>> 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. that's close to levs.

>> shares up 90% in netflix. target officially hikes the buyback and apple's music service attracting some anti-trust scrutiny. we'll get to that. first let's get to david and find out what to expect out of ma today. did he light up the news wires yesterday, david? >> yeah. the speech to the economic club of new york many of the themes following the closely as we do but certainly new for the audience yesterday. the charm offensive continues today. they're trying to explain itself to americans and the shareholders but also to emphasize small business and a way for american small business to access the chinese market of course, with the emphasis over there on trying to get the chinese to spend more to become more of a consumer economy or at least a bit more and the fact that they say at alibaba, we can

be your bridge to getting your products over there and getting them in the hands of chinese and helping you to expand. today here, where we are in chicago, they're having a big town hall with many members of small business organized by american express. we'll be here briefly with mr. ma presenting. the proposition that alibaba has to get goods that are made or grown here sent to and sold in china. >> david, one of the things that we keep hearing is that the chinese take our markets and we get nothing in return. that is certainly not up to jack ma. it's much more of a central government planning. i don't think that jack ma is a relancer. is this something the communist party wants because they fear some sort of backlash here? >> i don't know. i think alibaba is trying to

differentiate itself from many who like to lump it in with amazon or other e commerce companies where it's not quite like that. they don't own weararehouses or distribution network. what they are trying to do is significantly grow the percentage of their revenues that come from overseas. right now over 0880% are china. i think 4% comes from international. that's really where they're focussed right now. whether or not they're being encouraged by the chinese government, certainly there is an encouragement for chinese to spend some of their money and to try to transing igs from an export led economy to one that at least has some consumer spending as sending the gpd higher. >> even as ma is here goldman sachs is in beijing speaking and

saying china has achieved a very high growth rate at some cost. mistakes have to be corrected and bad investments have to be written off to have another stage of rapid growth. >> i think we keep hearing about certain renegades of the china economy. the local debt has gotten to big. thermofisher on the other day on mad money. their business is thriving. they test air. they test the quality of the environment. that's probably the fastest growing american business there. >> second to uber. >> exempt for uber. interesting you mention climate. yim jim, yesterday in his comments and we know this having had a long conversation before we comes back to the idea of

climate change and ire pollution. he talks about things that you rarely here executives in the u.s. address issues like climate change and the pollution in china is quite significant and a real health problem. yesterday he referenced in his remarks the idea of world war iii, people perhaps taken back abit but he's talking about a war from all of us against these things like climate change and air pollution and things of that name. it differentiates him from so many of our chairman. he's a chairman not a ceo. he'll talk about the broader issues. >> these are issues that are somehow in this country divisive. you almost feel like if you've championed one of these issues 50% of people are not going to buy your wares. it's so much better to away from them. when you're in a smog-covered country, it's not political to be able to say we have to worry

about global warm but when it's over here there's a split. you go on your chairman and talk about global warming, you might lose business in this country. >> that's why we're sometimes so taken aback by ceos who are vocal on certain issues like tim cook in indiana. it rarely happens. >> i remember when i was being told send the ceos notes about the indiana government and what he thought was blatant guy discrimination and it was revolutionary. here's ma basically saying here's the issues that people who are big in corporations must discuss. it's a different paradigm. kind of exciting. finally on what he said at the economic club. he was asked whether or not it's better now that he's public versus before when he was private. here was was direct answer to that.

>> if i have another life i would keep my company private. i'd do it not for myself. i'd do it for the shareholders customers, employees. they need it. i don't need it. this life is tough. before ipo it was tough. now after ipo, it's much worse. >> much worse. and he followed that david, with, of course again, sort of speaking about the time when he made $12 an hour as a teacher. >> actually $10 a month, i think. it's a broad theme with him which is seemingly that he was a happier man when times were simpler. he comes back to it any number of times, sort of revealing, again, sort of in a very different way from what we're accustomed to here some of his inner thoughts and even turmoil

about this. it doesn't mean he doesn't want a public company. and there's a lot of things he's been able to accomplish because of that. but it's interesting to here someone say something like that. >> life is a box of chocolates. >> right. >> we can't wait. of course, again, that interview coming up at 3:00 p.m.2:00 p.m. eastern time. >> gpd at 7, down a tick from the projection six months ago. oil is a story extending gains. looking for a sixth consecutive decline. >> this is the most insane story of all right now. yesterday u.s. monthly crude oil output highest in more than 40 years. there's been no drop p in production to speak of. it just doesn't dove tail what's happening in the oil market unless you think the demand side is getting stronger.

that would be europe. the demand side has improved somewhat. iraq is pumping in more barrels than we thought. it looks like it was a mispricing. >> you said a trendless market with a bias to the downside and the companies either need to get busy -- >> live it or get busy dying. we have companies are that are run by warden norton. i think unless you're doing something like controls today, here we go. we'll sell this division. first there's mary barra. what does she do immediately? we don't need you. gm you need him. wow. what a time for that. >> it brings to mind a column yesterday that m&a has it stabdsnds

right now is not necessarily a comment on the market. it's more about survival. >> it's about consolidation, trying to get an industry together where there's not much competition. look at the airlines. suddenly there's competition. the analysts keep fighting this. they don't downgrade. this morning what do we get? it's still one more sense from deutsche bank cutting numbers, american air southwest, and the rails aren't that good either. we sit here and say -- j.p. hunt was upgraded today. in the end, the employment growth and the bank stocks are not spilling over to anything else. i mean, bad numbers yesterday, a housing company. we know mortgage rates are spiking here. i just -- am just struck by the inconsistently.

urban outfitters we saw mid single digit numbers. burlington was horrible yesterday. we in a market, the last piece of information, if it's bad. look at the last 15 minutes yesterday. a lot of stocks gave up. >> a lot of chart work today about the last 30 minutes of the day. >> it's become horrendous. and i find individual stocks yesterday, united natural foods down badly. that was related to whole foods. this morning boulder brands a company that i've had on mad money, a ceo gone. everything is influx here. white wave pays a lot of money for a company that is natural and organic. yesterday campbell's did. . those companies are merging in order to grow. >> is a stock split at netflix an example of a company getting busy living? >> i know the gray beards out there -- i am a white beard.

that they are doing something that the people who own netflix want. they want a share of netflix. it's something people want. and i applaud them. i saw it at sales force and visa. these are companies that said we want a more individual shareholder base. let's make it so they can afford a couple of shares. it matters. >> not only is that split coming in due course according to hastings but now marriott is going to put a netflix app in rooms at 100 hotels by year end. >> yeah. they notice that their guests are not actually watching the on demand services they offer at these prices. it's important to notice netflix. we know it's a powerful platform at this point. i continue to wonder what the next iteration becomes for netflix, whether they try and create their own over the top

service to some extent whether amazon will do that. there's so many things going on. there was a story yesterday in the jury room aboutournal about the bundle and will it break apart. nonetheless, jim, i remember the days when stock splits back in as you remember '98 '99 would bring 25% moves in stock. yahoo comes to mind. we want to caution people. i think it's worth doing. it has no impact whatsoever on the financial performance of company or on its pe multiple but i guess it can be imbraced given you allow more people to buy the stock. >> you get more of the people who don't trade and rent fewer of the people who can knock down a stock. you know what we never talked? we never talked act yahoo

getting the nfl gain. yahoo gets that gain. abc, cbs, did not get that gain. that contract is out there. >> did you want to watch the bills and the jags in london? >> that's a game that's blacked out nationwide. the jags already lost their number one pick but the bills, a good running back there. that could matter. >> we'll see if they get game three of the nbc finals any time soon. what an amazing night last night. >> there's something worth watching. >> lebron with more points through game three than any player in the history of the finals. when we come back a little drama. later on this morning, the chief fashion critic of the new york times is going to join us and tell us why she's breaking up with her apple watch.

take a look at the market. trying to rebound here a little bit. a lot more "squawk on the street" from post nine in a minute.

target acknowledging it will hike the dividend by 7.7%

increase the buyback program to $10 billion. it put out a press release tuesday afternoon and quickly withdrew it. there was some discussion that maybe they sent out the release before the board actually had their official vote. >> it's very funny. whenever you have ask a ceo, are you going to increase the dividend they say no we have to wait for board vote. this was the kind of thing that happens that says maybe it's the ceo and it's a rubber stamp. now, that said i mean there's certainly so much discussion at a board level that it wouldn't be -- it's kind of a, i don't want to say it's bogus but it's a foregone conclusion. we were worried about the credit rating and this company moneys up quickly. they're producing big cash flow. important to note. >> overall, i would argue, you're fed up with retail. >> i am.

but it's a special consideration, whether it be a drugstore or a target it's so good versus a coles. what happened to them. walmart, 52-week low. costco can't get out of its own way. lululemon, there were so many guys shorted and then it goes up. nothing is working the way it's supposed to in retail. >> speaking of walmart, ma saying they're going to overtake walmart's sales this year. >> he's talking about over 400 billion this year and throwing out the trillion dollar in gmv. remember it's the amount of things that are thrown out on the flat form. they're talking about a trillion dollars as their target at alibaba alibaba. that would be more than walmart amongst those who sell and buy on the platform.

on retail overail, we've talked about the airlines and the hit they've taken but we used to talk about how the airlines are not investable. sometimes when i'm far away maybe i'm listening. i'm listening to what you're saying. is retail uninvestable? do you have to trade it? >> i think right now it's too hit or miss. you'll have an apparel company do great and mane macy's not so great, and then there's an activist. you have to own it and then sell it and this t strong dollar might be hurting their new york sales. there are more things involving hedge funds and private equity funds that i find if you buy them when they're crushed, you tend to do well. urban outfitters mid single digits, that stock can bounce

back a little bit. even as companies try to get away from monthly sales, you get a read. some of these guys have done well and one month you wake up and they haven't. >> to your point, the high frequency data of monthly comps is extinction. mcdonald's now. >> we have to talk about that. the employment numbers are the best though. >> we'll get to cramer's mad dash and count down to the opening bell. a lot to come this morning. more "squawk on the street" from the nyse straight ahead. t-mobile agrees. never settle for verizon's overpriced gimmicks. try the un-carrier risk-free for 14 days you'll love it, or we'll pay for you to go back.

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♪ >> just about six minute the to the bell. let's get jim's mad dash. a lot of intrigue in the. >> you're going to see the stock down badly. yesterday there was controversy. the controversy was we don't know if we want to massively prescribe this lower cholesterol drug. having been intimately involved in the intrigue as a patient, this is totally expected. i mean there are many doctors who are saying do you mind if we see a little bit more? the chatter is that everybody who has -- the statins aren't working for could take this and everyone who the statins are working okay for can take it. it's a huge drug. the doctors are not going to just rubber stamp. that's never the way it is.

sant if i could buy rejenner. eperion, this is a marmg new category, if you talk to physicians as i have no one is going to say i'm going to give it to you. these are caution people and they don't want to do anything wrong. this is business as usual. >> interesting week for that set of drugs. >> we'll get the opening bell in just under five minutes. don't go anywhere.

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you're watching "squawk on the street" live from the financial capital of the world. the opening bell in just over ninety-seconds. we're watching not just stocks but rates around the world. the german bund back around one. >> kind of where it should have been. >> people are talking about mortgage rates going to 4.25 now. >> you have to lock in if you haven't. really, you're kidding yourself.

>> you think it's too late? >> yeah. there was this moment and now you're back to kind of same old same old but things happen that are interesting. the yen last night, the central bankers saying i don't see the yen getting any any cheeper. and then someone buys it. when the insurance companies get bids, no one cares. that's a big deal. it shows me that don't get complacent. we're waiting for a deal where a company who we thought could be acquired. i was making a joke that gm, the fiat borrowed a lot of money and bought gm, would it be that bad. it's the autos with labor problems. you have to keep track of that. >> as we get ready for the

opening bell, we'll get you a look at the s&p at the bottom of your screen. the big board today as corrections corporation of america celebrating its 20th listing anniversary over at the nasdaq. viacom and the tack koe bell corporation celebrating a get schooled. amazon today, a lot of news out of tesla's meeting. the cfo is retiring. >> a lot of people felt that didn't happen and you wouldn't be able to make the numbers and they would have to raise capital. the company continues to be somewhat charmed and wall street likes it. i was surprised about the cfo. i like that guy. he's a straight shooter guy. >> musk talking about asking the government for permission to start testing thousands of satellite that would beam the internet from space. >> you have to understand that

we'll be bombarded. i said something good about the cfo. i will now be bombarded by people saying why can't you recognize blah blah blah when you see it. at the same time, it's a cold stock. when i see the satellite thing, i don't know. i know some people who work in that division. they're the smarters kids of my friends -- the parents. anyone who's smart wants to go to tesla and just wants to work in that division. >> amazing company. we'll see what their future is. >> johnson controls the ceo on squawk earlier today and talked about companies getting busy and exploring options. >> 198 i said of get rich carefully, i said they should spin off that auto business. it took two years. it always makes me think was there probably an activist. he said no activist. this was something they woke up and said we have to do. i think you have to be careful with the rest of johnson controls.

you're getting an hvac company. >> the jcic was on squawk this morning. here's a quick listen to what he said. >> the most important thing is we have an incredible business in the automotive business. but in order for us to become a multiindustrial, truly, it's been clear, more and more clear that we need to if kus 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. >> you know look this is again, part of what happens. the guy has been watching the stock. it's been a pain trying. i think a lot of companies are feeling, we're not going to get the growth we want in the economy. let's just do something and find value within our company. the only guys that have a lot of growth are people connected with cellular and natural foods. every other group, you would

think autos would make you a lot of money but look at ford and gm. those stocks can't get out of their way. >> the list of winners, the transoceans of the world. we always said 60 was some magic number in production. what happens now? do you think we're stabilizing? >> i think the rate we should have had this deplaegs you'll see we'll stop pumping as mump pumping as much oil. almost all the major stocks i follow is back to where it was at $47 or $48. these companies are capable of making a lot more money because they've lowered their cost. i find myself thinking oil would be $60 $65. if it's not going to go down on the 40 year production, then it's not going to get down.

china, we just got the baltic freight numbers again, they're up again. >> we are looking for a draw again today when inventories come out at 10. and crude is down. >> the chemical companies are moving because feel like they've, their margins have been cut. now people like them. it can't just be finance. even oil as a leader i'll take it? >> you would take financials and energy? >> yeah. they came public with so many different companies in the oil patch. it's no longer just exxon and chevron. you see a midstream petroleum transfer company that also does propane that's sent to canada. boy, did the bankers pump the stocks out. they do color the cake. >> can that environment recreate itself in a higher rate world? a lot of this production was financed by minimal cast to capital.

>> we have to keep an eye on the bonds but i look at the euro, and it is incredible. the euro is having a run. people don't want to talk about it. the german bonds doing what they're doing, which is to go up in yield. this is going to make it so there's not a lot of upper pressure on the dollar. >> colgate sells. some of the head winds they're saying the beginning to ease. >> it was a subject of takeover chatter. i don't think it's the case. you'll see the analysts where two guys go and they've been right. they go from a sell to a hold because if there is takeover talk, david faber was saying yesterday there could be fire. it would be hard for me to imagine someone is trying to break up colgate but procter is trying to sell a division. anything is possible in this market.

that's when moving stocks companies doing things and activists getting busy doing things and picking on companies that haven't been able to have great growths. by the way, utilities up. that's because of a ruling that allows them a price. utilities should be going down. but you have a confluence of rates going higher utilities going higher and oil and finance going higher. >> apple is right at the 50 day. we mentioned this piece in new york times. it's just out of color. but the fashion critics saying the headline is why i'm breaking up with the apple watch. >> that was a fast romance. you have to give it a little time. look, i was ten years in the making for my wedding. i mean tim cook should not necessarily take that as a sign. give me a break. wait until you see the different things you have. this morning it was calling me master. it said what would you like master?

i said how about some eggs? >> netflix, this is again, an all time high going back to the ipo. 661 now. the idea that netflix has so many different options, i thought it was brilliant to do this with brad pit. they put it in the movie theaters. they tease you and take it back. i always when i see in netflix, other than the move about the -- i always say why didn't i think of that. when i see the kreks corp., it's like orange is the new black. i said that's good. ka view toe is in the neighborhood. these are great characters and if you haven't -- someone tweeted me at jim cramer here's a guy attacking me for how can you like netflix? >> i like it because the dramas i see on netflix, i don't see elsewhere.

they're good. and when you get some of the executives from tv off the deck they like orange is the blue black and house of cards. >> the content is winning and now going into hotels. >> i'm waiting for shake shack to get into hotels. i can't get that done. it is killing me. what call do i have to make to get that done? i want room service and i want a good burger and fries. >> shack back to 75. it got above 95 not too long go. different. i saw a report yesterday about netflix and whether it could ever fwk default search engine for video on the web. >> my daughter uses it as that. isn't that interesting? i hadn't thought of that. i'll say i want a documentary about stalraulen grad and she comes right back. it'll be some it'll be bbc doing a thing about world war

ii. yes. the next generation. we have to think younger. i mean for those of us. >> it's hard to do. >> it is. >> finally, you mentioned regeneron is the biggest loser with biojen. >> that was crazy. lulu has been the great performer in this group even though you don't see the earnings momentum. i'm seeing stocks people are talking about breaking up starting to do things again. the industrials are working today. this is a better day. and i can't come back to what you were saying yesterday which is this market has a hard time staying down after a long time. it is a bit of a coiled spring. we're at a level where oh lot of technicians are saying it could hold. >> chevron and exxon leading the dow. up 102. >> we have a nice rally.

i want to concentrate on one sector in particular and that's emergency stocks which have had a tough time of it recently. oil is on the verge of breaking out. we're looking at a 62 on oil. it's not quite there yet but moving the big energy names. they're all up 2 to 3% at this point, and that's what's helping the market overall. chevron the big mover in the dow. the other group i want to mention is interest rate sensitive. even though ten-year yields are up again, i have pointed out for the last two yeekweeks, these groups and even emerging markets have been under pressure as rates have been moving up. that is not happening today. maybe we'll get a little bit of a bottom. most of these are at 10% correction levels already. we talked about that yesterday. chinese stocks we talked about this all day yesterday.

msi decided to put off including mainland china in the investing schemes. i think this is going to happen sooner than a lot of people think. here are some of the etfs with mineland china in them. msci said there are a few things they need resolves. first is quota allocation systems. there's a quota system. they want assurances that they're going to get all the stuff they need to put in their indexes and they want a system that's more streamlined. and there's limits on the capital movement and the amount of money that can be traded. they want to lift some of this uncertainty about that and make it easier to move money into and out of the country. chinese officials want this to happen. they are likely to have some kind of agreement sometime this year and there will be shares included in the indexes sometime

this year. they're not going to be dealing with this next year. i anticipate they will make this announcement in two to three weeks and it will probably be functional around august or settlement. that look like the shanghai hong kong stock link. that will allow people to get a stock. this is definitely coming j just a little bit delayed. the secondary market. numone had a big secondary offering. it's roughly a 5% move for the company. they're adding about 5% of the shares. there's about 500 million shares. this has been a huge yore forear for secondaries. 2014 year to date only 439. secondaries are big. a lot of companies think their assets are cheap and they're using secondaries to acquire

assets. that's what's going on with numonte. they're using a secondary. you're going to see more of this. i think energy companies with assets that are impaired are going to be acquiring assets. the ipo market is going in the other direction. i haven't gotten excited because look what's going on. there were 1919 this time year to date last year. the bottom line is there's more secondaries out there but the sure ipos, i was told the reason the ipo is the bar is a lot higher. you know and you've been pointing out for a long time how many companies are now engaged in private financing for their companies avoiding going public or at least delaying it. that sets the bar higher for the companies when they finally do go public. >> spotify, reports of even more

fund raisezing today. >> it isn't just treasuries, looks at rates across the globe. sovereigns of the best credit and lesser credit continue to move higher. let's start at the beginning of the curve. a two-year note you see on the chart, let's go to five years nchs remember here we are up two base points. one's 77. we closed at 174 on friday for a five-year. highs on everything. all the way out to boons as you see on this chart starting in settlement. let's look at a 2-day so we can see how we started to ratchet up. the biggest resistance is around 2 262. we sell at 2.46.

also comping about 8.5 months. this chart is starting at the end of the september. boon yields, same comp traded over 100 basis points. 8.5 is the wild number today. foreign engs change, the euro versus the dollar getting traction but not on a drag strip at this point. let's use a one of month chart starting around mid may. we're hovering above 113 and the last chart is the dollar yen. after the dollar screamed to the 125 handle and had a breakout it's bringing down prices just a bit. a bit under 123 but the best short even though the right side is kind of congested is to start all the way back to mid 2002 the last time we were in this range, although we have fallen you have rather dramatically.

back to you. >> rick thank you. crude oil above 61. good morning. crude oil trading around $61.5 right now. that's after a bullish api report on envenn torys last night. that sets us up from what we're going to hear today. they're going to be looking at the production numbers to see if u.s. production rises again this week or if it's starting to fall. what's key is the trading range. about 58 to 62. if we break out of 62 that's fairly significant to the up side. i want to mention that opec was out with its monthly report and said it doesn't see demand rising. that's not bullish by it says in the coming quarters it sees the oversupply issue working itself out. we have air strikes that are adding to the situation as well.

we're going to watch for the number at 10:30 and see which direction the trade goes. >> when we come back sun trust bob peck. we'll find out how long he thinks the rally can continue which is now 95% higher for the year. dow is up 127 as energy shows some leg. back in just a moment. when you're not confident you have complete visibility into your business, it can quickly become the only thing you think about. that's where at&t can help. with innovative solutions that connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most.

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apple music has gotten the attention of attorney's general. investigationing how apple negotiated deals with music companies for possible anti-trust violations. apple announced the streaming service earlier this week. when you're this size you're going to get this a lot. >> i'm waiting for europe to do something. it's almost like the attorney generals sit around and say who's strong? let's make a call. i think it's a shame. i think some companies know what they're doing and don't want to lose their turf.

now, you say jim, you're such a defender of apple. i am. if they want to be able to make a superior product -- no one wants anyone muscling into the point of doing something unfair. i think as soon as you're successful in this country you get a jingle a call from the government. and did you see treasury ringing? that's a new one. i forgot they rig treasuryiestreasuries. >> david with us where he's talking to jack ma later today. but a piece in the journal how the next financial crisis will happen arguing that things like the vulka rule and capital requirements are going to drain liquidity and demand and lending. is this making the rounds over there, david? >> a bit, yeah. i mean listen he's no stranger to criticism, certainly of the regulatory environment overall. if you spend any time with him, likely there's a chance he's going to hit on that.

whether or not he's right, time will tell. it's not the crisis that just passed but one that we perhaps have not been thinking about. on apple, guys i think the anti-trust stuff interesting and worth watching but more importantly, simply the competitive aspect of having such a muscular competitor in this market. what does it mean for pandora? and sirius? >> they certainly have a treasury ri to withstand for some time, it would seem, apple's competitive pressure on streaming but it'll be interesting to see how it develops. >> that's right. if they can raise all that capital, then what's the problem? why would you investigate apple? it's not like they turned the oxygen off the competitor. i feel like certain companies are really targets because

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trading. >> people get bearish, and then i'm doing a paid web for the street. this is one of the stocks i talk about. they have a fact buster. we hear they may have cancelled their appearance. people say who's buying them? maybe they cancelled for a million different reasons but we're in a market. they have a beautiful conference that makes you look better. i say wow. every time you get bearish, something happens that you feel like why was i selling kythera and i find that this is the smoke fire thing. you'll see this and you say okay, identify been short because i thought it was the joke. it's not a joke. they cancelled the conference.

this is a market where there's just action underneath. >> it's true. still waters run deep. what's on mad tonight. >> i'm doing a series of health care companies that i think go well. this one is doctor on demand. we use it. some of the people who work on mad money use it. this is like a doctor who's there for you. >> that's interesting. i think people who have used the service are can kind of mad about it. they love it. i'm just doing health care health care health care because when they raise rates, you'd better have some health care. >> we'll see you tonight. >> mad money. when we come back commodities research on the oil rally up 2%. back in a minute.

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♪ welcome back to "squawk on the street." we're at post nine of the new york stock exchange. david is in chicago where he'll

sit down with jack ma a little bit later on this morning. more from david in a couple of minute. the dow is looking pretty good. we're up. oil, we'll get inventories in a bit. and then financials. >> here's our road map for the next 60 minutes. oil, as we mentioned rising again today. we'll talk to the head of commodities merrill lynch about what happens now. >> and netflix is on the rise once again. another new all time high. find out what you should be doing with the stock right now. >> and san francisco the first city in the country to pass a measure that will put warning labels on ads for sugary drinks. >> we're up 145 points on the dow right now. a lot of this has to do with oil and nrng as the leading sector. >> absolutely.

it's a little bit surprising based on the numbers that came out suggesting we are pumping more oil in the united states of america than we have since 1970. probably before you were born i get that but for me i remember those days. >> you're way too kind. >> it's extraordinary to me. i think you need to look at the oil market with a jaded eye. it's not a supply and command of the commodity. it's based on dollars trying to enter that marketplace. >> a lot of people have said that but we're now up almost 40% since the middle of march. >> nice bounce. >> a lot of people have made a lot of money. others were scared to come in. >> i would be one that was afraid to come in. in the emergency sectornergy sector, i like to stay in the structure. the commodities, while the number has shown a virtually

wall 40% increase from the lows, if you trade to the future you're only up 3%. >> weak dollar playing a role when it comes to the trade? all dow components rising? that has to be a factor. >> it is a fok or the. and i think more importantly the financials. we are range bound toward no longer range bound. we're pushing up to 2105 on the s&p. the financials have enjoyed market activity while the broad market has been quiet. >> on higher rates? >> on the anticipation that banks will become banks again. >> there is a broader feeling that we're normalizing. rates are rising. the stock market is behaving as it should provided the feds can do what it has to do and not affect anybody.

>> i thank you for saying normalize rather than tightening. the fear has been the fear that we're going to tighten rates. we're allowing the market the to become no locker manipulated for the united states, i'm not so sure that's what we're seeing in the bund narcotic. we're see -- market. >> the risk is in the fixed income market and the rattle we saw in germany can happen to us. >> to the point of normalization -- >> it's the way it happened. it's the volatility and the swiftness of the move. people saying should i really be here? >> in other words, we've seen the ten-year yield go up.

245. when does it get to levels to question? >> i don't think you can use think of the standard matrix. the fixed income market is trying to be the bubble that was created by the central banks. their attempt is to deflate it without it popping. to rising interest rates when they raise normally is a sign of a healthy company. >> it is interesting. as you're talking, we see mor faj gaj dr mortgage rates rising. >> i remember people buying homes and they were celebrating getting 14.5% interest rates. it's just a question of normalizing and how you invest in that trade. that's why the people that are in the equity markets right now continue to focus on very

specific sectors. the financials the energies, the consumer discretionaries. the s&p 400 is up 4% on the year. the u.s. centrics stocks are doing just fine. ben, good to see you. dow up 146 points. >> as ben mentioned, one of the top stories in this market is oil. extending the two-day rally. this in the wake of opec keeping the forecast for the year unchanged and the eia predicting a drop in u.s. production after output surged to a 43-year high. are further gains likely? how do we entrerpt the news? we have the head of commodities research at bank of america. clearly there are a bunch of narratives out there. we hear saudi arabia is pumping record number of barrels per day.

what do you think is taking hold here as prices rise? >> i think right now the story is about the peak of the driving season in the u.s. over the next few weeks we're heading into the july 4th weekend which is seasonally the strongest command point of year during the summer months. once we go past that that upside pressure we're seeing in the crude oil market is going to start fading. yesterday we had a strong draw reflected on the api stats that came last night. that big draw in inventories, i think got the market going pretty excited. the matter is refineries are going to run strong through june, july rarks, and august and then september, we have maintenance. i think as soon as we get past the july 4th weekend, we'll see more pressure. >> i think you'll have to

explain the forecast. the fact that u.s. inventories are falling and u.s. production growth is near record highs and could start tapering and off that demand is rising. >> it's more of a seasonal play. we think it's more of a factor in the months of june, july august and then into the september contract, as i said i think that's when you see the downside pressure on prices. remember, as you pointed out, u.s. production could start to decline. it has been above expectations. let's not forget we're pumping almost 9.6 million barrels of crude oil. that's a record level in almost four years. we are seeing a lot of supply too and the global economy, you know, you mentioned things started looking better. they are looking better in the

u.s. but highest interest rates may not be so good for emerging markets which are the main driver of oil demand. i'm not fully convinced it's going to follow as the fed hikes interest rates. that's an important part of the equation here. >> i'm very concerned. i'm very concerned that we've had very much enjoy your interviews and a number of heavy hitters like you on the program who have time and time again said don't believe in this oil rally and yet, as i mentioned before, up almost 40% since the middle of march. something is working for a lot of people. we discussed how dangerous it was for people knob this trade and yet they've made money. i'm trying to square what's going on when why the central advice so far has not worked. >> well, i think demand overall has been a little bit better than we anticipated. in the second quarter, the demand kind of held up. the first quarter, we had the big inventory draws in some

products which were winter reted. a little weather related demand. european demand has been pretty healthy despite all the talk around greece. as we go into the second half of the year we have the iran deal on the table. we could see an extra 600,000 barrels of crude oil hitting the market. >> for many years when the price was really high, we talked about the weight of money and how you could forecast money and it would rise through the weight of money and bets. it doesn't have to correct to the fundaments does it? haven't we proved that year after year? the inverse in this case? >> well i mean remember prices have come down a lot. naturally, demand is going to be stimulated by the lower price. i think we're seeing a little bit of that. the europeans have a little bit of a better economy and they're consuming a little more diesel than a year ago. some of the factors are playing

through the market right now. but what you really need to have to have a sustained rally in oil is for the production number to start going down for real and it hasn't yet and you really need the emerging markets to help take you to the next level and i don't think the emerging markets are there yet. i don't think they can take us higher in terms of a rally and we've seen that in almost every commodity narcotic. at -- market. >> it's been china and india and middle east russia and countries, it's not really about u.s. and europe anymore. even though we're enjoying a bit of a bounce which is related to better economic activity in these two regions, i have a hard time seeing it lasting over the next 18 months. i want to see the emerging markets reacting well to higher rates and we haven't see it yet. >> so you're sticking to the

bearish forecast. and that target is what? >> we think that brent an wti go down to 50 and $55 a burglar over the next delay months and then they rebound at the end of the year. we need to see the production in the u.s. coming off to get that higher price, i think. >> we'll see what happens. for you we're seeing prices above $60 a barrel. the head of commodities research at bank of america merrill lynch with energy as the best performing. >> we haven't had a 20 point rally on the dow since may 8th. we're not there quite yet. david faber is live in chicago where he'll sit down with jack ma later today. >> that's right. we're looking forward to that conversation with mr. ma who's in this country to essentially try to get small businesses american small businesses to

consider using alibaba's platform to sell their goods in china. he started the latest tour off in new york yesterday with an address to the economic club of new york where he explained what he's doing here. >> 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. we not come here to compete. we come here to bring the small business. >> when he says hungry he's not kidding. in fact, they've used this as an example at alibaba, mainly the popularity of cherries grown in the state of washington and the ability to sell them to chinese consumers. lobster as well. many agricultural products and, or things from the land and sea that are eaton. we know the problems to a certain extent that mr. ma talks about often in terms of

pollution and the food chain in china. yes, he's talking about a broad part of products that we'll try to get american businesses to sell in china. oftentimes it comes back to things that grow on trees or in the ground. right now the sales represent a small percentage of the overall sales on the platform something that could be approaching $400 billion in gross merchandise this year. the aim to reach a trillion dollars over the next five years. we'll go over these subjects with mr. ma who's always interesting to listen to. they're kicking things off with businesses that will be listening to a presentation not just from mr. ma but someone from american express. they have organized this group together. >> people still talk about the last time you flew to china and interviewed him on the show.

looking forward to that this afternoon. david faber watching for jack ma in chicago. up next on the program, netflix setting the change for a big stock split. the stock itself is almost doubled so far this year. how do you play it now? more on that when "squawk on the street" returns.

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astounding moves for netflix. the shares hitting a new record high this morning. now trading up roughly or almost doubled since the start of the year. it's a 96% movemove. the latest moves you see there after yesterday's annual meeting where shareholders voted to approve an extra stock. that's a step toward a share split. joining us you, sun trust managing director pop peck. good morning to you. the stock doubling so far this year. >> it's been astounding and honestly it's caught us by surprise. we're big believers in the opportunity. they're rolling out to more and

more international markets. just announced japan, spain, italy and a host of new markets to come rolling out more and more content you're seeing. success of the conference there. tremendous opportunities. they disrupt linear tv but the reason we've been on the sidelines, it's currently trading 100 times the ept ebita. even if you look out, it's still trading 34 times. >> i think the expectation is we get a five to one or ten for one split. when you see them get authorization for 30 times of number of shares to be issued do you raise an eyebrow and way hang on a minute. that's a very big number. >> it was a big number and we're trying to put it in context. we've looked back historically, this is what happens to company post share splits and how they outperform. if you look at the studies, they perform 8% in a given here and

teens in the few years. it provides more liquidity. who knows if it means there's m&a down the loan. >> that's what i'm asking. why ask for 30 times? are they on the acquisition trail? >> it's a great question. it begs the yes what would the m&a be? would it be leaders in certain markets or international? is it for more content. right now they have over $7 million of content. the committed content rates are higher. >> i know they just went after a brad pit film orange is the new black launches on friday. do you expect these new content acquisitions to drive the kind of user growth we're used to seeing out of netflix consistently? >> that would be the bet. so far you've seen it. one of the things we're cautious about is you go further out on the risk spectrum.

you have to be careful that you don't have a john carter or something where you don't get the return on the bet. so far it's been successful. >> do you think domestic margins have been goosed by putting content cost overseas? that's a common argument? >> it is. and right now they break apart the margins. you can see the negative double digits around 23. and they look to go to the domestic margins over time. the 25 or 30% over time. that's the bullish argument. >> if you had bought this during the quick stir fiasco snrks. >> you'd have doubled your money before. >> i'm still concerned about this huge share issue that they're going through. they want to break into china. we think they're talking to jack ma about that. they don't have a license

themselves. talk me through how they get into china, what they could do with alibaba and whether they might ask far stake. >> it's a great question. as you know with chie that you typically need partnerships and someone like alibaba who has great government relationships could sort of pave that way. if you think back there hasn't been unone u.s. internet company successful in china. none of the companies have succeeded. unless you have a partnership. look at linked in. a partnership in the media side is important. >> normally the westerners would take a stake in the chinese company. has it turned around where the chinese might ask for a stake in a western company. >> it could be and that's even more recently. looked at the linked in. it's more of a jv and how

they're getting in there. yahoo and taking a 40% stake in alibaba, it's taking a turn. >> twitter, what do you do now? >> we saw trends on users that were deteriorating. we thought pricing was ineffective for their ads and more expensive than facebook. we think both of the problems are a couple of quarters before they get them resolved. >> we could talk more but we have to leave it. thank you for joining us. >> when we come back san francisco voting to put warning labels on all ads for sugary drinks. it is the first law of its kind in this country. we'll talk to the city supervisor who proposed the bill later on.

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♪ straight ahead, the market may be up strongly but transportation stocks are down more than 10% from their all-time highs back in november. are there more losses to come? we'll talk about that right after the break.

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here's your cnbc news update at this hour. national transportation safety board investigators say the driver of an amtrak train wasn't using his train in the moments before the train derailed in philadelphia. a suicide bomber blew himself up steps away from an ancient

egyptian temple. no tourists were hurt but police killed two suspected islamic militants who were with the bomber. wall greens is starting a virtually wall doctor. california is another step closer to imposing one of the strictest vaccine laws in country. a state legislative committee allowing only vaccinated children to attend private and public schools in the state. it goes for a final vote. that's the update for this hour. back over to you. welcome back to "squawk on the street." we're reporting from the department of energy out with the weekly petroleum status report. we got a draw down of crude inventories of 6.8 million barrels. this is very much in line with what we saw from the api last

night. we are seeing a little bit of a rally on the numbers. api and doe, sometimes there's a disconnect. today there's not but we saw a lot of this baked in and saw some electronic trading that got us up to these levels. crude is trading at 61.4 is. it's off the sessions lows this morning and we're expecting to see more range. the range is watch is closer to 62. it will be paramount to see if we can break through and close there today. we'll be watching this very closely. back to you. >> thanks so much. johnson controls up sharply today. the company's exploring more. >> the most important thing to understand is that we have an incredible franchise business in the automotive business but in order for us to be multiindustrial, 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. >> it's the seat business. >> car seats. they're the biggest maker of car seats in the world. >> and spinoffs are huge right now. we've seen in companies where they have conglomerates and spinning it off. >> i feel great affection for the conglomerates. >> the local regulator taking on sugary drinks. what it means for industries like coke and pepsi. the industry group with a strong response. we'll tackle that next with you on "squawk on the street."

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j the index and both falling. will the s&p will next in we dig into that big question but more

"squawk on the street" coming up right now.

the dow is up more than 175 points at this hour. s&p almost up a full percent. the financials are trading higher as well this morning. >> helping both the dow and the s&p 500 launching the financials this morning. they're being led higher by the big banks, jpmorgan chase and p and c all hitting new highs today. the rally is in line what w what's happening in the interest market. investors looking ahead toward any kind of data that could shed light on the possible interest

rate hike. we like to watch the banks. when the rates rise, the assumption is that their profit margins tend to improve. >> two cities today taking action to help people eat healthier. new york city approving new rules showing seed yum levels and california showing bans for sugary sodas and health warnings on sugary drink ads. we have the bill's sponsor. scott, thanks so much for joining us at short ♪ ♪ to discuss this year. >> thanks for having me. >> tell us a little bit about what you are proposing. this is for any advertisements on billboards or other city properties for sugary sodas. why now and what sort of effect do you want it to have?

>> sugary drinks are almost half of all sugar consumed in the american indict. one 12-ounce can of soda has 10 teaspoons of sugar. they're fuelling the explosion of type two diabetes we're seeing in the u.s. this legislation is designed similar to the approach with cigarettes, to get people to drink less. we're requiring health warnings on ads for sugary drinks warning people that it increases the risk of obesity, diabetes and tooth decay. we also passed legislation to ban soda ads on public property. >> we reached out to the industry, so several companies. they're responding as a group from the industry group representing all the companies in california. they say we are disappointed san francisco's board of supervisors

chose the rout of beverages instead of finding solutions to the complex issues of obesity and diabetes. they also say you're singling out one type of product that does nothing to educate people about the portion of calories and exercise? >> we're addressing a particular that is a significant factor. we're to the point where kids are getting diabetes. one nird-third of teens are diabetic or predee bettic. the soda industry is interested in the bottom line. their argument is the same as saying cigarettes aren't the only cause of lung cancer and emphysema, therefor don't regulate cigarettes. there are other unhealthy things people eat and drink but here's a product that is almost half the sugar in the american diet

that is scientifically linked to diabetes and we have a responsibility to address it. >> if you're so serious about going after sugar and obesity, why not go after cup cakes? cup cake shops opening up all over san francisco and california? two or roweos are the same as one can of soda. >> when it comes to diabetes it's not about calories. it's about sugar. you talk about 10 teaspoons of sugar in a can of sugar. it's a different magnitude. liquid sugar is a different problem. when you eat a piece of cake your appetite turns off. with liquid sugar, it never turns off. your body interprets it as water.

it floods your liver and makes fatty deposits. it's about a massive anlt ofmount of liquid sugar that's increasing the rick of diabetes in a way that other products do. no. the science is very clear here. >> i think people could can maybe understand your point of view if we were seeing an explosion in the consumption of soda. that's not happening. volume at these companies is challenged. it's tea and water that's growing. why now? >> well when you look at the sugar ri drink consumption in the u.s. soda is actually going down somewhat but sports krichkdrinks and energy drinks are exploezdeexploding. we're see an increase in teenagers. they're getting type two

diabetes diabetes. these drinks are one of the significant culprits. when you talk about the massive amount of soda and sugary drinks consumed in this country, if some of the numbers are going down, that's great, but we're consuming so much and we're seeing an explosion of type two diabetes and other health problems that are linked to these drinks. it is sincientific. the only scientists who disagree are the ones on the payroll of the soda companies. >> you're preaching to the require. the people who read it know the risk there. you almost create a counter culture. it was astounding when bloomberg tried this sort of thing in new york city. normal people almost consumed more soda as a result. >> what was proposed in new york was a ban on large quantities. we're not banning anything. it's about health warnings and

health warnings in addition to other tools worked with cigarettes. we used to have half of the country smoking. it's a little more than 15% now because of warnings and taxes. it worked with cigarettes and it will work here as well. this is about health warnings and reminding people and giving people good information. when you have these soda ads that are all about rainbows and puppyies and happiness, just reminding people that these drinks are making kids sick. >> i wonder how effective it will be. what you're calling for an ad on billboards why wouldn't they advertise one of their low calorie drinks that don't have to fit this requirement? >> well they can. if they're going to advertise drinks that don't have added sugar in them they can do that. and they won't require a health warning. we're talking about drinks. you mentioned a big gull m. a 32-ounce big gulp has 25

teaspoons of sugar in it. people don't realize the huge amount of sugar that you're gulping down quickly when you drink one of these drinks. people have a choice. they can drink whatever they want. we want to make sure that people have full information and soda companies are not able to continue to mislead people into thinking you can drink what you want and take a walk and it will be okay. it won't be. one to two sodas a day increases your risk of diabetes. >> it will be interesting to see if your mayor supports this legislation and how the big companies fight back. thank you for joining us this morning. >> in the meantime a rough month for the transports. down more than nearly 4 % this month. adding to the 9% fall this month. let's check in mark newton.

it's good to see you again. >> thank you, karl. nice to be here. >> getting a little relief today. when does it get attractive from a chart standpoint? >> there are a couple different things to look at. the weekly charts haven't seen that much overall deterioration. it looks like minor turbulence. a four-month trend starting to pull back. a little bit of a relief rally. it's important not to get too cute. you need to see this trend recaptured before getting too adepress ia aggressive and thinking the airlines have bottomed. for now the sector looks like it could be susceptible to additional weakness. it's very much a lagger in this regard. >> what's the correlation in your view relative to what energy is doing on an up day? >> well, that's what's interesting. we've recently seen a lot of airline weakness coinciding not only with the economic weakness but also with crude starting to

rally. now crude having another 2% up daybreaking out again. transports are rallying but that should coincide with weakness for the airline sector. i'm not ready to think that airlines are making a bigger break down and that crude could rally to the up side. i they near term crude rallies a bit more and peaks out. it is at a time when it starts to rally and that coincides with u.s. dollar weakness. transports have shown a little bit of weakness. that's concern to people who look at dow theory. it could lead to brotder market but for now there's not enough proof to suggest we're there. >> it's been an astounding eight days of trading in fixed income. the yield on the ten-perched just 2.5%. can you give us a technical view on that huge mover on probably the biggest of markets? >> we have seen breakouts with

regards to yields not only in our treasury markets but across the globe. yields are rallying without regard to monetary policies with regards to any of the nations. that's what's interesting. it hasn't just been a u.s. phenomenon. it's been global. my thinking is we're getting up to levels that will be important in the near term and that being 2.5% up to 255. there are some conditions that are now present along with signs of counter trend exhaustion signals that suggest heading into the fed meeting, it might be a good time to buy. that's only short term. the bigger move has been a huge move up in yields. we've seen italian and spanish yields almost double in price and the german bund got up this morning. my thinking is even on pullbacks, we see additional yield strength in the next few months. >> with that path and yields,

we've seen streng in theth in the financials. how important is it for the groups that the banks are flexing their muscles here? >> it is very important. it can provide a decent tail wind to equities given that financials make up such a huge constituency. the s&p almost 16% and the energy is working better awith financials. we've seen the recent strength in technologies. that's important. recently we've seen an up tick in the regional banks and that often happens when you see a big spike in yields. it's important. it's more of a short-term move right now than any long term move that suggests that financials are going to continue moving for the next few years to the up side. we've seen the move in the financials higher. i think that over the next week you'll probably see strength in financials as yields rise. we've moved a long way in a short period of time. i would think heading into next week it might be time to take a

breather. thinking the potentials can stall out after this recent rchb rchb. >> it's working today. the dow 178 in large part because of the banks. mart newton joining us from stanford. when we come back colbie cal lai will join us when we come back.

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want to bring you a live shot of the lincoln tunnel in new york city, where at about 9:35 a.m. eastern, a new jersey transit bus came into contact with the rear of a private bus inside the tunnel. sources tell wnbc that more than 15 people are injured. we're waiting for word on the extent of the injuries. delays over an hour expected around the area. of course we'll bring you more as we get it. 42 million car as year travel through the lincoln tunnel. amazing. >> okay let's send it over to rick santelli and catch up with events in chicago. good morning rick. >> good morning, simon i would like to welcome my wednesday

guest home jenkins junior. thank you for taking the time holman. >> my pleasure love to be with you. >> about eight weeks ago you wrote an op-ed regarding water issues in california and i can't help but look at the news today, it seems as though pop in california out is and pop is in. with regard to electricity in the turn of the century there was a blackout and a recall for grey davis who you can you tie all of that up for me with what's going on with price, supply demand and good old-fashioned economy 101. >> back in the '90s, california thought it had a surplus of power so it mandated that all utilities buy their power needs on the day-ahead spot market and no longer let long-term contracts for power. as soon as producers realized what was going on. they started shutting down the power plants and prices wet through the ceiling because utilities have an obligation to find power, whether or not they

can find it. it's the same situation with the water in california. the state and federal governments zit the to take a lot of water from the pacific northwest and redistribute it to the south and decided to do that politically. that was great when there was more water than anybody could consume. but now they're running out of water and they allocate it politically, not with prices so you have ridiculous wasteful water consumption in some places while other places are starving for water. >> in this area we now get our water, most of the people in the illinois area through the great lakes, suburbs used to use wells, they don't any more when i like at the price that we pay for water which is just 25 miles away it's much more expensive than many parts of california. i know that governor broufwn has a big pair of footprints is he ready to allocate whether it's corn prices strawberry prices water priceses why is it so difficult to see if we allocate based on price, that most of

this will get worked out? where's the inertia here holman? >> i think there's nobody who doesn't understand the economies of it. it's politics you have farmers whose whole oilalo alcareers face on the allocation of water. s is medicare how do you break the deals that people are accustomed to but become unaffordable. california, the farmers, home owners would benefit of a system of pricing water which meant they could get all the water they want for a price they were willing to pay. getting there is the problem. it takes political leadership. someone has to say i'm going to take on the political risk of doing this tell everybody why you're going to be better off in the long return. >> holman thank you for taking the time today. it seems odd to me that a state that can do so much in the computer industry can't just figure out you know if somebody needs water and they pay more. the allocation process begins

thanks again. simon hobbs, back to you. >> thank you very much. rick. here in new york it is denim wednesday on "squawk alley." good morning, jon. >> quite a show coming up the markets are part of the story, the major indices up about 1%. jack ma on ipo worries. he doesn't want to be rich now. he kind of wishes in another life it were private. what's going on with alibaba. and "the new york times" fashion critic who says she's breaking up with the apple watch. she's going to elaborate on why, coming up on "squawk alley."

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good morning, it is 8:00 a.m. attest la headquarters in fresno, california and 11:00 a.m. on wall street and "squawk alley" is live.