ompany because they're doing things like that. >> thanks for being here. it's been a pleasure seeing you. >> thank you. >> i think we see you later this week, scott? >> we shall see. i'm not going to see you this week. >> we're not? >> sorry. >> have fun. >> sorry to leave you hanging. >> it's been great. that does it for us. right now it's time for "squawk on the street." ♪ >> welcome to "squawk on the street." we are hoot the new york stock exchange. s&p is eight points shy of a record on the belief a greek deal is days away. core durables were reassure. powell this time says the stage might be set for a possible september hike.

oil is just below 60. darden adounsing plans to sell out a portion of real estate into a reit. >> facebook it bounces out walmart. >> and just breaking verizon's acquisition of aol closing this morning. the ceo and marnny walden will join us in a few moments. durable goods orders fell 1.8% dragged down by lower demand for aircraft. also nasdaq looking to make more history by setting some new record highs. s&p is out saying their assumption is not only does greece stave off default and it might be thursday. >> merkel was really sweet yesterday, nice, whatever you want to call it.

honestly i heard the translation. i still don't understand german as well as i should, but i think that it is without a doubt that now it's going to be about whether the negotiations can carry the legislators in athens. you know that any deal was supposed to not be made. all that drama, i think it lasts through the weekend. come in monday feeling better. it's not going to be done thursday. >> small caps are breaking out. financials and industrials leading. these transports look like they're trying to form a triple bottom. >> that's really important. even american air which was downgraded today by morgan stanley trying to form a bottom. i like delta. at least selling five six times earnings. i thought you'll get one more number cup when they report. it's important transports do better. union pacific is held. but the durable goods, a lot of that has to do with the fact the heavy equipment from the oil business. it's over. when you cut the rig count in

half, you're not ordering a lot of steel or pipe or a lot of just the major mechanics that go into a rig, hence why energy transfer has to be able to do something, ete does something because that industry is going to be saved by l and g but not until 2016. >> the cfo, jamie, making the rounds yesterday. making the case for why it's a good deal to williams holders. what about the dollar which has been strong? >> the euro is getting killed. we need the dollar weaker. it's going to kill earnings. >> there was a time not long ago where the dollar getting stronger was not a good thing for the broader market. >> we can't have that. we're headed into earnings season and we don't want these guys to say had it not been for

the dollar. the last oracle look at them. i know the quarter wasn't that strong. at the same time oracle never lifted and came back. i think when you have companies with a lot of exposure overseas if the fxe goes to 105, everybody is going to be down beat when we report the quarter. you have a little window to make money and then it's over. >> powell did say he thought the dollar and oil had begun to stabilize. >> yeah. they called him stretch at school. we did. we called him stretch. i'm really shortth shorter than him now. >> you and palmer and powell? >> yeah. just because he's a fed governor, we called him stretch. i knew someone was going to come out. he's such a terrific guy. i knew someone was going to come

out and say once you get greece done it's time to raise. i think he's right but let's get the greece deal done. jeh is a smart, considerate guy. >> you said for days you don't like the setup but does the picture look better today than it has in weeks? >> no. i think you're getting a little bounce because of greece but i care about the dollar. because i care about earnings and you have this window where the companies that are reporting are not focussed darden is not a dollar stock. you'll see niek nike has good western europe and china. we're in the little area where we're not getting a lot of international companies reporting and the ones that do are not doing well. >> you mentioned darden. olive garden expected better than expected results. the company is expected to spin off real estate assets into a

reit. they will transfer properties to the reits. with the reits assets being leased back to darden. comps for olive garden up 3.4. >> the operations are doing well. this is part of a plan that was originally most of it is similar to what was presented by jeffrey smith when he was trying to take over the board of directors, something they did successfully ousting off the directors at darden. this is basically all of what's out there. now, they have been doing a lot more sale leasebacks than they initially guided people toward. 75 properties have been let'sed for sale leasebacks. there is a lot of demand, it would seem, for some of their properties on a sale lease backside but in terms of this the cap rate is going to be a bit lower on the rate but more affordable rates for the properties in question. they've been saying we have a

property company inside of darden that we want to allow to grow. the i rirs has to sign up. they have a billion dollars that they'll retire over time. and it will allow them not to seek consent on most of these things from their bondholders. >> you're right to focus on the reit. i focus on the fact that olive garden had 3.4% comps. i liked capital grill, long horn, they have every single menu price covered. the menu upgrade now at olive garden shows you, even though traffic wasn't that good once they're there, they spend a little bit more. i like everything in the quarter. >> flies in the face of sonic which is going to open down almost 6% as their outlook is below forecast. >> i didn't think the sonic quarter was that bad. the stock went from 28. they're buying back a lot of stock.

i think sonic is in good shape. they're going to have very good forecasts forecasts. i'm watching mcdonald's going up. quietly, every day. talk about a company that doesn't necessarily sell good food. we have to remember there's tastes good and good for you. tastes good there's a role for that. now, i think part of mcdonald's tastes good. >> which part? >> the fries. the nontire part. >> you're going after their burgers? i haven't had their burgers in a long time. shake shack is good. in vegas we tried bobby flay's burger. he has one going on. bobby's burger palace or something. very good. >> i'm going to start serving

burgers. >> in and out burger. quite good. >> we all wanted in and out to go public. that's not going to happen. i'm just saying watch mcdonald's. this guy, easter brook is a comer. >> he's going to have to figure out how to make the burger taste better according to you. >> he's going to get the trillion dollar mcdonald's. >> and you bring up bathrooms. that's not a good combination. >> when howard schultz came back he said listen i'm going to clean the bathrooms. 18 down to 7. >> i would like star bucks to clean out in front of their place. there's always a lot of trash. >> star bucks here is clean. >> 86th and columbus, clean it up. go out there. sweep up a little bit. >> as david said earlier thanks to monday's rally. facebook's market cap now about 238 billion surpassing walmart,

knocking the retail giant out of the top ten since 1997. if we were going to close at these levels. high on facebook, 8 6.07. >> the company is going to earn a minimum of 350. when you listen to the companies who talk about how they have to put money into digital, it's almost always facebook and the return on investment is extraordinary. it's working. it's working. and i think that one of the things that -- people we all talk act twitter what's going to happen with twitter and yahoo? will aol get advertising? facebook is the way, the embed embedded adds in facebook are working. i have yet to meet a retailer that did not say the way to get people who are 30 and under is a facebook embedded ad. 30 and under. >> you're right.

more and more of the money is moving toward digital and much of that is ending up this facebook. this is the question for more traditional media companies. fox, time worner our own parent how do you maintain your market share in the face of this assault assault? >> and facebook, a lot of companies have dot comes that are doing well but it's from facebook traffic. and if facebook were to say, you know what? we're done with giving it to you. did you see "the new york times" got rid of the desk top in you have to watch it on mobile if you're there. all i can tell you is that facebook is a lot of people's traffic, and if facebook decides they don't want to give you the traffic, just like google you're done. >> wait until the political advertising season begins. talk about targeting your demo. >> holy cow, yes.

that is the way to go. michael wolf was on squawk this morning saying tv isn't dead. it isn't dead but facebook is the way to get the viewers. >> just moments ago, verizon and aol announce they closed the merger deal. alsoed the, adam bane who some see as a potential candidate to become the company's ceo, that's on squawk alley this morning. take a look at the futures in the green with the dow 192 points shy of its record. more "squawk on the street" in a minute. automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class.

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. >> verizon's acquisition of aol closing six weeks after the deal was announced. the ceo of verizon and the another join us this morning. nice to have you both. let me begin with marnie. these discussions began around a joint venture and then verizon decided they wanted to buy all of aol. why did you make that jump from joint venn dhour saying hey, we're better off buying all of

it. i ask that in the context of having spoken to shareholders who are trying to figure out why you want to own this thing. >> thanks for the question. we started out with a number of discussions around a joint venture but we saw there was a vision we both believed in where we could be the number one global technology company and we thought we could make something big out of this. we have a number of assets that we've been acquiring at verizon and we are contributing those to this business and we believe that this is going to be the value that we can deliver to our shareholders and the future of verizon. >> what does it mean to be the number one global media technology? explain that. >> tim, document to talk about your vision and i'll jump in? >> sure. first, it starts with how big the market is in general, and i think the internet is going to add a couple billion people j specifically to mobile and then

there's the 40 /40 opportunity. $40 billion going to mobile and $40 billion going to video and i think verizon is the best network, i think, in the world, and has really bridged into media already before the aol deal and we're going to sit on sop of verizon with a new set of services. i think the vision has hit a number one platform. it's really the number one mobile media platform in the world. we're top three in video and one of the top ad platforms. nobody owns the future of mobile right now and this is the most powerful combination of internet and mobile together. we're really excited. >> tim, you said nobody owns it. do you guys need to own even more assets at this point? there seems to be consolidation in the ad buying area. do you have to buy even more stuff? >> we have been a heard in that and i think verizon has been a leader in terms of what we've

seen with the nfl deal. the combination of these two assets are powerful day one. that's today. our back to work philosophy is to get the companies together and work well but i think one of the ground breaking things that happened last year and i sent our executive team a note about it is the nfl verizon deal. i don't know if you want to talk about the media part of verizon. >> are you guys going to interview each other here? let us ask the questions? >> let me just comment on future acquisitions. as we've always done we look for fill in when it makes sense. we did that with our digital need mead ya business. so edge cast and uplink will continue to look on how to grow the business. as tim said day one, a lot of opportunity right in front of us with all the things we've been working on as individual companies and now as a combined entity. and the nfl deal this is where content becomes so important. we've got to bring premium content to drive audiences.

we know how important that is. we think our nfl asset is huge. we think all the content that aol has, we love half post part of the business. we're very excited about how we bring audiences to our business. >> why do you love huff post and the content businesss? many say you don't have enough size to make a difference and many expected you'd get rid of them. instead you say you love them. do you have to buy a lot more content. >> why do i love it? consumers love huff post. we think that's really critical. you've got to connect with the consumer and make sure that they want to come back and huff post does that. that's why we love it. >> are you going to be able to -- will you buy fandal and will you be able to get the international games up for grabs? >> jim, i think the first thing we're buying is into the operational business we have and

that's where the teams are focussed on overall. i would say from a full stack perspective when you look from the video to the content and the advertiseing stack, the combination of verizon and aol put a new seat at the biggest seat in the world. and from your standpoint the acquisitions in the past and this one one plus one is going to equal more than two. my guess is we'll be aggressive with investments and with what we're doing. a lot of them will be operational investments as well. we have an adept team at building big platforms at low cost and i think verizon is a powerful partner for us and our job is to make verizon successful. i think you're going to see us work closely to make sure that verizon gets a really big benefit out of that deal and the whole team here knows that. i've messaged that.

we're set on doing it and our teams at the advertising festival, we're probably the hottest company there right now and will be even hotter next year. >> it's been written that huff post leans left and verizon leans right. is that true? >> i don't care which way we lean. i think it's about making sure that huff post has editorial independence. we've committed that, and we think that's a corner stone of what has to happen regardless of which way people lean. >> the huff post when we bought it was 20,000 unique visitors. now it's 20 million multiplatform visitors. it's one of the largest businesses, content businesses in the world, and one of the fastest on the innovation front. i think the fact of the matter is if you went out in the world and tried to find a property with 200 million multiplatform

uvs that people use every day, there's only a hand full. verizon is going to tech crunch that. and -- >> tim you mentioned, how are q 2 ad sales going right now? >> overall we had a very strong first half of the year overall. i think led by not just this deal but other deals that we've been doing with other partners overall and i think if you look at where ad dollars are movings, they're moving quickly to the following places, number one is the america anization of madison video, two is video, and three is mobile. we launched our aol 1 platform at the beginning of the quarter two. we've seen a lot of traction and verizon was a partner on the launch of that overall. if you're in digital and mobile and video, that's the best places to be. you're seeing the results today in this deal and what the future holds for these two companies.

>> i want to thank both of you. congratulations on getting that job done. they're both from verizon now. >> a lot of good ideas but they're really focussed on the content and the strategy. >> when we come back we'll count down to the opening bell. one last look at the premarket. a lot more "squawk on the street" is back in just a moment. ad the shooting, burning, pins-and-needles of diabetic nerve pain, these feet... ...served my country... ...carried the weight of a family... ...and walked a daughter down the aisle. but i couldn't bear my diabetic nerve pain any longer. so i talked to my doctor and he prescribed lyrica. nerve damage from diabetes causes diabetic nerve pain. lyrica is fda-approved to treat this pain. lyrica may cause serious allergic reactions or suicidal thoughts or actions. tell your doctor right away if you have these, new, or worsening depression or unusual changes in mood or behavior. or swelling, trouble breathing rash, hives, blisters, muscle pain with fever, tired feeling, or blurry vision.

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for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business. we only have about 4 .5 minutes before the opening bell. we'll do our mad dash seated. where do you want to start? >> it takes an analyst village to move at&t.

barclays and ubs hold to buy. and ubs says business is going to get better. barclays likes the the dtv deal. we didn't ask arm strong. >> we would have talked about the stack. one stack, three, four, five. you can stack up to ten. i don't know what the stack is. >> i wonder if they'll start medicating at verizon? they do that at aol. at&t has a good yield. maybe this is the beginning of a move to get it to 36 $.08. i heard a portfolio manager this morning say something positive this morning but also their dividend coverage ratio goes way down. they're able to cover a lot more. does it go up as a result in. >> multibelievers. that's the barclays note. the hottest stock in terms of

fight going on at this very moment is ambarella. >> it was also a good. >> jane fonda. >> here's the -- i don't understand how that could be. jane fonda is in brel la. not really. citron which is sometimes good and sometimes bad. they put out a piece saying ambarella is way overvalued. i question whether that's the case but this morning there's a lot of movement. here's the thing about ambarella ambarella. this is not just a go pro story. it's chow me which is how you pronounce it. it's koimcomcast. it's all remote every time you have those. some of the remote security

camera, it's them. this is a connected play and it's a strong play. let's not say it's a go pro play. it's bigger than go pro. >> all right. >> so ambarella, the battle is on. shorts versus longs. i was going to mention fitbit but i'm so hated at likingeing fitbit at 30. i do think that there is fitbit people shorted that on friday ambarella, people heavily short that. 25% of the float. nobody shorted at&t. >> fit bit up again after three days up. you said you blessed it to 35. what about 37? >> it's still inexpensive there. you could take it much higher. i was talking to ben soda who works with me on mad money and we said why don't we say sell it. we just picked up ten quick points. if you're thinking about today,

maybe you wait a little. it moved up so much. a lot of people thought it was apple. it's a lot cheaper than the apple watch. this thing is a very expensive nonfitbit device. it does not do all the things fitbit does. they can co-exist. this is not a cold war between fitbit and apple. >> you're going to wear both of them? >> you don't have to wear fitbit here. >> you can clip it on -- >> i did not know that. >> you didn't know that? and the surge. the kids love the surge. >> you mentioned your eye on the dollar. the euro is at a two-week low. >> we don't want that. that's going to hurt earnings. earnings are going to matter. in another two weeks we'll be looking -- >> we'll be looking at the end of the earnings. >> don't want that. the guidance is going to be bad if the dollar keeps going higher.

super freakin' dollar super bad for earnings. >> this is the euro, fallen below the 20-day moving average. the first time since june 8th as we await the opening bell. a look at the s&p at the bottom of the screen. at the big board is trim tabs celebrating the etf and at the nasdaq pattern energy group, an independent power company. a lot of discussion about the wmb deal the journal today says pipelines ripe for consolidation because of what gas prices have done. >> i didn't really like the gas prices thing because what really matters is the northeast, new england, transco-has something good going there. i think that there are too many pipelines but the two bottle necks of the northeast new england where we don't have it and that's going to be somewhat contested in terms of people not wanting pipelines in. i think energy has the -- i think that energy and williams both want to get in that market.

but then it's the going to the gulf to do l and g, and i think ete has a great pipeline down there. if you go on williams ae website, they chris cross each other. it would be fantastic. it's going to be kinder and this ete williams if they get it. that's going on it. it's going to be three. >> well it's a stack. >> it's a stack. >> it's a stack of pipelines and a stack of rails. >> fed governor powell, or stretch, as jim calls him remains on the tape addressing asset prices. we have more on that. >> good morning. looked like the ten-year yield got a pop this morning when the fed governor jerome powell said he sees rate hikes in settlement and december. what you'll hear if you listen is that there's a lot of

uncertainty surrounding it here's what powell said. >> my own forecast calls for lift off in september and for an additional increase in december. i would want to stress that as i said i think september lift off for me is close to a coin flip. it depends on the data. it will depend on how labor market data global events unfold and december is even more uncertain given where we are. >> he wants to see economic growth improve from the current rate. and there's the ten-year yield. you can see it's around 236. now raiding around 2 .42. the you ree weakness might be reltded to that as well. we saw governor powell he's in the center. the lone republican nominee there. the durable goods this morning was weak. i want to clarify something i

said earlier. boeing has deliveries of 60 planes in the month of may and orders of 11. i reversed it but it was a big part of the orders weakness. back to you. >> thank you very much. guys, powell also says he sees no troubling pattern in asset prices right now. >> i don't like this setup. i don't like the dollar being strong and this labor report that's coming up. the only thing i see that's bullish is copper. rates going the wrong way. we had a big run yesterday. i'm not crazy about it. this is a period where we are really in limbo, but you heard governor powell and he's not saying anything that you wanted to hear if you're a bull. if you're a bull in stocks stretch is not giving you what you need. >> he's not? all right. >> we're getting some changes in the top of jz's title. >> good morning, carl.

that's right, jay ski-z's streaming has lost another. they are leaving the company. no word with the company on who will be replacing him. this comes after the prior ceo left in the end of the march, beginning of april. a lot of changes at the title. title facing growing competition from apple music as well as other services such as spotify. title has less than a million paying subscribers dwarfed by spotify and facing more competition next week as apple music launches. >> thank you, and it brings us to apple which, is it ever going to break out of 127? >> it's really stuck there. >> the journal saying they're learning a tough lesson that you're going to need large artists if you're going to survive in streaming. >> i think a lot of people now

heard about them from the three-minute piece in the today show. that was great publicity for both taylor swift and for apple and i think that the apple offer is a bit of a bargain but it's not going to move the stock. this is a stock that trades on earnings and this is not all that earnings related. >> no and neither is that thing on your wrist right now. >> no. this is not the driver. you need more programs written for it. as opposed to fitbit which is ready to roll. >> i feel like you're souring on your watch. >> no. the wife loves the fitbit. she wears the fitbit and has the apple watch. >> i'm not talking about you. i was talking about the wife. >> i don't matter anymore. that's the don't. no how could you not get that. >> you said it until you were blue in the face. >> you don't matter anymore. >> i don't. it's good. >> it's a first. first time.

>> i'm a role player. >> somehow i just don't think that that is true. >> i'm a bit of a skill player with my own life. all right? >> darden remains the top gainer today. at&t, this barclays upgrade is interesting. >> i think -- people want income. of course just when rates go higher, no one is going to want income but at&t is steady as she goes and if it's able to get to $36.09, that's the promised land. that stock, talk about apple, at&t, these are bonds. apple is not y. at&t is a bond. >> that's a big move for at&t, 2 %. verizon up also. of course we just had on mr. armstrong and marni walden both of verizon, closing that deal. but that's not a needle mover either but things are competitive in wireless. we know from john legere how

competitive that can be. continually calling at&t dumb and dumber i'm not sure which is which. >> you have to follow john legere on twitter. he's always asking us to get together. he loved your special sunday night. he's one of those guys he communicates with 1.2 million people at all times. not as many as taylor swift. >> did you read the piece in the times about the lonely art of short selling. >> yeah. short-selling is very hard for those who are short fitbit you're discovered for those at shake shack, you don't do it when a stock is unseasoned. that is before you -- you can't do it when there's a stock that doesn't have options. you have to protect yourself. i understand, there are lots of situations where you want to get short, but if you do it on valuation, you could get crushed. you really need to know

something that no one else knows and have a long term view and be able to take a lot of pain. >> does it make you nervous that a lot of these funds are -- >> when you see the short funds closing and getting away you need them they are vital for a long base. again, i'm not crazy about the setup here. i just think that you have a better opportunity. i just think that this is not -- i am so focussed on the darn dollar and that's because i'm focussed on earnings and that is all we're going to be talking about. right now you can talk about biotech and radius health with the bone density drug they have that's so good. you can talk about biojen and ms. in the end we'll be talking about boeing and ge they need the dollar to be weaker. just saying. >> all right. the dow is up almost exactly 100 points below the all time

high. let's go to the floor. >> good morning. mixed market. telecom, financials, the strong dollar and yields up on the treasuries putting a little pressure on the markets overall. not mixed is europe. great day again. second day in a row in europe. it's amazing what happens when you have two billion euros, it focuses the mind. the leaders have been holding out an olive branch of debt relief. a lot of hope something is going to happen over there. second day in a row we've seen europe to the up side. darden, i think the developments there weren't, just a couple additional comments really, it was two-pronged attack from darden. they had an earnings speed and their guidance was above con sen census for 2015 but puts companies to a reit has a lot of

implications for not just darden but other restaurants that have significant real estate companies. they're going to use the proceeds to pay down debt. they blew threw their old high at the eping. this is intriguing. i think the positive results and the guidance should be margely helpful to the rest of the casual dining segment. so brinker, for example, cheesecake factory, put up those stokes, they're all fractionally positive right now. buffalo wild wings isn't. cheesecake was positive at the open. it just turned negative but also i think restaurant reit would be a positive overall for some of the other companies that have a lot of restaurant holdings. mcdonald's and bob evans farms. i think it's an important announcement on two fronts from darden. let's talk about ipos and

secondaries. i said last week this is the biggest week of the year for ipos, but it's been dwafred by secondaries. ten secondaries overnight and con tear to opinion they're not just using it to pay down debt. there's a lot of acquisitions particularly in the energy and real estate fields. here's four of them. southerly hotels they're using their proceeds to buy hotels. a big interest in crowd plaza, hollywood beach. gas log partners they're buying l and g carriers with their secondaries. new senior investment, they operate senior housing properties. they're buying more senior housing properties. white stone is a reit that owns community centers. they're acquiring properties more community centers as well as paying down some debt. i know there's been a lot of complaints about buybacks are not a good sign because nobody is going out and buying anything but this enormous title wave of

secondaries that has been going on for almost a year now is continuing and with much of the proceeds are actually being used to go out and buy things. right now the dow jones up 30 points. back to you. >> thank you very much. we've seen a lot of m&a activities aactivity and things are busy. things are so busy they're sort of wondering, when is it all going to come to an end. things feel frothy. the stock price, of the potential acquirer goes up in. yesterday that was not the case. let's start off in hmo land where consolidation is the keyboard. the key question is what and when. anthem wants to acquire cigna. they're going to be talking over the next few days and making

their case why 164 is a good deal. cigna didn't say it was bad deal. their objections seemed to be around social issues. the ceo wants to be the ceo of the combined company. and people close to the situation say he made that clear saying i want to be ceo immediately. originally he wanted to be ceo before it closed but he wants to be ceo once it does close. this is not something anthem is willing to do at this point. we had that strange announcement of a bear hug on a saturday. why? they were concerned because they had heard that cigna was going to have a board meeting that perhaps the board meeting had nothing to do with anthem's interest but because cigna was preparing a bid for humana. they came before anything could get done because if you are out there publicly, it would make it different to get a shareholder vote. humana was down sharply

yesterday. why? cigna would need a shareholder vote. would they get it with anthem out there with the bid? unclear. and aetna is the other potential buyer of humana but we know united health care is interested. multiples being talked about for humana, quite high. it feels like the synergies it will be able to get from a cigna deal are higher as a result it would seem of the price it's willing to pay and what it can pay as opposed to humana. i mentioned the price of acquirers, and their stock prices always are almost always going up when they announce a deal. yesterday ete shares were down. they have to get that stock moving the right way if they are going to continue in their pursuit of williams. take a look at ete shares if you can. we'll see where they are today. this is pipeline con solation. jim has been talking about it.

that's going in the right direction. they're making the rounds. they did it last night, and they're doing it today. the cfo is out there j jamie welsh, i believe is his came. they have an aggressive ceo. he presented last night to some people. and today as well. they are talking up the prospects of their deal to acquire williams. $64 a share all in their stocks. that is a key reason why you need that stock price to be moving in the right now. one thing that came up today. he mentioned sorobon as a large holder of ete. this is a hedge fund that is on the board of williams they're not listed as the holder but if they are a large holder of ete, that's kind of interesting. overlap is always an important component in these battles.

they are often looking for overlap in the shareholder base because they expect that's the potential acquirer that would help their position because if there's an overlap, you have other people who want the deal. williams was up so sharply yesterday. >> but these are competitive entities. i'm surprised to hear that. >> they are but it's interesting if they're a big holder. i made a couple of calls. but that's what he said in the meeting this morning. they're going to keep making their case. the numbers are pretty big when you look at potentially what they might be. i'm looking at some of my notes from some of these meetings. they're not going to go hostile. they're talking about -- they talk about the overlap in their share bases and akreegs significant. do you think it's a good deal? >> i do. and i think the people have to realize the duplicate pipes don't work not in an era where a lot of the companies are not

going to be drilling a lot for natural gas. that was the notion of the journal thing. i don't want to knock the journal. the idea is if you drill a lot, you have to send it somewhere, but if you don't drill a lot, you don't need the pipe. that's the issue right now. the pipe they do need is more l and g free port or dominion. dominion is kind of covered. there's too much pipe if people stop drilling. >> you're losing money on naturalpropane. you need to pay people to take propane. >> i didn't know that. william's partners shares were up. short williams because an ete contingent on it not getting done. let's get a check on the bond market. >> well we're up 15 16 basis

points in tens and 30s and 5s are close from friday's close us. look and acknowledge we had a durable goods order money. if you dug in the number wasn't horrible when you made adjustments for aircraft but nondefense capital orders nondefense aircraft was not very good and that really weighs down. maybe techals has the most. look at the two-day. the market zoomed a bit. opened up to may 1st, we talked about how much wood was under that 230 level and indeed 226 where tens closed friday. here we sit at 261 -- 241. let's look at a two day of euro versus dollar. another european product that boomed early.

consider the spread between tens and bunds. for about a week and a half two weeks, if one moves, the other is going to move. that spread gives you a little bit of foresight as to the current relationship. remember, it always does change. if we look at a may 1st of the index or euro. they're not huge at all. depends on what's going on with greece and who knows exactly how that will end up. we still have news home sales to come up. i'll cover it at the top of the hour. >> thanks so much. when we come back navigating the online automotive retail landscape. we're back in just a moment.

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time for cramer and stop trading. >> i have to tell you, there's smoke.

that's how i feel about this deal. deeiageo upgraded again. four upgrades? sudden my everyone decides, give me a guinness? >> who's the buyer? >> i don't know who the buyer is. i just know that everyone is afraid. the loneliness short seller. the short sellers are going to be buying the cheap johnnie walker red on the floor when they're done here. >> what's on mad tonight? >> we are doing the unknown cyber security stocks. everybody knows, we've been recommending cyberark since noah and pal low al a. >> we'll see you tonight at 6:00 p.m. eastern time. when we come back breaking numbers on existing homes after the numbers yesterday, and bob

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welcome back. i'm carl quintanilla with sara eisen, and david faber and simon hobs. every single european bors is higher. powell on the table. oil is the only lagger today still remaining below $60 a barrel. >> the landscape of streaming music changing rapidly. how do companies keep up? well the ceo of i heart media joins us. >> plus online buying and selling sites are disrupting the world of auto sales and traditional dealers have a lot to say about it. >> and at&t trading higher after an upgrade. we'll talk to the analyst who made the call later. >> let's get to breaking news on house sales. >> a june number, we'll hold off and see if it shows up. let's look at the may new home

sales number. 546,000. that's seasonally, annualized adjusted. that was last month moves from 517 to 534. better than expected. that comps out pretty well. 538 february was one of the highest reads we had. that takes us back a bit. now we're looking at a comp on this going probably 546 to february of '08. richmond fed now showing up at six. six versus one, if you go back to december of last year you'll hit another high of 7. let's go to dianna. 546 with a decent vision your thoughts. >> existing which was also a nice number is based on

contracts closed in may. that is the contracts signed in march and april. this number is based on contracts signed in may and may was when we saw the sharp jump in interest rates. to see a nice jump in sales even when interest rates is rising is even better when we're talking about new homes. the only issue, inventory. we're down to a 4.5-month supply. why aren't the builders building more in they're seeing the demand that. they're able to keep prices high. prices were down just 1% year over year but we're at 680,000 starts. you have tight supply of existing homes. everyone is saying why not build more. sales year over year were up 19.5% in may compared to a larger 26% jump in april. that's the only downside. >> it is a volatile series. thank you very much. in the meantime major indices

are still edging higher. of course this amid persisting optimism over greece and perhaps more importantly this morning, the fed's powell speaking this morning seeing conditions for lift off on rates as early as september. let's get some analyst on that. joining us president of global strategies. let's talk about powell. i wonder if powell is actually shifting as one of the two rate rises this year voting members of the vote which is presumably what it suggests. looking past the headline he's suggesting there's a 50/50 chance we could have met conditions for lift off in september. my question is and this is very important for where you think the voting members are going since they're split evenly

whether we're seeing the move toward one rate rise this year and not a rate rise in september. >> i think even if there's a rate rise any time this year is very doubtful. i think what the fed has been doing and mr. powell's statement today is no exception. it's along the same lines. the fed has been wanting inflation to go up. they want you to believe that the interest rate increase will take place. they want the market to adjust to the expectations but when it comes close to the date they always get cold feet. they find that the conditions are not good enough to increase interest rates, and mr. powell's statement today notwithstanding, i think the same thing is going to happen as we approach september. and i've been saying that for the last year 1/2 and a half and you have had so many false signals but never proper forward guidance from the fed. >> so the consensus may be using your way. this is important.

last week goldman sachs stepped out and said we think there will be only one rate rise december 16th. they have doubled down saying don't worry about thin markets the week before christmas. it's okay. they are nailing their colors to the mast again overnight. if we had a full six months from here where with no rate rise, what would this market do? >> i think the market can still go higher. we're calling for a rate hike in september. i think the key message is rates will go higher and the u.s. market is up 4%. it's lagged europe and japan. i think there's a bit of a catch up trade. >> for what? >> u.s. equities versus others that have done better. >> isn't the bigger issue that the fed was delayed the rate

rises, you could argue from a normal cycle and so they've allowed equities to baalloonballoon. >> they ballooned because earnings growth has been strong. the valuation story i think is still reasonable about the u.s. and i think the second half earnings estimates may have gone down too far. we may be in a situation in december where companies can start beating again. >> what gets my attention this morning is the ten-year yield, 240. selling treasuries, yields go higher. you've been banging the drum on lower yields and have been accurate over the last few years. are you willing to say we've seen the bottom of treasury yields? >> i continue to say that 241 is very much a buy for the u.s. treasury for a couple of reasons. one, i don't agree with the analysis. i think the u.s. equity market is doing well simply because of the abundance of liquidity.

we don't even know if the u.s. economic recovery will be on if the interest rates are increased and the fed has been hesitant to increase interest rates for such a long period of time. second, yes, you have the movement toward a greek agreement today, sara but that again, it has to be sold by the prime minister to the various leftist factions. i don't think that will happen. so with both of these problems when they man testifest themselves they have to go down. it's a matter of buy at 2.41%. sell at 2%. >> i was in meetings in athens last month. i came away convinced that whether information in june or july or august there is going to be a default and an eventual exit for greece coming up

because the combination of austerity and no concessions from the european group which is not willing to give them a haircut, they will not lower the level of debt that's not going to play well in athens at all. >> do you want to come back specifically in that point of disagreement that he believes equity markets have increased? >> we don't feel that way. m&a continues to reach new records, so we think the overall picture in the u.s. is pretty good. that said it's going to be a more normalized return from here. we're not going to have double digit gains but we think there's great opportunities, particularly in places like health care and technology and even public even financials that have lagged this year. everyone is going to be talking about protecting your portfolio? >> sielen in answer to that, i think go back to a statement at the beginning of the year when

he said publicly that the fed really doesn't know what the fallout is going to be once the interest rates are increased. the fed hasn't increased interest rates since june of 2006 and zero interest rates have persisted. i have no idea how anybody can say what will happen when the rates start to move up. there is no history here simon. >> well yes, and i think, we watch two things to set interest rates, the state of economy and what market rates are doing. we have to leave it there. thank you both. >> when we come back we're live at the festival in france. we are there. kayla, what do you have coming up? >> carl we have some interesting conversations coming up all around the cannes lionsing festival. it's all about mobile streaming and video, and we'll kick off with bob pittman, that's coming

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♪ the biggest names in tech film and music, descending on the cannes lions festival. kayla is joined today by a special guest. good morning kayla. >> good morning. we are live from cannes where

all of the biggest mockers in media and technology and tizing are descending here for the week to have a conversation about where the industry is headed and we are lucky to be joined by one of those very people here today. bob pittman is the chairman and ceo of iheartradio. besides the obvious, what are you doing here? >> this has probably one of the biggest gathers of advertising creative people. we get to meet with everybody that we collaborate with and we wildly efficient to do business here, and plus you wind up talking to one person somebody else is there and they come over and join the conversation and you wind up with some great ideas. >> is it more about beginning a dialogue or closing a deal? >> it's all of those and more. you begin somewhere where you meet people you never knew. you have some people are a busy

and we meet here but we're scheduled all day long and it's like speed dating. >> two of the people that you are meeting with, or that you had a panel with today, ryan seacrest and pharrell williams. it's an interesting time for artists. what did they have to say? >> i think at the end of the day, it's about creativity. they should do with what they do which is make fantastic job and our job on the radio side is to connect the fans to the artists. and then there's the retailers, the new tower records, we're the radio extending our reach into digital. even the retailers like spotify, about 70 to 80% of their users say the way they discover new music is fm radio. we know our place. we work with the artists and when they come out with great music, we sit with them and

strat use strategy. pharrell is an authentically creative guy. today he was talking with ryan about it's all about intent. that the audience can smell their intelligent. if their intent is to make great music, if their intent is to just make money, they smell that too. >> their intent is probably both as we learned with apple. you mentioned retailers and i tunes and now apple music. a hiccup this way trying to give away music for free. do you think their intent was wrong? >> i can't speak for them. i think one taylor swift spoke up by the way, she's great. i think she laid it out and not in a nasty way. she laid it out in a let me explain it to you way. they said you're right, and they

changed. and nobody gets it right 100% of the time and i think they handled it well and i think taylor spoke up as we should because we all have to make sure the artists are getting paid for their creativity otherwise, they can't afford to do it. >> sit just up to taylor swift in there is some sense of fatigue. we heard her come out against spotify and pull her music from there. we've heard her write this letter against apple saying you're trying to not pay artists for a quarter of a year. another came out and said they agree with her and how much longer can she serve as the symbol for the try?industry? >> she's enormously creative but she's also really smart and she's very articulate, and i think she articulated for the other folks the message very clearly, not in a

confrontational way but in a think about it way. if you want to sway somebody you don't push them up against the wall you say, let me explain it to you, and i think she did that well. and i think that's the combination of she has the platform because of her talent but she's also equally smart and articulate. >> the last time we had you on you walked about the return on investment for radio and said it's bigger than a lot of people know. it's bigger than the industry gets credit for. are you closing that gap? >> to us it's interesting. with tv what we found with tv networks, unfortunately is that they were in many cases retailers for a program and when new programs showed up a bunch of people went over there. they've seen a decline in individual networks. radio has the pop sit.opposite. our digital ratings are up almost 20 %.

so we don't have a consumer problem. we have a modernization problem. for us unlike the other business, we just have to get more money for what we do. we're making progress step one was to prove that you do have a superior roi and when you've got six to one versus a two to one, you say i think we can figure out a way. >> you need more elvis due rans. >> we do and ryan seacrest and big boy. >> thank you so much. we'll have much more from the cans lion festival cans cans cans -- >> lucky lady. good assignment. see you later. when we come back on "squawk on the street," more and more consumers are relying on the internet when it comes to shopping for their next vehicle. that's music to true cars ears

but dealers are not happy. true cars facing lawsuits from dialers in new york. the ceo will be joining us with a response just after the break.

top chef. soccer! top chef! disco. the x1 voice remote from xfinity. on the iconic tour today with a great lineup of entrepreneurs and business leaders. joining us now is the ceo of true car. welcome. thanks for joining us, scott painter. >> good morning. thanks for having me. >> i'm looking at the three-month chart of your stocks and it's ugly.

what's not being understood by the investors. the results or the legal issues? >> i think the company is really as a newly public company focussed on building long term shareholder value. the things we're building are long term and out there. there's a lot of noise that affects the stock day today but we're focussed on building the long time value. >> i want to ask about the lawsuits because they've been a big deal. new york and california dealers and shareholders, it seems to me this centers around the idea that they claim that you're a dealer and sell cars and therefore, cannot collect revenue from the sale of a car. what is your defense and do you think it has a good chance of winning these lawsuits? >> well i think whenever you're innovative and disrupt i have inive in terms of your business model, there are those who seek to maintain the status quo. some of it is expected. i think the market is the final say. you have 7 million consumers every month going to true car.

nearly 5% of the u.s. market is transacting on the platform and a third of all car dealers. when you have a third of car dealers, it doesn't appeal to everybody. the two thirds of dealers who aren't on the program, want to maintain things the say they are. it comes with the territory. >> i would think they would want to push their own websites and push out the middle man like you. when do you think the legal issues are going to be resolved? >> well i think any time you're sitting down with a dealer and recommending how they keep their customers and make sure they can finder a discover their websites, it's important. i think what true car is establishing is a new way to buy a car. there's a generation modern buyers who grew up on technology who believe that access today a and information is the way to go. i think it's proving out that this trend is becoming very powerful. you have a market that grows

about 6%. tree true cars grows about 60% on the branded channel. >> the problem is shareholders have got to deal with the realities of life on whether the car dealers can block you. that's really where we are and whether you told shareholders that those risks were as material as potentially they may be. i mean it's very well to paint it as an uber but in each of those ventures you're going to have to try to break new ground. >> there's no question that in a free country and a rueful of law, you have to allow anybody to sue anybody for everything. we think the lawsuits are meritless. we look forward to having a judge rule on these things. i think we're clear on what it takes to operate in all 50 states. unlike in uber where they're looking to break into markets. we operate legally in all 50 states. these lawsuits are not from

dealers or regulators. they're a trade association claiming that we are a broker or not a broker in the state of california. we have over 50% of dealers participating and nearly 10% are on the platform. we're aware of the legal and compliance issues that surround our business. not unexpected but we do look forward to the day in court. >> want to talk about the business fundamentals. you've seen double digit sales growth and traffic growth. i think the concern is that it's costing you an awful lot in terms of marketing dollars and advertising to achieve that kind of growth. how do you respond and do you have any comments on when you could turn a profit in. >> well keep in mind that in sort of the classic sense, we are putting money in the bank and i think that as a capital constraint privately held company, we were focussed on

faking suree making sure we were growing the business. we're not asking people to fund a set of losses. as a public company, we have to report to a gap standard where we are showing all of our revenues and all of our deductions in a way that even noncash cost in the business has to be added. when the stock does better we have a bigger cash expense. i think we're focussed on growing the business profitably. today there is a lot of positive contribution margin in the business. and i think the positive roi dollars we spend into the market are fuelling the growth. today as a national brand, we spend about $80 million. we acquire customers for a dollar compared to others on nearly 20. >> thanks for joining us. it's good to see you. scott painter is the ceo of true car. >> straight ahead, the euro is

sliding to a two-week low. down more than 1.4% as you can see on the session today despite the idea that we might be getting to a deal on greece. people focusing more about rate rises here. verizon say neversettle. 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. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series.

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the senate holding a hearing on the air bags. takata saying there have been four more air bag ruptures in the u.s. safety regulators saying the size of the recall will need to be recalled because cars with two front air bags were double counted. people trying to clean up after illinois is cleaning up after storms. a tornado ripped through a town west of chicago. trees were uprooted and mobile homes for damaged. a heat wave in pakistan has killed people. temperatures reaching as high as 111 degrees. the government has been criticized by opposition parties were not managing the crisis. and pdiddy released from jail after being accused of assault with a kettle ball. he posted a $50,000 bail bond.

and that is your cnbc news update for that hour. back to you guys. >> welcome back to "squawk on the street." greece and the creditors working to hammer out an 11th hour deal by tomorrow. german stocks building on yesterday's gain. we are live in athens with the latest. >> reporter: the technical teams for the finance ministers of europe are behind closed doors. going over the plan that greece submitted last night which includes a lot of tax hikes, a little bit of spending cuts but almost 8 billion euros worth of fiscal measures. hopefully they hammer something out tomorrow and it gets approved later in the week. in the meantime today the ecb has extended more liquidity for the banks here.

at the same time, we're hearing blowback from the prime minister's party. we interviewed a professor of political science who's here from the summer from yale. he's greek. he says the one good thing that has happen second-degree theed is that the country has run out of people who request k promise austerity. >> everyone will have been tried at the government had. and so they won't have the opportunity to claim they're going to do things that they cannot possibly do that. they're not a going to have the excuse anymore. they will be basically transpiring for everyone. that is a lesson in education, but it took five years to get everyone through power for people to say that there's only one way to do things. >> reporter: still, people are going to fight it. the pensioners are about the to start protesting in about a half

hour. back to you. >> we love a protest from athens. michelle for the moment thank you very much. for more on what this means for stocks and a big conversation about where we're going after interest rates after powell did an interview in which he suggested as a voting member of the fed that maybe the conditions would be in conditions for a rate hike in september and another one in december. art cashin joins us from ubs. >> for many us of it seems like powell might be walking back from the certainty of two rate rises. what's going on. >> i think the fed has adopted a sort of party line. after yellen's press conference many people moved to one or none this year. there was a look for a september hike and now they say most likely in december. i think you've seen williams came out last week with a very similar message, possibility of two rate hikes this year.

powell pocketssibility of two rate hikes this year. not a certainty but i think they're following guidance from stanley fish toreer to keep the uncertainty out there. if data began to accelerate toward a rate hike if they didn't prepare everybody, they'd be in deep trouble. i think they want to keep that possibility out there. >> in places in what you're saying is there may be a general belief that there's one or no rate rises by the end of the year generally, behind closed doors. i suppose you can also argue it's a continue wall easing of policy when you don't hike each time. it's kind of, it soothes everybody or at least that people -- >> it causes a little bit of confusion confusion, and i think that powell apparently was successful. we saw the dollar strengthen and the yields on the ten-year go up. so he's introduced enough doubt about that that the currency markets have respected it.

despite what's going on in europe. >> utilities are getting plumled right now. worst performing group in the s&p. the 30 year near the high of the year. how much of a focus is it for stock investors and when is it a worry smom signal. >> you're going to see it in everything that's interest rate related but if you started to get the yield on the ten-year back up above 3 then i think -- >> that's not going to happen. >> you'll get everybody's attack. >> three? >> 2.5 would raise eyebrows. >> i think you were looking for what would detonate a problem, 3 would be it. >> there's a note out today. auto sales, nine here high. jobs nearly 300,000. they say evidence the kplieconomy is booming again.

their words. true? >> no. stronger than anybody expected. i wouldn't use the word booming. >> what about durables? they were weak today. manufacturing has been weak? it's not exactly broad based. >> that's why i said not booming but better than expected. >> but. >> relative to almost six years of that too. it's got to move someplace. in the meantime the markets are taking its own pulse and it's own temperature. you notice the rally in the morning took us back to yesterday's highs. and now we've pulled back a little bit from that. >> what does this summer look like do you think? >> well can you get me through greece first? >> let's say that greece results and nothing falls out of that and it's kept together? our volatility we don't get big moves on this market anymore. it just kind of goes up. does it continue to do that through the summer. >> i think it may. remember one thing.

lack of volatility is bad for me and bad for your program. lack of volatility is very good for investors. >> and enindeed, if they don't get theirvolatility they extend their position. >> correct. relative calm is good for most investors. we action junkies look at it the other way. >> action junkie art cashin thank you. >> when we come back shares of at&t getting a nice boost today after the upgrade at barkclays. [ male announcer ] at northrop grumman, we've always been at the forefront of advanced electronics. providing technology to get more detail... ♪ ♪ detect hidden threats... ♪ ♪ see the whole picture... ♪ ♪

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♪ >> shares of at&t up more than 2% this morning. both ubs and marbarclays upgrading. joining us to explain, talking about an interesting note. dwoorng. >> good morning. >> you point out all these competitive pressures that we talk about all the time are not going anywhere but you still say they're going to be behind tmo do to the defend their earnings. why? >> i think with respect to at&t the opportunity set here really is the direct tv acquisition, right? when you look at an acquisition of this size and scope, it provides a lot of opportunities for synergies, and driving down costs, providing other

opportunities to upsell products and what that does is it provides at&t with a diversification avenue. >> does it matter as you point out that some of these benefits are largely inorganic, as you put it? >> well i think that from our perspective, we sort of believe that the stocks move where the numbers move and so certainly at&t is buying a lot of these numbers through the acquisition. there are longer term opportunities to integrate and sinner sinner jazz. if the numbers are moving the right way, the stocks should tend to follow it. >> what happens to the competitive pressures, the dangers of turn the possibility that tmo continues to carry out their strategy? >> well we are supporters of t mobile stock as well in terms of opportunities set for further

growth and share gains. it's a question of how they filter through to the numbers. there's a lot that's going on right now and certainly we expect to see more marketing activities through the course of year. when you look at the impact of some of the pressures on a year over year basis, they've been a little bit less pronounced than we saw around this time last year. i think that as we move forward, when you start to expect the diversification strategy to take hold with at&t some of the levers offset that they didn't have post the acquisition of direct tv. >> it's hard to find. there aren't too many 5.4 yields out there. you argued the direct tv secures the dividend. why? >> if you look at where at&t's dividend coverage was last year at this time. there was a lot of problems on the cash flow. when you integrate the deal there's additional cash flow and

if at&t can execute on the cash synergies, that improves. and it should ease concerns about dividend coverage for the total entity. >> you know they're not buying a growth business here and some people still wonder why they would go down this road given that. what are your thoughts? >> well and certainly agleeree that there are some secular challenges when you think about the rising adoption of ott and streaming services. there are a number of competitors coming to the market but i think the way we're looking at it is from initially a financial transaction standpoint standpoint. you have as i mentioned, improving dividend coverage and numbers moving in the right direction and also the increase distribution where they can cross sell some of the products through the different channels could provide revenue channels.

it's really, you know, makes sense from a financial transaction standpoint and there's a little bit of an option value with respect to some of the longer term revenues. >> when is it going to be finalized? i feel like we've been talking about it for a long time. there were regulatory issues to work through. what's the timing? >> i think that the timing is you know with respect to the regulators. it's in the regulator's hands. we feel pretty comfortable that we're closer to the end than we have been and we should see some resolution over the next couple of weeks with respect to the transaction but in terms of specifics and some of nuances, i leave that to the regulators to figure that out in terms of what they're looking for. >> on the dividend could we cut to the chase? how does that over 5% dividend stack up against the other telecom players. and who will deliver the most

over three or four years? >> it's the highest dividend yield we have in the large cap telecommunication companies at the moment. at&t is sort of the highest right now. and so when you look at sort of what the direct tv brings to them, the fact of the matter is it secures that type of yield and at&t has had a multiyear history of continuing to raise the dividend and should be able to continue to do so on the back of this transaction. >> well second biggest gainer on the s&p today. that doesn't happen a lot. thanks again. >> my pleasure. thanks for having me. >> which state is the top state for business this year? we'll take you live to the secret location to tell you how we came up with the answer. we'll be back after this quick break.

welcome back to squawk on the street. shares of molson coors, down about 1% in early trading. downgraded to neutral raiding from a prior buy by analysts over at nomura. the analysts say the beer market is weakening and the unit is

dropping, hence the move in those shares. let's get to chicago. the cme group, rick santelli and the santelli exchange. rick? >> thank you and good morning, carl. i would like to welcome my special guest, my housing guy, mark hanson. thank you for taking the time mark. >> thanks, rick. >> i'm going to do something different. go through a little opening here and i want you to respond. yesterday we had existing home sales, 5.35 million. the high-water mark you see on chart was 7.25 million. low-water mark in 2010 3.45. let's play a decimal game. let's pretend this is somebody's salary in '05 you made $72,500, now you're making a 52,500 up from low of 32,500. high-water mark just shy of 1.4 million. in 2005 you made 139,000 now you're making 54,000600. your low is 27,000 the.

being optimistic is wonderful, but when it comes to investing it has to be black and white. there isn't a lot of gray. are these numbers as terrific as we think they are? or am i right to put it in the context i did? >> well you have another component there. interest rates and that can be correlated to hours worked. back last year when interest rates were at 3.5%. right, which is what goosed this spring season. which was what drove people in because houses are $30,000 cheaper. when those went into the pending status, they were $30,000 cheaper than the year before because of interest rates. if rates are hours worked anyone the -- it looked really good, because they were working fewer hours, now with rates up 100 basis points 75-100 basis points over the last 45 days. things are expensive. we're talking 23,500 more

expensive to buy the average priced house over the last 45 days and we haven't even seen that data yet. remember, all of the data we're getting on housing, rick is what occurred when rates were back at historic lows when 10s were at 1.7% in march and april. the new home sales today contracts, those are from people that saw rates start to increase. who jumped in the market. i think may is the high-water mark for new home sales for the year. >> you know mark we've always disagreed just a bit. i know that rate of change is important and rates have moved up a bit. but when i look at the difference in payments for the amounts of 30-year fixed for $200,000 it wasn't a whole lot of money. in the final 25 seconds, is there going to be some rate where it starts to have a larger effect than current? or is the sit on the fence crowd going to look for higher rates before it jumps in the market? >> with the home buyer tax credit.

with the rate plunge in q 3, 2011, with the rate plunge in the second half of 2012 the more interest rate sensitive first-time buyering all jumped in the market. when rates went up 100 basis points after, which always happens, there's a demand hangover. it happens every time. i would be foolish to think it wouldn't happen this time as well. as a public sfgs announcement. when the national association of realtors, god bless their souls warns us about a bubble when no one is asking don't walk to the exits, run. >> i got you, mark hanson thank you, never enough time. sarah, it's all yours. cnbc's ninth annual top states for business ranks all 50 states on more than 60 metrics in ten categories of competitiveness and the big reveal is tomorrow. our scott cohen joins us live from a secret location and this year's top state to give us a preview of what is ahead. >> hi sarah, does this help you at all?

the background behind me? we're getting a lot of very interesting guesses. we want to hear yours, use the #topstates on twitter. we have a lot of fun with this but there's a serious study. we've been doing it for nine years. here's a sense of how this works. first of all we go through every state, all 50 states their economic development marketing pitches. we look at those pitches and sort them out into ten categories, the ten categories of competitiveness. work force, cost of doing business, infrastructure, economy, so on. there are 2500 points in our study and the selling points that are cited the most get the more points. so this year all the states are talking about workforce, that carries the most weight in our study. you can read about that methodology at top states.cnbc.com. we've got a lot of information about competitiveness, a good article up about why your state may be forced to raise taxes in spite of a strong economy, state

budgets are in tough times. our special website, topstates.cnbc.com. the first hint, is going to be on "power lunch" at around 1:00 eastern. we'll give you the first hint about where i am and as you said the countdown starts tomorrow. guys, any guesses? >> i have no idea. somewhere green and beautiful. carl? >> it looks like north carolina to me. >> i was going to say somewhere in the northeast, like vermont, maybe? i see hills, mountains. simon, i'm deferring to you. >> we know scott is stingy with clues, man, he -- we beg and beg, he does not give. >> you can't give us anything scott? >> no no sorry. we have to draw this out so we'll give awe hint during "power lunch," you've got the background behind me i don't know why that doesn't make it obvious to you. >> farmland? >> it will all come to pass. >> scott, looking forward to

some of the hints late they are afternoon and of course the big winner tomorrow. let's send it over to jon fortt with a look at what's coming up next on "squawk alley." >> i'll give awe hint about that. we've got adam bain chief revenue officer at twitter, potential ceo candidate. he's going to be life from cannes and tim westergren with all the news on pandora and after the earnings miss on blackberry. automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class. at the very touchpoint of performance

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