from smart phones as the enabler of new product. wellness is a clear opportunity. apple will be player. fit bit is a player. i think that scratches the surface. >> it's been a pleasure. thank you for joining us. >> joe, cheer up buddy. it's going to be okay. >> thank you. i feel better. thanks, pal. >> that does it for us today. join us tomorrow. right now it's time for "squawk on the street." good morning and welcome to "squawk on the street." i'm david faber with jim cramer live from the new york stock exchange. carl quintanilla has the day off. let's get a look at futures. as we get ready to open the morning 30 minutes from now. we are poised for a lower open. a lot coming back to that ten-year note yield.

look at that. 2.341%. the german bund, almost 1%. for a ten-year paper out of germany. that is part of the market story. let's get to our road map. it starts with t-mobile and dish networks. i can't confirm they are in talks, but this pair has a long road ahead of them. it could lead to a dead end. twitter getting a downgrade even as anthony noto steps up his defense of the company's strategy. round-about retail. nordstrom, costco l brands all with very different reads on the consumer. there are talks going on between dish network and t-mobile. i should add its parent deutsche telekom which owns as much as

65% of t-mobile. they have been of on and off nature. nature. the ceo of dish is a difficult negotiator. seems committed, backs away. where are they right now? there is activity. underwood dish would be the acquiring entity for t-mobile. germany's deutsche telekom would

own a significant stake. the deal would largely be in stock. the ability of dish to lever up its balance sheet. they could do involvement could they do the $17 billion in cash they offered two years ago as part of their deal? there is a lot to go through here. you could say, i'll be chairman you be ceo. i think you're doing great work. strategically it makes sense. then i want to get down to the brass tax of what are we paying? what's the structure. you're deutsche telekom. what are our minority protections? i know you don't do that great with partners. that doesn't mean an entity problem you seemingly have. the s.e.c. telling you at dish

we are not sure we want to give you those discounts, the $3.3 billion in discounts you got when you bought that spectrum? if i'm t-mobile i want to make sure that's resolved. that is a big number. you can advance down the road and you can have talks that make a lot of sense. conceivably will end in a deal. when you've got those issues in front of you, it's no guarantee. >> i have to tell you, when i first heard it it's so brilliant. we've been talking about it would make sense. one of the reason why both stocks are running is the brilliance of it. it creates the player we have all been waiting for. it's the world at&t directv, verizon fios sprint maybe left at the altar because of other issues involving anti-trust. i think your reporting dove tails with the notion both stocks could be up because it makes sense. not because it's tonight -- happy birthday john legere.

when i tweeted him to come on he reminded me it's his birthday. it's so strategic, john would want to play because john said over and over again he wants to create wealth. you know charlie ergin, i don't. i always thought empires suit him. >> he's been brilliant, i would argue, in moving away and diversifying away from a declining business. >> yes. >> buying the spectrum the way he has. not putting it to work which is the key question. he has until 2020. the clock's running, but it's still got time before he has to use that spectrum. and creating sling tv which is not an unimportant part of dish's business. we are going to start to get numbers. apparently this meeting tuesday with analysts in colorado he talked a lot about sling. the prospect of wireless video, mobile video, fixed wireless

broadband into the home. you can go back and look at the sprint press release from two years ago in april when dish made its offer for sprint. look at some of the things they were talking about. nationwide bundle in and out of home video, broadband, voice services. fully integrated nationwide. it's a similar construct. they have a huge spectrum portfolio they would bring to a spectrum start-up company. we talk about it. we had john legere on. we had charlie ergin. take a view of our february interview with john legere. what is he going to do with all that spectrum? >> biggest question of all. he's got a great portfolio. you've got to like watching him in the auctions right? he sort of like was the patriots, right? he didn't make the rules. you made the rules. he just played them extremely well. he's got a great portfolio.

he's got to do something with it. even if he wants to sell it wholesale, he's got to build it. i play 2 game all the time. play from a position of strength. charlie ergin's portfolio, would that go great with t-mobile? in a minute. >> i was with ergin in arizona. >> love affair going on between you and john legere. he is always happy to say nice things about you and you say nice things about him, why is that? >> i think we like what he's doing. he built a brand not only of t-mobile, they are taking on the big guys. they are attacking the pain points to the consumer contract, rollover data international roaming. that is striking a chord. it's an impressive turnaround. we are innocent bystanders as we look at that. >> almost as much spectrum at dish as they have at t-mobile. >> we do.

we may have more spectrum. >> they are a wireless company, you are not. >> we are going to be a wireless company. we are going to get in the wireless business in some form or fashion. we'll be in the business. that spectrum will be used and we hope to compete. >> not a big surprise they might be talking. >> the uncarrier. i wore this because of john. i thought he would make a surprise appearance. makes a ton of sense. one of my predictions is these stocks will not necessarily give up their deeds, unlike the sprint situation which needs to refinance. t-mobiles number one right now in terms of gaming. ergen is a rebel with a cause. legere is a rebel with a cause. two rebels get together. they have a revolution. i think that's what they want. these stocks will not come in because you have been frankly, analyzing where there's smoke, i've been saying there's fire. >> again, i think what needs to

be said here is that while there are talks, they still have a lot of hard issues to deal with. again, dealing with charlie ergen, he has a lot of different hands he can still play. i continually uses the analogy i play a lot of poker, he says to me and i fold most of the time. i fold, fold, fold. you know when your hand is the one you want to play. we'll see how he decides he wants to maneuver this. if you are on the other side of him and you're legere and deutsche tel, a lot is principal to principal. you are always wondering, is he really there to make this deal happen? >> i think i tweeted, i got up very early this morning and i tweeted john to try to get him on this show. john answered immediately and said he could not be on the show, it's his birthday. there was a tweet before me that inspired this. we have it. >> he may have removed it.

what does it say? >> there it is. snarky sensational and shallow look at a rumor that deserves no comment. that doesn't mean it doesn't deserve our discussion about it. john has been candid. he said if there is something to say, he would come on even though it's his birthday. obviously just like with marc benioff and the alleged talks with microsoft -- >> they were real. >> excuse me? >> they were real talks. >> i meant mark was not able to tell me. hey, jim, we are talking. let me come on the show. john can't say they are talking. these guys are scrupulously honest. i talked to john in san francisco. john wants to create the greatest uncarrier. this would be another way. you are dealing with men of principle who, yes you're right in terms of the deal-making, that could be a sticking point. david, they want the idea of the company.

sometimes i find that can trump anything. two no trump, no. >> german portfolio and this is one significant asset for them. they can roll into something that will give them more value. when it comes down to getting a deal done i say we'll see. it could take you four weeks to do something like this or you never get to it. they don't get the minority plot protections they want. >> all that's true. we know the principals. these are two amazing men. okay? amazing people who have fun. that's why i think this is not two stodgy guys with a lot of lawyers around them. i'm talking to john, where are your lawyers? he's like shakespeare about lawyers. >> it's true. when you get down to negotiating contract, you need lawyers. you do. >> how about if you have lawyers you roll? >> before we move on the one thing, to the extent t-mobile --

you just wonder is there somebody else who might have assassinate interest? does this preclude dish from doing something down the road with google? probably not. what is our parent company thinking when it comes to wireless is a key question. does it regret having sold that spectrum? remember that spectrum they had? i don't know the answers. certainly things to keep in mind as you consider this entire landscape. >> that's why i ask john about it. i'm not getting the denial. i'm not. >> right. >> the same way i know marc benioff and the others get along great. steve ballmer never gave mark the time of day. steve is not in the playoffs. >> wouldn't that be fun? although a couple of years in it could be a disaster. who knows? >> no. i thank john for making the whole game fun.

he does. he makes the game fun. it is a bit of a game with these guys. >> without a doubt. >> these guys are stand-up guys. i'm just saying. >> the directv, at&t people are loving that deal. we never got to anthony noto. >> he's got the little league. >> anthony noto speaking out. axel weber. weighs in on europe's economic challenges. what's the stake here in the u.s.? another look at futures as we get set for the open 17 minutes

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>>. >> twitter receiving a downgrade from hold to buy. taking a conservative view at their long-term growth prospects and user trends appear to be less attractive than facebook. last night at twitter annual shareholder meeting, ceo anthony noto defended the company strategy. >> in terms of profitability, it's important we don't short change the long-term size of our company driving profitability today at the expense of investing those dollars to unlock the value for u.s. shareholders. we are taking a prudent approach that is not unconstrained. still holding us responsible for not having the ability to spend as much as we would like. >> what are your thoughts? >> okay. >> anthony noto is an old friend helped to bring the street public. periscope i think is actually where i want to go.

i think a lot of people misinterpreted the note that sacco put out. it's 8,000 words. people talked about it without reading it. it's positive about twitter. there is nothing negative about twitter in this. it's got millions of ideas. >> why should we listen to this guy? >> the biggest backer of twitter there is. >> sacco. gave you a hard time about periscope in san francisco. >> no he didn't. we were talking about i got into say it's time to be more critical. this is 8,000 words about what twitter can be. it's brilliant. i would convene a board meeting and say who is going to be in charge of executing this? it would make it so people -- >> you are going to take some guy's plan and execute it? >> this is not just some guy. i threw it down and said i want to be as smart as this guy, but

the clock is ticking for me not him. >> somebody comes in an activist investor -- this is not the case here. >> no. this is friendly. >> management is like we thought of all those things. this is why we are considering doing some of them or not. >> i think there are sometimes you have a white piece of paper and there are smart people come in and say this is the way -- this reminds me of what ballmer wanted to do in the famous oxford discussion he had where you wished he had done so many things. this is the wish list. my charitable trust owns it. let's go back to the downgrade. he said they are going to miss the quarter. they are going to miss the quarter big. monthly average users may be down. in this note he says let's stop it with the monthly average users. this is reflection it's not

doing as much as it should. unless they say we are adopting many of these, therefore you are not looking short term. this chart is trying to base. if they miss the quarter, the stock goes to the $20s. my charitable trust owns it. petrified about that. short term and long term are different here. periscope is brilliant. there is a new sound app i'm trying that will be brilliant. >> sacco said the future could be google. listen to what he had to say on "closing bell." >> it's a fantastic use of google's cash. it's pup to this board to figure out if that is something they want to pursue. i don't think there is religion remaining an independent company forever. right now, i think a lot of the board members see these types of recommendations, see this potential for the company and realize there is value keeping it independent for now. if they have any doubt or start doubting those prospects, they'll look for those other options. from the google side it's an

instant fit. >> instant fit. they could hit the exit button according to sacca. >> this is a company that reminds me of camelot. >> really? >> camelot. was a great idea the round table, except it didn't exist. >> richard harris? was he in "camelot?" >> robert goulet. richard burton. >> i'm thinking the song. >> it's not supposed to snow in the month of june? >> we've got his mad dash next. there are a lot of other stocks to talk about. we'll get to a lot of them. take a look at futures. coming off a very weak day for the bond market. >> what's bad for them in europe is good for us. i like this down opening. it's all about the euro. not the base and not just twitter and t-mobile. we are getting criticized for

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40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.

fire eye visa. >> it's thursday already. >> almost time to go to ocean grove or montauk. >> not going anywhere. >> i was in the hot tub last night. >> fire eye is where we are going to start. >> more information than you needed. two of my favorite ceos are david dewalt from fireeye and charlie scharf from visa. fireeye had a great meeting. dewalt is bringing it.

don't forget. if you get fireeye, if you hire them the government has immunized you for $1 million. they want so desperate to have everyone focused on cyber terrorism. if you have charlie sharp who is revered in business everyone is going to follow him. they are. they are brilliant. we talk about execs on the show whether it be charlie ergen, john legere. i want to point out. these ceos some are larger than life and they like to make deals. you must listen up. scharf is amazing at visa. this will be the beginning of what people recognize in cyber security. most important issue they face. >> palo alto hung in there.

>> we'll be looking at a lot of other stocks. opening bell just a few minutes away here on "squawk on the street."

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you are watching cnbc "squawk on the street." the opening bell will ring in about a minute. we haven't talked broader market. >> no. >> german bund. our own treasury. the euro. this was the conversation yesterday. it set up for a very interesting day as we saw yields rise to a high they haven't seen quite some time. the 10-year note in this interest. >> interest rate is less important than dollar going down, euro going higher. it's hard to mount an advance on the eve of the big employment number. hard to mount an advance without this being solved. you can't get too bullish without an opec meeting getting past that employment number getting past that and greece getting past that.

we've got road blocks. not a cul de sac, road blocks. >> the opening bell going to be ringing any second now on this thursday. the realtime exchange getting itself together. here's the big board. transportation and infrastructure investors -- those chinese took it to us on infrastructure yesterday. >> they are highway builders. >> at the nasdaq dinner with the boys a new comedy off broadway. way to go. >> what the heck? why don't we advertise barsa miguel there? 27 out of 30 stocks in the dow jones average are weaker. when you see futures down horribly on the idea europe basically, they may not be able to buy back as many bonds. that is counterintuitive our

markets are down. begin the fact 27 out of 30 unitedhealth not benefitting, that's part of the rotation in health care that ended. home depot being a u.s. company and verizon not benefitting because it's possible rates go higher. that makes that stock less attractive. the other 27 all in the camp they need a weaker dollar. it's hard to predict chaos, 10% decline. those don't add up. doesn't mean we can't advance ahead of an opec meeting, unemployment number and greece. i had one ceo that said please stop talking about greece so much. you are making it bigger than it is. 11 million people versus 177 million people. >> populationwise, it is a speck. what i like to look at is that german 10-year yield. it does seem when it is moving up, our market seems to follow to a certain extent.

>> that's a mistake. >> remember the focus on negative interest rates in europe. it was incredible. >> you talk about subprime. >> negative seven to eight years out on the curve to. 0.6 on the german bund and now up 0.84%. that's moving the other direction. >> they need to do transportation and infrastructure there. trillion dollar auto bond redo or whatever. they need to put people to work the rest of europe. they need to help the rest of europe. they have been the biggest beneficiary of the weak euro. i question whether they are selfish. that is something you are not supposed to -- is a country selfish? people think greece is selfish because they got all the money from everybody and didn't privatize effectively. they haven't taken the cuts people want. there is this moral imperative

that is dictating europe when what they need is to get moving. that's why greece is so important to me. got to get past it. >> back to this country. talking about getting moving. the read on the u.s. consumer has been back and forth, back and forth. >> yes. >> look at auto sales. you think one thing. you look at retail to a certain extent, five below. costco same-store sales were flat in may. u.s. same-store sales up 2%. international stores fell 4%. >> you get translation numbers. 27 dow stocks do better. if you look at pvh which had down numbers. people saw a 10% increase in same-store sales in the key calvin klein division. people are betting that this is real. it's not just a short squeeze in the euro. i do think the euro got way too weak. i also remember what happened to

the yen. they decided to weaken that forever. that is a market closed to us. we pretend it's open. >> right. their competitors are able to get higher on the run. we talked to meg whitman from hewlett-packard. she made the point time and again in terms of printing. they are seeing the japanese competitors really able to underprice them. >> right. only sales force has great numbers. cisco used to have dominant numbers in japan. i mention cisco because there are people upgrading alcatel lucent and ericsson. that is a mistake if the dollar peaked. >> to round out retail here. l-brands 5% increase of sales. >> we have j. crew numbers today. they are private. >> they have outstanding debt.

>> lesley wexler is an amazing man. he is not a publicity hound. he never comes on. you go to columbus ohio. they might call wexler town. he is an incredible visionary. he doesn't get credit because he doesn't seek it. that company is fantastic. >> right. mickey drexler, who we haven't seen in some time. >> no, we haven't. we are not going to see wexler. he is so fantastic. oh imf urging federal reserve to delay rate hike until 2016. how many divisions does the imf have? >> that is not so funny, right? >> no. that is stalin. >> yes. dish network up almost 7%. that stock is getting a big boost. the strategic rationale embraced by all that spectrum. the idea of being able to link

that with t-mobile which has been spectrum starved, capital starved in the ability to get more in one being embraced. mobile video. sling tv has been a success so far. that being able to offer people broadband in their homes, fixed wireless. these are the keys, this is what they are playing to in terms of the mobile phone jim is holding up there. it's being embraced right now. again, just to tell people yes, they are talking. yes. they have been. they talked many times in the past and they haven't talked. >> this is the longest i've seen john legere not go on twitter. i'm not kidding. the reason that's important is because john is a forth coming by. he is itching to tell what's going on right now. >> there are always any number of things that need to be dealt with when talking about a significant negotiation. >> people don't seem to care. >> they may care when this thing -- if and when it doesn't make the finish line.

>> i would tell you t-mobile is not an expensive stock going into the high 30s even. particularly among millennials. i would like to focus on this for a second. this is the new samsung phone. this is aluminum based. he is not allowed to talk about apple. apple is aluminum. this is what people use to watch tv. >> can i see that? it's nice. nice phone. >> nice but just important. i want alcoa -- smart alcoa is in the f-150. what we need is for it to be titanium. aluminum is in the dumps. >> i want to get to steve liesman on hq out of the imf and

the fed. >> thajs. a thanks. the imf advising the united states to await the first half of 2016 to hike rates. echoing the bearish or dovish commentary we've gotten from some fed officials. saying the united states should wait until wages begin to rise until hiking rates. it's slashing its forecast for u.s. growth this year from 3.1% from the april assessment down to 2.5%. saying it doesn't see the fed hitting its 2% inflation target until mid 2017. right now, best we can assess the conventional wisdom is for september rate hike. the first one in what will be more than nine years. now the imf suggesting the fed should wait until the first half of 2016 before it hiked rates. >> thank you very much, mr. liesman.

>> imf urges mcdonald's to sell breakfast all day long. >> that's how denny's -- they would tell you that's their secret. the grand slam which i take it with lipitor. it's dynamite. >> a good combo. is that patented? >> if you go on youtube, there are 15 versions of grand slam. 40 million people plus infinity members of the gamestop? that is such a buy now. i didn't understand the transformation of gamestop where they sell apple in the hinterland which is anything west of the hudson and the world you and i are in. >> i know. we talked a lot about the prospects of the deal with t-mobile and dish. i want to hit this briefly. >> dr. phil frost put together an incredible company opco.

we've been behind it on "mad money." it's got remarkable formulations. he is buying bioreference lab. this will create a juggernaut. it's not just a lab. it's also a genomics lab. phil is a visionary. also a great philanthropist. giving away money when you're rich is good. >> malcolm gladwell took real exception to john paulsen. >> how we ought to ray the pay of politicians and give them stock options. we should get rid of the penny. >> i agree. >> phil frost -- you wouldn't believe the amount of insiders that buy. you have to sell it but this is a great combination. phil frost is a spring chicken compared to rupert murdoch.

he is 80 years old. >> rupert's not that old. bertha coombs is on the floor. >> we saw markets mostly lower in asia. what a lot of folks are talking about is the volatility we are seeing in the bond market. mario draghi telling investors they should get used to bond volatility. they had some this week. investors worrying about whether or not these high interest rates, whether or not the fed moves are going to cause folks to take pause. particularly whether it's going to hurt a lot of these companies that are looking to use debt to do m&a consolidation we've seen in health care. consolidation we are seeing in the chips space. whether that might give a pause to that momentum. the other thing they are watching is friday's jobs number. we are getting to that point where good news if it's too good is bad news. whether that's going to force

the hand of the fed. notwithstanding the imf to say maybe they hold off on a rate increase. the big moves they've been watching this week have been in utilities and transports. utilities have fallen here for a couple of straight days. they are down about 9% this year. folks are selling out of utilities. they bought back into transports earlier this week. not today. transports are lower. we talked a lot of discussion about her dow theory projections. we saw a big move up yesterday with a bit of short covering in the airlines which had sold off what was leading the transports down. we'll see if we'll get any follow through. we've also seen the regional banks yesterday were strong. kre, etf hitting a new high.

there are some participants that benefit from higher rates. the big question is will these regional banks start lending again? that's been the big problem. they are very, very skittish to lend. back to you. >> i think they want to. i think they are afraid. if you look at nonperformers, they go down quarter after quarter. the bank regulators come in. you need to have some nonperformers to be able to lend at a level that is sustainable 2% to 3% gdp growth. i think they fear the bank regulators more than they like to make a profit. if rates go higher don't be surprised if they don't do more commercial looks. >> the stocks until today had been responding positively. >> the rotation is into the financials. it's not talked about. jpmorgan has been the leader. goldman sachs. look at the way that stock has done. >> not to mention wells fargo

almost a $300 billion. >> charitable trust owns wells fargo because i think john stump is an incredible banker. from a birth farmer family in minnesota. these guys ought to be the financiers behind the legere/ergen. >> rick santelli joins us from cme in chicago. >> good morning. we know there is big data tomorrow. that might be impacting kind of the recent trends in interest rates. look at a two-day chart of 10 year. a couple of things should jump out at you. first of all, before our market opening, we traded up over 2.40%. it's a compelling chart. you can see the drift lower already started long before we opened. we did make new lows at the time

8:30 eastern data was released. productivity and unit labor cost were outsized in a negative way than many expected. maybe the best chart, if you want to keep it simple to look at is a five-year note chart year-to-date. why? you see that spike that equals the spike on the right side of the chart? that is march 6th that was a big day. 5-year settles at 1.69%. intraday late yesterday looked like they would close above it but they didn't. that's what many traders are going to be looking at as one of their key points. the rest of the curve, 10s and 30s surpassed that high. let's open up the chart and go to the 10 year from november 12th. that's the last time they closed up here. you can see we took out the march 6th high yield. the longer the maturity the more aggressively. look at 30-year bonds. march 6 doesn't stand out. that is something on the yield curve that traders have been

dabbling with aggressively. if we look at bunds. intraday when we were close to 2.43 in 10s they were trading away from 1%. they eased back. chart reveals these are the highest yield closes since around halloween. two-day italian 10 years, they traded almost up to 2.30%. once again the dates in terms of last fall we comp to even on weaker economies in europe come many back to the same. it's a good high correlation trade, whether you are on the right side or not. foreign exchange has been volatile. not necessarily as volatile. this morning, the dollar index grabbed some territory back. look at a euro versus dollar. this is very fascinating. let's look at it since may. it hasn't done a lot. it's not on the extremes. if you want to see the mere image called the dollar index, there you go. starting in may.

back to you. still to come who is up and who is down on the new fortune 500 released this morning? editor alan murray will join us.

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christine lagarde speaking in washington this morning on the state of the u.s. economy. urging the fed to delay any rate hike until the first half of 2016. >> stanley fischer needs to sit in a room with her and listen to her. she is a person of the world and understands currencies as well as stanley fischer. this is right. >> why do you think this is right? >> i was talking to her about the weakness in america. the strong dollar is killing us. >> my lord how often are we going to have this conversation? we've had it the last six years. >> we are not lending that much. look at transports, they are horrendous. when the dollar started going higher, we settled into not being able to rally. the euro must get strong. ms. lagarde is very, very intelligent person. judge >> does she have influence with janet yellen? >> imf has influence with everyone. it's not the impossible mission.

>> i didn't say that. >> i think they are doing a new one. jeremy renner is in it again. >> really? up next. we've got stop trading with jim.

time for stop trading. >> i was talking about how crown castle sbi and american tower are screaming here. what's interesting, you pointed out a well capitalized competitor, dish and john legere's t-mobile might mean more towers. >> more spending. you've got to remember that spectrum is not being deployed right now you bring it over and you can match some of it. you've got to buy more stuff. more tower space. >> all these companies are well run. amt. these stocks are screaming. i'm not going to tell you not to buy them. the other group screaming, wynn resorts and mgm. these talks of tie-ups i mention -- i throw them out there and you shoot them down.

>> we are in a robust m&a environment. it's indicative getting topee where you can throw stop out and everybody is like oh yeah. >> when the first cell phone companies started getting together i thought was insane. it worked out. we had -- congratulations. your reporting on this stuff is -- >> listen. >> no. i'm saying it is. everybody else says what they want. you like to actually have the facts not get in the way of the story. >> we'll be following it closely. what do you have on "mad" tonight? >> i have carnival cruise. and alder is the hottest stock. biotechs, they are curing diseases everywhere. we can't talk enough about them. janet yellen felt they were run, but that turned out to be

premature. >> their ability to hit with drugs seems to have increased. >> the bioreference is about immunotherapy. i wish phil frost would come on. twitter moving up. >> have a great show later today. talk to you later. i will be in constant contact. what's europe economic challenges mean for the u.s.? we'll talk with axel weber.

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good morning. welcome back to "squawk on the street." i'm simon hobbs with sara eisen and david faber. carl is off. we lost 18,000 on the dow. this call from the imf to delay rate hikes means we cut our losses. crude trades at $58.57. >> let's get to the road map for the hour. fortune 500 list is out today. lots of newcomers. who made the cut? "fortune's" editor will join ug

live. >> axel weber will be with us live for an exclusive interview. what he thinks about the challenges facing europe's economy. plus high frequency trading and the iex crew. and later, alan schwartz the last ceo of bear stearns at the height of the financial crisis. he'll join us live for an exclusive interview. we'll ask him about those comments from christine lagarde head of the imf who just finished speaking. this is the annual update. big call out of the imf to the federal reserve. recommendation to stay on hold and not to raise interest rates until the u.s. economy is ready, holding it out to 2016. >> we have revised our growth forecast down to 2.5% in 2015. this is large die you to those

factors that affected the first quarter. but this is not my message. we believe the underpinnings for a continued expansion are in place. >> the imf's call for the fed to delay any rate hike till next year helping to importantly reverse the brutal sell-off that it otherwise gripped bond markets for days. not until a 30 basis point surge in the 10-year yields in one week. that is the euro zone bond market which had anchored u.s. rates low, broke down the sell-off in german bund spiking the yield almost zero towards 1% earlier in the session. huge moves this morning. joining us here at post nine third avenue management ceo. we would like to bring in john silvia wells fargo security chief economist. these are huge moves. first we thought we were perhaps normalizing rates. we have intervention from christine lagarde.

what should people make of it? >> i would disagree with the imf. my understanding is in april, their economic forecast was 3.1%. that was above the blue chip survey and above our expectations of 2.6%. i would support the fed raising interest rates, preferably in september. what you are seeing now is the impact of very very thin treasury sovereign debt markets throughout the world. much of sovereign debt is tied up in bank holdings and central bank holdings. so i simply disagree with the imf. i think the economy has enough momentum going forward. it's time to normalize interest rates. >> how should we stack the voice of the imf with its research abilities against the research abilities of the fed which is intent on some move and wall street calling for a rate hike? >> this is great market noise. it probably doesn't mean

anything for the real market which we participate in which is picking securities to invest in for the long term. tomorrow somebody else might come out and say something different. i agree with what john is saying. they should just lift off as they've been talking about this and directing the market to the place. get that over with so people like us who are are value investors, who invest long term can just let that noise go away. >> it's our job to talk about the noise here. >> i've got it. >> what should we make of the huge moves in the bond market? you are framing it because it's an illiquid market. when you see market interest rates rise by 0.3% in just a week, what should we make of that? >> the focus has to be long term. i agree what was discussed. i think there are two problems.

you are running from a market where the fed and other banks administered interest rates to a more free market open market movement. second, i think a lot of people were talking about buying treasuries below 2%. the 1% 1.5% moves. there is a lot of correction going on there, realizing there is economic growth. as we are seeing there is modest upward inflation pressure. it's not booming. the combination says that the interest rates were held too low for too long. >> the stock market is at record highs partly because interest rates have been so very very low. if this is a major turning point, if what the imf just said turns out to be just noise and rates are rising what does that mean for the equity market? >> i think the equity markets priced in already some move along the lines of what john was talking about.

securities continued to slightly inflate, as well. we think there is a real good call for certain securities in the u.s. we are bullish on the u.s. economy. we like the fact interest rates are rising. we are inenvironmentisting in regional banks that will participate in the success of this move. >> what happens if they don't? >> you know the securities have great balance sheets. there is a long-term fundamental play. >> it may be noise, but the dow just wiped out a 114-point loss on these headlines. how are we set up for the big jobs report tomorrow? how do you think the equity market will take if it we get a strong number? >> consensus is around 215, 225. i think the equity market will

take it positively there is good economic growth out there. certainly, when interest rates rise, as they have there are some leverage players in the marketplace who overstepped their position. on average i agreement the market will take it very positively. reaffirming good economic growth going forward. again, if you are long-term investor looking out six months two years, five years, you still have to be positive on the u.s. economy. >> we'll leave it there. sorry, david. >> on the dollar given you are also in europe i'm curious what you are seeing there. a little strength in the euro. what is your sense in terms of european economy based on investments you are making there? >> again we are looking for a good fundamental business wes great balance sheets staying power. companies that are going to thrive long term in the environment. we are bullish in europe too. not as bullish as we are in the u.s. we have individual selected

securities. like telefonic and deutscheland. individual companies that will take advantage of long-term rising economic behavior. >> we'll leave it there. thank you both. . >> wanted to get to a potential deal in the offing. last night "wall street journal" reporting on talks between dish and t-mobile. this morning we confirmed there are talks taking place, but there is a lot going on here that is certainly worth sharing in terms of investors as they try to understand what the likelihood of a pairing between dish and t-mobile is. while the two companies are in talks according to people familiar with the situation, those talks have been on and off again for quite some time. they did pick up with a more earnest tone or more momentum behind them after the conclusion of the aws spectrum auctions a couple of months back. they have yet to deal with many

of the major issues that come up in any negotiation. some that are somewhat unique to a potential tie-up between these two companies. the deal under discussion would be an acquisition of t-mobile by dish largely used stock would be used as the currency to accomplish that. charlie ergen would be the chairman of any combined company and still be controlling shareholder, if you will. t-mobile's very energetic ceo john legere would be the ceo of a combination. deutsche telekom which owns 65% of t-mobile would be a significant shareholder. while you have impediments such as getting to an agreement on price, you also have deal issues such as minority shareholder rights and protections that deutsche telekom feels needs to be in place to protect what would be a significant investment for it. a company that mr. ergen will be overseeing as its chairman and controlling shareholder. you also have questions about the designated entity dispute,

if you will right now going on at the fcc. where that agency is at least reviewing the discounts dish was able to take advantage of through using this designated entity structure to bid on $13.3 in spectrum which it only paid $10 billion. any number of different issues that stand between what are significant talks and a potential deal. as many people know it can be difficult to get down to the final details with him on a deal. there are no shortage of potential options he still has in terms of dealing with that huge spectrum portfolio he acquired over the last few years. nonetheless, questions about how he will put it to use. if we have time i think it is worth referencing two of our interviews we've done with john legere and charlie ergen. both men have almost been conducting a dialogue via cnbc. take a listen.

>> what will ergen do with that spectrum? >> biggest question. he's got a great portfolio. i've got to like watching him in the auctions. he's like was the patriots right? he didn't make the rules. you made the rules. he just played them extremely well. he's got a great portfolio. he's got to do something with it. i play this game all the time. play from a position of strength. charlie ergen's portfolio, would that go well with t-mobile? in a minute. >> love affair between you and john legere. he's always happy to say nice things about you. you seem happy to say nice things about him. why is that? >> i think we like what he's doing. they are taking on the big guys attacking the pain points to the consumer. contract, rollover data. international roaming. that is an impressive turnaround.

we are innocent bystanders as we look at that. >> you own as much spectrum as dish? >> we have a little more. >> they are a wireless company. >> we are going to be a wireless company. we are going to take our spectrum and get in the wireless business in some form or fashion. we'll be in the business. that spectrum is going to be used and we hope to compete. >> not exactly sure how. i would argue is a key road he may go down. we'll see how this develops. >> you should get a fee as the middle man if this deal happens. >> we'll see whether, in fact it happens. both stocks up sharply. investors reacting positively to the idea of a tie-up which would create a much more formidable competitor in wireless broadband and mobile video. >> deutsche telekom is still losing money on t-mobile. >> the voicestream purchase which ended up being the position was extraordinarily expensive.

that is one of the better investments they made. >> they view it as a global asset portfolio. they want to do the best they can. they want protections in any deal with charlie ergen. speaking of the m&a activity. we'll talk to a top deal maker. exclusive interview with alan schwartz.

the annual fortune 500 list has been unveiled. familiar names like exxon, pepsi, and new names like sales force and pepsi. let's bring in alan murray editor with "fortune" magazine. what are you trying to achieve here? >> well, this is a measure of size. it's very straight forward. one of the biggest companies in the united states. you know the interesting thing is because a lot of people think today, well do big companies matter? it's about uber air b&b. $12.6 trillion it's 72% of u.s. gdp, the most it's ever been.

20 years ago it was only 58%. back when we started this list in 1955, it was only 35%. so size matters more than ever before. that's why we do the list. >> why in this list this year are the profits down almost 13% on last year? is that because you are swapping people in and out? you swapped out some big profit makers? >> no. i think it's actually more cyclical. profits tend to be higher in the early stages of recovery. as the recovery matures, more money goes to wages, for instance which is a good thing, but profits begin to get squeezed. that's part of what's going on here. >> you referenced uber and air b&b. shouldn't you include private companies now that they've gotten so large outside the public market? >> it's a good question. i don't think they would yet have a prime spot on the 500, but we talked about this a lot.

you don't have the same quality of information on private companies, but we did a poll of the ceos of fortune 500 companies. one question was would you, could you manage your company better if you were private? if you weren't in the public markets? 84% said yes. if you really start to see a trend toward private markets, we have to reconsider that. >> just run us through the highlights. walmart is number one. apple is number five. >> apple is five. if you rank them on profits or market cap, apple obviously goes to number one. it's clearly the best performing in the top 10. frankly, a lot of the top ten companies by size by revenues have had problems in the last couple of years. walmart is an example of that. getting same-store sales growing has been a struggle. the two oil companies, exxon number two, chevron number three are examples of that. they felt pressure because of low oil prices.

you also have general motors on the list coming in at number six. obviously, the recall scandal, et cetera. i think mary berra has done a good job starting to turn the corner on that. it's been a tough year. apple is the one in the top 10 that shines. number 10 cvs health. you're seeing health care companies move up the list. >> that is a sign of the times. who fell off the list this year? >> we had about 26 companies that left the list. some of those were inversions which you talked a lot about. medtronic, mylan left the list because they are no longer u.s. companies. you certainly had some of that. >> good to see you, alan. thanks for the update. >> good to join you. up next on the program, an exclusive interview with gugenheim executive chairman and former bear stearns ceo alan schwartz. his take on the state of the

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$800 billion in deals so far. gugenheim partners has been right in the thick of it, advising on such deals as verizon's acquisition of aol and merger with time warner cable. joining us alan schwartz from the iff here in new york. good to see you again. >> nice to be with you. >> so this burst of m&a, what do you think it signals? does it signal confidence in the u.s. economy? what does it say? >> i think it's probably more strategic. the m&a activity has a lot of things driving it at the same time. i think that corporate balance sheets are quite strong and they've been strong for a while. the cash builds up with the rise in stock prices using that cash to buy back stock is not as attractive as it was.

you have changing technology in a number of industries so companies that have been following one business model need to think about adding capabilities in other areas. you've got some industries where m&a is being affected by a u.s. corporate tax code that is noncompetitive and companies that are at a big disadvantage about that are looking to merge sometimes with foreign-based companies. there's a lot of things going on in m&a. they seem to be coming together at the same time. >> it's david faber on that subject. you advised pfizer on that failed attempt to get together with astrazeneca to create enormous conversion. it could seem those deals are no longer possible or am i wrong? >> well i think that the those kinds of deals, some deals are no longer possible. others are. they change the rules. they did it retro actively.

they changed some of the rules. deals that would have worked won't work any more. you are seeing activity where you are seeing true foreign companies acquiring u.s. companies, as well. if you make conversions harder you are going to get foreign companies to have an advantage buying u.s. companies. >> it's the complete inversion. i've been around m&a a long time. i'm curious to your thoughts. some of these multiples being paid lately seem to be creeping up to fairly high levels. some of the financing being offered for altice which did not make a bid for time warner cable, but had the ability to. is it your sense things are getting toppy in m&a? >> it depends on the balance sheet they are using, the advantages and the synergies. point number one. all multiples are high.

low interest rates, the offset is high multiples. when you have lower cost financing, that will translate into higher multiples. altice had a high multiple stock of their own they wanted to use, supposedly in an acquisition. that affects values across the way. >> what about this post deal move by companies to return cash to shareholders? the form of buybacks or dividends? is that healthy or problematic? >> i think it's a byproduct of other factors. i think any company that is generating a significant amount of cash and has excess cash in the balance sheet has to look where they can reinvest it. if they can reinvest it with a good rate of return they should do that. a number of companies, if you look at u.s. economy the percentage of capital investment versus total profits has been declining for a number of years

at all-time lows. the companies are not seeing good return opportunities to use their capital. once that capital builds up you should return it. if you can't use it and invest it, it should be returned to investors. whether you do that through dividend, whether you do it through stock buyback should be driven whether you think stock is trading at a significant discount from its fair value. when you do you'll see more buybacks. >> we are seeing it. another note here on deals. mention the verizon aol tie-up you are involved in. also earlier this year i covered the kraft/heinz big deal with warren buffett. the common thread is no bulge bracket firms were involved on advising. has the tide turned? has your world of boutique investment bankers taken over? >> i think taken over isn't the right word. there's been an opportunity for boutiques. it's not coming at the expense

of the banks. if you want to look at it. it was a tremendous consolidation that occurred earlier during the financial crisis. you saw a number of large m&a advisors bear stearns and lehman brothers and merrill lynch, that were acquired by large banks. when you put together two m&a firms, you jenny generally don't get one plus one equals two in market share. absence of those banks opened an opportunity for m&a boutiques. we are excited that we are one of the firms that's taken advantage of that. i would want to point out one significant difference for us. we think it's very important. in recent times while our m&a franchise has been doing well that's in a strong m&a environment. we also had recent events because we are a full service investment bank and securities firm. we are very excited about seeing some events in our underwriting business which goes a long with

our m&a business that are exciting. for example, we were an advisor to asina when it acquired ann taylor. it was announced we and goldman sachs were providing them with their acquisition financing, which means we will go ahead and do the underwriting or syndication of the loan. a deal we were very -- go ahead. >> i didn't mean to interrupt. a lot of wows love to get your view on the markets and where we are with interest rates. within the last hour, the imf asked the fed to delay interest rate rises in this country until next year until there are better signs of wage inflation or price inflation. what do you make of that call? how much notice should the fed take and what do you think of these markets at the moment? >> i think our cio has been

writing about this a lot. i think our own view is the fed will go ahead and start to let interest rates come up. we think it's overfocused on the same way the taper tantrum. when qe was going to be ended, interest rates would go back to "normal levels." we think "normal levels," are not that much higher than they are today. there is too much focus on monterey policy not enough on supply and demand for credit. we think the monetary authorities here in the united states, fed, will probably start to raise interest rates. the big question is what pace does it go? my view is that pace is going to be relatively slow. i don't think there will be that big a move in interest rates. >> that is certainly what vice chairman stan fischer told us. want to ask you about dick foale's bizarre comeback moment which he didn't take responsibility for the full of

lehman brothers. talked about the 27,000 risk managers he had owning a piece of the firm. you were on the front lines of the financial crisis and sale of bear stearns to jpmorgan. did you watch mr. fuld? what did you think of it? >> no i didn't watch it. dick is a friend of mine and somebody i have a great deal of respect for. i think all i can say for the ones on the front lines, we all take responsibility when we are talking to each other we take responsibility for a number of things. we cared a lot about our colleagues. i think there is this narrative. if you look at the career dick fuld had and the rise of lehman brothers under him for many years, and if you look at the severity of the crisis he was facing, i think people are looking for a much simpler narrative. while i didn't see it my guess is he was pushing back at that simple narrative.

>> alan schwartz we'll see it there. let's catch up with the new york merc. >> we've got a lot to look at here. natural gas inventory numbers out. we had a build of 132 billion cubic feet. prices down ahead of the report. the report bearish because of that build. we are sliding again. i want to point out natural gas prices popped up to the $3 range but they are off about 7% now for the month. traders think we could see more volatility ahead. it depends on the weather. and how much demand there will be this sum foreair conditioning. i want to take a look at oil prices. we are sliding today. $58 and change. about a 2% move to the down side. we are watching opec ahead of the meeting tomorrow. despite the fact nobody thinks we are going to see a production cut from the cartel.

this game of chicken between opec and shale players does continue on. cnbc conducted an exclusive oil survey. we are going to do it quarterly. certainly ahead of this meeting to get a pulse of the energy meeting to get strategy of analysts. they think supply and demand is a key factor and oil price movement. 50% told us they think sly and demand is the key driver. there was an even split on what they think will happen with it. 30% think the u.s. supply will continue to rise. 30% said it will flat line. 30% said it will fall. that tells me nobody knows. what we do know saudi arabia is at peak production levels. u.s. production on the rise. more than 9.5 million barrels a day. it went up again last week. opec is keeping its production probably over that 30 million

barrel per day level that's its quota. opec had a goal trying to squeeze the shale players out of the game. what we know is it's not working. it hasn't happened yet. they are hanging in there. having said that, our respondents said it's opec that will be squeezed. in 2016 we'll have to make that production cut to balance the equalibrium in the markets. you never know. they could throw us a curve ball tomorrow. oil prices lower ahead of their meeting. >> we'll see of what comes out of vienna tomorrow. let's get to sue herera. >> apple says it is making progress clearing out its backlog of apple watch orders. the company says it should ship most unfilled orders in two weeks and selling models in apple stores. the watch will arrive in seven more countries by the end of the month including mexico south

korea and spain. >> a gas explosion at a gas station in ghana's capital killed at least 78 people many of whom had sought shelter there from torrential rains. that caused by a fire erupted in a nearby truck terminal. early indications, the fire started by accident. >> number of confirmed mers cases has risen to 35 in south career according to the south korean health officials. number of people quarantined stands at 1,700. several public schools have been closed. >> jeb bush is expected to enter the presidential race on june 15th. he tweeted this morning he'll make the announcement at miami dade college. that is your news update. thank you. straight ahead, an exclusive interview with the former president of the bundis bank. axel weber.

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at the center of the financial universe the german bund. it's off its highs of the morning after the 10-year earlier hit the highest level in eight months. joining us, axel weber.

what a great day to talk to you. mario draghi told us yesterday to get used to volatility in the bond market. does it worry you to see these moves we haven't seen in years in german bonds? >> we are in an environment with the central banks, also here in the united states, are moving away from forward guidance and becoming more data dependent. their view is volatility is part of the reprising of markets. i've been saying for a long time we should get used to more volatile environment. yes. that's going to be part of the picture. i am concerned about liquidity in the market. particularly under stress situations. repricing and volatility is part of getting back to normal. liquidity in the market seems to be still a concern i have. it's not widely shared but i think it will increasingly become an issue. >> we are hearing more and more about this idea liquidity is a problem in the global bond

market. is this a result of the reregulation of the financial sector? an unintended consequence of all the regulation? if so what should be done about it? >> it's a number of things. i think central banks buying vast amount of assets and putting them on the balance sheets. not bonds from government but also corporate bonds takes liquidity out of the market because they buy and hold. second thing is re-regulation has moved a lot of banks out of market making into more long-term sustainable business models. ubs is an example. we refocused on our long-term business that ises there in wealth management. we de-emphasized the business we do in investment banking, in particular on the trading side. it's a combination of factors. also markets were used to a long period of clear forward guidance on what is going to happen next. we are seeing views emerge on both sides.

take the u.s. rate hike. there is views to both sides. they will wait. they will go earlier. part of that impact on pricing in the market. market moves are then translated into much bigger moves because people are not on one page initially. >> we are seeing spillover facts from bond market moves, including the euro which has been surging. do you think the euro bottomed out? got down to 1.04. was that it? >> i've been saying when the euro was at 1.40 clearly given the outlook for monetary policy in europe which was focusing on doing qe and given the outlook for the yen, the differential past the u.s. was leading to a depreciation of the euro. and appreciation of the dollar. i think we've seen that. bearing any dramatic events around greece i don't think the euro will move much more. probably trade in the range between parity and 1.10 1.15.

that is a more likely development than they break in parity. i think it is rightly priced. >> that should be helpful for europe. got to ask about what the imf said today. christine lagarde saying the u.s. federal reserve should wait until early 2016 to hike interest rates. wait for more evidence the economy is solid and inflation is moving to their target. do you think it's appropriate for the imf to give policy recommendations to central banks? previously, it did give one to the ecb. >> the imf always held views on the global economy, on individual countries. they it's part of what they do. the question is should it be a guidance? i don't thing it can be. central banks have to do what is right in their view. markets comment on that. institutions comment on that. central banks are focused on their mandate what we are seeing here in the united states with a

negative first quarter in the more final figures, we are going to get a big bounce back in the economy in the second quarter. it's going to be some volatility in this data. that would entice the federal reserve to wait a bit longer to get more clarity on the medium term developments in the economy. there is a risk they get behind the curve. i think this has, to some degree pushed out in time the moves that the fed will do. at the same time i think the risks are still there that they might fall behind the curve if they wait too long. i've held the view central banks should, when they get a pretty good medium term view they should act decisively. my expectation is that the fed will wait longer. >> just before we let you go can i return where you began the conversation your concerns about liquidity in the bond market? icap appears to be asking its customers whether it should start introducing circuit breakers in the trade for treasuries. there is a discussion whether that would be good as you see in

stocks or treasuries, as the investment of last resort and to where people run in times of great fear whether it would be wrong to halt that trade? what would you say about that proposal from icap? >> i haven't seen it in detail. i think it is really something i would have to look at in much more detail to comment on it. but we haven't seen periods, take the 15th of january when the swiss national bank removed the floor, where basically institutions were unable to execute trades. the ability to execute those trades only came back when the market found a new price and new bottom. i think there are sporadic episodes. in october last year market volatility and liquidity impacted on pricing and ability to settle trades. we have for cautious this is not exacerbated by other features put in bond markets or equity markets.

these things need to be looked at with a lot of caution. market making is important. it's just not, the banks moved out of it to some degree. they've not been replaced by other players. through higher volatility is partly the result of that. regulators should have a second look at that. we have to make sure it's not part of the regulatory repricing happening here. markets should be liquid not just in good times, but bad times. we need players that make markets in those periods or we face new challenges. regulators should revisit that issue. >> i farve a feeling you guys are talking about that at the iff meeting. axel weber, thank you for joining us. it's been more than a year since the debate that stopped trading here on the floor of the new york stock exchange. up next, brad katsuyama will talk about flash crash and the

state of the markets.

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millions of people protect their families and run their businesses. we have the right people on-hand to answer your questions backed by a trusted network of attorneys. so visit us today for legal help you can count on. legalzoom. legal help is here. take a look at the utility sector trading higher today after getting beat up badly yesterday. morgan brennan at hq. >> news the imf is urging the fed to delay any rate hike until 2016 is helping utility stocks today. a sea of red. they are the only s&p sector that is not trading lower right now. shares of power companies, exelon firstenergy, southern company and cms energy are trading higher today. the sector has fallen more than 10% off recent highs. it's in correction territory on fears of fed interest rate

increases. today it may be bargain hunting. any updates from the fed could lead to more volatility in these stocks. simon? >> thank you very much. it's been more than five years now since the market was robbed by its biggest history. you may recall the dow dropping roughly 1,000 points in five minutes only to rebound nearly as quickly. so just what have we learned since the 2010 flash crash? let's check in with our own bob pasani, who is at the sandra o'neill global exchange and brokerage conference with a special guest. bob, to you. >> sander o'neill, the biggest exchange conference in the world. we're talking about how business is doing. let's talk to a guy who wants to become an exchange. he's the head of iex and became a star of the flash boys book. with michael lewis, your claim to fame. you're seeking to become the fourth stock exchange in the united states after the nasdaq and nyse and of course bats how

is that going? >> we're in the process. i think it's going well. it's it's kind of an arduous process, you're going through line by line you know a rule book and filing that's very big. but our team is doing a good job. we have the right people on the case and it's going well. >> is it going to happen this year? are you going to become the fourth exchange? >> we're hopeful that that will happen this year. it's still part of the process and we have some time to go. i think we're hopeful that it happens this year. >> in the "flash boys" book it was obvious you had a different approach to this than some of the other exchange. they're charging rebates to trade on their exchange. you're going do launch this exchange if it happens this year. not charge any rebates, how are you going to make money? and how is that different? why is that important? >> we've felt for a long time i think that a lot of the large asset managers feel the same way. that rebates create a conflict of interest in the industry. paying someone to send you an order, i think creates, creates a pretty significant conflict.

so when we started iex, we started on the premise of first of all not wanting to create these conflicts, we make money the traditional way. we charge people to trade. it's a usary fee and i think by doing that every single exchange that's out there pays a rebate. so we're looking to do something different. i know a lot of talk has been about having the pilot, this and that. we view ourselves as the pilot. we think that we can provide a service. we don't have to pay people to send us orders and that's the way that our market has grown and it continues to grow. >> i said there's three exchange and three exchange companies. but there's actually 11 stock exchanges out there. there's subexchanges that the exchanges all run. largely because they offer different kinds of rebates. should we get rid of the concept of rebates and make the stock trading system simpler? is that the way to eliminate all of these different exchange and different dark pools that are out there? >> when you look at the market being fragmented 11 exchange

over four atss, pricing structure, we have a lot of markets, that do the exactly the same thing. i think we have too many markets and simplifying the pricing structure would consolidate a lot of tradings on to fewer venues. that's naturally good for traditional investors and that's kind of what we hope to do. >> you became famous in the "flash boys" book and you were very critical of high frequency traders, yet the dark pool that you run allows high frequency traders. is there such a thing as good and bad or is that too simplistic? >> i don't think it's too simplistic, i think that some high-frequency traders provide a value to the market if you're trading an etf against the underlying stocks that's an arbitrage that will exist until the end of time. it's existed for a long time and computers trade that today. we built a market at iex that does not sell certain types of technology advantages to high-frequency traders, and as a result, the high-frequency traders that didn't rely on buying those advantages trade on

iex. to their credit they found a way to add value to our market to exist in a market with brokers and asset managers and really not kind of you know -- >> we got to let you go. but ten seconds, we've had the flash crash five years ago. we've had new bans that have been instituted to deal with the problem. is the market safer than it was five years ago? >> i think the market is safer in a way. but i still think that you know can another flash crash occur? i think it's possible. and i think that we still don't have a lot of answers on why the first flash crash occurred. the recent arrest that just kind of came out. when you look at it we need better answers as to why things are happening, to feel safe about the solutions that are in place that are going to solve this long-term. >> katsayama. i'll be here talking with the heads of nasdaq and the head of nyse. >> he always gets the attention of the folks on the floor. thanks, bob. when we come back how do you transport a potential triple

crown winner? in a giant private jet known as air horse one. we'll take you inside right after the break. and before we break, let's send it over to jon fortt with a look at what's coming up on "squawk alley." hi jon. >> air horse one, that's good. we've got talk about t-mobile and dish. would it make sense for the two of them to get together? also, twitter, we had a chat with the cfo about whether or not there's a tech bubble. hear what he had to say. and that was about yahoo's cfo and twitter, chris saka has plenty to say about what the company should do. and there was an investor meeting, find out about all of that coming up on "squawk alley."

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if you own a horse that's worth $20 million and could potentially win a triple crown. you don't just use any plane to get him around. our robert frank joins us with that story. air horse one? >> that's right. big race coming up at the belmont on saturday. and horses rack up a lot of miles, most of them getting to the track and the most elite horses don't use trailers the secret lives of the super rich. we took a ride along on a

private jet for thoroughbreds. now boarding air horse one. kentucky derby champion american pharoah is headed to the second leg of the triple crown. the preakness, and this is his ride to baltimore, maryland. a 727, that's been completely gutted and transformed into a flying barn for vip horses. airfare for the 50-minute flight starts at $3500 on his quest for the triple crown, he'll take four flights. that plane alone had $100 million of horses. and we asked them is it better to trailer them since the distances are not that far and they say the plane is safer, smoother and faster and the horses prefer the private jet. back over to you. >> that is awesome. i love that story. and now you got to look inside of air horse one. thank you, robert. be sure to catch the special

edition of secret lives of the super rich, the triple crown really interesting story about the family that owns the horse. that is tonight, 10:00 p.m. eastern only on cnbc. that does it for us on "squawk on the street." kayla, over to you for "squawk alley." good morning, it is 8:00 a.m. and 11:00 a.m. here on wall street. "squawk alley" starts now. ♪ ♪ good thursday morning. carl is out today, but with us is henry blodgett founder, toerd and ceo at "business