ads. almost like cigarettes. meanwhile they want a high salt label on chain restaurant menus. i'm afraid to even drink this water today. squawk box begins right now. >> live from new york where business never sleeps this is squawk box. ♪ >> it's over. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. remember last summer's celeb gate? they ended up online after a hack. jennifer lawrence kate upton and kirsten dunst were effected. now it may reach wider than known. the breach of almost 600 online storage acounts. we'll have more on that story a little bit later this hour.

first let's get to the market news of the morning. take a look at how things are shaping up today. you'll see we have seen some swings over the last several trading sessions. this morning right now up about 72 points this morning. things are holding up even though we have seen concerning trends over the last few days in the market. the s&p up by about 9 points. nasdaq up by 21. >> yesterday i watched it all day long and i watched apple. apple looked like it was going to start selling off and it didn't. it was down fractionally. it was 735 billion. i don't know whether it goes below 700 billion or above 800 billion. that's important for what the market does. the market did make another stand but it's still below 18,000 and the dax is now in correction territory. as you'll see the german ten year was above 1% and we got almost to 2.5 on the ten year. >> the yields picking up again after taking a respite on monday but you can see this morning

what's been happening with the ten year bund. just about 1%. it was 1% earlier this morning and last week it was right around the levels. you can take a look at the ten year note. 2.467%. these are the highest levels we've seen since september. >> it just seems like the market is having -- if you look at the market over the past three months or so as rates started backing up in europe we have gone nowhere and i almost think the market -- we talk about the fed so much if they went up a quarter maybe that would be enough to make an advancement. it almost seems like that's providing overhead resistance. >> it's not may but the inclination is to sell. >> next week is the fed's meet meeting. no one expecting they're going to do anything. >> when it seems like it's top heavy and having trouble getting

everywhere. it always goes up. >> we'll tell you about the other stories we're watching this morning. apple music facing antitrust scrutiny. they're investigating apple's negotiations with music companies. in particular they want to know whether labels colluded or were pressured into the new company. taylor swift took her music off of spotify. this is all about taking music off of that model. apple did get dinged with the book publishers and they had that lawsuit and fight awhile back. in the meantime speaking of music streaming and talking about streaming, spotify despite all the news we heard about apple's news and their new music service, spot identify raising $526 million in a new round of funding. now that values the company at more than $8.5 billion boosting

it's quarterly dividend by 8%. company confirming the moves after information was published on its website yesterday afternoon and then that was removed. the official decision was made at a board meeting last night. the retailer holding a shareholder meeting today on that. >> other things happening in the headlines this morning. the justice department is considering charging general motors with criminal wire fraud. the wall street journal says the charges come from the company's failure to recall those vehicles. millions of vehicles equipped with a defective ignition switch and gm likely made misleading statements and concealed information about the switch. fda panel backing a cholesterol drug we have been talking about this week. there is a caveat though. the expert panel says that the

drug should be limited to certain high risk groups. more tae at a is needed about the drug's long-term ability to not just reduce bad cholesterol but make a difference in heart attacks and the ceo of regeneron is to join us in the next hour. facebook says it earns 51% of its ad revenue overseas. executives at the social network tell reuters that growth in asia is the fastest in the world. this is the first time that facebook has given such detail on ad sales out of what we think of -- i still think of it as main market. everybody is on book. everybody but me. >> you're still not on facebook? >> i'd rather stick needles in my eyes. >> why are you on twitter there. >> twitter i get sort of a news feed from twitter. >> why don you think you get a news feed from book. do people put stuff they're interested in on facebook. i'm definitely not interested on what you're interested in.

sorry. how often do you go on? >> a couple of times a day? did you say something about odd mom out? upper east side and all of your friends? what are they doing there? socializing and going to yoga? >> you should check it out. >> you're going to be on book. you are. >> i'm not. you are going to be -- >> i'd rather have a garden hose for a catheter. >> you should be on facebook just from the perspective that you're on television. watch, roll that tape back. nine months you'll be on facebook. >> maybe linkedin in case i need that some day. >> not going to do it. >> that's why you need to get on book. >> no thanks. >> deal news this morning as well. tokio marine holders agreeing to buy hcc insurance holdings for

$7.5 million. also bayer is selling it's diabetes care business to panasonic health care holdings which is backed by kkr and panasonic. the price tag is $1.2 billion. and alibaba's executive chairman jack ma is on a visit to the u.s. this week. we talked about some of the news he was making yesterday but get a look at some of the other headlines. his chinese e-commerce giant doesn't want to take on amazon and ebay in the united states. he wants to help small u.s. businesses sell more goods in china. he's getting a lot of attention for this comment. he wishes alibaba never went public. he told an ooechtevent that life was different for alibaba but adds it was much worse now. he said if i had another life i would keep my company private. this is a year later. >> easy to say except for things

have changed. he points out extra scrutiny from investors. extra scrutiny from regulators and the media. >> how else do you get it valued up where it is. it's made him the richest man in china. >> money doesn't buy you everything. >> he's one of the few that i think done care about the money. >> also in expanding your business it's much easier to expand it. >> with the money that's the plan. check out shares of alibaba since the ipo. you'll see after an initial massive run off it's come back a little bit but you're still talking about a stock valued at $88 a share. >> he loves to come here and tell everybody he's trying to help u.s. small businesses and he's not trying to compete with our businesses in the u.s. five years from now that will switch. i sometimes search for things and you end up on -- there are english versions -- >> links that take you over. >> take you over to alibaba

sites. >> have you ever bought anything? >> not yet because the site isn't up to snuff when it comes to an american consumer audience. >> a guy like this this successful at an early age, he knows exactly how to play things. he knows exactly what to say to people. i'm helping small -- he knows exactly how to play everything but keep your hand on your wallet because he will get the best of you. >> you mean you want to be on the other side of a deal. >> i'm not saying he's going to pick my pocket literally but he's very good at what he does. >> i loved watching some of his interviews. when he was on cnbc remember how he talked about how he loved the movie forest gump? today he's sitting down with david faber. >> this is another interview chance. >> what did that have to do with it? >> he says interesting things and you'll get a chance to hear that again today at 2:00 p.m. >> does he act like forest gump?

>> no he was very open. >> when he gets nervous he watches forest gump. >> things you would not expect to hear a ceo saying. >> that's self-depricating. obviously he's genius. disarming. it's a way of disarming. >> you do this. >> i try. doesn't work with you. some off beat comments from goldman sachs this morning he says he's optimistic about the economic recovery in the united states. he was speaking in beijing today on that topic. >> jeffrey gundlach believes the fed won't raise interest rates this year. he points to the lack of wage inflation. he thinks the odds of a wage increase in december are less than 50%. under 30% in september. i guess my june hike season going to happen. the odds of a september interest

rate hike in his words weirdly have risen. i don't know why it's weird. the jobs number and with the -- i thought we're seeing some signs of life in the wage market too. people quote him instead of bill gross now. >> he's the go-to guy. did you see the numbers yesterday, highest level in 15 years since they started keeping track of these numbers. we'll talk about that and how that's had an impact on the market. let's take a look at the futures. there's green arrows this morning. these are relatively significant increases. right now the dow futures indicated up. s&p futures up by 10 points the nasdaq up by 24. take a look at the early trade in europe. as joe pointed out the dax now in correction territory. >> the dax is down more than 10%. >> so it's up 1.2% today but that tells you a little bit about what's going on. >> i thought the european

markets are the place to be. >> they are the place to be unless greece pulls out so we'll see what happens. >> doesn't take much to hit a correction. seems like it takes a lot -- we don't even know what one is anymore. >> we haven't seen one in how long? >> a long time. >> years and years. take a look at overnight trade in asia. you'll see that the nikkei was down by about a quarter percent. the hang seng down by 1.1%. oil prices also worth checking in on this morning. wti picking up quite a bit. wti back above $60 at 6141. that's a gain of 2% this morning. the yield pushed back toward 2.5%. 2.467%. if you take a look at the dollar you'll see this morning the dollar is down across the board. euro still at 113. that's quite a bit higher than we have been. dollar yen at 122.76. finally gold prices at this point up by $10.

$1,188.50 an ounce. >> the transports were weak yesterday. how much down from the high are they? >> 11%. >> no 99. >> 99. >> but they were in correction territory too i believe. >> were they? >> i think. maybe earlier this week i was reading about how -- it was just ad correction. >> they hadn't confirmed a new high this year. >> maybe it was down 9%. >> so that's right on the verge. >> doesn't count. but there are questions about whether it's differ this time because the airline stocks have all of this new supply that's moved in and driving the dow transports. >> what kind of supply? >> additional seats. >> i thought they had a whole monopoly. >> no about three of the airlines warned they have new supply that's come online so ticket prices are probably coming down in the last two days. >> like the market is working? that's awesome.

good. >> as we mentioned netflix is one step closer to a stock split. shareholders improving an increase at the number of shares the company can issue. the stock is up 90% so far this year. joining us on the newsline is the senior analyst at fbr capital markets and thank you for calling in today. >> happy to be on with you. >> what do you think? i guess it's not a huge surprise that we saw the shareholders go ahead and approve this move. what does the company do with all of these additional shares? >> it shouldn't matter but it's really provocative. the company is talk about sending it to split enormously. this really doesn't think the stock is reversing. they think it's stick chg ising which is an interesting statement. clearly they look their stock here. >> what about you? do you like it? >> i do like it. we have a $900 price target

which is high on the street. you know we think that netflix is occupying the space that used to be occupied by tv. you like netflix more than tv. that gives these guys a ramp for subscriber growth domestically and internationally and pricing leverage overtime. >> let's talk about pricing leverage. one of the things we just saw did a $30 million deal with brad pitt to distribute one of his films. they'll be spending more and more on content and competing against the hbos and show times and everybody else trying to do that. are they ever going to be actually able to create real margin in this business if they're spending the way they are and how long can they spend at this rate? >> they've been enormously successful. they're spending over $3 billion

internationally you add another couple of billion on to that. for that spend they're getting consumer love on fire with all the rest of tv. it's a great return. i don't know that there's tons of pressure for them to spend a lot more. they could spend $30 million north of that and it's a drop in the bucket. they can do things that other people can't do because it's working. here if you can start to level out the incremental margins is huge. they get $700 million to the bottom line for each extra dollar they charge. they're charging $8 or $9 right now. and consumer pays 80 or $90 for their tv subscription. it adds $100 million to the bottom line. that's for a company with a limited margin now. the earnings growth here will be explosive. >> what concerns you, what could

throw a wrench into the mix again? we saw what happened the last time they raised prices. is the consumer more apt to go along with the price increase at this point or is the company much less likely to raise things drastically without warning the consumer base first? >> i think these guys are learned. the last price hike was really stupid the way they played it out. it was very huge. 70% plus. not well marketed. ridiculed on snl and it reminded people they were paying for this thing which is the last thing you want to do on a subscription business. you pair back the discounts, you charge a little more for the extra feature, high definition multiple streams. they have a lot of easy ways to get more effect per subscriber and are smarter about it and expect it to be pretty successful. >> barton davey crockett had a

brother named samuel barton crockett. you have a unique name. do you know your genealogy? is that where the barton comes from? >> the barton is really not tied to crockett. there is a family tie to crockett according to my uncle but i can't vouch for him completely but tsa what hehat's what he tells me. >> that would be exciting for me if you were directly descended from davey crockett. >> that's the raccoon. >> the raccoon cap. >> who is that guy -- from black rock? never mind. >> thank you for calling in today. it's great talking to you. >> okay great thank you. >> coming up when we return call the food police. one major city is approving a health warning on sugary drink ads while another wants a high salt label on chain restaurant menus. the details ahead. but first here's a look back at this date in history.

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san francisco improving a health warning on ads for sugary drinks. they contribute to obesity. all food contributes to obesity

i think. diabetes and other health problems. the ordinance would require warnings on print advertising within city limits including billboards walls, taxis and buses. reports suggest san francisco would be the first place in the country to require such a warning if it receives final approval. they also talked about tooth decay. meantime here in new york city officials want a salt warning on chain restaurant menus. today the city's health department will propose all chain restaurants add a symbol resembling a salt shaker on menus next to food that contains more than the recommended daily limit of 2300 milligrams of sodium equal to about 1 -- >> i'm in trouble. >> one teaspoon of salt is the recommended daily allowance. the salt one i like to know. >> it came out if you had too

little salt it was bad and the higher levels weren't necessarily bad. >> my dad had a heart attack and he hikes to know the sodium levels in things. >> but still like red meat used to cause heart disease too. >> but all they're doing is telling you what it is. they're telling you there's high salt. >> yeah. just because i think if you're trying to monitor your diet in some way. sometimes it surprises you the items that have extra salt. even if i don't know the calorie county on things now that they have started putting up the calorie count in there there's foods i will no longer eat because have no idea. >> the way i get the food it's not nearly as salty as the way i -- i should get a tattoo that says i'm too salty. >> extra salt. >> i do it myself. >> i try to cut back at home but i'm not great at it. >> do you know who is really heavy handed with the salt. >> buffet. >> michael bloomberg. >> bloomberg too.

>> in this case i like knowing it. it's not that they're saying you can't sell salty food. >> did you see president obama taking a step outside and he's reaching into a pack of something. it's not clear what it is but it said please -- please let the president have a smoke. please let him do it. it's not a big deal. let him -- that was the thrust of it. >> i'm looking at the picture now. >> but this is differ than not being able to sell sugary drinks over a certain size. >> he was smoking in his office. >> people smoked but i wouldn't want to be married to michelle and smoke i don't think. >> penelope would yell at you too. >> she would. >> i think it's a pack of gum. >> zoom in on it. it doesn't look like gum to me. >> no he's on a vestibule.

>> outside on the balcony with a buddy -- >> but the buddy's not smoking either. >> not there. not in that picture. that's the question that the story has. it's not my story. i'm channelling it. don't shoot the messenger. >> a new episode of consumed on cnbc tonight. daniel races to fix his flag ship location in time for the fifth anniversary program. she prepares to relaunch her struggling new york location. >> observations on things we should be doing differently. service operation standpoint. >> i brought him in and i want to see him on service. >> i don't think the space is broken. the space is amazing but i did not feel like that service was good. i felt that the server seemed overwhelmed a lot of the time. i felt like the server wasn't happy to be here.

write see a smile on her face. i saw her touches her hair a lot. i don't see people with energy. i don't see happy to suggestively sell. i don't see people happy to add on. i don't see people asking for that second drink. you have to hold the staff to a certain amount of service and you have to guide them by their hand. >> tonight miss the all new episode of consumed tonight. >> coming up say good-bye to the carry on bag. how airlines plan to get more passengers to check their luggage. i'm not happy about this. a look at yesterday's s&p 500 winners and losers ♪

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>> welcome back this morning. we're in the chairs looking at some stories that caught our interest this morning and we're talking about airlines. you have an airline story too. the story, this is -- by the way this is a big problem. so they have now announced that it -- whereon if they have technically announced it now. but they have said if you buy your ticket on something like expedia or kayak or other services they're going to start charging you additional fees. this comes on the heels of a number of airlines that have effectively taken their listing even off a number of these

services and really what's happened and i would argue following all the consolidation that's taking place now the last step in this consolidation race or race to be able to raise prices is to stop the comparison shopping. that's what has happened here. what you're seeing now is they're going to charge people for using these services. >> i stopped using expedia a couple of years ago because if you run into troubles along the way or have to change anything a leg of your trip -- it happened because we had an illness in the family and i was trying to get my father back quickly from san francisco because we had bought it through a third party we thr they were not willing to work with us at all. they wash their hands of you when you do it. >> but what's happening is even some of the sites like kayak that send you directly you are going to orbits and expedia and straight to delta.

>> you can go straight to delta or united. a lot of those are even taking certain plights off and as the consumer you don't know what flights are on and what flights are off. >> it's probably a smart move by the airlines but i had gotten burned before if you're not flying directly through them ner not going to treat you as the same type of customer. >> the internet is extremely powerful in helping everything. >> prices come down on everything. >> the other story we were looking at -- >> hold on. just so i understand -- >> i don't want to argue andrew. think what you want. let's just move on to the bags. >> hold on. >> you just heard that airline prices are going down. you love this. >> you don't want to be able to comparison. >> it's not an american company to hate. so it's not worth talking about. >> other american airlines are taking share airlines off of these services. it doesn't bother you at all. >> whether it bothers me or not shouldn't be your concern.

>> let's talk about something else we have been looking at this morning. the other story that comes through is something that says that they're announcing new guidelines that would shrink the size of bags that were allowed for carry on on planes. it's part of an effort to free up space in the packed overhead bins. if you're a frequent traveller this is something you're applauding because people bring tons and tons of huge bags on. it's part of the reason it takes so long to load the plane. it's been a huge effort as people to avoid the 25 or $35 fees to check your bags. >> i've always got enough stuff where there's no way -- >> i can't make -- honestly i have so much stuff and my make up i'm never allowed to check. >> i want to bring those on and see how people like that but big things where people get where they know exactly what's going to fit and this is this big and they have the thing on top and then they take the thing off the

top and then put it up from and they have their armpits in your face and they jam it in there and then the flight attendant has to come and help. >> however they did this to themselves by charging people to bring these bags on to begin with. >> newark 45 minutes to an hour. >> i would argue -- >> why do you want to argue all the time. >> i think they think you're totally wrong because they want to be able to get on the plane and off the plane and do it quickly. if you fly with with your family totally different story but most of the people that are actually traveling -- >> conference calls. >> wait a second no more travel. don't go down that one. don't discourage people from traveling. there's an industry that relies on it. >> face time people. i don't think people should be going to las vegas and blowing their money on gambling. >> there you go.

you're going to walk down a dangerous path there. what story were you looking at this morning. >> i was looking at your stories. >> you don't have a story? >> you can talk about facebook again. >> i'm going to roll that tape back at some point. >> it's been three years. how long has facebook been around? i never even thought about it. >> more than ten years. we have mark zukerburg when he first started out. it was on bulls eye. >> was that bulls session or bulls eye. >> bulls eye. >> and by the way that was 12 years ago. >> bull session or strategy session. >> strategy session. >> a lot of sessions. >> sessions and bull. >> and bull. >> the company's cfo was retiring. the new model x suv is going to be delivered soon but first as we head to break check out the dollar. stay tuned, squawk box returns in just a moment.

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welcome back to squawk box this morning. blackstone ceo writing an op ed today. he talks about how the next financial crisis will happen and he suggests the banking system is now stronger. that's the good news. but he warns despite good intentions in his words politicians and regulators constructed an expansive and untested regulatory frame work with unintended consequences for

liquidity. the regulatory changes may well fuel the next financial crisis as well as slow u.s. economic growth. he takes a particular issue i think with the vocal rule to some degree and talks about some of the unintended consequences that hastthat's happened. >> it's the smaller companies that can't afford to regulations that have the problems with it. the big banks actually do okay but this is not only we heard it from other people but he's a republican. he's a free market guy. he is private equity. made his fortune. makes a billion dollars a year or whatever it is and if you wanted to dismiss it as someone that's a progressive you just say it's the same old antiregulation stuff coming from a guy way horse in the game. >> but you agree with him. >> i absolutely agree with him. but there are other people that say with a straight face that as highly regulated as the banks were all along, end periodly during the financial crisis you heard it the other day, no

regulation of the financial sector. it's not true. but we'll see whether this helps but we have heard more and more and what's dodd frank? half done? >> more than half done. >> maybe a third or 25%. >> i'd say 2-thirds 75% of it is done. >> one of these days they'll never known why we have grown so slowly and maybe some day we'll come out of it but we'll never know what went out of it and one side says it's this regulation. >> difficult in getting loans. some people tie it back singularly to that. if you can't get access to credit it will slow down growth tremendously. >> after it when you need the healing then nobody can get credit afterwards. we overshoot. how many times have you heard people say regulations always overshoot? and that's basically what he is saying here. >> i think it was mark that tied it back to the availability of o loans for small businesses for individuals in getting those

things. that will crimp your economy like nothing else. >> all right. let's tell you about tesla. they're not getting crimped. at least in terms of the loans they have been able to get. holding the fifth annual shareholder meeting this week in mountainview california. let's turn to the founder and cio of cups capital management. having bought the stock back when tesla first went public. you have nothing to worry about if you bought it when it first went public. what do you worry about them? >> we worry every day. the stock has to keep going up. performance mark to market every day. it is always new. doesn't matter when we bought it. >> have you taken any of the table since then? >> we have traded around it. there's been big moves as we all know but we have kept that core position in place. >> we had bob lutz on the program earlier this week. he made the argument that the

company was overvalued. he couldn't find what would make it go higher. at least under the current environment and basically made the case that batteries or the technology that we think makes tesla so special isn't so special at all. >> he's one in a very very long line of people that have used one or other traditional lenses trying to relate the company back to what they know and to what they know has been in the past and that mostly misses the point. tesla has brought to the markets both the economic markets and financial markets. a taste of change never touched by the rest of the industry. that drives directly to share gains and today the company accounts for about 2% of the

equity value of the global industry. it deserves more of that through time. i'm fairly certain. >> what's your key takeaway from the investor meeting? >> there's a few of them. a basic affirmation of the launch is great. that's the second major platform. i like the phrase. the model s is the worst car that tesla will ever produce which is a major compliment as you think about it. the x is the second major platform and it should be outstanding and should earn a lot of credit then for gen 3 but i think one of the things that's really really important and not talked a whole lot about is the semiautonomous features that the company is also turning on in

the next few weeks. they're leading in that category and we think that category semiautonomous safety features is the new battle front of the high end auto industry and low and behold here we are again. >> but even if you're right on that score how long does it take everybody to catch up. to the extent we think we'll all be driving electric cars which is a big open question. >> we have next gen auto as a theme that we coined in. there are some enablers to that. right? delfi is in the business of advancing the feature set of all the auto makers as is mobile eye as well. it's in as much flux today as in a long long time. the fact is that tesla continues

to lead that. so we do believe that the others will layer in these feature sets but when tesla is leading in semiautonomous and leading in range and leading in the charges network, what are they going to lead in next? the organization. tesla as an organization simply moves faster thinks bigger and brings to market things that the rest of the industry hasn't got their arms around yet. so that really is the long-term value of this franchise. >> i hope you're right because they're not leading in profits just yet but we'll see what happens. >> not yet. >> coming up summer really is here and it's on the way in. >> 91 degrees tomorrow here. >> it's been slow coming. the hot weather though. it's been 50 and 60 degrees every morning. >> but it means long relaxing days at the beach.

other fun getaways but maybe not anymore. why a growing percentage. that's what i want to know. is it different this year? a growing number of executives are forgoing vacation. they're really high numbers. we're going to find out. we want to hear from you. are you taking time off this year? >> yes. >> we want to hear from you souls over in europe too. is it five or six weeks in portugal this week? tweet to us at squawk@cnbc.com. use the #keep squawking and we'll read your responses and share the rest of the bunch at 8:50 eastern ♪

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you're ready for real business. in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day.

welcome back, everybody. could ads on shipping boxes be the key to amazon's profitability? they have started sending ads for the new universal "minions" movie. analysts say this could get consumers talking. but even if the ads prove to be profitable customers could grow weary of them. i don't know. looks kind of funny. i don't know why anybody would hate ads coming in on their boxes. amazon had previously advertised on packaging tape. and the corner offices across america will start turning into ghost towns a summer begins? the answer is probably not. many corporate executives are just too busy to take a

vacation. 67% say they have postponed getaway plans in the past year due to demands at work. joining us to talk the survey now is gary burnison. it's nice to say boy, i had to cancel a vacation. i don't know if i believe it necessarily. 67%, let's say last year. what was the number last year? >> about the same. >> and the year before that? >> we didn't do it the year before that. >> i bet it's the same every year. >> people don't want to be uberized. you don't want to be the yankees kip. walk around and people are like this. >> you think people are working harder now and more concerned about job security now? i don't know what this is telling me exactly. 73% cite too much work as a major concern. these are ceos?

>> this is the executives. >> executives. and 50% -- everybody does -- how many times would you say you connect to work? >> a lot pop. on vacation. >> could you define what vacation is. i know a lot of ceoos if you call the office there's an assistant or somebody who will happily connect you to this person in their house in the hamptons. but they've been there for the last three or four weeks. so the idea when you say vacation, how are you defining that? working from home count? >> yeah. is there vacation anymore? i took my youngest daughter on holiday a couple weeks ago and walking around the pool, people are plugged in and connected. >> also an incredibly competitive environment. step away someone else will do your job and may do it better. do you think this is a reflection of the slack in the workforce that is causing wages

to stay lower? >> i think you've got to couple things here. you have ceos that want s.e.a.l. team 6. you've got people who are working longer. then you've got technology. and the thing that's disheartening is actually people getting out of college. like my daughter you know president of her sorority. 35 girls in the sorority in her pledge class. and, you know she worked at bloomberg. worked for james carville and she's working two part-time jobs making 12 bucks an hour. and she has to bring her own coffee. i mean that's the environment. you've got a 25% underemployment, unemployed rate for college grads. >> we have seen some heartening news. yet the jolt numbers. the job openings labor turnover was the strongest number in 15 years. you think maybe there is change afoot. maybe there are better days ahead? >> the companies should hire

korn ferry for sure. there are skills that there are a shortage of. ios engineers. the salary for those people are several hundred thousand dollars a year. you've got some of that. but the reality is today's college is yesterday's high school. i mean that's the deal. >> can i ask a technology vacation oriented question. maybe though job takes over everybody's life to some degree do you not think it's allowed freedom for the executives to leave the office in the middle of the day and go to their kids' whatever or go home or whatever it is. work travels with you, but do you think it's better or worse than where we used to be? >> i think it's better. i think you used to plan life around -- plan work around life and i think that's changed for sure. >> i want your long-term survey to be ten years from now that 67% of the time executives say that they're planning on not -- and they're also saying they're working flatout just way too

hard. yeah. after ten years, you say that's what i need to know. whether they went up or not. if we don't have the data. but one thing i think everyone needs to remember this is your key point. the irony is that individuals who take time off are shown to be more productive, have higher morale and are less likely to make critical mistakes. >> so where are you going this weekend? >> i'm going to europe. i'm doing it to be a better employee. it's got nothing to do with me. >> amen. >> okay. thank you. >> okay. nice to see you. coming up, this morning's top stories including a key cholesterol lowering drug. the company's ceo will join us next. but first a look at the futures. dow 66 points higher. back in a moment.

hedge fund manager mark husco is here to share his best investment ideas and tell us why he thinks airlines are, quote, stupid cheap, right now. gop presidential candidates taking the no tax pledge with one notable exception. so far jeb bush is avoiding the sins of the father. >> read my lips. no more taxes. grover norquist is here to talk taxes. and a new cholesterol drug winning approval from a key advisory panel. the ceo of regeneron joins us

first on cnbc as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, this is "squawk box." >> welcome back to "squawk box," everybody. this is cnbc, first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. among our top stories at this hour, the obama administration is preparing a plan to send several hundred more troops to iraq to help in the fight against isis. officials say the plan would set up a new military base in anbar province. several advisers would help bolster iraqi fighters. final approval from president obama may come as early as today. in corporate news apple music is facing antitrust scrutiny. the attorneys general of new york and connecticut are investigating apple's negotiation with music companies. they want to know whether labels

co colluded or were pressured into the subscription service. and checking the markets this morning, the u.s. equity futures have been higher this morning. take a look at things right now. you see right now dow futures up by about 67 points. s&p futures up by 8. the nasdaq up by 20. >> silly wabbit. >> oh. check out wti. if you thought lower oil prices were here think again. right now the wti is up by more than 2%. $61.39 is the last trade. opec saying it sees no further rise in demand for crude this year. the last monthly report says oil over-supply should ease in the next quarters. netflix investors have okayed a big number of shares in the company. that brings the company one step closer to a stock split. netflix is the top performer in the nasdaq 100 this year.

and target is doubling its share buy-back program boosting its quarterly dividend. the company confirming the moves after the information was inadvertently published on its website yesterday afternoon. and then removed. the retailer is holding a shareholder meeting today. that seems like that can happen to anyone at any time. i don't really understand how companies put stuff out. i guess because it's going to be on the website eventually, so they're setting it up. >> got to do it. >> they're building these things and stick it there. right. like they should make a plan to just always stick a picture of homer simpson there but they use the real things as place holders and there are a number of journalists and digital detectives who have spent a lo lot of times trying to figure out how to maneuver. if you can figure it out without the link to get there. >> problem is you have to put it up before it goes up. >> to test it right. >> the worst thing is the new

services that have all the obits already to go. >> and accidentally hit send at one time or another. >> that's where demise is greatly exaggerated. >> i've written one of those in advance. >> you never hit the button. >> at "the times" we write them before people pass. >> the bbc killed off queen elizabeth last week. >> bad. target is yielding 2.6%. 8% increase from that. and the summer heat is coming on. by that i'm talking about dom chu. just check it out, ladies. dom chu checking the sector dom, you know you get these things that you come on and do -- the assignment desk do these people sit around thinking about what you should do? i have some suggestions for what i'd like you to look at some day. >> you should definitely put those in the suggestion box that resides on our assignment desk.

i would say, joe, becky, andrew it's a real mix. right? there are stories that i like to tell sometimes and there are stories that they want me to tell sometimes. so i'd say, joe, it's a mix. but we are always open to suggestions. >> what's going on with the transportation? that's one thing i want to know. >> we will. that's a key area of focus for a lot of investors right now. >> and the dax. the dax is down. >> it was in correction territory the last few days. >> i know. i thought europe was the place to be because of qe and they were where we were two years ago and that's you know get in over there for the -- it's already had a 10% correction. >> it's an interesting theme. because remember some of these assets, the dax, transports they had great runs. and so maybe a little bit of profit taking is not out of the realm of reason. >> we have great runs but we don't do corrections anymore in our averages for some reason. >> no. well, let's talk about some that are maybe in correction territory. >> good segue. >> right. okay. so let's talk about this first. hot sector last year.

still hot on a relative basis. the biotech stocks. they're cooling off a little bit but still near their record highs. if you look at the etf that tracks biotech stocks. you can see here over two years it's doubled in price. but just at the end here, we're starting to maybe show signs of stalling a bit. too early to call maybe cooling off a bit. hot sector hot industry group. then there's two others here that have really put the brakes on and investors know it. if you look at the utilities etf, the xlu, it's up 11% over two years. but take a look another the last quarter of the chart here. we're off about 15% since our recent highs in this etf. like bond stock proxies. people giving to them for those dividend yields. so when interest rates rise the relative attractiveness of these stocks go down. that's one thing that's really cooling off. down 15% from its highs.

and transportation stocks a huge focus, dow theory. does it really signal a downturn for the market? these transportation stocks over two years up a modest 7%. the focus here has been that last quarter of a chart here. because we have entered correction territory down by 10% or more on both an intra-day or closing basis for this particular -- oh well. that's the wrong one. but it should say iyt. that transportation index would have shown you we're down that amount in that time. the transportation stocks are key because they signal more downturns in the market here. utilities have take an beating. three varying degrees, guys, of these kind of pullbacks we've seen. but utilities and transports a focus for some. >> you're illustrating one of the problems with the way things are working. you would think that energy -- cheaper energy should have helped utilities and transports. >> the idea we're talking about energy being expensive above $60

shows you how we've changed our minds about things. >> but the interest rates which haven't gone up yet because people are anticipating it. so everybody's anticipating, you know, the fed looks at oil and says inflation is going to stay low frerorever. the fed says we don't need to raise. but the averages the markets are telling them they're already behind the curve. they already started selling off. that's why they should just do it. it's obvious it has to happen. >> to be fair right, interest rates on the 10-year market side have risen in about a month. >> that may happen where the market makes the -- the market dictates where rates go instead of the fed. >> well that would be normal right? >> right. would serve them right. yeah. how's that feel? all right. thank you, mr. dom. >> you got it. >> sizzling. our next guest built his street cred by investing in some of the biggest hedge funds with

julian roberts. now he's here to share some of his best ideas. mark cusco, the cio of creek capital with $4 billion under management. also the former cio of the endowment investing office of north carolina at chapel hill. nice to see you. >> thanks for having me. >> what inning are we in as we get into -- especially as we get into e the summer we don't know what the fed is going to do or maybe you know or think you know what they're going to do. >> i think the fed isn't going to raise rates. i thought there was a lot of talk they would. i don't think they will. there's a lot of speculation. >> for all of '15. >> i just don't think they can. i think they're in a box. and they're stuck. and the market is trying to do it for them. but the market's done this before. it's like a rubber ball bouncing down the stairs. we've had lower rates and lower rates. so i think we're in the seventh

or eighth inning of the business cycle. and i think that's the bigger question. that might be something about why the transports are starting to roll over a little bit as people are anticipating. coming up here yesterday, my plane was full. >> we're going to talk about airlines because we teased and showed you think they're ridiculously cheap. >> stupid cheap. >> eighth inning of a business cycle at zero. seems like not the way to manage the world. >> one would say the artificial is probably not healthy. >> and i just -- you know nobody knows how this finally plays out, but one thing's for sure. if we're in the eighth inning and we stay at zero in 2015 and we get into the ninth inning and if we go into a slowdown what do we do? >> you know i think we won't be able to -- the fed won't be able to manage it the way they have historically because they'll be out of bullets in their traditional means. >> does that mean a deeper recession? >> not necessarily.

you know i think that -- >> then we're fine. >> it's more like 2000 and 2002. it's not the 2007 2008 kind of collapse calamity. i think it's the more regular downturn. remember 2000, everybody thought it was a big downturn. we were down about 9% for the year. there were some big ugly tech names that went down and things like that but the market was okay. 2001, that's when the recession started and we're down another 11%. >> -- responsible for more than just the markets. we think the fed is responsible for the actual overall economy. if we get into a downturn in the markets, a downturn into the economy, the fed's hands are tied and can't do anything. then what? do we come up with new measures or do we finally take the pain. >> could always come back to qe. i agree with you, but that's a non-traditional method they could use. i think the business cycle will be a shallow downturn. the problem we have really is the long-term picture.

demographics. there are just too many people turned 65. 65 to 85-year-olds don't spend as much. >> you don't even blame the fed. you say they're in a box. it's not their fault. >> they're in a box. i don't think they have much control. i think it's more about debt demographics, and deflation. >> so if you think we're in the eighth inning, you take your chips off the table and wait for the ninth ining to go wrong? >> i think you hedge. from 2000 to 2002 hedge funds outperform long stocks by a lot. and i think the same thing will happen over the next three years. >> just as all the pension funds are taking their money out of alternative investments and putting them into s&p tracking funds. >> when did they buy the funds? at the wrong time. human beings like to buy what we wish we would have bought. and we're spectacular at it. >> would you say it's not the place to be? >> sure. hedge funds -- >> aren't you a hedge fund guy? this is the time for hedge funds according to you. >> the things about them is they can be long biased market

neutral -- >> they haven't outperformed and they're 2 in 20 and no better than the averages. >> it's interesting. we hear that talk every time there's a big move in the index. so 1995 to '99, best five years in market history. we heard lots of stories about the end of active management the end of hedge funds. we heard it again in 2007. it's not different. >> warren buffett has been having that contest -- >> it's been about eight years. >> when you take the fees out, all of a sudden doesn't look that attractive. >> and he didn't know that going into it that it was going to be great years for the s&p index. >> true. >> this is the truism that lives through the ups and downs of the market. >> i will say one thing is when you make your decision to be long biased or hedged really does matter. and when valuations are cheap, you want to be long biased.

your point is we are buying the wrong thing at the wrong time. we look backwards. >> is 2 in 20 still a real thing? or does that have to come down? >> every business you know baseball coach, football player doctor, lawyer the best person charges the most money. would you go in into the hospital and say could i have the cheapest surgeon today? >> the problem is in hedge fund land, there's a lot of marginal players charging where you don't have that necessarily in the other businesses in the same line. >> well in every business you've got pretenders. i agree with you though. people say they're 10,000 hedge funds. i disagree. >> in the age of walmart where there's been compression -- in every industry there's been compression except this. >> corporate america, they're at all-time highs because they're squeezing employee compensation. so pricing's come down but

they've expanded markets. >> let's talk about some of the stocks you do like. we did talk about airlines. you called them stupid cheap. make the case. and is that just in the past two weeks? >> no, look. the correction in them certainly helps, but they've been cheap for years. no one believes in the last three years the airline business has fundamentally changed. for 35 years the industry didn't make money. that was the entire industry. >> that's the way it should be. i mean, why do companies need profits? why would there be a not for profit sector if they needed profits? >> wow. i know i know. >> i'm channelling someone. and you should say truthiness instead of truism. >> is that a real word? >> it was coined. it's better. >> to answer your question it's about consolidation. any industry that consolidates and you get 70% or more with capacity with top three, you get higher profits.

>> you like facebook. he doesn't go on facebook but -- >> me either. >> you're not a member. >> it's an age thing. >> but i have twitter. >> there you go. >> you think facebook is almost like a defensive stock. >> i do. i think facebook is a dominant player in social media. and i think they figured out how to monetize better than anybody else. twitter, great company, great tool. i love it. i don't use facebook i use twitter. but twitter hasn't figured out how to monetize yet. facebook is the king of monetizization. they're great. >> come on back. i know you like valeant. >> i love the valeant story. i love health care generally. some of the biotech stuff like you said earlier, is a little frothy. but health care whether it's valeant, actavis. >> all right. okay. so quickly with facebook you don't care what other people's

lives are -- or what's going on there or you don't want to share your own life or both? >> the truth, my wife won't let me be on facebook. she says it's too easy in the investment business too easy for people to come on and say things you don't want to. >> it's worth of twitter. >> it hasn't been yet, but it can be. you're right. it probably will get out. >> it's weird because it is a reflection of the deepest -- like the darkside of i think humanity. don't you think? >> i do agree. >> it's harder to troll people on facebook than it is on twitter. >> interesting. >> because facebook it's you. the better conversations happen on facebook. >> how about linked? do you do linkedin? >> we're all on it. >> you're speaking for me? i'm not on it. >> andrew and i are on it. thank you for coming in. when we come back an fda

advisory committee voting to approve a new drug by regeneron. the ceo of regeneron will join us next. then grover norquist holding presidential candidates to the no tax pledge. but one republican has so far resisted. and later, two titans of real estate join us on set. richard lefrac. we'll be right back. financial noise financial noise financial noise

well, that panel an fda panel voting in favor of approving the latest cholesterol fighter from regeneron. dr. len schliefler joins us first on cnbc. our reporter meg tirrell is here as well. you're in here, too. this is you, too, for regeneron. $54 billion company. $54 billion company. absolutely staggering. what was it ten years ago? >> about five. less than that. ten years ago it was probably a couple billion. >> couple of billion. unbelievable. part of what we talked about with -- >> creating value. >> so this latest thing, the three that said no is it a side effect issue?

or it's just an efficacy issue of whether it prevents heart attacks, do you think? >> i think the debate that really took place yesterday at the fda advisory panel was whether or not you could use ldl lowering lowering of bad cholesterol as enough to improve a drug. and some panelists struggled with that because there are others where that hasn't worked out well. but i think the class of drugs represented have such a strong foundation in genetics. it's really a triumph of genetics. and modern approach is to got the drug targets that most of the panel -- >> what happens with people that hereditarily or whatever is in their genotype -- >> they did their nobel winning research and showed the center of the universe for bad

cholesterol and cholesterol metabolism was the ldl rescepter. this basically sits on the surface of the liver cell and sucks out the bad cholesterol from the blood stream. those who were genetically board without it they had elevated cholesterol. and they would get heart attacks at the age of 12 or 13. they didn't have that. when he was at merck, his team they came up and got the first drug approved which was an ldl -- >> first statin. >> it was the first statin approved and the class that are ldl receptor elevator. now you come around to 2000 or so and a group of france led by catherine barlow, they figured

out if you have this mutation it dramatically affected your cholesterol. if you were missing it your bad clust roll went down quite a bit. and if you had it overactive it went up. then dr. hobbs went on to find out if you didn't have this protein, this genetically. you had a lifetime reduction of 90% -- basically you didn't get a heart attack. you're almost immune to heart attacks if you didn't have this protein. and because you had a lifetime lowering of your cholesterol. now my partner george enters the picture and he and his team at regeneron, they came up with the first that was tested in humans. they showed it works and together with san fee -- >> it blocks it. >> i don't see why it wouldn't

be the same then. >> the lowering is dramatic. >> if it's 90% no markets, you should be able to -- and with statin, their whole body hurts. >> well statin intolerance is complicated. it's common, but the question is how do you sort it out? many people who actually are statin intolerant you can get them on a statin. and we believe that the first line of defense here is statins. statins work. they're cheap. they block heart attacks. they've been shown in different outcome studies. but there are plenty of people -- people who have a high risk. they're on their statins. people who have taken a maximum tolerated dose of statin and still get heart attacks. it's still the number one killer of americans, heart disease. >> i want to ask you about something that's different with your drug and amgen's. they have an extra question because they only offer one dose

of your drug. you offer two doses of your drug. why is that better do you think? >> well our feeling was we wanted to develop a drug that would lower ldl cholesterol. but if it got too low meaning we don't know what that means and we haven't seen results from going very low, but we're getting to unchartered territory. we're seeing people who have familial are seeing lowering. and we felt that you should have flexibility in dosing. where if a doctor came down too low, he could come down to a lower dose. that was our strategy. we think it was a good strategy. and i think that if it gets aprooued that way, the doctors will like that. >> you were nice what you said about statins. but i would have said i get a huge market share with this. so what is your projection for market share for this?

even if statins continue to be the first choice. >> it's not even if they should be the first choice. they should be the first choice. let's just be clear about this. patients should stay on their statins. patients should go on statin. look. if you look at the numbers, just start with the various classes of people who have desperate need. in fact the most important thing about the panel yesterday was listening to the patients. you heard the patients where everybody in the family and their children, they have high cholesterol since they're little girls or boys and go on to have heart attacks in their 20s or 30s. so it should be -- if you look at that there may be as many as a million people according to the fh foundation ol though only 20% are diagnosed. >> in this country? >> in this country alone. and then you have millions more people who are at high risk on maximum -- >> so this is billions of dollars. >> estimate $5 billion peak annual on each of the drugs.

>> we don't have any forecasters at regeneron. we don't like to forecast. what we like to do is optimize. we think this is an important -- we hope if the fda approves it an important addition to fight bad cholesterol. which is fundamentally hasn't changed since it was figured out so many years ago. this is the really bad actor. >> the ldl. i wonder what it does good. we have some idea. the structure of -- >> there are -- cholesterol is -- >> all right. all right. we always got to go. >> great to see you. >> nice to see you. >> thank you. coming up we've got buzz over comments by jack ma. we'll tell you what's grabbing headlines when "squawk box" returns in just a moment.

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welcome back to "squawk box." among the stories that are front and center at this hour the number of new mortgage applications jumping more than 8% in the latest week. this as interest rates rose to their highest level this year. people seem to be file for loans now worries that costs will move higher. also mcdonald's naming robert gibbs as its new global chief communications officer. going to be manager of communications and government affairs and helping to improve the brand. the fbi says almost 600 accounts were breached in the so-called celeb-gate nude photo hacked. the breach happened last summer. it led to purported photos of jennifer lawrence and kate upton showing up online. at the time they said it was a targeted attack on personal information used to manage storage accounts on that icloud system. >> if either of us show up it's

photoshop. for you too? >> you've never had a naked picture? >> can you say if a nude picture of you it's photoshop. >> i can. >> you're hesitating. >> i don't know. i don't know. the abs are real. no no no no. >> i'm talking full monty. not monty hall. >> i got to check my photo roll. >> he always tells the truth. >> i always don't. >> if it's me it's photoshopped. that's all i'm saying. >> or what about -- the only thing i could think if someone took a picture and snuck it in when you were in the shower or something. i've never taken a naked picture of myself but i've not never been naked. >> really? >> really. >> you know those horrible stories at hotels. >> yeah. when we come back this morning, grover norquist has been holding candidates to the

no tax pledge for nearly 30 years. but potential gop candidate jeb bush so far is refusing to sign. grover will join us next. e financial noise financial noise financial noise financial noise

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welcome back, everybody. grover norquist has been carrying the mantel for the antitax pledge. the major candidates vying for the gop nomination in the 2016 elections have promised to oppose or veto any tax increases. including most recently rick perry. one notable is jeb bush. so far he has refused to sign the pledge. joining us right now is grover norquist. he is the founder of americans for fax reform. thank you for joining us. >> absolutely. good morning. >> are you surprised jeb bush is refusing to sign? >> well, he didn't sign when he was a governor. and as a governor he cut taxes. the challenge is that he said he won't put in writing that he won't raise taxes.

the has made other definitive statements on other issues. it'd be helpful if he'd start by saying i'll veto any tax increase. he hasn't been willing to do that. so it's not even some i have a problem with pledges. his brother took the pledge and kept it. his father took the pledge and broke it. >> is it surprising we ourselves have been running the video today. read my lips no new taxes. everyone remembers that. i can understand why jeb bush wouldn't want to be having that juxtaposition placed up against him. >> well his brother simply said you know when i was governor of texas i didn't raise taxes. i cut taxes. i'm signing the pledge. i'm not going to raise taxes. nobody brought his father's tax increase and used it against george w. bush. but when jeb says i'll leave the door open then automatically and has defended in print his father's tax increase that led

to higher spending. he promised $2 of spending cuts for every tax increase. and the democrats oddly enough fooled him. they did the same thing to reagan eight years earlier. he might have learned from reagan getting cheated. but his son should certainly listen -- if my dad had on the away a completely good presidency by raising taxes, i'd say don't do that. >> we've known each other for a long time. i respect in what you've done in raising the terms of no new taxes and like you as a person -- >> but. that was photoshopped. >> i do think some of these are crazy to sign onto something to put themselves in a position where they have no flexibility. i know you think this is liberal media talking, but even forbes recently said, look, it puts the candidates in a difficult position because it means you can't compromise. it gives them no flexibility. what do you say to that? >> i think that was a columnist at forbes not forbes magazine.

but it's the opposite. when we put taxes on the table in 1982 we got all spending increases. there was no spending reduction because of the tax increase. 2011 we had a majority of the house and signed the pledge. they told the president we're not doing tax increases. they got $2.5 trillion of spending restraint. not a dollar of tax increase. we just did the fix with $3 trillion reduction in present liability. no tax increase. we have twice now gotten serious spending restraint in return for no tax increase. so when you take taxes off the table, you get real spending cuts. when taxes are on the table, no spending cuts. history tells us and reason does as well that politicians raise taxes instead of governing.

instead of reforming government. so if you tell them one option is raising taxes, option two reform the government, reform entitlements. that gets pushed off the table. so it's exactly those politicians who have said we're not raising taxes that have driven real success at the state level, at the national level. those that leave the door open get taken. >> what we have not seen yet is reform of the corporate tax codes, that it seems like we have both sides who say yes we would like to see a reform of tax codes. i think the part of the problem is there has been very little flexibility in terms of where you adjust rates, where things might go up to get lower in other area zblps no. the problem is that the president wants a trillion-dollar tax increase inside any tax reform. his non-negotiablenonnegotiable.

i think he may have compromised. he only wants a trillion now. you can't raise a trillion dollars and have it be pro growth. you can with dynamic scoring and ryan and others have put this together in the house and the senate. that rate should not be 35. it should be 25. that would not lose revenue. the canadians have 17.5%. the french are at 25%. not where we ought to be. we should stake the rate down go to territoriality. those would gain revenue because they're so pro-growth. >> grover i wanted to get your view this morning. i don't know if you read the piece about marco rubio and suggestion that he perhaps had some irresponsible spending habits given you want us to spend responsibly. mitt romney's campaign when they were vetting him for vice president flagged this as an issue. is it an issue for you? >> personal spending or state spending?

>> in marco rubio's case the article contends that we has a personal spending problem taking on too much debt. >> okay. i thought the original criticism was he took on student loan debt which if you don't have money is sort of the only way you can pay the tuition fees. i think his track record as a speaker was quite strong. certainly as a senator has been. his tax reform package would turbo charge the economy tremendously drop the cost of capital and make tremendously better incentives. he and mike lee have legislation. but also rand paul has a flat tax coming out shortly. i was talking to governor pataki who's going to have a pro-growth tax reform. i think we're going to see a lot of republican plans around a theme, corporate rate down territorial system, full expensing, and improvements on the kalcapital gains tax.

>> had a few traffic -- would you be all right with those? parking tickets, would that be a problem you think for rubio with you? >> no. as long as he's not going to raise taxes, he can have all the parking tickets he wants. >> grover thank you for joining us. come and see us in the studio soon. >> i should love to. yeah. >> thank you. okay. when we come back we've got two titans of real estate joining us on the set. richard lefrak will join us and jeffrey soffer. we're back in a moment. ♪ ♪

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two family real estate dynasties are teaming up to develop a once condemned property in hopes to turn it into one of the largest projects. richard lefrak and jeff soffer joins us now to talk about this venture which we go back a ways. welcome, good to see you. we haven't met before jeff but good to have you here. you told me about this a couple of years ago, i think.

>> this is something i came upon kind of in the depths of the florida real estate market depression. >> near miami. >> it's in miami. >> in miami. how many acres? >> 183 acres. >> you went in with $20 million in 2008. >> it was 2010. >> it was a former landfill? >> it was a landfill. it actually had failed under the prior developers and credit suisse there, cmbc -- >> it was the biggest there. >> they were happy to take 20. >> they didn't get anything. there was one bidder. >> there was one bidder. and i've tried to do a multiplier on this because you guys have some pretty fun plans for it. it includes -- you're good at hotels. shopping malls. >> he's good at everything. >> turnberry, fountain blue.

what's the name of the mall down there? exactly. >> which is the most successful single mall in the united states. he won't say it but i will. >> one of them. >> and there's -- what will this turn into? >> we're hoping that it will turn into a brand new, exciting community. it's called sulfemia. it's going to contain approximately 3,300 residential units. commercial property including a new shopping experience that jeff and his assistant are putting together. hotels, some office buildings. so it's a new exciting thing. >> you paid a lot for you. did he hit you up for half of the fee for coming up with that name? >> no no.

richard just goes along with everything. >> no we have to rebrand it. we have to create some excitement about it. but it's going to be a long-term project. it'll take 10 to 15 years for sure. you know you have to be an optimist if you're my age and take on one of these things that's a long-term thing. so it's kind of a longevity thing like the guy giving out the injections for the heart you just had on. >> fountain blue is as popular as ever right? >> miami is doing great. miami obviously is a true gateway city in america. people from all over from south americans to europeans, obviously the northeasterners that come during the wintertime. and it's grown. it's not just a small little city anymore. the airport has 40 million passengers going through it. >> i know here in new york -- i don't know if it's been the same in miami -- the dollar has had an impact cutting back on foreign buyers. is that the same there?

>> south americans traditionally have always run to miami as their safe haven. so sure the dollar being strong stronger has taken a toll on south americans. but the ones that do well that are buying these high priced condominiums and spending money there, we're still seeing customers from the ocean. >> what's inventory in capacity look like right now? >> it depends where you go in e the city. downtown there's a lot of projects underway or being started. as you go to the beaches, there's not many. has a few. but it's not -- the beach probably has 600 units for sale on the whole beach. downtown has thousands. >> and south beach probably has 200. each market down there is slightly different. you can't generalize it even though people like to say miami.

but, you know it's not one market. it's multiple markets. >> who lives there? >> turnberry as a hotel. my father started in the late '60s and was all swampland. >> right. >> and so it's progressed through the years. 40,000 people live there today. so it's grown through the years. but we have have presidential condominiums and of course shopping and malls. >> is occupancy above where it was in 2006? >> i think so. >> at all these places. >> yes. >> not everywhere. maybe miami i'm sure. >> we just opened up our one hotel in south beach which i'm proud to say has reached number two on tripadviser. >> have you been there? >> i've been there. it's nice. >> it's okay. >> it's not as nice as fountain blue. >> that's what i mean.

>> there's a lot of excitement about miami and the tourist business is still very vibrant. >> why don't you get your buddy sternlicht in on this? how did you guys happen? just made more sense? >> barry's a wonderful guy. >> diversify. >> jeffrey is a real true developer. these kind of projects don't really fit the description for a private equity fund. >> so you said sternlicht's not a real investor. >> no. i said private equity does not fit with 15-year development. >> come back. good to meet you. please come back. congrats on this. i look forward to seeing it. >> nice to see everybody. >> thank you for coming in. come on back. when we come back this morning, we will have the big movers in the stock market. plus we want to know what stories you're buzzing about today. tweet them to us. send them to us @squawk cnbc.

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welcome back everybody. let's take a look at stocks to watch this morning. one that we've been paying attention to is japan's tokio marine holdings. it's buying hcc insurance holdings for $7.5 billion.

this is the biggest m&a deal this year by a japanese company. when we return this morning, president obama blasting claims that his health care law is a job killer. but douglas holt aiken begs to differ. he will join us for a lively debate.

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the streaming war heats up. spotify readies its war chest with a new round of funding while apple comes under scrutiny from new york and connecticut. details ahead. showdown in the supreme court. obamacare versus jobs. we debate the impact of the upcoming ruling and tell you what it could mean for the economy. and navigating the markets with louis navellier. the stock picker tells us why investors could see healthy returns from cvs. the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin.

we are 90 minutes from opening bell on wall street. right now looks like the dow futures are up about 68 points above fair value. s&p futures up by 9. nasdaq up by 20. crude oil prices have been rising as well. this comes after the report of falling inventories and signs that oil production growth was leveling off after sharp increases. as a result you could see wti up by 2.5% by $61.64. oil over-supply could ease in the next few quarters. here are stories investors are going to be talking about today. the number of new mortgage applications jumping by more than 8% in the last week. this as interest rates rose to their highest level this year. fearing that borrowing costs will move even higher. and target is now doubling its share buyback program to $10 million and doubling by nearly 8%. and the company confirming the moves after the information was

published on its website yesterday afternoon and then it was removed. we talked about that earlier. and how that seems to be happening more and more. new this morning, fifa is suspending the world cup bidding amid this scandal. all said to be in contention to host in 2026. but we'll have to see what happens. a lot about apple music written in the last couple of days. it's facing now antitrust scrutiny. the attorneys general of new york and connecticut are investigating apple's negotiations with music companies. they want to know whether labels colluded or were pressured into favoring the tech giant's new paid music subscription. >> colluded with apple, they mean? colluded with them or were pressured? it sounds like it's digging around at this point. >> they're digging around as the service takes off and whether people were pushed like taylor swift to get off of services like spotify. this comes in the wake of the

whole investigation around the book publishing piece that happened back in 2015. meantime one of their competitors spotify raising half a billion dollars to go to war with apple music. the latest round of funding values the company at $8.5 billion. the streaming service now has 23 investors including fidelity coke goldman sachs, and kleiner perkins. we have breaking news for you crossing the tape as we speak. johnson control saying it is exploring strategic options for the automotive business. it is the largest auto maker. we think of this as an autoparts business. it accounts for more than 50% of its revenue. $22 billion in global sales which we should say is more than double the other two main units combined. by the way, if you spun that company off, it puts it up there with southwest. it's a fortune 150 company.

the company hiring goldman sachs and centerview partners to serve as financial advisers on a transaction. will hold a conference call this morning for the plan. but before that the chairman and ceo is joining us on the set here. alex is here. he's here to walk through this decision and talk through it. thank you for coming on literally a minute or two after this thing crossed the tape. so how did we get here? last time we talked we were talking about automotive company or proxy for the automotive industry. >> yeah. i think last time we talked you were talking about automotive and i was trying to not talk about automotive. but the most important thing to understand is we have an incredible franchise business in the automotive business. but in order for us to become a multi-industrial it's been clear, more and more clear that we need to focus on the segments that are going to move us forward as a company. and allow the automotive

business to have the investments it needs to be successful. we've been constraining capital. we've been making investments outside of automotive and went to make sure we don't hurt that business. >> we should put that stock back up on the screen. literally within the past minute or so that stock has now moved close to 6% higher. let me read you a quote. when you were here last time, you said i think we will always be in the automotive business and always be a great automotive supplier. are you giving up on this as part of this? >> what we're doing is realizing in order for the business to compete, we have to allow for it to be successful. the timing of all this relates to the strategic planning process. we look at our allocation, how we want to be perceived. if you look at the buildings business the franchise and energy storage business. i think they're undervalued. i'd love to stay in the automotive business. i'd love to make the right investments. but i think what has become clearer and clearer is in order

for the business to be successful, we can't overweight our investments away from it. >> 18 million units or i don't know what it's going to be. you call it some kind of a top in the automobile market? >> no. i mean obviously we're in -- who knows where we are in the cycle. but we're in a great place as it relates to this. >> is there a reason you'd be able to appeal to customers and the other businesses better if you didn't own the awe motive part of it? why doesn't it make sense? is it a slower growing business than the others? >> it's just much more cyclical. if you look at the way we -- everything from the ratings agencies to how -- >> and we're at the high of the cycle. back to that again. >> we're certainly not in the early part of the cycle. >> so you won't be the ceo. you'll stay with the remaining part. >> that's correct. >> what kind of multiple would you put on the new company, if you will? what kind of comparable

companies do you think that you should be compared to because i assume part of the spinoff involves a new -- trying to get a new multiple attire. >> i think it's to make sure we get the value for the businesses we have. it's a little hard to say, but i would say if you look at the multi-industrials, those are our -- they're our competitors, peer set. one thing that will be interesting to see is how people actually value our energy storage business. it happens to be an automotive battery business. but if you look at the nature of that business it's an aftermarket business. it has great cash flows. margins are really high. but i think because we were the owners of that business i think people look at it as an automotive business. >> you're spinning off more than half your company and not going with the bigger chung of the company, is this because the automakers have consolidated and it's tougher to get margins in that business at this point? >> it's certainly tougher. if you look at that today, it's

gone from purchasing entire seats to purchasing components. and if you get inside that business, we've strategically moved to be a component supplier making the metal frames the mechanisms, the parts and pieces that add value. that business is a good business. there's no doubt about it. it's just the cyclicality of the business. what it does to our overall portfolio. unfortunately it doesn't make sense for us to have it. >> a lot of capital that goes into it too? does it require -- >> absolutely. >> -- heavy capital investment? >> huge capital investment. and quite frankly, that's where the rubber meets the road. we look strategically where we're going to allocate our capital. we have made choices not to allocate capital. >> we lost some great domestic autoparts companies to foreign buyers because of the difference in tax. who was it? i mean one of the biggest is now owned by a foreign company. i watched it go over. are you going to -- i mean you

would sell this to someone who can buy it and make more out of it because of lower taxes? what's the tax rate for jci? >> pretty competitive. around 20%. so this is really not a tax play. this is essentially no more than how transparent we are about this entire thing. >> it can be bought by someone who can make more money from it because they make less taxes. >> could be. but i don't think that will be what drives this. >> got to ask because it's happened over and over again. any agitation by actavis or other shareholders behind the scenes we don't know about that got you -- in terms of getting you to this moment now? >> no. nobody's gotten us to this moment. i think where we've been is we've gotten lots of feedback as we've gone through our portfolio changes. over the last two years, this is not the first that we made or acquisition. as we've gone through this process, people ask can we get to our goal and being over half of our business being automotive from a revenue perspective. but i haven't met with any activist personally that owns

our stock, that's saying you need to do this. this is not something that's being driven except by our own internal needs. >> in terms of dissynergy i've heard you and others about your business and other conglomerates. when you separate them are there dissynergies? >> i would be not completely transparent about is that we have a great business in china. if you look at our business there, it's world class. i mean, we have a 40% share in the business through our partners. and that will -- is a potential dissynergy because it's important to be successful in china. the rest of our business a lot of our operating business capabilities have come from the automobile segment.

we have done a lot to transfer that capability. >> very quickly, what would you do with the proceeds? would you buy something else and add it into the conglomerate? >> i think there's plenty of opportunity within our existing businesses. we're not looking outside the businesses. but within our businesses the space around energy storage, the opportunity is unbelievable. within the building segment. >> within the last year not even a year zf bought automotive for a big acquisition. they definitely can make more money with their tax rate. >> alex thank you for coming in this morning. what's the stock up now? i don't know if we can flip that screen around. i don't know. there you have it right there. up over 6% now. >> seven-month high. 10-year treasury touching a seven-month high of 249. in the spread between 10-year

and treasury above 1.74%. >> and yet the futures are still hanging in. it's been the higher yields that have been pushing spriess down. when we come back this morning, the stock picker louis navellier. he expects healthy returns from cvs. we'll find out why after the break.

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welcome back to "squawk box" this morning. take a look at futures right now. you're looking at green arrows. dow looks it would open up higher 65. s&p 8.5 points higher. and nasdaq up about 19 points. the platinum portfolio continues to outpace the s&p 500. the managers are up 4% year to date compared to the s&p 500 which is up only 1%. louis navellier joins us right now to talk about his picks. by the way, he is ranked second in the overall portfolio. he's up 23% this year. that's just below kevin landis who's up 31%. louis, thanks for coming in today. >> it's an honor. >> it's an honor to have you here. you've done very well with your picks. you say there are things you're

looking at into the summer. >> it's still the dollar crushing the sales of the s&p. so you want to have companies that have real sales. although it's getting harder to find earnings that grow fast in sales. so actually all my picks, the earnings won't go quite as fast as sales. >> and the picks that you have are centered in certain areas. health care is a big thing for you. >> sure. health care's good. right now tech is awesome. things like that are great. but, you know i knew it was going to be the bumpy summer months. a stock we've been talked about is activist. they have new knew of an fda approval. >> sure. that helps but it's the fastest growing company for sales because they bought allergan. i just flew in from florida.

botox is a big deal. apparently i'm the only guy that doesn't have it yet. >> we're sitting right here. me and andrew. >> okay. andrew doesn't have any. >> oh. do i look like i've had it? it doesn't work of course. >> you're great. >> thank you. >> is there anything that would change your picks? you're sticking with these because it's a safe way to go? >> i stick with them for a simple reason. we measure risk. risk to us isn't the angle, it's the version. these stocks aren't that volatile yet. when they get too hot to handle then i will definitely sell them and buy something better. that's why i sold that chinese stock i was here on. >> you replaced it with cvs. >> correct. which is very conservative. i've had pneumonia four times in my life -- >> four times? >> yeah. flying airplanes. but it's -- i had to get all these special shots, go to fancy places. you go to cvs now.

and cvs will give you chemotherapy. >> seriously? >> yes. they have some for chemo. part of the outsourcing of health care is that. >> how much of it is the caremark? >> that's a big part too. but cvs is a winner in the health care reform. >> finally you like gilead. is that because of tamiflu or is there something else? >> it's still hepatitis c. it's better to take a pill than go to a hospital and die a painful death. and it's a very expensive pill. it's a better solution than the other solutions. and gilead is very innovative. they've got more products in the pipline. >> we've seen quite a bit of hesitation. you've seen the interest rates selling off. 10-year has moved higher but there is concern they're going to raise rates by september. how does this impact the overall market and do you worry about what happens when they do? >> they won't raise rates this year. that's not me that's the vice

chairman of the fed in israel speaking. he thinks the global economy is too weak. we don't have the wage growth. the report was good but downward payroll. people get two temp jobs, they get counted twice. the household survey had issues last year. i mean there's so many issues. they're not going to raise rates. then they hit the election year. no one wants to raise rates next year. >> you're talking about another two years before we actually see the fed stepping in which is crazy when you look at how far the economy has come. >> officially when i give a talk, i say they're not raising rates in my lifetime. then they want to know how long i'm going to live. but on a serious note if they did do it it would be december and one and done. they do not want to raise rates next year. and imf told them not to raise until next year. >> but it also represents

developed nations. >> we've seen this surge worldwide. the fed will be forced to -- >> but we've seen that over the last couple weeks. >> of course. we will see. you know, this is all on the feds. janet yellen is going to be the only one not in the world. i think she's trying to hide personally. >> maybe she doesn't like fishing. >> or there are bison on the road. >> most beautiful place in the world. >> must be hiding. >> it's a good gig. i think steve takes that gig every year. >> oh yeah. yeah. >> thank you for coming in. great to see you. if you want to learn more about his summer stock strategy and get his three additional stock

picks, go live to cnbc.com. once there track all in realtime and read their exclusive analysis. coming up when we return, salt and sugar under fire in two major cities. we've got details. then president obama blasting attempts to reverse his health care law. the supreme court expected to rule on who should get federal subsidies. is obamacare killing jobs? we will debate that topic when "squawk box" returns. (vo) me? i don't just wait for a moment. i watch for the perfect moment. the one nobody else sees.

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an fda advisory committee recommending an approval of a cholesterol fighting drug produced by sanofi and regeneron. it could be available for patients later this summer and could be more potent and carry fewer side effects than the statins. we spoke to regeneron's ceo in the last hour. >> our feeling was that we wanted to develop a drug that could dramatically lower ldl cholesterol. we felt you should have flexibility in dosing where if you got too low, the doctor could come down to a lower dose. that was our strategy. >> take a listen. oh no. i was supposed to say that before the sound bite. i'm sorry. the stock is down this morning likely because the fda panel says the drug should be limited to certain high risk groups and argues more data is needed about

the long-term ability to attack. still shares are up over the last 52 weeks. len, the ceo on earlier, it was less than $5 billion in the early 2000 stz. incredible. two cities are taking action to help people eat healthier. new york wants to require warning labels on high sodium menu items at chain restaurants. that proposal expected today. the health department wants a symbol resembleing a salt shaker next to items. measure also prohibits the use of city funds to buy soda. i wonder what i think of all this. >> i know what you do. >> no i don't. >> really? >> yeah. >> isn't quite as crazy as actually making every drink manufacturer in the world redo

their bottle. >> like i said earlier -- >> the city can't buy soda though? makes no sense to me. >> i appreciate having the salt and sodium labels because i want to know. >> the way things are going, just be drinking water all the time. this is a nanny state. i thought you thought ma might be good. they are the smartest people that are in the government, andrew. they know what to do for us don't you think? >> speak for yourself. check it out. a marathon game in the ncaa baseball playoff was won by tcu and it may be because they put on one heck of a rally cap in the bottom of the 12th. one teammate put on 20 caps. maybe the mojo came through for the horned frogs. four innings later -- four innings? tcu would score to beat interstate rival texas a&m 5-4 for the second year in a row and secure a spot in the college world series in omaha. no way four innings --

>> sit still. don't move for four innings with all those hats on your head. maybe. clearly they have about as much to do as we do. when we come back this morning, the debate over the president's health care plan and job growth. and later, alibaba's jack ma says he wishes the giant never went public. we'll look at the company's business model and tell you if you should be a buyer of the stock. and don't miss david faber's interview with ma coming up today at 2:00 p.m. financial noise financial noise financial noise

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welcome back to "squawk box" this morning. here's what's making headlines at this hour. houston-based insurer hcc is now being bought by japan's tokio marine in a $75 million deal. this may be a rush to beat further interest rate hikes with average mortgage rates now at

the highest level since november. and if you have been missing your netflix while on the road we've got good news for you. marriott has announced guests could access their accounts on hotel tvs. from what i understand, it will cut down on wi-fi usage and band width because so many people use their laptops or ipads to watch movies over the band width. now they'll have it over the tv. and it's a bigger screen. >> so do you have extenders in your wi-fi extenders in your -- >> i have -- because we have such a large place in new york city, we have a dozen extenders to get from one side to the other. >> does the servants quarters have extenders? >> we had to get them two. they were complaining about the wi-fi. >> they came in the mail yesterday. >> we have one. >> complete wrong idea about what this was.

i opened this up, and thought what is this. supreme court about to make a major decision about the future of obamacare. the president mocked what he called chicken little warnings that the act will hurt job growth. >> while we were told again and again that obamacare would be a job killer amazingly enough some critics still peddle this notion. it turns out the experience of straight months of job growth. a streak that started the month we passed the affordable care act. the longest streak of private job growth on record. >> joining us now to debate this and more austan goolsbee professor at the university of chicago school of business. and douglas holtz-eakin, he is president of the forms action. it's going to be interesting. we should know in june some time -- i wonder sometimes

austan when you hear the victory lap for how great job creation and everything has been, how that sounds to you. because you've been you know you've been one of the people that have illustrated just how weak and you've always been pessimistic about a real surge in hiring. do you just roll your eyes and say he should have kept me and it would be better. >> you know that's true. but i think what he said is correct in that you heard massive vitriol of people saying this is going to destroy the world. i never said it's weak. i said we're going okay and that's it. i want us to be going faster. but you can't argue that this was a job destroyer when we've had a real really extended period of recovery. >> doug, in "the washington post" the other day, it had the obamacare approval rating hit a

new low, 39%. but in the"the washington post" said please don't gut the health care law. yet it said it hit a new low. then there's something in here, austan, in the journal taedsoday saying words are words. >> is that an insight from the journal today? >> yes. words are words and that the supreme court has only one choice. if you take it literally, you need -- >> now "the wall street journal" editorial board is your legal authority? i hope you don't hit anybody in your car or something. >> because i picked "wall street journal" instead of "the washington post" or "new york times," you're going to cry? >> no. i don't want you to take the newspaper for legal advice. i'm giving you advice. >> doug it's going to be the end of the world. i also saw if we do do it i think these guys heilemann and who's the other guy? halperin every liberal progressive tenant that the

media has put forth, it's what the president said the other day. you know that he doesn't talk about net new people on insurance. he talks about a total number which doesn't include all that had to switch insurance to stay in. and he also takes credit for the cost moderation which was happening in health care anyway. in what probably isn't due to obamacare either. >> right. it is true they have a large group of entitlement programs. i don't think anyone would argue that's pro-growth policy. how fast would we have grown or created in its absence? we don't know the answer to that question, but just spouting jobs figures doesn't make the case. second, on the legal standard this is a case of administrative law. and the standard is not congressional intent. it's what does the law say? if the law is clear on the face of it then they have no choice

but to rule that the irs had no reason to reinterpret the law and put the subsidyies in into the change. that's what's at stake here. >> austan the journal says the president either feels or has an inkling it's going against him. and he's already stirring up the troops and castigating republicans in advance of an adverse ruling. do you know anything? >> i don't know anything. i'm not a lawyer thank god. i don't have a special expertise on that. i do know there are a lot of well-informed lawyers who do not believe that it's a clear case against the law. they say there is ambiguity in the law and therefore the ruling could go either way. i think the supreme court -- >> it's gone both way at the district courts. >> i think there's ambiguity and i think this court has shown on some various measures that it's willing to basically be political. i think this would be a chaotic

nightmare to try to shut down the subsidyies and threaten to blow up the exchanges. i don't think they're going to do it. >> austan can i make a point of that? i think that's really overstated. if the supreme court rules for king, they can easily stay the decision for 30 to 90 days. they'll probably pick 90. that gets you to the third quarter of 2015. that would direct the irs to make, quote, regular payments. but there's no reason they can't make that quarterly. they can easily make sure the subsidies flow through without a problem at all. so it's not like these subsidies will just go away. >> -- election year of 2016. i think that sets us up -- >> i'm not saying that's a good thing. i'm saying those are the facts on the ground. >> you know, austan i keep hearing how badly this is going to hurt republicans. so badly that hillary or a democrat will win in 2016. that's why i'm not sure -- >> that's probably already going to happen, joe.

>> right. but why don't you -- if it's going to be so bad for republicans, why aren't you more hopeful it happens? >> because millions of people will lose their insurance and people will die. that is why i am not for this happening. regardless of the presidential election. >> stop. 75% of the people who got the insurance in those exchanges had insurance before. they were okay with their insurance and they would get it again. >> that's millions of people. >> most people got health care, though austan. we won't let people die in the street very frequently do we? >> joe -- >> that's a little hyperbolic. >> there are 50 million people who didn't have insurance and we added more than 15 million to the roll. >> no. >> if one quarter of those people lose insurance, we're still talking about millions of people. >> austan most of that is medicaid expansions.

which is not at risk. has nothing to do wit. that's a completely different part of the law. >> as i said if even 25% of the people that added lose their insurance, that's millions of people who are losing their health insurance. >> it's a million and a half people who will -- >> oh is that all? look come on. what are we talking about? >> austan, stop. there's a million and a half people who in 2016 will have to have a different policy than they have right now. and both sides of the aisle said they will do something to make sure they have an insurance policy. that's not really the issue. the issue is how this will get done, not weather it will get done. >> i hope that's true. >> well we'll see. you know the president has seen fit to talk extensively and from the heart for a couple of straight days about this. so you wonder whether going to be -- >> >> that is true. >> it's going to be interesting to see. thank you. i don't know -- how did he let

you -- how did you slip through his fingers? i mean it's insanity that you left the white house in the first place. >> i agree. >> and it's never been the same. doug, we didn't get to talk about that study showing it might be a boom for jobs. but maybe another time. thank you. >> absolutely. thank you. when we come back this morning, the future of alibaba beyond china's borders. jack ma is in town addressing questions and concerns about the company's global strategy. find out if the stock is a buy right now. check out the futures again. been a much better day for the bulls again. s&p up by 8. nasdaq up by 16. "squawk box" will be right back.

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welcome back to "squawk box." alibaba founder and chairman jack ma speaking in new york making a big pitch to u.s. businesses. >> my purpose coming here that we need more american products to china. we have hungry 100 million people coming to buy every day. so this is why we come here. not come here to compete. we come here to bring small business. >> joining us now with his reaction is dan ernst. dan, you were on site. you saw him make his presentation b. he also said he's not happy he's a publicly traded company. >> i think you see a lot say that. >> was that pretending to be

humble or real? >> i think a little bit of both. the reality is he was here for a very big mission. actually it was interesting because dudley the president of the new york reserve said that they don't usually have business leaders there. usually economic leaders, world leaders. when you think about it jack ma is kind of the economic ambassador for china to the u.s. his pitch really makes a tremendous amount of sense is that, you know the next -- the last 20 years of growth in china has been exports. and he said the next 10 20 years of growth in china is actually going to be importing. and for most american businesses, it's a relatively difficult market to access. and he has his platform that has 100 million people a day shopping on their site. i mean it's so good that actually apple and amazon have stores on alibaba.

>> just the idea where he said they're not going to be competing with american companies like amazon do you believe that? it's hard to imagine. >> well you know sure. i think at some point he -- >> sure but you were hesitating. >> i think he would like to at some point, but he doesn't have expertise in selling in the u.s. or operating business in the u.s. he has a tremendous platform for doing commerce in china. and american businesses don't do well there. in one of the few elements of the q & a someone said is china an open market? can american companies compete? he said apple does well there. microsoft does well there. ford does well in china. but name a chinese business that's doing well in the u.s. and maybe the u.s. isn't so open. but he's trying to create more commerce into china. so i think it's a tremendous idea. so i think that will be very successful. >> what do you make of the

stock? >> i mean it was a little bit overbought after the ipo. then that kind of a rough december quarter and it was oversold. pretty reasonable. it's 32 times earnings. amazon is 100 times earnings. the earnings per share at alibaba should grow around 60%, 70% this year. so it's trading at about a half peg. it's pretty interesting opportunity. but we're in a volatile period here i think for the stock market overall that the domestic chinese market is on fire. the shanghai composite is up. alibaba is down for the year. >> so 87 do you want to own the stock or no? >> i think we'll have a seasonal slow quarter. in june we have a new ceo on board. so i think the market will provide an opportunity. maybe i'm being a little bit, you know, cheap in thinking about it. i think it is another, you know future business.

i think it is a lot like an amazon building a big platform. just a different part of the world. >> we've got to go but do you have a leadership problem. around some of the senior leaders of the other businesses? >> you know one of the things about jack ma is he's not afraid to make change. and so he was disappointed in his ceo over the last couple of years. he said i'm going to put an end to that and put a new ceo on board. >> dan thanks for coming in. appreciate it. >> thank you. >> and we should remind viewers we're going to have an interview with jack ma. david faber has an interview this afternoon. it's at 2:00 p.m. exclusive interview, jack ma sitting down with him on "power lunch." and coming up next who would win if american pharoah raced secretariat? i've got my money on american pharoah since secretariat's dead. the side-by-side video results are next. plus is tesla ready to pull the plug on the battery swap process? elon musk saying it doesn't make

much sense. we'll talk model x and autopilot as well. "squawk box" will be right back.

the viewer to send us stories that have you buzzing. do we say squawking or buzzing? >> squawking, we like. >> it's time for us to share some of our responses. the ceo earlier of corn favor told us 67% of executives surveyed, they're postponing cancelling, vacation plans in the last year. they're working way too hard. they're flat out for their companies and share holders, and every dime of that ceo pay, i think, maybe in the back of their minds, i think we'd better come up with us.

most of the twitter fans disagree but one woman says she's in the baahamas were three weeks. they tweet, don't worry. the resort has cnbc so i won't miss an episode of squawk. we don't want to make it like work. jennifer horner has big plans. she has eight days of vacation planned in zion and bryce. >> it is a favorite game of sports fans comparing current champions and speculating how they'd win if they went head to head. this is of the triple crown star secretariat racing american pharoah. the side by side comparison shows american pharoah was two seconds slower than secretariat but it doesn't take into account the heart of the horses or how

they would challenge each other if you had a faster guy. it seemed to me that american pharoah ran faster every time someone came up on him. >> and after the second fastest running behind secretariat. we'll take it. we don't need another secretariat. i'm ecstatic that we got to see the whole thing. let's get down to the new york stock exchange. jim cramer joins us now. are we watching more sports or do we have less interesting things to do if our life now? why do i find myself all the sudden these things mean more to me. i'm not sure why. >> i think that in the race situation when you have a horse that is such an incredible monster, everybody has to turn to it. the triple crown is a big deal. the basketball series it's not the same old teams. suddenly, it's interesting. a cleveland game versus a san francisco game. they make for great viewing.

>> if you would have told me that i was looking forward to watching a tampa bay hockey team play, i would have said no way but i do now. how about rates moving up now? do we see 3% soon do you think on the ten-year? is it finally it? >> that's what everyone is talking about. it's amazing. i think a lot of people feel it's going to get there so quickly that we ought to be immediately reconfiguring portfolios. that's why all the consumer packages have been under tremendous pressure. i see the mortgages going un. i think 2.75 is double but 3 is a lot. the problem is the h vac business isn't as good as united technologies. this was the star of the company, but i know that you asked him whether he was under

pressure or not. this was something that the street thought should have happened years ago. positive for the common stock but why now that's what i didn't get. why now? not an effective answer that we heard. >> okay jim. we'll see you in a couple of minutes minutes. when we return elon musk talking about the company's progress. we'll give you a return down of the details when we return. the conference call. the ultimate arena for business. hour after hour of diving deep, touching base, and putting ducks in rows. the only problem with conference calls: eventually they have to end. unless you have the comcast business voiceedge mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions. i've never felt so alive. get the future of phone and the phones are free. comcast business. built for business.

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tesla's ceo elon musk addressing the future of the company at yesterday's big shareholder feeting.feet meeting. >> some interesting nuggets from the meeting yesterday. let's start with the model x. a lot of people wondering if tesla is on track for deliveries. he says deliveries will start in three to four months. remember the battery swap program in they were testing it out. it turns out tes rala owners isn't really want to do it and it's stalled out.

the first battery packs are coming out mid 2016. musk says he expects deliveries of 50% annual. he says it will be about 50% per year and then the auto pilot technology that they've been working on first beta versions going to test customers by the beginning of next month and down the road this is what elon musk thinks the auto pilot technology might be like. >> several years from now, there will be a operational auto pilot with sensors and everything that's needed for someone to actually go to sleep and wake up at their destination. >> i love the idea of falling asleep and waking up at your destination. take a look at shares of tesla, the cfo is retiring after seven years with the company as the cfo. back to you. >> thank you for that. >> like being on a train, i

guess. >> being on a train? >> being able to fall asleep and reach your destination. >> it would be better because it's door to door. you don't have to go to the station. >> make sure you join us tomorrow. >> still won't be on facebook. >> yes, you will. >> "squawk on the street" begins right now. ♪ >> good wednesday morning. welcome to "squawk on the street." we're at the new york stock exchange. david faber is in chicago where he'll have an interview with jack ma at 3:00 p.m. eastern time. stocks continue to get buffetted by bonds. back in this country the ten-year is approaching 10.8.