot hero in 2011, after racking up thousands in tickets. >> i had about $1,000 worth of parking tickets, which is a lot -- >> reporter: over what period of time? >> that was about a two-year period. >> reporter: how many did your co-founder have? >> $5,000. >> reporter: he lets them buy parking spaces in advance, meaning no more searching for spots. tell me thousand works. >> i've got a reservation, i know where i'm going to park, i know how much i paid. i'm getting a discount because i prepaid ahead of time. here's for the online prepaid customers. it's completely paperless. put it under there.

>> reporter: nice. do we have a specific number that we're going to? or you can park anywhere? >> you can park anywhere. the app helps you to navigate the mayhem of city streets. and someone trying to cross the road, tons of construction. >> reporter: and while mark is trying to bring this to a evolved state, some things will never change. all right so now the big question is, since you launched the app, have you gotten any tickets or towed after that? >> so i'd love to say that i haven't. >> reporter: you have? >> i have. it's definitely gone down significantly. >> reporter: spot hero is limited to the u.s. for now, the company says they're not ruling out a global expansion in the future. and as you mentioned, john, we'll be live all day tomorrow. we have a great line-up, mark cub cuban. tune in for that, carl, back over to you. >> nothing better than being in chicago too, kate, thank you so much. kate rogers. >> thank you. let's get to the cme group, rick santelli down the road, hey, rick. >> hi carl. i look up at the board, 222 for

ten-year note yields, 214, settlement on the year is 217. and many traders continued to monitor not son-in-law 217, but 2.24 just because it was a double top in yields prior to this recollection. let's start at the beginning. when did all of this seemingly start? first of all, let's put up an inch today to show that there was no day da that was strong, that was out. there's nothing that's changed dramatically. but we have this upside volatility. the personality of the interest rate complex that specific treasuries just change. it started to changed on the lead up towards easing announcement january 22nd. yield curve. let's look at the yield curve. i like to use five to 30s. if you open the chart up to january of '08, you can see that it was years of very historic flattening. but if you tighten the chart up to around december 1st of last year, things changed. okay. so, we had the oil price take a

big dip, why was that instrumental? because like many institutions that tried to look at post crisis worlds, central banks and the federal reserve may be fighting the wrong war. now, as of late, post the oil sell-off, we did see that the disinflationary argument seemed to have gotten traction. especially japan and europe. and it made so little sense. because of the energy dependence in those areas. so whether it's computers or cell phones or energy in a globalized world, many of these products or these issues tend to see lower pricing pressures. globalization is about export competition, and the pie has grown dramatically since the 80s and 90s. but, let's go back to this surge. the surge seems to be a rejection of the argument of disinflationary or deflation their boogieman. we talked this morning with mr. rashir and what he, and he was

writing about the same dynamic. this disinflationary boogie man may put rates in a mode where they don't make fundamental sense as they come back to a level that makes sense. the steepening curve really is all about that, just consider, in a world of globalization with competitive exports, the cpi isn't moving much. but maybe we need an api, asset price index, whether it's stocks or condos, the globalization has put a lot of easy money, wealthy investors into things like that where the real pricing pressures seem to be showing up. post nine, back to you. >> all right, thanks, rick. up next, how are your investments doing? this five-star fidelity fund has beaten 97% of its peers in the past five years with holdings in companies like apple, amazon, and facebook. the man who runs it will join us next on "squawk alley."

welcome back to "squawk alley." we're coming to you live this morning from the jpmorgan technology media and telecommunications conference in boston. joining me now is gavin baiker who manages fidelity's portfolio, it's a five-star $13 billion fund. it's benchmarked against the nasdaq and beaten 99% of large growth peers over the past three

years, gavin, great to have you. >> great to be here, kayla, thank you. >> quite a stunning record when you say all of those stats out loud and you manage to do those with 50% of your portfolio invested in the tech space. why do you think that's the right balance given the part of the psych that will we're in right now? >> well tech has historically been the alpha rich part of the market. it makes sense for know concentrate my portfolio where active managers can have the most value. i really try and think out three, five, ten years. i don't think about where we are in the, you know, economic cycle and as much as where we are in the life cycle of some of these companies. >> why are we in the nasdaq though? all year we been trading close to or at all-time highs, i know the nasdaq some people try inflation adjustments, still a couple thousand points away from that, but you're outperforming the nasdaq by about a percentage point, and i'm wondering, what you see the valuation based on

for the nasdaq. >> sure, well has, you know, you didn't say it, which i appreciate, but people talk about bubbles a lot these days. and i just think, you know, to quote a friend, i'm always working on everything, above all, overvaluation is not one thing i'm worried about right now. the simple reason, the last time the nasdaq was at 5,000, it traded at 80 times forward earnings. today it's trading at 20 times forward earnings. so about a quarter of the valuation that was added the last speak. said another way, nasdaq has been flat for basically 15 years, and the earnings have quad rup med. >> i like what you said to barrons, back then in the last dotcom crash, it was trading on a dream, today it's a reality. there are some companies, janet yellen pointed out specifically, social media and biotech last year where you could argue the valuations are getting quite rich. on what metrics do you try and find pockets of value? >> well, i think for all

companies, you always ultimately have to value the cash flow, sometimes for growth stocks you have to value them on free cash flow power, looking out three to five years. that's the way i look at all of my portfolio. are there always pockets of overvaluation with public equities around the world? of course. >> you have your largest position in apple. you have $1.3 billion invested in apple's stock. this morning we heard from carl icahn, it's going at 240, based on today, the product pipeline and the company should do more buybacks. your thoughts as a very large apple shareholder. >> well, i hope he's right. from his lips to god's ear. >> but you tend to set a price stock after you buy it, is 240 in line? >> i wouldn't say i really run with price targets, just in growth investing, often the way you make the smoes by holding stocks. you know, and starbucks, you know, went from having 1,000 stores to now over 20,000.

and i just think, sometimes you'd be ill-served in the great secular growth stories by having a price target that leads to overtrading. >> one place that invests in your space have been finding value recently is in private companies. just to give one example, but there's a question of how you value these companies, at what point you take the mark, and how you report this to your investors, what would you say? >> sure, first of all, spacex, it's an interesting company, amazing things for america. our military, we sent a lot of rockets up to space using russian engines and spacex, it's a great american story during media and manufacturing. if elon musk were a stock, i'd have a big stock on him. and as far as private valuations in general, we kind of have a church and state perspective. as a fund manager, i'm not allowed to value my own positions. we have an entirely separate part of fidelity that does that. >> we haven't gotten into your thoughts on artificial

intelligence and self-driving cars, we have to leave it there for today, hopefully you'll join us. >> gavin baker of fidelly. hail to the tweet. we'll explain in just a moment. thank yoand my daddy. sailor, thank you mom, for protecting my future. thank you for being my hero and my dad. military families are thankful for many things. the legacy of usaa auto insurance could be one of them. our world-class service earned usaa the top spot in a study of the most recommended large companies in america. if you're current or former military, or their family, see if you're eligible to get an auto insurance quote. seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild.

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welcome back. might have been seeing on twitter, the president now has his own twitter account. president obama just tweeted hello twitter, it's barack, really. six years in, they're finally giving me my own account. all of twitter is abuzz looking at who he's following, jon, so far, no companies are media organizations. >> probably wise. of course there is @barackobama. i wonder is this an official white house twitter account, i assume he doesn't get to take that with him. >> he hands that off to whoever succeeds him. the white house is the link on his profile. follows a bunch of chicago sports team and his wife and the vice president, obviously all of his cabinet members, government agencies. we'll see how that develops and who his first retweet is. there'll be the big game.

>> i bet it's michelle obama, but we'll see. dow set sboolg a narrow -- dow settling into a narrower range. new, all-time intraday high at 2126. that does it for "squawk alley" today. let's get to the half at headquarters, and melissa lee. ♪ welcome to the halftime report, i'm in for scott wapner. let's meet the lineup, kenny joins us in the meantime from nyse. game plan today looks like this. losing energy, goldman sachs says it is time to get out of two major oil companies. trade school it is graduation season at the traders are sharing their pearls of wisdom for the investors of tomorrow. we begin though with the debate on apple. this morning, carl icahn pushed far much larger buyback. he says the stock is worth $240 a share. this is a handful