williams. >> did you know there was a hockey game on on nbc? >> yeah. you have to support the home team. >> okay. all right. >> it was a great weekend for nbc. >> great job. thanks. >> thanks kenny. >> that does it for us today. make sure you join us tomorrow. right now it's time for sidewalk on the street. . >> good tuesday morning. at the new york stock exchange. futures have had a bit of a bounce this morning but the dow has lost its gains for the year. s&p is on track for a four-day decline. ten-year is creeping back above 24 this morning and oil is caught up up a bit. our road map begins with the slicing and dicing in the financials. ge finds a lender. and thousands of jobs being

slashed. >> behind apple's announcement. the operating system watch payments and big music unveil. what's it going to mean for the stock? >> and lululemon results are out. the retailer raises the outlook for 2015. first up hsbc announcing plans to cut up to 50,000 jobs and shrink its investment bank by a third. half of the reductions will come from a sale of businesses in brazil and turkey. they are looking to cut money within a couple of years. and ge selling the sponsorship business for $12 billion. ge says they're going to execute $100 million by year end. all part of the plan to sell the bulk of the ge capital. >> that's going to be positive and they are aggressively getting out. i wonder if there isn't a trend here. everyone is retrenching at a

time you would think that rates being low, you would to be out there in different market vsmarkets. i was on a panel last night talking about jobs and people who are not in midlife crisis but people in their 40s and 50s. what are those 50,000 people doing that they couldn't generate a return off that? >> i don't know. we should say 25,000 layoffs and 25,000 resulting from selling of businesses in turkey and brazil. >> right. >> shrinking assets by 2%. >> when i see these banks, were they that overstaffed? citi was the first to pull back. i remember in the 80s where you saw banks coming here. by the end of the 90s they were all gone. periodically people have these -- this thought of this grand scheme and then they realize it's not working. >> hsbc has been an enormous

global player for a long time and asia is where it's based and makes most of its money and it's re retrenching to refocus on that arena. ge wants to no longer being a systemically important financial institution and it's going to be able to do that or expects to. those assets are moving along at a very big pace. this is one of the biggest business stories of the year. you're talking about what was the seventh largest financial institution in the country that will buy, let's call it two years but probably sooner than that, be all over the place but not a part of ge. >> earnings and industrial it's funny, i have hr block on mad money tonight. they're trying to get out of the bank. the country has changed. every insurance ha had a bank they want to be out of it. it's almost like in this country

it's -- there is a taint to being a banker. >> tell that to deutsche bank whose offices in frankfurt got searched today looking for information about client transactions. it's a tough time and, of course, it's a heated debate about whether that is deserved or not. >> i think they say government. i also heard the justice department here played a role. one of the things the justice department did here was basically no one gets to the promised land except for maybe jamie diamond. >> what is the promise land? >> the justice department put a lot of heat on certain banks to be able to change top management. >> he's the only one that made it through? >> lloyd blank find made it through. >> it's like we're going to get out of the businesses you don't like and clean up our balance

sheet. i'm just saying the government has been heavily involved. a lot of these are motivated by government. >> they have spent $11 billion on regulatory and compliance charges in the last four years. you're talking about it. we know the money laundering foreign exchange rigging. i'm not sure they were a part of that one broadly speaking so many others were. it's not as though -- these are significant scandals? . >> is there anything left to rig? what else was there left to rig? >> we've done commodities and live bore. >> were they involved with deflate gate? they did not touch the nfl. >> any of them involved with fifa? >> yes. there are some involved with fifa. if you're out home i think you're sitting there thinking what didn't they rig? >> explain to me why jpmorgan is at all time highs? >> interest rates are going higher and people are looking at

net interest margins and they don't care about the riggings. in the end it's kind of like that comes with the territory snm. >> the cost of doing business. it's the business they've chosen. >> although when you're managing one of these institutions, i think you would prefer and oftentimes it was one employee or a couple that had not done what they did. >> we've had one of cnbc saying you want to end it put them in jail. i always found that refreshing. >> and as it relates to stocks people are debating transports clearly not confirming the theory but doesn't have a market do better if the markets are leading. >> they should but there's no one following them. i'm looking at the tape and saying american air is down again. delta. there's ten firms that are recommending the airlines. they have buys on them. only six that aren't. the numbers are way too high. the rails go down every day. the banks are not being followed

by everybody except a couple of random biotechs. the one thing that's going for them is the thing you started the show with. how many straight days are we down? >> this is four. >> and it's not the pattern. >> we have not had four in any direction. >> once again we open down. i was watching europe roll over this morning and we rolled over with yurm. it's like are we really completely hostage to europe in we have completely -- we're not hostage to china. have you seen the chinese markets up and we don't talk enough about china at all. they did the trifecta there every day. >> it is quite something to watch that. the main indices, they actually the hang sang was down. >> you'd think that they could rally. >> cpi up 1 1, 2. >> isn't it disconcerting that

the chinese market goes up regardless, just goes up on supply and demand. they keep opening these accounts and the money keeps flowing in. >> as a result i think it's the number one market for ipos this year too, if i recall. you're seeing a lot of the companies consider not going public here obviously al by baa baa. >> are you part of the charm offensive? has he reached out to you, like we're helping american businesss? >> absolutely. you need to charm me if you're going to charm american business. >> they're charming people. who was your guy that you love? you have a great repore with. you have a fabulous relationship with alley baa baa, and i find like when you're with people like the jockey espinoza.

he reached out to me and said alibaba. i came back with apple. >> on that note we should why not do a little promotion here. we're going to talk with jack on cnbc. >> i did everything i could to get that plugged. >> we usually script out the show a little bit? >> a little bit? very little. >> big on ed in the journal made written by ma talking about what their goal is trying to open the market for small u.s. entrepreneurs to sell to the chinese middle class which he points out is the size of the entire u.s. population. >> he's kind of an alexander hamilton. basically we're a better capitalist than you guys are. tomorrow aren't you -- isn't there a 2:00 with jack ma?

>> yeah, there is. don't miss i.t. we'll see if he's feeling better about things in general. last year he wasn't personally. the company was doing well. quick on the markets jim, the transimportant transports. you had that important interview a few weeks ago in capacity. these stocks keep going down despite the facts the analysts keep trying to come back to defend them and the companies say it's different this time. trust us. >> doug parker came out. i like him very much american airlines ceo. he came on the show and said unfortunately, we're going to have to match these price wars. >> i'm like price wars? match? it was one of those moments where i then repeated. i said i want to be sure what you're saying is you'll be matching capacity and then southwest game on gary kelly

who's another great operator saying we're adding routes. i pulled back from 8% to 7 % capacity. the market is going to have a hard time. >> have you seen some of the projections of air travel demand? doubling by 2025. >> i know and boing will tell you that too. as you add capacity the numbers go down and the analysts are all caught. they're caught right here. they were all recommending the stocks because they were selling at 5 and 6 and 7 times earnings. that's a classic tale they will come down. i remember in 1988 when things sold at two times earnings. did it mean it was cheap? it meant the earnings collapsed. $12 in earnings power and then the company was bankrupt. i'm just saying when you see the pes, that's small. be worried and afraid.

>> although some people see opportunity because they don't believe the market has it right. that's what makes a market. >> that's true. it's kind of like scooby do on monster island. >> darned kids. would have worked if it hadn't been for you darn kids. >> sure. >> do you think jer rasic looks scary? >> sure. >> we're going to tell you what lululemon said today and gross margins. and a reaction to apple's new streaming service. take one last look at the markets.

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lululemon reporting better than expected numbers. the retailer also raising their full year guidance. gross product margin continues to come down. >> let's be careful. the stock is up. i recently sold this from my travel trust. the reason is it's not an

inexpensive stock. it still sells. all that gain really was the threat to consumer the same score not that good. canadian company. this is good. at the same time i find that when you look at what's going on, it's hit or miss. burling ton which has been big, a big miss. dave and busters surprise to the up side. every day there's this good bad, good bad. the cfo is lulu is very good and he talks a pretty good game on the conference call. these stocks are not cheap. >> lulu is up 10% on the year. now a fifth of all revenue. >> wasn't that something? the highest other than williams sonoma. >> the conference call it's not eve an call. it's more of a -- >> it's set to music.

i like that. i think they should use something else. i think something. >> that might be dramatic. >> voger in? >> no. not at this end of the table. >> we could go on and on but i think -- >> smoking of music, much of the buzz from apple's worldwide announcement was about apple music. and an ios mobile system that's replacing newsstand. some of the narrative that's being written is that news is following facebook's instant articles. the split screen on the ipad is following and now muse sick trying to camp up with spotify. they are now playing defense ily? >> i think the answer is yesterday you said the stock

doesn't go up after these meetings. they're filling in holes. look, these are the things that a company does when they're trying to make sure that no one has an edge on them and i think that's fine. i watch the streaming. i think a lot of people expect more showmanship. i don't know. there's nothing wrong with a workman type stock. that's not my arm. i took a call from the wife yesterday. i said i'm brushing my teeth. i hit it with my watch. there's a picture of victor espinoza and me. i set it up that way. this is right when he told me alley baa baa. >> wall street yawns at apple hoopla as the stock is now back below the 50 day. first time in a month or so. >> look, technology is awful right here.

>> what happened yesterday specifically? everything was falling. >> everything in the last half hour -- i came out to do mad money and i was depressed. >> e-bay was down. alibaba started up and was down by the end of the day. >> union pacific, yesterday was an ugly day. i said we can only have so many of these days before we start saying june is going to be as bad as previous junes. they were all kind of in each case something specific to blame. this one is just kind of well you know what? numbers may not be coming through. the airlines are bad. lots of rollovers in the consumer product group. technology is starting to get very weak. it's just not a good time. >> usually there seems to be a little buying mid-morning and then it dies again at 3:00. >> and then you get up and there's a greece story and france is down.

we're trading off of france. we need something to trade off of. we need some sort of get out of this may last. the market as a may last rating. >> i'm sure something will come along. >> look at the ge. i thought the ge news was good. maybe ge will be up $0.38. >> maybe. >> but you should be working on something right now that you just kind of, when i get the report you're going to change your mind about x. >> i don't have anything today. but we always end the conversations on m&a. i've spoken to a lot of bankers, they are all out. i am fully expecting we're going to see a lot more deals. >> we need that before july. everybody is out of here. >> they're gone. >> this may be one of the strange years where people are working from the beach and working all out. >> are you serious? >> i'm not saying that august isn't going to be a busy month which is, i guess saying it

might be. >> no vacation? >> i was on the beach last year when time warner fox fell apart. >> you recked my day that day. i was scrambled. >> i learned you can do reporting from your phone on the beach. >> that's why i don't get any time off ever anymore. >> worked for gecko, right? get to work. we'll get cramer's mad dash and count down to the opening bell. more "squawk on the street" after the break. ♪ ♪ ♪ alley baa baa. alibaba.

the ted) back to work, guys! i love this times of year. for all the confidence you need. td ameritrade. you got this.

can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ the answer is yes, it can. so, the question your customers are really asking is can your business deliver? it is the 240th birthday of the u.s. army and that's being celebrated at the opening bell

here. we have some you can see. >> happy birthday army. my dad served in the army. >> with that we will get to our mad dash. about six minutes before the opening bell. we want to get to something else that's happy? >> i feel like i want to report on stories that are positive. i had to reach down but dave and buster's recent ipo, they reported and did a secondary recently. 8.5 8.5 million 8.5 million shares at 31. had you been in the secondary you're going to make money. dave and busters worked. one of the things they credited this is another story, mike and mike they advertise them espn and said it is helping them. they're closing profitable stores because there are more profitable stores in the neighborhood that are good.

i remember the first id ration. i thought it was impressive and important to point out something good. the gloom has become palpable. after doing a billion dollars in mens, people are making a move. >> we're not really far off our highs. >> i don't know. i say that on twitter, and people just crush me. they want me to say that mankind is going to 20. i like mankind. i don't have a problem. >> there's also a drug company. i see it going up. i'm trying to be more optimistic. it isn't that bad out there. it isn't that bad. >> we'll leave it on that hopeful note. >> a bit of a hopeful note. an opening bell coming up. we'll get to see if there is a little more optimism. >> i think there's a short

squeeze in the airlines coming.

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you're watching "squawk on the street." we'll getting the opening bell in just over a minute. you mentioned the brigadier general of the u.s. army walking on the floor and making his way to the balcony. 240 years is how old the u.s. army is. >> as we watch, a lot going on. the medheadlines out of greece you almost don't want to look. >> i know. it's so difficult because it's so small and yet, there was a fabulous interview this morning the italian minister saying we're so far apart. there's a picture of obama on a park bench with merkel. you can only say can you solve this greece thing? no, i can't. i mean zoes kitchen i had on last night. make the talks.

>> ready for the opening bell here and get a look at the s&p at the bottom of your screen. as we said at the big board, the u.s. army celebrating its 240th anniversary and over at the nasdaq, owner and franchiser of a steak house celebrating its 50th anniversary. nice. >> you know that group has been very bifurcated. the part of garden at stake has done well. steak is a complicated thing. it doesn't do as well as hamburger. >> i saw a chart a few weeks ago. camps of stores that specialize in proteins versus carbs. it's like this. we are becoming a protein nation. >> the companies involved with protein toods, tyson -- >> they paid enormous sli for it but yes. >> there's a lot of chicken

companies that are hovering around these. pop eyes louisiana kitchen protein but fried protein, i don't know about that. >> campbells makes a move today. they're buying garden fresh gourmet. >> i thought this was great. they're doing better snacks and better natural and organic. they could be a comeback play. i'm not endorsing them fully yet. you're going to see unfi is down and maybe this group has cooled. they supply a wholesaler and retail. and i'm going to quote a guy from wolfe research who says isn't this weakness whole foods and the company did not deny that. they supply to whole foods. in the call scott mush kin says hasn't whole foods deaccelerated

quite a bit? they didn't disagree. target and kroger were cited as doing quite well in this area. >> in the theme of m&a, that's the campbells news, and then that pocketer is getting a sniff on the hair care business. >> and then in ge, they want scale and he needs it given his margins. an annual meeting is going on the ceo of gm saying there's no interest in a merger with fiat and it has scale. there's this idea expressed in the journal story today that they would try to enlist shareholders in gm into his cause to get them to the negotiating table. that can sometimes work but we don't know about this case. they're saying we're not interested. we've got scale. the question becomes is he

seeing a clock ticking by in terms of his business? >> right. isn't that the thinking that in a downturn when one comes, he's the most vulnerable? >> he's done such a great job. the share take is good. the cars they've been able to raise prices he does well in a stronger dollar. >> and to the extent of there being three global players, toyota, jokes wagon. >> a deal with introduce so many unknowns and so many potential negatives. you have to be very careful. >> but i like the tone. there's an underlying tone in the market that we're oversold. when i heard that fiat said that, the stocks have been horrendous. they've been one of the big disappointments in the market.

>> and one thing that's not going to happen. jack ma, presenting at the economic club in new york. tomorrow we're talking to him on cnbc, they're spreading the message, you've heard out rumors e-bay and papal or what we're taking on amazon in web services, that we're going to buy a papal or an e-bay or you name it. not going to happen. they're not doing a large deal in the west. >> this is a total charm offensive and nothing about spending all the money they have. >> they're not buying another e commerce player. >> they're not buying etsy. >> is it too early to buy it? >> it is. >> although tiger global taking the stake from 8.9 to 8.4? >> a pretty smart guy. >> look, i think the difficulty with etsy is the quarter, they

made it hard for you to own a stock. sometimes you have a conference call and they're saying listen you know wow, i'm going to spend a fortune and it's not going to pay off. when amazon spends a fortune, you get blessed. etsy doesn't have that glow yet of amazon. >> i wouldn't think they're going to have it ever. >> stock is up 5%. >> look it's just been -- >> it's been a difficult time no doubt. airlines, jim. cannot get out of their own way. southwest down another 34k94%. american, delta. is that a play of crude. >> crude was matter to that group but it's also a question of strong dollar and these airlines, they've got to make a turn. honestly, i think they're getting oversold and you can buy some technologies.

tablo data is the best stock in tech. when i had zoes kitchen on last night. they sort through the data to see what people like. a crm, that's the company to watch, and then sky works, avago and xpi are the others that need to turn in the tech group before we see any sort of oomph. you need something else. it's not to be techs or airlines. >> $0.41 is disappoints. they blame everything from winter weather. they're going to boost their minimum page to $9. >> a big noticeable slump. down to.8%. i thought this would be their quarter. this is the problem.

5 below was really good. urban outfitters was really bad and had been previously been good. the consistently is nil. you look at ulta. the stock is substantially down from where it reported. >> okay. which means what? we're not going anywhere as rates start to tick up? >> i'm saying that -- >> the dollar stays strong? >> normally you'd be cycling back. no one knows what to do. i've been saying buy health care because that's the only thing that's trying to make a stand. the int consistencies are so great that people are paralyzed, and you sense it. you sense that humana goes up 40 points and now we're waiting for u a deal. if you don't give me a deal there soon it's going to go down. we need deals and more companies

doing what dave and buster did and fueling burlington. it's hard to figure out who's going to do great. i like ambarella. it's the inside of go pro and drones and come cast using them. they're going to be able to have a doorbell and you can see on your tablet who's at the door. i think this is a fabulous thing and that stock has been going up. that's it. it's the only one going up in the sector. it's so hard. >> yeah. >> i saw an idti going up. it's hit or miss. it's killing me. and twitter, we haven't mentioned that yet. >> 36 is the new normal for twitter. >> there was a guy from google who neil mohan people thought he might be going to -- he's going

to drop box. the idea that there are guys who you're not replacing the guy. it doesn't like it. it's like who's going to replace a manager that's in last place? who's going to replace the philly's manager? >> steve martin gave an interview last week. he used to be active on twitter. he said i've cut back. i wonder if that day is coming for you. >> today -- a guy just tweeted. >> you've had it with people today. >> here's a guy. cramer does not tweet. someone tweets for him. i tweeted at 3:43 this morning. it takes a maniac to do that. this guy is wrong. i am tiring. honestly, at 3:34 does someone think that's someone else tweeting for me. you think anybody who's 27 is

going to get up at 3:43? that person comes in at 8:00 when i come in at 6:00. that's the new way. >> that's the problem the america, you can't find 27-year-olds to wake up at 3:43 anymore. >> that's right. >> not far from the flat line let's go to the floor. >> you don't sleep at all, jim. we know that. you're amazing under all circumstances. let's talk about the markets. that has been a frustrating month. it's trendless. energy is up because oil is up. that's up and down every day. transports down 10%. most of the major indices are well within their zone of however they were off from history highs. the s&p 500, it's okay. it's not that far away. i think it's about 2.6% from the history high.

we haven't put together two up days since may 14th to may 18th. the nasdaq was may 20th last time we saw it. pretty close from the history highs. the dow is 3 %. nasdaq 2%. these are from the recent history highs we've hit. several rate sensitive sectors. dow utilities are 15% off the highs. the reits, 14%. telecom etf, not the dow telecoms are down 10%. we're talking about the airlines speaking of the transports, they're down again today. we saw some issues again today with them. americans forecast of revenue growth was on the weak side. we explain this every time but it's passenger, unit revenue.

it's their guidance for all these of the airlines were weak. american says it's down 6 to 8%. united down 5 to 6%. southwest down 4 to 5%. the only good news today is southwest specifically said they were taking steps to lower capacity. that's good news and maybe that'll make a difference down the road. they're talking about 2016 issues for them. there's the problem and the transports down again today. the overall sector is weak. emerging markets having a tough time again today. indonesia, philippines, thailand on the downside. interest rates have interested in anticipation of a rate hike by the federal reserve. just keep an eye on this emerging market. bonds and etf funds are also under a little bit of pressure now as the interest rates have risen. we're seeing the-esque in the u.s. market on interest rate

sector as well as foreign markets about anticipated rate hikes. right now the dow industrial is down. >> oil going to be one to watch today. good morning jackie. >> good morning. well, as they're saying on the floor here this continues. this is buying the dip mentality from the drop we saw yesterday. strong upward pressure across the board. crude right now $59.86 traders saying the fact we didn't close higher than $58. it's not just gasoline. it's heating oil as well. that's something to watch. now, this is the kind of pattern that we've been seeing for the last few weeks. it is expected to continue in the short term. i want to take a turn and talk about natural gas. a big rally. 2.80 is where we're trading. traders are saying they're

expecting to see warmer weather. demand boosting. last week on thursday we dropped under 2.60. that was the buying opportunity in this trade but if you haven't gotten in may not be left out at this point. looking for prices back at the $3 range if we have a hot summer. >> when we come back apple's new streaming service is on the way. does pandora have reason to worry? we'll get reaction from the cfo coming up. first, what a year it has been for netflix and the shareholders shareholders. dow down about 15 points. back in just a moment.

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on the docket a proposal to increase the number of shares. shares shares shares up almost 85% and they are teaming up with brad pith. they have a short run to get the qualifications for an oscar. and then big global release in 2016. they say it's a big move for netflix. >> i'm waiting for the battle from fallujah with harrison ford. it's interesting. the crystal. that's a general in the marines that's profiled there. i think you're going to start seeing these war movies. it's interesting. this debate about splitting, you'd be surprised. at the highest level ceos trying to figure out do i do it or not? i know it's art fshl but they're all worried that they should. different share base. they want that better share

base. they think hedge funds are playing with the stocks. split four for one. >> at a lower number. >> yes. >> in the meantime, abc speaking after announcing blithe danner will play the wife ruth. the show is based on the madoff chronicles. it brings to mind the front page story of the journal study on disney and how the entire team decides what will be a franchise and once they make that call the whole organization just goes into beast mode. >> as it should. i mean i thought that article was kind of like there was something about the article that said i don't know if this is right. i'll tell you it's right. it's brilliant. what do you think procter & gamble did? shelf space and it.

>> i don't think they like something described as a consumer company. >> it's interesting. pocketer kind of peaked. i mentioned many times i thought this was what they were doing. >> it's a creative enterprise to a certain extent. >> right, but i think this is the way to make it so you don't have bombs. bombs hurt you. >> it lit up. >> usually it's just black. when it lights up i notice it. >> it's time to get up. >> it actually does see that. what a useful thing that watch is. >> very useful. >> stop it. >> some of the apps are going native now. >> it's okay to stay up. the problem is i'm on a tv show. if i stand up right now, it would look like what am i doing. >> at some point you'll stream

yourself with your watch and it'll be beautiful and you'll speak to everyone that wants to hear from you and that will be useful. >> okay. >> i'm waiting for that. >> we'll get stop trading with jim in just a moment. dow is down 19 points. don't go away. there's some facts about seaworld we'd like you to know. we don't collect killer whales from the wild. and haven't for 35 years. with the hightest standard of animal care in the world, our whales are healthy. they're thriving. i wouldn't work here if they weren't. and government research shows they live just as long as whales in the wild. caring for these whales, we have a great responsibility to get that right.

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time for cramer and stop trading. >> there are two upgrades today of note. i think one of the things they've been right. the stock has been a dog but one of the things that happens is that people are so afraid to have a sell on a stock that might get a takeover bid that they're saying i'm not going to fight this thing. this is johnny walker but also guinness and beer has been consolidating for years now. the idea that it could be the target of a company, i don't even want to mention. >> rumors in the brazilian press have been 3 g. beer and spirits are different. there could be an ability to take the cost out of the business so it could fit the 3 g business. i think it's unclear. 3 g separately with them beer and beer is still probably more

the focus. meaning, sab eventually. >> and that's why koors i like. constellation has been anymy favorite. spirits has been hurt by chew china. it's very anti-vice. we don't want conspicuous drinking or homes or watches or gambling and that's what's hurt diageo is china. >> what's on tonight. >> h&r block. i think that this is the great read. a lot of people are blaming short falls on when tax return money came. let's find out the truth about tax returns. >> what does that mean? >> about whether they could have

hurt the consumer. a lot of retailers when they don't have a good number, it's when they got their check. the guys with good numbers don't cite that. i think it's maybe a kanard. >> watch for 2:30 to wake up the guy two tweets for me. >> he sounds just like you whoever it is. >> i'm going to pull an all-nighter on thursday. i'll be tweeting from a plane. it will be me. >> i think you may need snob tweet for you. >> have you ever heard of the five-hour energy drinks? >> mad money tonight 6:00 p.m. eastern time. when we come back goldman sack's chief equity strategist david kostin. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it.

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s&p is on track for its four-day decline in a few months now. we're bound at 20.74. oil driving a lot of this. a 3% gain as it makes its way back. >> let's get back. the dow negative for the year. what do stocks go from here. david kostin is here live at post nine. >> and black rock cio weighs in on the recent bond market selling. >> and apple shares falling. what should you do with the stock now? we'll talk about it. >> breaking news crossing on wholesale trade. let's get to our contributor. >> this the wholesale sales and inventory numbers are a little more significant than normal. they're the first significant

number. this number came in good. what we're looking at is for sales to outpace inventories. they did. we were looking for up.6. we were looking fp up .the 2 in inventories, it came in .4. the stock market didn't like it. stock market does not like good news. rates are going up a little bit. they're about 244 .5 right now. >> is s&p back below the 100 moving day average. joining us today is david kostin kostin. the ten-year is almost getting back to friday's high. some argue the stock market is in trouble. is it? >> no. it's one of the head winds to think about in terms of high e interest rates. it's a major valuation and for a

row is dispersion of returns in the markets are some of the challenges that portfolio managers are facing. a rate hike in september would be a challenge. i'm anticipating the market stays around this level for the balance of the year. >> where does one go for return. >> we can look inside the market or over seas. look at the idea of higher rates which suggests you have interest rate differentials and a stronger dollar. markets that sell domestically that would be a positive to focus in that area. another idea is to look at risk adjusted returns. volatility in the market. those are issues that the fund managers are grappling with.

>> in the new york times today writing about mergers and how all the mergers don't necessarily signal confidence in the economy. >> if you think about the uses of cash we have capital spending and that context, research and development but the next big discussion point was with byuybackings. that's where companies have been allocating their money. that i would question in many cases whether that's the best use of cash in a world where the market market. >> it might be a more attractive way to allocate capitol domestically and internationally. it seems to be perhaps a more attractive use of cash than strictly buying back stock.

>> we're getting some news from the new jersey supreme court regarding the governor and the funding of some state funding pensions. we have more on that. >> rouders is. if you remember this big political battle in new jersey going back to last year when the governor cut $1.6 billion in funding saying new jersey failed to take in enough revenue to mandate that payment. a lot of the unions in new jersey decided they did not like that decision. they sued in the lower courts. now the supreme court has backed the governor's position. that means they don't have to scramble to come up with that $1.6 in additional payments. >> thank you. let's go to david kostin to talk about where we are on the markets. you've been clear recently in

the research note last week and today that companies should not be buying back their own stock at the rate that they are. that was what you were saying before we interrupted you for the news there. >> the issue is every company has hierarchy of uses of their cash. and so yrlly when we look at the use of cash for this year companies return about a trillion dollars of cash two investors this year. about 600 billion in the form of buy backs. i would suggest that in many cases buying back and repurchasing your stock is a questionable use of cash as the optimal use of cash. >> i think when the chief u.s. equity strategist for goldman says that it's important to note. maybe $1.1 trillion of buy backs over the next year.

given that we have that level of buy backs in the market and still we've gone nowhere for the year, what happens if they cut back? >> well it is the single largest source of cash into the market. >> can you give us magnitude so we can understand what $1.1 trillion of buying is. >> if you think about the ownership of the market they own one-third of the market. about 20% of the market is owned indirectly individuals by mutual funds and etfs, roughly about 4 % each. a hierarchy of importance the retail investors are important but the corporate repurchases have been a very significant driver of flows into market and we've seen that now for a number of years which is why have from a tactical point of view it depends on when the blackout periods happen roughly a month or so before earnings season. there's a lot less demand for

shares. >> what is the underlying state of this market if you strip out that buying from ceos? as you point out in the research reseach, the timing has been bad over years. they will buy into crashes. let's look at the last five or six months. dow joans dow in negative territory. >> what's the fundamentals? we have a potential for a higher interest rate environment. strong economics. economics are growing. we've seen that. some inflation indications of wage inflation. we think the fed will hike rates twice now to the end of the year. that is a head wind generally speaking for higher equity prices. and then valuation. i said before the median stock trade, that's the 98%.

if you think about the narrow rnsz, money flow into etfs which is where most of the mutual fund money is going. >> do you see job openings the highest in 15 years. your call is getting some play this morning. you see unemployment with a fore handle by the time of the election? >> my colleagues in economics research expect continued growth in job demand and it's falling slightly. >> we're seeing a reaction in the treasury market. the ten-year yield is at the highest point since october 2014. we just hit a high. in terms of insurance against high yields in the stock market is there a group you're looking to buy? >> technology would be an area to focus on. in terms of underlying demand basically companies are struggling with high margins. one of the ways in which they're combats is to invest in technology and increase their

margins would be one area to focus on. >> that's question. that has stock market seen its highs for the year? >> the market could go slightly higher but i expect that historically speaking when the fed hikes, on average on the 8% that would suggest if you were to look back the market has a lower p/e at the end of the year. it could be a little bit higher. >> thank you for coming in. >> one stock that is moving higher lululemon topped sales expectations along with raising the full year outback. they are focusing on product improvement and growth. is their turn around strategy taking shape? let's bring in a retail analyst at fbr markets. it gets your attention. is it the shift into more

fashionable products? >> the women's business is still nicely positive but i think the real growth is coming from the men's business. we saw the men's business comp 19% this quarter which even accelerated from last quarter which was up 11%. i think they're doing a really good job transforming the brand into also a men's brand. they're modelling it after a men's customer called duke which makes over 100,000 a year is athletic and wants quality n and i think they're attracting this customer to the brand now. >> i guess is question is when you see a surge on the back of better results, we're right at the price target of $65 per share. the stock is getting to be expensive expensive. do you raise your target or hold? >> well we think it's fairly valued here. we have a market perform rating on the stock. we are seeing some margin pressure as they invest for the pressure.

at these levels we think it's fairly valued. we have flat earnings growth because of this year. about 20% the following here. given the levels where it's at right now, we do think it's fairly valued. >> given these moves in mens and i have been in a lieuululemon store lately and have seen more patterns, more ready to wear kind of clothing. if you're a consumer in this name, can recalls and missteps and the blunders, can we put it all behind us if you're going to own this stock or the clothing? >> i think it is getting behind them, yes. they've done a good job getting the women's business back on track. i think the new fashion product and increased penetration there is helping. the concern we have is the pressure that it's going to add to the margins. it is a lower margin mix part of the business. >> i guess the area of growth that investors see as

international, they're increasing the international expansion and e commerce which saw a 30% growth. how are the efforts going? >> international is a huge opportunity for them but what we've seen historically with the other retailers out there, it's hard for international really to make up for slowing growth in the u.s. which is what we're seeing on the women's side of the business. while there's a lot of international opportunity, it's a lower margin business as they ramp it up to scale. we don't think it's going to replace the growth they've had in the u.s. over the past five or ten years. >> susan, how low can gross margins go? >> we're seeing about high and thes operating margin for this year. this has come down to about 31% at the peak. it's come down. i think a teens operating margin for them is realistic. they talk about getting to low

20% levels. that could take longer than we expect because we have the growth vehicles like the men's business, the kids the international which is lower margin. i think weigh on the business until they can ramp it up. in termings of e commerce at the higher end of penetration for a retailer but i think this customer shops a lot online. i think it could grow to even significantly more than where it's at right now. no. >> what is it with mens? are they really buying $90 yo ga pants? >> i think they're making apparel for at the gym, what they call sweat, no sweat, post sweat. i think they're just becoming versatile in their offerings. they make khaki pants that you can wear any time and they're very comfortable. they have speshldsed fabric and material and i think men are attracted to that.

>> interesting to say it's fair valued right now. thanks for joining us. lululemon from fbr capital markets. >> as far as the mac kro data is concerned, treasuries dipping the ten-year note yield reaching the highest point since october of last year. a lot of that has to do with the fact that they're making way for nearly $60 billion of paper to be auctioned by the treasury. black rock ceo rick rieder will join us next. financial noise financial noise financial noise

getting breaking news this morning on mcdonald's appointing new executives. robert gibs you might remember from his political days in the white house is going to run communications and silvia vognato is going to run marketing. interestingly, she created dove's campaign for real beauty. it was one of the most awarded in advertiseing. >> obviously he needs to make his mark and he's got to turn around to implement. we're starting to see that. >> in the meantime greece providing a new plan to the creditors. whether it gets down could be left up to italy.

we sat down earlier this morning. whether. what would happen under a worse case scenario? what kind of implications would it have for the eurozone and grease greece knows this. >> i have a very good relationship we met several times. this is not the first time he said something i totally disagree with. italy has completely turned around. it's growing. it's a country that's implements structural reforms and going from becoming a problem for europe but an example for europe. the imf, the commissioner saying that italy is an example. and it's becoming stronger by the quarter. so i'm afraid that this time my good friend got it completely

wrong. >> i also asked him about the rising interest rates which we're seeing today and true in germany and italy as well. he said it's because people have a better perception of the european economy. >> certainly one way of looking at it and inflation as well. treasury bonds here have resumed the sell off this morning. selling on the yield on the ten-year note racing back pushing the yield back above 2.4% hitting the highest level since october as the market gets ready to absorb paper being auctioned by the government today. rick rieder overseas the income opportunities and total return funds. nice to have you back on the show. good morning. what are you telling people about the rising interest rates? last week we moved up a third of one percent on the ten-year

yield. >> not only is it a big move but you actually have fixed income market because of the supply that's coming into the marketplace. it's a market that sensitive to even small moves of interest. we're saying you're supposed to look at fixed income differently than you have. we think the fed is going to move and they have ample opportunity and economic conditions in which they can move sooner than we think people believe. in fact, what the market is doing now is giving the fed the window. the fed, when you're normalizing, it likes to be behind the marketplace. i think market is going the fed's job. how do you take over risk in fixed income to generate return versus straight interest rate risk. >> it's interesting the words you use to describe the relationship between the ten-year yield and what the fed

does. a lot of people say the fed would like to be behind the curve. it wants everybody to say thank god you're there raising rates but you could argue the market is beginning to force their hands and they may look as if they're losing control of it. >> i think the fed benefits from a couplinge of things happening today. the population is aging and needs more income. that holds things down. you have the ecb doing with the bank of japan is doing. the fed has a very attractive history window in terms of keeping back end yields down. i think the economic data the payroll report on friday. there's strength and employment in the company and it's not the right price today. >> i have to give you some props. you were on with us a few weeks ago and you said treasury yeedle

are going to move up. that's where we are right now. the question is what's next and do we move another leg higher in such a short period of time? >> so we think the rates are going to drift higher but it's not very provacative to say drift but we think we are moving for the reasons we talked about before. there's a number of governors keeping rates down particularly long end rates down. as you talk bded about earlier on the show better inflationary numbers globally. can you drift up? do you hit a 250 ten-year? i think so but i think you have to think about we're not going to history levels of interest rates but do i think it's far higher rate dynamic, particularly the front, i do. >> to have somebody like yourself on is a big thing in itself, rick. to have both of you of your own

volition focusing on stock buy backs from companies, he wrote a company saying ceos should stop buying back their own stock and you have spoken about the growing buybacks and unintended consequence of monetary policy and in your view again, a cost or a cost of waiting to lift for the fed here as well. talk me through your criticism. >> i think when people say there's no cost to keeping policy easy for an extended peer of time is not true. there is a dynamic you're seeing play out today. i've seen in my career where many rates people are talking about bond supply as the impetus. it's because more and more companies are -- i don't think it's a leveraging crisis. they're taking advantage of extremely low interest rates, and tapping into the market particularly long end interest rates to tap into the marketplace and buyback a good

deal of stock. point being, i think if you let rates normalize and has the fed starts to move you create an ek wa librium in the system. we think equities have an up side was growth is good. >> i just want to get this in. if you look at stock buybacks at $1.1 trillion this year are you noting that's a by-product of what the central banks are doing or is it more important about dangers? >> i don't think there's a big lerj leveraging risk. but i think an equal librium, i think that will make its way forward. i don't think there's a crisis. >> good to see you.

thank you for your time. >> when we come back campbells soup facing floundering sales growth. it's expanding into fresh foods markets with an acquisition. will it work? more on that after the break.

welcome back to "squawk on the street." burlington stores down 20%. same store sales were below analyst estimates. they will raise the minimum wage to $9 an hour and earnings expectations, a move here karl and moves that missed the share. >> thank you so much. when we come back apple stock

not reacting well to news out of the wwdc. does that mean it's a buying opportunity in we'll talk about it in a moment. hp instant ink can save you up to 50% on ink delivered to your door so print all you want and never run out. plans start at $2.99 a month. right now, buy an eligible printer and get three months of free ink with hp instant ink. available at participating retailers. the most affordable way to print. hp instant ink. checking out the listing on zillow i sent you? yeah, i like it. this place has a great backyard. i can't believe we're finally doing this.

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here's your update. iraqi forces say they can taken

part of the key oil refinery in iraq from isis militants but they're getting strong resistance in some areas of the town. they failed to isis when they overran most of northern iraq almost a year ago. south korea linking another death to mers and the number of people suspected of contracting the virus continues to rise. they are trying to find out why the virus is spreading. . the deal is a step toward in ge's effort to sell off the bulk of its $500 billion ge capital unit and scientists in austria say they've produced the first prosthetic leg that can can feel. artificial sensors are integrated in the sole where measures contact from the ground. that is the update for that this

hour. back to you guys. apple getting into the streaming music business. the kpen unveiling apple music at the conference yesterday. the streaming service set to launch june 30th. the other announcement a new news reading app. is it a buying opportunity with the announcements. read your note this morning, steve, couldn't get a read on whether you were impressed by all of the announcements nlkding the real big gi apple music. >> i think it was a decent development conference. there was a little bit of pop missing, i think. apple music is neat but they're trying to catch up to other streaming services. what's good is apple's ability to integrate all the products and services together as opposed to being first to market in this

case. >> and then the question is how do you think apple music is going to fit into the idea that you're using your apple products and this might cause you to buy more apple products. does it drive further revenues and i know it's going to take a big product announcement to do that for such a big company? >> we view the services like apple music as supporting device sales. we don't emphasize how much revenue they bring in on their own. you can argue it's a bit defensive but they have to make up for the fact that the i tunes store is in decline. music has shifted and now apple is going there. the integration of the streaming music and the platform as an interaction between the artist and the customer i think they did a good job of that and notice it's also running on android which was a bit of a surprise. they also did not announce but sort of in the deep weeds you could see they now have an app that helps users move from android to ios. they're focussed on getting

people moved to apple. >> it's the biggest weight on the dow right now. a terrific year. up 14% in a flat market. one of the best performers in the dow, and up 30-something percent in the last 12 months. what's it going to take to get another leg higher? >> i think is lot is baked in at this point. investors want to get a sense of what the next cycle looks like. what are the compares for the fiscal 2015. i think the stock is in a bit of a lull. in addition, think about the downside. that gives me some comfort. the stock is selling at about a 20% p/e discount to the markets. we don't think it's going to come under pressure. as a result, we're willing to be patient and we think ultimately the stock breaks out to the up side. >> listening to what you're saying, these advancements that they bring to the market are that, in many senses defensive

in that the idea is you have to create a difference to selling the iphone in the market? it has to be at the cutting edge of what people want to be the center of things they might demand that they don't go elsewhere? >> i think so in the sense that apple is all about customer experience. they sit at the high end of the market. they have to create a better customer experience. i think yesterday provided that particularly on the pc side with the new os and things that aren't getting as much press. apple music is kind of a catch up but we like the integration of the eco system and at the same time the fact that apple is a bit more open than it used to be. they have more apis that allow developers to do things for the watches, and apple pay is another platform that's out there. it's all about the customer experience and apple has the best approach. >> steve, people put all these things together. flip board has taken attention away from their news app. the surface did split screen

before the ipad. google did a proactive assistance beforehand. how long can they play catch up or do they have the luxury because of their large user base. >> i think apple as the luxury of a large user base. they haven't been first to market historically. we make a differentiation of first to market and first to mind. what do we think of for search engines? it's google. maybe apple music is an extreme example. apple doesn't have to be first anymore. given their user base of phones i think what they did yesterday is probably sufficient. >> we're out of time. i just want to ask one quick question. tv streaming obviously isn't coming now. it could come before the end of the year. is it crazy to suggest they might buy netflix? >> i think it's unlikely. apple is very focussed. i wouldn't look for that but i would look for them to make an impact in the streaming word.

>> thank you for joining us. be sure to tune into squawk alley. pandora pandora's cfo will be joining them. big competitor. how his company plans to stay competitive with apple releasing that. the stock has been under pressure in that news. >> when we come back greece presenting new proposals trying to stay away from default. we'll be joined and tomorrow an exclusive with jack ma as he visit the u.s. to attract business to his e commerce company. 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

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take a look at the s&p technology index trading lower today. look at hq with more on that. looks like it's behind the curve. >> it's the worst performer. it's important because it is the biggest sector. the tech sector down by over half a% in early trading. it's being led by larger stocks like fabz and apple both down. apple working on its possibly fourth straight day of losses. the day after its big worldwide developer conference. micron, sky works solutions making a bigger solution.

micron and xerox hitting lows. and paid to the sector in the t waiting in the s&p. this one has a bigger impact than any of the other sectors. >> thanks very much. want to talk about another deal that happened in the food business this morning. campbell's soup buying garden rush. it does speak to a larger trend. established food giants like campbell's soup playing catchup. they're going into fresher organic and perceived to be healthier snacks. it's high hormel bought apple gate. campbell's soup bought a company that sells fresh indicators an bemplgs. it's boosting results along with the cost cuts. campbell's soup stock has held up for the year. bottom line for the industry,

without the strong sales growth at the companies, we're talking big companies, general mills and others, it is a race right now to cut costs and scoop up fast growing companies. consumers, especially millennials really want. >> do you buy your kids soup cans? >> no. a. >> annie's maybe. >> you could see this happening five or ten years ago. the fact they're just waking up to it now is crazy. >> they've been innovative and now it's going to be a game of catchup of weather they can grow type line growth. it's lacking. >> up next on the program, is it still time to be bullish on financials? more on that after this break.

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er greece presenting a new plan as it looks to end the continued standoff and prevent a default. joining us is james mccormick. good to to the see you back.

welcome. >> thank you. >> what a few days of headlines. this bundling to the imf, why did it not have an impact? >> we're looking at bonded debt. our focus is on trooift sector debt. it's implying a default is possible if not probable. >> is there risk of a mispayment in mid june do you think? >> i think we're going to have to get to the end of the month. the realistic deadline now is the end of june when this program expires. between now and then i think it's all about negotiations, not paying. >> let's have both of us explain why the move yesterday from the journal report onwards is important. the money that's on the table, $18 billion in all disappears at the end of the june unless they say that bailout, that second bailout, we extend this now for another year which is what they're saying. we can negotiate for something that's in the kitty, potentially. the flip side is they'd like to

stay in greece for that period of time. do you think the greek prime minister can deliver? >> it's tricky for both sides. the most realistic scenario is we get to the end of june and there's an extension, maybe into 2016 which provides greece with enough funding to see us through the beginning of 2016 but then we're back to where we are today. a third program hasn't really been started. we're still talking about the second program. we're in the extension already. >> it could be debt relief, couldn't it? delaying interest rates. greece then becomes more solvent? >> we have a triple c rating on private debt. there's not a lot of bonded debt out there to begin with. i think the rating is not, not in play. >> identify question. let's say a miss a payment which you say is a possibility. let's say they default and they

have to lee the euro. do you then lower credit ratings of italy or spain or some of the others? >> i a and see what exactly the market reaction is because at this point in time. we don't know. >> if funding becomes a problem for other countries in the eurozone, then we will have to think about the ratings again. >> like interest rates, like what we saw a few years ago. >> at the very least we're going to see a divergence of bond yields we've seen a convergence of bond yields over the last 18 months, the likes of which we saw precrisis. that's going to perhaps unravel and funding costs become differentiated. >> merrill lynch put out a note and said we think that if there's a greek deal done you'll get a 5% spike in equities and we don't see much down side. because the european central bank and the rest of them will come in with force to keep the contagion in check. that's a very viable argument. isn't it? >> yeah.

but i don't think we know exactly how big the contagion is going to be. if greece were to exit, if greece were to defult and exit. this is something that is quite significant in terms of the construction of the eurozone and there's a lot of things that kind of come into question. the institutional credibility of the eurozone. >> it's no going to happen is it? >> don't 80% of greeks want to stay? >> they always have. >> but there's no deal. >> there's no deal. we'll have 0 to wait and see. our best guess is there will be a deal by the end of the month. we're into 2016. we'll be talking about these issues again. >> what's your best rebuttal to those who say we've overthought this that the size of greece is not material enough to be talking about the kinds of grand upsets that were discussed. >> that's correct in one sense. the size of greece isn't that big but the example of greece exit something as i said quite significant. the institutional infrastructure of the eurozone will be potentially called into question. that's what greece represents. >> what would happen to the banking system?

>> the banking system is really reliant on the ecb for funding. so once that's taken a away if greece were to exit there would immediately be a banking crisis i think that's fair to say. >> a eurozone banking cries snis. >> no. you've got a busy few weeks ahead. >> in the meantime, a strong run for the banks here. the sector up 2.5% in the past month. amid volatility. the bond market hitting the highest level since september. a potential rate hike clearly on the horizon from the fed. should you continue to be bullish on the banks? betsy isis a financial analyst from morgan stanley joins us now. >> i feel as if we've discussed whether doctor rates are going to rise in this country forever. before we dive into that what are we to make of for example, you won't cover hsbc i'm sure but the fact that they could axe

50,000 jobs around the world what does that tell us about banking, about cost cutting and margins? >> so as you know i don't cover the european banks, i only cover the large-cap u.s. banks, that's a totally full time job for me. what i would say about the u.s. banks is that we've been doing a lot of expense management for the last seven, eight nine years and that's largely because of the tough interest rate environment that we've been in and the recovery psych that will we've been going through. as we're poised here for a rate rise in the u.s. i would argue that we have been doing a lot to improve operating leverage. if we get a little rate rise on the back end of the year that will be good for u.s. banks. >> do you think the treasury market will correct on its own? or do you hope for more than say two rate rises from the fed over the next year? >> sure. so you know what's baked into

our models is what we consider to be a fairly conservative outlook, we do not have rates going up in our models for large cap banks until the beginning of '16 and we've got a couple of rate hikes in 16 we're playing it conservatively with our estimates. i would tell if you we do get a rate rise or two by year end, our estimates are moving up. >> of the banks that you do cover, which ones stand to gain the most from higher interest rates? >> relative to our eps outlook, bank of america. for a couple of reasons, they've got a significant amount of deposits that are surm and they have a decent amount of securities that have been marked down as rates have come down marked down meaning the reinvestment in those securities has been lower, so as yields move back up nsa a positive for our net interest income. >> are we past the point where

investors need to worry about big bank fees and legal stlimts have. all of those big ones already come out? >> i think as you know we do believe that we are well past the peak on legal. i don't think investors ever stop worrying and we never stop worrying about our positions, think we're past the peak on legal there are a couple of other things coming down the pike. four names that i cover in particular. but we do have what we think is a decent amount set aside in our model for more legal fees 80, 85% done. >> sara asked you which of the banks will be the most responsible to rate rises, and you said the buy is bank of america. is bank of america the top buy in general with your conservative scenario? >> yes. we have a 2016 outlook for b of a, $20 target price, 16% upside. it's the top in our group.

>> and xg? >> excuse me could you say that? again. >> synchony is one of your buys? >> it's b of a, we have regions as an overweight. a function of their exposure as well. citi group and synchrony is an overweighted stock. >> betsy gracic joining us from morgan stanley. and financials are a group that's up in this flat market. let's send it over to kayla tausche for a look at what's coming up next on "squawk alley." >> we're going to look at apple music from the music industry standpoint. we have the cfo of pandora in an exclusive interview to talk about what the landscape looks like now that the 800-pound gorilla is in the room. and now netflix' shareholder meeting kicks off this week. we're going to talk about whether there could be a stock split waiting in the wings, coming up next on "squawk alley."

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♪ ♪ welcome to "squawk alley," joining us kevin o'leary is the chairman of o'leary funds and an investor on shark tank. kayla tausche, and jon fortt is at intel headquarters in santa clara, california. he's going to talk to ceo brian krzanich a little later on. the market having a tough time. we're seeing pressure in retail names and housing names. oil back up above $60. first up apple unveiling its new music streaming service, called apple music. the service will debut on june