$100,000. >> just stay up. >> i feel like i would stay up to watch letterman. i was in school and didn't want my parents to know. >> tomorrow long time executive producer rob joins us in studio. maybe he'll be up all night. make sure you join us tomorrow. right now that's it for squawk on the street. good morning. welcome to squawk on the street. i'm carl with jim and david. new york stock exchange. a lot boiling today as the retail earnings come in heavy. meantime japan and gdp highest of the year. crude oil is up despite a dollar today and we'll get inventory 7:30 eastern looking for a draw. right around 224 225.

lowes misses expectations. people entering the u.s. market with a deal to unlink communications. now, we'll tell you whether the french accompany has eyes or not on time westerner. johnson -- time warner. first up. target better than expected first quarter results. pops up two, three driven by signature styles. target also raising the guidance. as for lowes, the home improvement retailer missing results and the narrative has been written again they're consistent over promiser and under deliverer.

>> i still like the fact that they did a nice number of 5.3. when you go over home depot verses lowes, you see head to head. it looks like lowes fell behind the plumbing and hardware. that's the professional. things are strong for home depot. these are one two, they go at it. home depot is winning the battle for the spring. hats off to the new team out home at home depot. it's strong. lowes just didn't deliver. >> 24 quarters of home performance. >> technology they are literally the latest technologist in retail. when you go to the register at

home depot, you're in and out. when you go to the dot com you're in and out. they've turned on the key. we're going to do the same thing with target. it's the dot com doing well. lowes is behind in the dot com. look at macys. why should macys be a tie though? >> this is a pattern, david. they come out and give guidance and stock gets hammered. step by step inch by inch it goes higher. people would like to see omni channel strong. macys, it's the arch others will follow. >> there continues to be the conversation around macys. >> yeah i know. >> they own the square what they could do there, they have dismissed it. not that it has momentum but it keeps coming up.

>> the quarter verses target. it's like khols did not have a good quarter. urban outfitters. i think the fact macys can come back tells you do not write off retail. i don't see anything in walmart i want to buy but macys, target. >> digital sales at target up 38. >> yes, they have. >> target beats 110 over 103. guidance in the range. the point people are making is a year ago they thought target was lost. >> remember he closed canada at once. remember players said they couldn't figure out why. >> 20% of the sales here was digital channel. i would point out what he's done is brought back expect more pay

less. >> remember when there was a huge praise. >> sold out. >> target has done a lot of great things. >> that story is minus 10. it's now plus 7. hardly ever do you see a come back like that. minus 7% minus 5. first quarter black. now it's plus 7. this is extraordinary. >> sorry. >> i get so excited about american eagle. it's great. >> margins were up. fewer mark downs, jim. get excited. go ahead. >> wow. you want me to play it like that. >> i want you to play it like you are. jim cramer. >> it's retail for heavens sake. >> they had jordan and stephon.

maybe they're excited about that. >> the next is one thing in the draft. we came in fourth. not going to see good basketball in new york for so long. curry is very good. >> by the way, squawk had the number one jersey sale. watch out might be in jordans. it's ahead of the quarter. >> nike this week record high all time high going back. 1980. >> what a great growth. 19 and starbucks remain stocks and if you brought them you did so much better. throw whatever your index is. >> meantime the dow is going to aim for a closing high a day after the blue tooth and s&p. investers waiting.

meantime, the new rally to a new 15 high. it's the fastest pace in a year during the first quarter. two four in japan. we were looking for one six. is it finally sicking in? >> it's working. they have a huge business in japan. cisco seen an early turn. excellent interview this morning. i think japan just for real but we won't see because of the trade agreement. i think japan does not allow us to sale as much. it's not political. i don't want to go there. fourth quarter sales from around the globe are fantastic around japan. they have not done that well. japan is back. they use to be such a great market. >> yesterday you said you didn't like the set up the rising dollar set up. >> i don't but i like the interest rates going lower. that's terrific. we have a lot of things. these days are so day-to-day it's killing me because what

happens. we have oil up today. does the market really. >> we have the inventories coming. >> this market each day comes in and the algorithm size you sale it or buy it. in the meantime you pick up the bargains. >> the euro down against the dollar as of yesterday. 6.0% again. they keep coming and going to increase. >> they're now saying the first day is june or how many days have been important for greece? >> you ent up ignoring it. >> you don't. why pay attention? it seems like every day there's another date. >> what retailer really zeroed in on the sales? >> etsy.

i didn't know they had it. that's the problem. etsy. that's the zone. >> 19%. >> 16 opened the first day at 31. >> who comes out of the box in their first quarter a few weeks after and completely. >> i do when my quarter has sold okay. i question whether it's not more it's like investing in yale. i had rather own stock in yale. >> all right. let's move on to a deal this morning and at least the potential of consolidation down the road.

the accompany never heard of. it's a $33 million market cap. a french base accompany that has operations in france, portugal. it's grown overover time. he's been very aggressive and they're now making moves against the united states. they have a plot plan that varies. they have acquired aggressively using a chief beneficiary you could argue. they have a number 3% 4% and people buy it all day long. they're willing to buy their paper. he's made it a strategy in which he's rolled up a number of properties whether it's portugal

portugal. now they move on here in the states. it's a private accompany. $9.1 billion purchase price. the investers are remaining in. they're paying that exceeds 9.5 times. the first question might be that's just. >> it's a french accompany. what are you talking about? they say the way we do things in terms of cutting cost out of companies beyond what many people think is possible sort of the the way is the synergy we're going to bring the bare they believe they can cut as much as 200 million out.

look at that. they're 50% and u.s. is 36%. they believe you can get as much as 75% margin. we'll see. >> it's a plan. >> watch the stock today. time warner cable, this is what i can tell you. they have asked. it may be in each other's interest to stay in touch. does it mean they're going to make a move on time warner

cable? that's unclear. however, why you would start or just want to own suddenly which is a hodgepodge cast away. that said that's not where you're going to just buy that and see you later. we're going to have a u.s. presence with one and a half million subs. >> time warner cable is up today because they said we're in the neighborhood now. let's at least just be aware of each other. if you're time warner cable and you know charter wants to buy you and you have a stocking horse in hand that's helpful. if you create the idea you have a stocking horse in hand that

could be helpful. again, i would come back to the basic overall and say there's 5 and a half times leverage. they run like a accompany. they can take more cost out but they're all about borrowing cheaply. investers chasing anything they can get with the yields on it. >> do they have customer service? >> i don't know what their customer service is. >> that would be a big change. >> i'll tell you one thing. if you're a reporter right now, twc, utx, there's a lot going around. >> someone was knocking on their door. they didn't give you a $10. >> they're a half billion dollar accompany. >> they've been getting killed by auto zone. why not get that thing. >> maybe you just buy two of them. >> i'm so old. >> i know. you're the first person i thought of this morning when i

saw the names. >> i knew that. >> i didn't know the marsh brothers. >> opening up at 16%. >> when we come back exclusive with ceo and chairman mcmullin. up more than 55% in 12 months. a lot more squawk on the street live from post 9. see you in a minute. what if there were only one kind of dog?

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johnson and johnson announcing plans to file 10 new by 2019 each with the potential of $29 billion in revenue. >> if you go back to 2009 we've launched 14 compounds and now we've had about 10 compounds. you're going to have some that don't turn out the way you expect but overall we're going to base what we've done on our

ability to impact the nation going forward. >> johnson and johnson moving on that. >> it's been going up this week. i think they got the best of it. >> he's done a great job on the actual interview. i think it's really the right time. let's stay focussed on that. that's been the leader or is a lot of talk pure talk about getting together. they say what do they know? it could happen. watch chatter take over. >> they can invert by doing an moe. >> i know he's a hard charging

guy. >> it still continues to be the event split of the accompany. >> when we saw that gigantic over pay people want deals in the segment and j and j is starting to get back to where it was. i like that stuff. >> they of course cannot operate with the advantage of being inverted in some way or having a lower tax rate. we should always point out they're taxable. we do anything your out where the tax rate is lower.

>> you would buy that one. >> yeah, interesting. almost exactly flat for the year. j and j. >> well it was a stand out in april. up >> that is true. >> we'll get cramers mad dash and count down to the opening bell. back in just a moment. here at the td ameritrade trader group, they work all the time. sup jj? working hard? working 24/7 on mobile trader, rated #1 trading app in the app store. it lets you trade stocks options, futures... even advanced orders. and it offers more charts than a lot of the other competitors do in desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivative pricing model, honey? for all the confidence you need. td ameritrade. you got this.

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yesterday i recommended at five. five goes to 500 and it's not done. this is about a formation they are well ahead on. or even people can't tolerate. they have often made that mistake. you take a stock from five to

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they have been a hot stock. people felt it in the formulation this is a very short stock. >> all right. we got to opening bell. we will talk yahoo and a lot of other things when we come back. it's part adrenaline and part adventure. it's part geek and part chic. it's part relaxation and part exhilaration. it's part sports car and part suv. and the best part? the 2015 gla. it's 100% mercedes-benz.

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you're watching squawk on the street. we'll get the opening bell. a lot happening whether it's retail earnings. it's more about what oil is going to do this afternoon.

this is america. i think we got to understand there's things happening right now whether april was not bad for lowes. we have to keep staying in touch with the second quarter. it's something target had no problem with. remember everyone else has been a fan. not target. the buy back is crucial. >> there's the opening bell. look at the s&p. new york festival going on this week. over at the nasdaq we see a lot of retail. computer science is going to kick off the s&p.

>> yes. there's a lot that will happen. >> a lot had a sell on that stock. they're trying to get it upgraded so they're ahead. too late. time to recommend that stock was yesterday. time to say sale it was a long time ago. >> solid by time warner cable and of course, yahoo. it might endanger the send off. yahoo defending that we've already filed. >> i think this is the opportunity to buy yahoo. the accompany is valued at

nothing. we'll bring out the value. yesterday do they buy twitter? i think yahoo put together a vertical, coming in again. >> he has the possibility on the website. the challenge here at b and b and if i were at yahoo i would buy that too. >> >>. >> there was a lot of pain yesterday when this came out. yahoo obviously going down a great deal. i think we got to keep an eye on this for the administration and irs search. they've been aggressive overall. you got to be aware of it.

we'll wait and see what's happening. >> does it have the actual operating momentum? not the operating momentum facebook has. google, i think has operating momentum. a lot of people feel it's not inverting that. yahoo is worth little when you back out. >> that's what i like. they're saying listen, if you think, don't buy yahoo. the award performer followed by staples. traffic down two. we said we're overstored. >> yeah we are overstored.

>> latin america down 44%. i think whirlpool and appliances, you could buy it for a trade. i like ppg off that. they're trying to pair. ann taylor web for athena too many stores. we don't need as many stores. even as i like to shop, i have to admit. >> putting out a note which it talks about vision and rational for integrated agriculture accompany and the proposal. that came out this morning. let's call it around 8:00 a.m.

it had all the info and the trust hurdles are more of a challenge than implied. >> using terminology properly. >> yeah sensing the cuts the deals and values talking egypt. value goes to everybody. >> wherefore you are on the globe. >> we're value.

>> when are we going to finish this? >> not for a long time. they've got to get anti trust. then not until september that being minus and then six days under irish law. you're talking quiet a while. the key is, is it going to really try and get a shareholder vote? let's call it july. if it does will it be able to get a shareholder supported and will it say or amend? it's awkward to say we'll only take one shareholder vote. it's a lot more to come on the island perrigo i would think. not much right now. >> the cruise operator of course the nor is on it's off

the coast of santa barbara. it's 21,000 gallons, i believe. it's off 5% as well. >> we all remember when unical had the terrible spill. >> we got to get the energy one place or another we are still a fossil fuel country. when you move energy it's a dangerous commodity. >> suspended from cruise lines because of that. the fines are going to pay for resolving this alleged currency manipulation and the air bag

recall. >> it's the largest part of the market. it is so hard to get little momentum going. financials are good for a couple of days and then they give it up. >> now 404, high of the year. the all time high yesterday. >> wells fargo, yeah approaching a market value. one was $300 billion.

>> around town the ceo went up and kind of an amazing guy. really the most fun anchor of the country and he tells a great story. >> i had a very disturbing i felt conversation with american airlines. >> yeah, all the airlines getting crushed today. >> some companies, some airlines starting to expand capacity and pull competition again. >> he took it to me. >> i was trying to come up with an equation. he did not want to.

i think the airlines are leading us down and when the retail comes back it's disturbing. they came to the office and told me air transition we got to be careful about that. he said it's back. wow, i see. >> yeah. dow down 28. let's keep bob on the floor. hey bob. >> we have mixed opens today. europe is on the mixed side. market there relatively quiet. asia got a little action. another historic high on the end. it's like the nasdaq. we had 15 year highs here. let's talk about the united states. the thing everybody's talking about, 5.3% given what home

depot did. it's 180 basis. i heard a little bit about it. they did say having strong expectations to what's happening in may. they seemed optimistic about that. lowes is under performing home depot once again. you can see them down 4% here. target was a good number. all those we've got in ipo today

that looks very very well. financial is right behind me. good price, 18 million shares, 2450. right now, the indications are 26-27 for that. it looks like that's going to open on the upside. they do servicing for the big mortgage lenders. >> also owned by alibaba. they helped brands like nike access chinese consumers. 12-14, that's going to be over at the nasdaq tonight for nike tomorrow and toronto. they helped small businesses set up online stores for e-commerce including the payments. they increased 22% this week.

a lot of interest in the business, we all know what happened. right now, we've got 26-27 for financial set to open in just a few moments. guys, back to you. >> thanks very much, bob. we want to come back to time warner cable given the news today the french based accompany is making a move to the u.s. the questions are will they enter into negotiations quickly to be acquired perhaps by charter which, of course originally sought to expire. charter certainly is focussed on getting that deal done to the extent they can. there are a number of things here people should at least keep in mind as we watched stock hit resent highs. certainty is closed. if you were to enter into

another deal you certainly want to make sure this time it's going to make it to the finish line unlike the deal with the comcast. so it will include some sort of break. by the way, they're at least some firm ris out of the fcc. i don't want to make more of them than we should. it's about the idea of even a time warner cable-charter combination will be looked at closely in terms of broad band concentration. i find it hard to imagine that deal could be stopped. at least we want to take that into consideration. if you're time warner cable as well and want to figure out if things have gotten better or operations seemed to improve last year you're certainly going to want to enter negotiations with a potential stocking board. at the least they could represent that. as i reported earlier, they in resent days have at least made it clear to time warner cable it

has aspirations in the united states and that might have some mutually should be aware of each other's interest. does that mean they did, could they do a deal like that? it is larger than charter and market cap. it does have a lot on its balance sheet. taking 7 billion. they are very cheaply. it seems to have a group of investors willing to gobble up whatever. with a new stock in the deal could they? they have a new shareholder base base. we'll see. as far charter, what would it look like? is it 100 bucks? a lot of investors made it clear to time warner cable and charter. they think the stock will go up. they don't need the stock.

again, we come back to time warner cable. we have a lot of questions. if they were to do time warner cable, you issue the stocks and that help helpss the capacity. just want to put all that in perspective. >> once again, if you look at treasury they're sticky. look at the date. we traded on change about 5:30 a.m. eastern coming into our time zone and that's basically a high yield close. not only during the year but

early to last year december. looking at the chart, clearly see as we start to get above the day levels about 228 229 especially it looks like we're in a close there, you're going to find some stock traders. keeping the trades close to the vest on the long side and the fields move up and that means the price drops. since early december we haven't changed these closers. it's significant as you see on this chart. let's look at the boone. they would like to see boone rates respond. these rates are snapping back a little bit as well back to the currency. let's open the chart up to march of this year. why? kind of look at that middle to left section. remember we're in a range for several weeks close to 105 to 110. now to euro is coming down

testing the top of that. very important. let's look at a couple. that's been great. it's making fresh lows going back to april of last year and the mub, they go annoyed. they get funded under liability. this is at the lowest level since july of last year. carl, back to you. >> all right, rick, thank you very much. rick, when we return exclusive kroger ceo and chairman. hear his game plan for taking on the likes of walmart, whole foods and amazon. dow down 23 points. a lot more in a moment.

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largely because american ceo told jim last night the threat of initial capacity was coming. jim calls this disturbing a few moments ago. stock trading with jim in a moment.

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time for cramer. >> we got to watch the 6 million shares at 9 bucks. this shows the appetite for oil.

we got most importantly permia. i know that's opposite of what david says. just call me skeptical. we got the man of the hour. i've seen the most extensive player in the book. let's see what mark has to say. can the momentum continue? nba well in china by the way. >> i think it's still that opening of the biggest opening trending. entertainment forever. >> you didn't like this from the get go. >> you have to get out of this thing. it's not run like a business. it's run like a flee market.

if i want to go to a flea market i'll go to union square. >> and you can stop at shake shack. >> up another 5% today. an $80 stock for the first time. >> they call me the shaq shaq meister. >> you'll never rest until that happens. when we come back live and exclusive with the ceo of kroger and we'll take you live to the justice department where the general is expected to make a major announcement about the long running exchange rates. back in a minute. and when a market move affects, say a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move wherever you are. and start working on your next big idea. ♪ ♪

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good morning. welcome back to squawk on the street. we're going to sit down for an exclusion evidence interview with the ceo from kroger in about a half hour. market center action we'll get a

tight range down the 29 points. s&p down about 4. oil should be interesting. inventories in about half an hour. >> let me take you to the scene where the attorney general is about to make an announcement about the bank in connection with the currency manipulation scandal. the world's biggest banks will be fined 5 billion u.s. dollars and in an inprecedented view plead guilty. we'll bring it to you. in the meantime another snapshot at what's working or not in retail. sales surging more than 5%. meanwhile, target in the green estimates. the turn around retail joints also raising its four year. we have the recommendation on

both of the stocks. good morning. >> good morning, simon, how are you? >> i think we should point out both of the stocks have risen. let's say 40% for each of them. as far as they're concerned, the risk of suggestion on high expectations, would you agree with that? >> i agree with that. i think especially on the heals of what home depot reported yesterday, there was expectations. you see about an average position. >> right. i looked at myself you have a mutual on target. on lows, are you sticking to the $83 upside from here? >> without a doubt. it's an opportunity to buy a retailer with great long term positioning and less evaluation. >> let's move over to target. i mean i guess the most

positive thing you can say in a turn around story, sales are up 2.3%. that's twice the gain we were getting from yesterday. >> it was a little slower than what we saw in the fourth quarter. we saw the quarter had started off strong. still, the moral of the story right now remains the structuring, the cost production initiative and i think in time it's already reflethcting an evaluation. that's really what has our mutual stock. >> let me interrupt you. we are getting breaking news regarding the manipulation from justice. five banks here. >> yeah. a complicated settlement being announced today by the new u.s. attorney general. it's going to involve the

department of justice and a whole host of regulatory agencies. here's the break down of the foreign exchange manipulation piece of this as we go through the ones coming out now. jpm, barkleys and royal bank of scotland are set to pay $2.5 billion in criminal fines. that's an important distinction some of the prosecutions we've seen in the past. they're agreeing to plea guilty to admitting they broke their nonprosecution agreement with the department of justice in the case. ubs will pay $203 million, we are told. also, the banks are going to pay federal reserve fines of $1.6 billion. there's a lot of different agencies involved here. a lot of different numbers thrown out. they're reporting that the grand total of the fines going to be paid is $5.6 billion from all the banks. interesting these are criminal

cases in this announcement. that's something we haven't seen in the past necessarily. also interesting here guys, i'm told by the department of justice there's no individuals going to be charged today. what we're looking at is the banks being charged. the critics hate that. ultimate ultimately, the shareholders bare the brunt of this. these individuals not charged here today. the department of justice telling me the cases remain open and investigations remain open and there's a possibility of individuals being charged going forward. >> let's listen to the attorney general. >> the attorney general lesley caldwell. assistant director in charge andrew of the fbi's washington seals office and the division of enforcement. we are here to announce a major law enforcement action against

international institutions that for years participated in a display of collusion and foreign exchange rate market manipulation and will, as a result, pay a total of nearly $3 billion in fines and penalties. today's historic resolutions are the latest in our on going efforts to investigate and prosecute financial fines and a reminder this department of justice intends to vigorously prosecute all those who tilt the economic system in their favor and submerge our marketplaces. now, startsing as early as 2007, currencies traders at several multinational banks formed a group they dubbed the cartel. it's fitting they chose that name as it describes the legal behavior that they were engaged in on a near five year basis. almost every day for more than five years, traders in this

cartel used a private electronic chat room to manipulate the spot markets exchange rates between euros and dollars. they acted as partners rather than competitors in an effort to push the exchange rate in the direction favorable to their banks but detrimental to many others. the prices they set for the currencies influence every sector of every economy in the world. their actions inflated the banks profits while harming institutions around the globe. from pension funds to major corporations and including the banks own customers who placed their faith in the market and relyied on it to produce a competitive exchange rate. as a result of our investigation, four of the world's largest banks have agree agreed to plea guilty. they are city corp., jpmorgan

chase and accompany, barkley coc and the royal bank of scotland plc. these four banks have acknowledged their role in the conspiracy and committed to changing their corporate cultures starting at the highest levels. they've also agreed to pay criminal fines totally lower than $2.5 billion. the largest fines ever obtained in the history of the department of justice and the fine that city corp. alone will pay $925 million is the largest single fine ever imposed for violation. these unprecedented figures appropriately reflect the conspiracies breathtaking flavor and its significant impact. a fifth bank usag has agreed to plea guilty and pay a $203 million penalty for breeching the nonprosecution agreement it entered in

december 2012 regarding manipulation of the rate. a benchmark interest rate used world wide. the breech of the nonagreement was based in part on the fortune. >> the attorney general referring to the five banks. paying a combined $5 billion for manipulation of rates over the course of five years reading as well that barkley is now saying they're going to terminate eight additional employees and in this case we have more details in d.c. >> yeah carl that's right. the attorney general saying these are unprecedented figures. they are. it's tough to tell whether or not these are top penalties for these banks relative to the size itself. remember, this foreign exchange manipulation went on for years. the cartel was engaged in manipulating prices. the question is going to be though, carl, how profitable was it?

what was the total profit of the scandal and how does that number compare to the finds today. i've asked what the total profitability of this is. they're telling me they have not calculated it. the intensity of the involvement is not based on the total profit bltd of the skamt. it's hard to tell if it's way above or way below. that makes it an important one. >> okay. thank you very much. is we get the announcement finally from the attorney general. retail analyst before we started, we were talking to him. michael, welcome back to the program. before we let you go i want to ask you about the consumer in general. there's been a lot of agonizing about what's going on. today you have this large survey from j.p. morgan on consumers

which indicates a survey of a hundred thousand individuals saw their income fluctuate 30% month to month and a spending. it's not necessarily a low income but income owners, it's middle class income loanowners. i wonder if it gives a reason why retail sales challenge at the moment. >> no doubt. influence by consumer. the outlay i think there's also a shift in the nature of consumption away from goods more towards service and experiences and we're probably seeing that manifest in the retail sales numbers. that's probably continues over

time time. >> okay. thank you. >> markets in range of new highs. bob, good morning to you. good to see you again. >> are you feeling any better about retail this week? >> my view is that things will get better they think it's going to get better because it hasn't done better. i think consumers will spend some of their energy dividend. they haven't done that yet. a job growth needs to stay good but not great. maybe see somemore increases in wages. it's not going to be a home run but i think we get singles and doubles here and the economy gets better. for the market carl it's amazing to me how hard earnings have come down since the fist year and how well the market has

done. >> yeah, we've had a couple of folds over the last couple of days saying two things. one is that employment is a better indication of what's happening than overall gdp itself. we've heard about the seasonal arguments and now today goldman says why aren't retail sales doing better with low gas prices? maybe half of that. there's a promise of that eventually being delivered in the coming quarters. do you buy that? >> i agree with both points. >> it takes consumers a while. my guess is that's why i have confidence that's going to improve this year.

>> the employment figures we've had since they met, where are you on interest rates? are you where you believe they'll get one height in september and another by the year end or do you suggest they'll be lucky if they push through this year? >> i'll have the argument they will do one. i think they want to get on with it. i think they need to get on with it. the economy justifies low fit funds rates. not zero. >> do you have a feeling of how the markets will react to that after so much talk and preparation? >> yeah it seems to me that a historical pattern will prevail. that is for volatility and bumps along the way, but ultimately higher because it's raising the rate because things are going

better. i think the same thing on the other side for the bottom market. i think the bottom market will struggle and interest rates will drift higher as it moves at the short end. some argue should have done it a long time ago. >> 3004 the title is what rising interest rates mean to you. can the economy handle that can housing handle that? >> i think it can. if the rates are still low relative to most of history and i think it's about confidence and jobs and income. if that's there, people see more in mortgage. >> bob, good to see you. talk soon. meantime, vmo holding the market conference here in new york city providing an indepth look for ag industries. sarah is there. what can we look for today? >> good morning to you carl.

the top of the conversation is the changing way in which we eat. the trend which is main stream at this point is for healthier, organic fresher food and protein. that's what the food companies are presenting here. one of them is kroger. kroger has been way out front and early on this trend for healthier and organ ek. no wonder it's on a hot streak. you've seen that in the stock action. it's continuing on into this year. the question for rodney we're going to have exclusively here coming up in this show is how to continue, what does he think of some of the competitive moves his competitors are making like target this week. they're going to focus more on the organic products. what about whole foods moving into the concept of the a cheaper, smaller ma lineal focus

and by the way, there's a big merger brewing over seas with a big footprint in the united states which could create the fourth biggest grocer in the country. a lot of new topics to talk about. we'll be bringing you the interview in a few moments and see if the stock will continue to be a stand out guys. >> see you in a few minutes sarah. up next does time warner table have a new future? squawk on the street comes right back. then it would be easy to know everything about that one breed. but in fact, there are over three hundred breeds of dogs. because no one can be an expert in every one... an app powered by ibm watson will help vets tap specialized knowledge in the cloud for every breed... and whatever else walks, flies or slithers through the door. ibm watson is working to make medicine smarter every day.

welcome back to squawk on the street. large deal this morning in the cable industry. a telecommunications broad band video telecom provider outside the u.s. largely in france and a number of other markets around the world agreed to acquire 70% of communications this morning. southern link, a million and a half. much of it in the midpart of our country. sort of encobbled together overtime by a management team. they will stay in to a certain extent and seek 70% ownership. $9.1 billion. that is the purchase price. that represents for the nine and a half times that is being produced by this accompany. about a $33 billion market

value. maybe more today. it's getting rewarded by the shareholders for the deal. it's not an unimportant fact to remember. they have been very aggressive using, of course, quantitative easing in europe being able to issue debt at extraordinarily low rates. level up and buy assets. you can see that 11th in the stock price quiet significant this morning. it's investor base. they're rewarding it for this deal. again, i pension mention the high multiples. they're saying we do things this way. we're going to be able to take out of the business and keep it closer to 7.6 times. it's not like you're getting much on the side that are fiebl.

the bigger question do they look to con sal date the cable industry. the accompany has been aggressive. it's built up over time and certainly, that ability to boar borrow at an extraordinaryily low rate. it's a positive for them. time warner cable becomes the question mark. we know it is likely to enter negotiations, not with charter communications which wants to buy the accompany. the question becomes what happens is really interesting. what i can tell you is there's an outreach made recently and we said hey, we have ambitions for the u.s. and aspirations to acquire here. this is before the field. we want you to at least be aware of our interest as we are aware of yours. one other thing i would mention here, as far as the ceo, it was

on the directors proposed by charter back in february of 2014. interesting, he was one of the directors put up by charter. it raises the idea that there's a possibility of a joint here. you never know. i'm not telling you i know this. this is speculation. but certainly something as well to keep in mind as charter will continue to try and now time warner perhaps tripes to get as high as possible. >> glad you mentioned that. he put a accompany up for sale and if these guys are serious, they're not going to stop. >> that's another property they would look at. up 11%. >> when we come back a first look inside what steve is

trading for and now he's trying to reshape his business. later on we're live at spotifie spotifies big event. >> that is the question. over behind me in just a few minutes we're expecting live streaming video features. we'll see what more they might be able to do to get the free users to pay up. that's what a lot of record industry people want. weevil we'll give you all the details coming up on squawk on the street. good. very good. you see something moving off the shelves and your first thought is to investigate the company. you are type e*. yes, investment opportunities can be anywhere...

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founder steve trying to revamp his business including the trading floor in connecticut. that's where we find kate with our first look. >> hey, carl. thanks so much. as you just mentioned we're live for the very first time in sanford, connecticut on the

trading floor belonging to steve steve. he's over my shoulder now. he's at his own trading desk making trades. he was the master mind behind the hedge fund that went through a number of difficult years with a setment in 2013 and a guilty plea to insider trading. since then turning the firm into a privately held family office. he's made a number of changes in the last year or so since 72 went live. he's replaced the entire executive staff. we're going to meet him later today and bring you updates. he's made a number of changes to make it more friendly to work here. he's installed a lactation room nap room and many remember nations to the building. he's continued to make big money

in the markets. he beat the s&p generating returns north of 14% for gross profits up to $3 billion. that's net of fees. for the first quarter of the year he was up 7.8 percent. we're going to talk more to president doug as i said, buysguys, a little bit later. he's helped reshape the culture adding surveillance among other things here. that said we were not able to get access on camera to steve or talk to him and still remains a very low profile shop. this is new to them to have a camera in here. still limitations to what we can learn but i look forward to hearing more and bringing it to you guys on power lun. . back to you simon. they're a family office. i'm curious to your take on the

willingness to let us in with the camera although they won't go on tv and what can be done down the road. >> i think steve has said to people in the last year or so privately, they want to be the premier firm. they're working on changing the culture as well. there's a number of legal issues playing out. when they're resolved i wouldn't be surprised to a return to managing public money. as you know recently set backs for the u.s. attorney in the southern district when it comes to a trading case that is needed to some of the cases that effected the traders including michael michael steinburg. that will have an impact on a separate civil case led by the scc. long story short it's going to be a couple of years before the legal issues are fully resolved. once they are, however, i

wouldn't be surprised to see a number of growth changes or potential return managing public money. they're not saying that now. they're focussed on making it the best shot they can make it. >> yeah. getting a camera on the floor. thank you so much. our kate kelly joining us. we're going to get oil inventories in a moment. it's been a interesting week all over the complex. let's get to the news on that. >> hi good morning to you, carl. we just got the data from the energy department. looks like a drawdown of 2.7 barrels last week. you can see we're losing ground on pricing here. we have about 85 crepts up now. we're up $0.60. 58.54 is where the july contract is trading at the moment. a couple of things to keep in mind, the first isty a five year average. slightly more than that. the last two reporting periods have shown 6 million barrel

drawdown. we're starting to make some significant progress here. traders are also going to be looking at the refinery utilization rates. we had unexpected problems last week. we're going to see if those are increasing. i want to point out gasoline saw a drawdown of 2.8 barrels. the question everyone is asking are these draws between crude and gas now because we're heading into the memorial day weekend and the driving season is kicked off. will we see that in a few weeks and see it trail off and prices go back down in the fall? that's the big unknown. back to you, simon. >> thank you very much. straight ahead on the program, sarah's exclusive interview with kroger's ceo double bubble cincinnati after this break.

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you can even check your connection status on your phone. now it's easier than ever to manage your account. get started at xfinity.com/myaccount good morning everyone. i'm sue. here's your cnbc news update this hour. authorities find five of the world's largest banks $5.6 billion with four of them pleading guilty to manipulation to foreign exchange rates.

a cruise line ship which ran aground after leaving bermuda yesterday and was later floated off after high tide is now docked back in bermuda. no one among the 3,500 people on board was injured. a pipe lean ruptured off california near santa barbara yesterday dumping tens of thousands of gallons of oil in the pacific ocean. officials don't know how much was spilled or what caused the rupture. as you can see, it's about four miles wide and very prestine beaches. she was sentenced to sex years in santa cruise county jail but

that includes time served. that is our cnbc news update at this hour. back to you. >> fema hosting its annual fund to market conference here in new york. that's where we find sarah and she brings us an exclusive interview. good morning, simon. >> good morning. i'm here with the ceo of kroger who just slammed it in new york city from cincinnati ohio. i think we should start broad. the topic on wall street now is what's going on with consumer? pretty mixed signal. you have 2,600 grocery stores across the u.s. what's your sense? >> overall, pretty mixed. if you look at the third and fourth quarter, some of the things we talked about then we use to get better but very slowly. we don't have if you look at like starbucks and those

departments that continue to grow, we just reintroduced our value products and it has growth equally as well. so its very fragile. >> high end and low end. >> very fragile. people on a budget are paying attention. >> what's the component? sit wage growth? >> i think wage growth is part of it. obviously, helping some. you know you really need a little bit better job growth, better wage growth. >> let's talk about kroger. 45 consecutive same store sells growth quarters. 10 years of improving markets there. the question investors have is is it sustainable? how do you plan to do that? >> total expectation and it's really our associates do a fantastic job to continuing to take care of our customers and getting better and better and that's really the course. we continue to then invest more capital and building more stores

and we're using our technology and data if were thefor the benefit of our customers. >> what is the secret sauce there? what's the edge they're giving you in the retail environment in. >> we just had a new agreement where we continued to like their products. we have a 54.81 that focussed on kroger and the biggest thing is when you're in retail everybody has an opinion and it keeps you honest. so you really look at what a customer does verses what he thinks. that would be part of it. part of it is identifying a trend in terms of where the customer is headed. if you look at what we've done in natural foods, that was something. >> simple truth. >> simple truth has been a huege problem. >> is simple truth whole foods's problem? >> let's ask whole foods that.

i think whole foods does a great skrob and continues to grow. >> what do you think about the idea of smaller cheaper stores they're trying to do? >> it will be fascinating how their customers react to it. i'm sure i'll be there early on to see what it looks like along with a lot of customers. it's always harder to operate multiple formats and it's one of the strengths kroger has had. it's worked well for us. whole foods, time will tell. >> what areone of the concerns is higher oil prices. we asked for a rebound in oil and what it's going to do for your margin. >> oil prices the biggest thing will be what does it do to individual household budget but. >> saving it and not spending it. >> which is good for us. that means they haven't been spending it just a little tighter. it's not something they're going to take away from us. one of the things when you have 45 consecutive kwautquarters, you're

reacting. >> the other concern i've read about recently is the low food inflation. walmart decided deflation in dairy and other foods. >> right. right now we have deflation in produce and seafood, dairy. if you look over all we still have inflation and if you look at where inflation is tracking it will be 1-2% and we expect it still to be at 1-2%. it's where inflation is and what we've been thinking it would have been. >> let's talk about the industry. your number behind walmart considered the best grower. there's a potential merger brewing overseas with an impact in the united states. in terms of u.s. footprints how will that impact you? >> we've competed with a little bit for years. both are good operators.

whenever somebody mergers, it creates opportunities. you have to do a lot of work behind the scenes. >> like what? do you have to go out and get bigger? >> no it's in terms of worrying about computer systems and things behind the scenes. it creates opportunities to take care of the customer. we don't, the votes are a good size. we don't think there's going to be that much of a scale for them. >> you're not worried about it. >> we look at it as any other mernler and it creates an opportunity and how do you take advantage of that? >> how do you think of mergers? are you looking at smaller ones or do you think there's potential for another big one? >> on mergers, it's been the same for years. we look at probably just about anything available. we don't bid on too many things and we're really looking at what does somebody bring to kroger

verses what kroger brings to them as well. if you look at vitacost and jeter both great people great organizations and they've brought a ton of stuff. if you look at the things they brought, it's just as good as what we brought to them. >> it's helping you test out the idea of going online. when are we actually going to see some type of online delivery service across the country at kroger? >> we have 180 stores. we continue to role it out. we feel good about what it is and that's something we'll continue to go. clifr delivering to homes is a lot more difficult. we've tested it for years in denver colorado. >> when it comes to actually going online. do you see where we're going to be getting our groceries online 10-20, 30 years down the road.

>> i think it will always be an and. look at customers that engage with us. they still come into the store for certain products. sometimes if you don't plan well enough in advance, forget family and friends coming over at the last minute they still have to run into the store. we don't find customers not still going into the stores. they just do both. i think he'll always have stores. i think online will be significantly bigger for the business as you look at in 10 years. >> always good to catch up with you. thanks for talking. that's the ceo of kroger here. farm to market conference. actually about to get on stage and present the 700 investors, back to you guys. >> thank you very much. when we come back we're live at spotifies big event to see what they're going to unveil but the accompany's adviser joins us

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make their communities the best they can be. building something better for all of us. down at the bottom industrials so far today and we'll get more back at hq. >> good morning, simon. weighing the most on the s&p 500 today. among the laggers, american airlines and delta down. the horse performer so far fuelled in part by the accompany's international

expansion plan. the stock is making its worst day, market's worst day ever since 2011. the airline sector overall went for a lot of focus today especially because of the move lower. showing really interesting signs. >> yeah, of course, that's ffr last year as we all remember. time to go to chicago and check in with rick. hey, rick. >> good morning, carl. hopefully, all the chicago stayed up until 1:00 a.m. watching the hockey game. this is about chicago, illinois this is representative. thank you for taking the time. >> thank you. it's a pleasure to meet you. >> all right. simple question. are we going to be able to pass type of reforms needed to address the mountain of underfunded reliabilities we face? >> i don't see that happening. we've done nothing but just keep

no work on bills that don't matter. nobody's serious about reform down there except for the governor. >> okay. if that's the scenario here's our buckets that we have to look at. there's pending legislation and municipalities can go or default. if you don't think reform is practical or going to happen is there any other bucket i'm missing? >> there's not. i think though given the budget pressures that chicago public schools have and the city of chicago has itself, when they actually have to make a payment let's say a teacher salary and they don't have the money available to do that, when you start to see massive lay offs maybe that prior to bankruptcy prior to going to the fall maybe that's the pressure point that has to occur.

we are there. they cannot make the $600 pension payment. chicago can't make. >> 2.2 billion, the bigger payments. >> that's correct. they can't make that. chicago can't make their $1.1 billion pension payment that year. happen. >> when we have tax hikes in the past, in the 2011 tax hike i went into this in great detail yesterday. 90% of every dollar collected went to the rear-view mirror. in other words, and they do great jobs. we're not arguing that. teachers policemen, firemen, they're getting that most of them long retired. so the 10% that's left of that tax hike are for the actual people in the community living here now that need services. where's the money going to come. the tax hikes can't be big enough. even if they are what's going to prevent people in the community that live in various places like rockford what's going to prevent them from just leaving? >> that's why we lost nearly 100,000 people last year. that's why we're still down 236,000 jobs since the great

recession. that's why illinois is struggling. because we don't have the growth. people know what's in the future. and while it looks like a tax hike. my opinion is we need big strong reform and we need to get it now. we need to hold the line on everything else until we get the reform in place. >> many believe that all of this started in the negotiations of 1981. we can't go into detail. but quickly, we're running out of time. it's taken quite a few years for this to metastasize the way it has. you're looking to bring regimented reform in an orderly process over years, is that correct? >> that's exactly right. because we can't build a budget for just the next year. we need to build a budget that's good for the next generation. and until we do that until we get somebody who looks like a calvin coolidge out there that looks at everything. like we're going to cut red tape. we're going to white tape. we're going to look at everything we can save money on. we don't have calvin coolidge yet. i think the governor wants to be but i think he's blocked right now. >> representative it's been a pleasure and may the force with

be you, we're all rooting for you, rooting for next democrat republican or independent that can address this issue. hobbs, simon hobbs, back to you. after the break. back to business the chairman and ceo of johnson & johnson speaking in a rare exclusive interview this morning. find out what he had to say. importantly about the company's drug pipeline. "squawk on the street" will be right back.

johnson & johnson holding its pharmaceutical analysts meeting today in new jersey. the ceo speaking out in an interview this morning. our meg tyrell at the meeting with morning. >> hey, carl so j & j laying out its plans for growth for the next few years. its pharma business is the largest, fastest growing portion of all of johnson & johnson. but they do face some increased competition over the next few years. up to a third of its pharma business could face generic or biosimilar competition between 2017 and 2019. so really laying out where growth going to come from we spoke to the ceo alex gorski this morning. take a listen. >> if you go back since 2009 we've actually launched 14 compounds and now if we look forward between now and 2019

yes, we expect to have about ten compounds. now of course you're going to have some that don't turn out quite the way you expect. but overall we're very confident in the ability, particularly based on what we've been able to do over the past several years on our ability to impact patients and drive this kind of innovation going forward. >> now the company also said today that it plans to file for approval of its multiple myeloma drug by the end of the year based on mid-stage data that will present in a couple of weeks at the asco cancer conference, a little earlier than analysts expected it could bring up in $1.3 billion in sales in 2019. we talked about m&a, the company has been active among mostly smaller deals, announced one yesterday with achillion, the stock is trading down today. investors may be hoping for a total takeout. it's just a partnership deal and an equity stake. also a bidder for pharma cycleix, we talked about alex

divorceky ky gorsky about this as well. >> whether it's an area that's in oncology viralology. whether it's neuroskips we make sure we're always on the hunt. looking for those new opportunities. >> a lot more coming up the rest of the day here j & j will bring it all to you. simon, back to you. >> safe journey back meg tyrell, joining us from new brunswick. let's say hello to kayla tausche. >> we're live from the spotify event in new york what does the $8 billion music streaming company have to unveil? and the ceo of roku will join us on the company's seventh birthday. talk about the future of the streaming landscape and what's the deal with yahoo's alibaba spin? coming up next.

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