it's like the next generation bundle. it happens to be over the internet at a lower price. remember, you still have to pay for broad band in order to be able to stream it. >> thank you so much. appreciate it. make sure you join us tomorrow. "squawk on the street" begins now. ♪ ♪ >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david databaser. greek deals starting to creep in as both sides say there is no compromise in sight. ten-year right around 237. inventories coming up this morning. netflix hitting $700 a share. that's a seven more one split.

>> and a $29 billion super market merger. both big sales in the u.s. >> what happened to the done deal in greece? the proposals being rejected. >> and boeing names a new ceo. mcnerney stepping down and will become chairman. >> and netflix is poised to offer at a high. the shares have doubled in price so far this year due to begin striding on the post split price on july 15th and it's been noted the single best gainer of the s&p for the year by far. >> look it's doing a lot right. an interesting note to give a sense of where they are from dbr saying if you -- netflix is on pace to have a larger network audience than all the networks together. people say what do you do with the split in apple when they

split happened to be a company with an unbelievable earnings. five days later it was at $84. here there's no earnings announcement. this is all optics. people say how about if i wait until after. that's a similar situation to apple. that's a good analog. apple when it began to split the seven shares you got, stock was at $92.75. then it was at $92.20. there's no earnings announcement and once the split has occurred, when you get more shares it hasn't caused the stock to move up. get excited all you want but that is really kozcosmetic. there are no values being created by a split. >> to your point in the past it allows the price to be more affordable in the sense that retail can potentially buy 100 shares. >> and that matters. i've been over this with visa and sales force.com. you get a little bit better share base fewer hedge funds,

more individuals who like the stock. i like it so much i buy a share in netflix and it has worked. it's exciting to people but let's not forget this has often been a sign of froth when we get splits. >> not to mention vie come eclipses by $13 billion. that is $13 billion more than cbs east market value. they are dealing with an extraordinarily difficult advertising environment and it is difficult. the upfront is not as important but they didn't go particularly as well. these guys don't have to worry about that stuff. it's not about ads. it's about selling subscriptions. >> remember babe ruth's famous quote, why are you making more than the president? he said what kind of year did the president have? >> the average price of an s&p

stock is 84.2. >> what a great stat. we used to see a lot of splits when we went from 80 to 20. those days are over. we get to the 200 level and people say let's get the retail investors back. >> greece one to watch. we have reports that they are saying the creditors did not accept their proposals. germany is saying we want the parliament to approve before we bring it back. we knew this would go in fits and starts. >> this is still this weekend's business. i thought this was tactical in the sense that it would be better for a greek leader to come back to the parliament which is also set so reject any deal and say listen we just we're already shut down. you got to realize how close we are to the edge. even what we presented wasn't good enough. you may want to tie any hands behind my back but we can't get

the deal through. there's a little theater but it was interesting to see the dollar soar in anticipation of what i guess turned out to be a break down. a lot of people thought there was a breakthrough, and the dollar did not signal that yesterday. remember, we need the dollar if you care about stocks. you need the dollar to go down. >> a lot of discussion that if dwrooegs greece has to take this back to the parliament, it's going to be a tough debate over the weekend and if he can't hold the majority maybe see press has to leave? >> i know he's not trying to get the people who previously agreed the last deals. he's got a coalition he's trying to get together. i don't envy his situation. his finance minister may not even be in favor of that. >> i'm aware of that. >> his finance minister is against the plan. >> by the way, did you see the queen in berlin last night, this

morning? the queen looks dynamite. her imaginesty looks very distinguished. the hat. >> i've been there. >> you stayed at the queen -- >> many years ago. >> the queen was not there when i attended. >> i just think that members, largely ceremonial figures, but i think this is britain and germany playing nice. her family has german roots but she's going to a concentration camp. >> she's a, what -- >> don't get me caught up in british history. i'm just saying this is ceremonial but i think more than optics i think that -- everyone is fed up with greece, and i'll bet it even comes up with the queen. the queen. >> yeah. on gdp, were you enheartened by this vision in why were we excited that we were only down.2 in the quarter. >> i still think because we have

stretch pal saying we may need two rate hikes and we've got the federal governor jerome and we have the gdp number that would indicate that you need a rate cut but i know employment is good. i know the employment number that's coming up is going to be crucial and it's going to be nobody around. it's right on the eve of the holiday. and it's going to happen and people -- that's going to be the wild trader. that's the data point i am most worried about. that's why i'm saying i don't like the setup. if it's really strong and if there's no embargo on the fed people, they may say we have to october september. >> september, december september, december. >> maybe both. that's the problem. did you see the pred on the treasurys? biggest in a long time. >> let's get to m&a. we had a little bit as well overseas, though this morning. >> 60% of the super markets are

here. >> that's right. in many ways it's a u.s. deal even though it is involving two of europe's largest supermarket. the owner of stop and shop has agreed to merge with delhaize the parent of food line. the company is valued at about $29 billion. that's the combination of all stock. they're talking about a significant amount of overall synergies. you're talking if put the two together. we certainly had our share this year and it's all about cost synergies. or i should say cost savings and potential synergies. >> at the same time cisco not the cisco kid. >> no. >> cisco and food service, u.s. food service blocked or an

injunction issued by a federal judge. they can continue to fight but it's unclear if they're going to do that. sysco. >> why is one deal because that's the first and second largest, that's no good but theoretically if you have too much combination in super markets, there could be a gradual price rise but one is constant price wars and there's no real overlap. it's food lion and stop and shop. >> and you see the new york post argues that. the new york post obviously, the brand ice or justice frank frankfort frankfort. i think the cut throat nature of office supplies does not make it so it's like u.s. food service. i think a lot of the restaurants behind the scenes were saying this could really be a killer

for us. >> each deal has to be considered on its own merits but anti-trust figures prominently and a lot of the things that have been announced or may be announced. and we talked a lot about that. it was announced because the fdc had give an favor to the last deal where they took into account the market being much larger than office super stores. including amazon and costco. that said, the specter of anti-trust takes over things taken over in the hmo industry. you have a lot of potential deals, of course that you have to consider it. >> and it's the summer. it's not supposed to be happening. you're supposed to be abletop to be at the hamptons. i'm cancelling all the vacations. >> i've done it before. >> when we come back, some changes at boeing as you know.

we'll hear with the outcoming and incoming ceos have to say about that. up later, tom vilsack. take another look at the premarket still in the red as more "squawk on the street" continues. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar

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boeing announcing mcnerney will step down as ceo. he'll be followed by muilenburg. he will continue as chairman until he retires at the end of february '16. last night muilenburg said he's update about the road ahead for boeing. >> this is about stability in our path forward. we are ramping up our commercial airplane business, growing our defense business internationally, and we're i'm vesting in productivity and innovation for the future. we have a strong strategy in place and we're going to continue to execute that with pace and confidence. >> he's been president ceo since '13. mcnerney said he's going to stay on the board until such time i start getting in the way.

>> those of us who have gotten to know him. he's a towering figure. never blinked or waivered. in the midst he came on mad money, are you concerned about the dream? >> no. my team is the best. he is a titan. he'll be missed but he's staying on as a chairman. fill bow is the best there is. anyone who was thinking wait a second, is there anything hidden here? no. this is just an orderly setup by a man who's also a fabulous dad, by the way, who was a great hockey player and loves to play ice hockey with his kids and just a remarkable towering figure that will be really one of the best there is and made this company head to head against air bus. he would tell you, he dislikes them. >> it's like harvard yale in he

says i can't stand air bus. i like that kind of guy. >> to your point, it was done it appears very well. this is the appointed or anoint anointed successor for a long time. we've seen different outcomes. that's not a good thing when they're not ready. in this case certainly, they are, and it's kind of a well trod path that they've already put forward. to the extent you want to say a board is doing what it should do, this is the case. >> let's go there. let's contrast the interview with mcnerney and your interview with costolo and jack. how would you -- >> i think in the case of twitter, the board of directors. >> i'm trying to be funny. >> the board of directors knew that mr. costolo was thinking about stepping down early this

year, and i wonder why a board once you've heard that from your ceo would not in some way figure out a way to go about it where you didn't -- you would have come public but perhaps pressure them to step aside. they said there were a lot of things they wanted to accomplish and they said they had during the sixth months cost low stayed on. >> if you know a guy is to be or not to be that is the question. this is not hamlet. >> twitter the 7 years old. boeing is 100. beginning at p and g, and boeing. >> i think what the analysts are really looking for because i think most of them think we have a winning hand the company has been doing well. the future is bright if we execute. i think that the source of

reassurance that they can draw on is that we have crafted that strategy together. >> by the way, i was also thinking big departures in q 2. mcnerney, costolo, her dockmurdoch, chambers. >> those who want a sense of history, go to the boeing wing of the museum. you'll see what jim is capable of doing. telling the boeing story. maybe boeing, the most important part of winning world war ii you can make a case for that our air force, how many planes they bulletilt, and that museum is stirring. you'll be shocked about american industry. >> interesting point you make. july 1st we'll see a lot of significant change in the

generational change in the ceo suite for iconic companies. >> people are in their companies. i regard that as young. mcnerney i said jim, come on you're 65. >> that's nothing. >> that's nothing. >> you could start an entirely new career. >> doing what? >> who knows? whatever you want. >> how about being a thoughtful good guy with a great vision. he saw this through. the dream liner problems were inherited and he saw it through. and boeing has the only company other than exxon, a legitimate 20-year plan that's created. great american mcnernny, and i mean that. >> we will get cramer's mad dash and count down to the opening bell. take a look at the opening market in just over ten minutes.

all right. time now for a mad dash on this hump day, this wednesday. >> i'll tell you, david, there's a call being made from goldman that's resonating. they go buy to hold general motors, hold to buy ford. those have been terrible stocks and ford, in familiarparticular, people waiting for it to move. remember all the activists trying to get it to move.

failure. ford has done nothing either though. maybe ford gets a bit underneath it. you have europe and latin america. latin america is a disaster. it's a disaster for everyone. don't forget venezuela is kind of, hey guys. >> even direct tv. the at&t deal will close soon. >> and that makes at&t much more international. maybe we'll be talking about argentina in the conference call. >> you may be. how about ford here jim? do you agree with the call? >> i don't agree with it. i just think these stocks are going to flat line until latin america and china gets better. freight was up there. but latin and china and europe have to get better. europe gm is opal which never seems to move. bends is moving. beamer, but opal? nobody is driving an nobody.

you needed the fiat to make a deal with gm. >> you like the prospect of that deal because it's been rejected. it doesn't appear to have a chance at all. >> no. i mean i know that mary barra favors a higher price, i'm presuming that. that was a weird conference call yesterday. we'll get into that later. the blackberry conference call was hideous. >> i get e-mails from him at 10:00 at night. >> it was a play -- if it was it would be played already. the curtain, it would stay down at intermission. deutsche bank whose stock is a pathetic parody of a european stock takes its wrath on citi and goldman. they've been magnificent stocks.

this is the rate of corbat. >> is that the prospect of liar rates? >> it's being delivered. on our own network yet, goldman sachs downgrading that. look at this. >> how can you downgrade goldman sachs? >> i don't know, i think there's going to be heck to pay there. >> elizabeth warren will open up an investigation. >> she's going strong cell to cell pain. >> the fact of the day is the fact that obama got the trade authority through. >> we got the opening bell coming up. maybe we'll talk about that on the other half. about four minutes to go. we're back on "squawk on the street." female announcer: don't miss sleep train's 4th of july sale! save $300 on beautyrest and posturepedic. plus, pay no interest for 36 months

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live from the financial capital of the world. the opening bell in 90 seconds on a day where the markets waiting for headlines out of greece. a nice revision to q 1 gdp in the states. housing continues to be a story.

>> there's a lot good in lennar. i'm afraid someone is going to focus on things that weren't good. revenues up 32%. average home price up from $322,000. i think after kb homes this is the market that looks good. punches above its own weight. this would be what the fed is looking at and saying we can raise rates. this housing market is back. pack back to where it was in 2008. people are having homes. there was an article i didn't like today in the journal which said about renting. i think that's peaking right now. that's the point. the first-time home buyer is back. that's a written up piece. it was three months ago. >> and prices keep going up 7%. squeezed out as you're renting. >> they could but, yeah i think that the difficult thing here is how long can you stay in that

smaller apartment. it's about having living space. >> yeah. household formation, back on the rise. people are having kids again. >> i think that this is -- it's an actual big number stepup. >> there's the opening bell and the s&p at the bottom of the screen at the big board in lower manhattan cultural counsel celebrating the river to river festival. and something focussed on regenerative of that meteorologist. >> there's unbelievable biothe techs. a terrific anti-coagulant drug. there's a couple of this alder bio. they have the most exciting migraine drug in the pipeline. don't forget tens of millions of people possible. migraines migraines. they have it. >> they can be debillating.

>> this alder bio is another one you want to watch. >> bo foxw fox is something that can be effective. >> brent, you can go buy alder bio. i'm going to bless it. just like i blessed kythera. >> facial domination is how i think you put it. >> the real estate of the face is the most important realize. brent sanders owns the face. >> wow. those are words i never thought i would hear. it's nice to hear something you never imagined. he owns the face. >> and by the way, we may own chi bella. off the record being used for flabby grandmother arms. >> you mean the flabby tricep

thing. >> that was what my mother called it not me. >> all of it just bring it on. >> he owns the arms. it's going to be heads and shoulders, knees and toes when he's done. >> top three gainers. lennar and polty. and kb homes was the beginning. that's when they said the first time home buyer, you're going to hear stuart miller best with the industry talk about that it is the beginning of a return to the days when we start building homes at the million five level. >> we may never get back to a 70% ownership rate. that is something that was probably artificially high and unhealthy. >> that was when you were taking down ten homes and flipping them. that's over. >> and it's a good thing.

we are going to have more renters. we should have more renters. real quickly, not real quickly. hmos continue to be a focus for a lot of investors given the continued drum beat of consolidation. humana shares keep going down as they have much of this week. the question and concern there is if u and h is serious about mounting a bid for aetna, that's all speculation, would aetna be able to get a shareholder vote. reported yesterday anthem decided to come with their bear hug for cigna. they said hey, it could be to try to sign up a humana deal. let's get out there now. they're huking to humana and activity discussing this and the governance. whether they can give him two years and guarantee but that conversation between anthem and

cigna shareholders all the while, things have been quite on the aetna humana front. i have not been getting calls returned. i'm curious if they're in exclusive conversations. there's also an expectations that humana may have at least underpriced the market a bit and may miss on numbers slightly. that's been going around too. >> look we know that before this happened there were a lot of shorts in humana. because people felt that they are the most proned to missing the numbers. that's why it was such a head slam when this happened. that's why you saw that huge gap up. because the shorts at had all been playing it off the quarter. it was supposed to be the weakest versus cigna where we heard a big quarter was hamming. >> if you get a humana aetna deal expect a big spread. could aetna get a vote if they did, anti-trust hangs over all of this.

you've seen what happened with sysco u.s. foods. think about the consumer. how are they going to view it at the regulatory authorities when either you get five to four or four to three. >> when i started this street.com, we needed health care. there was united health and oxford, and you'd go to united and say i'm getting this quote from oxford. you used to be able to do that. that ended when they bought oxford. that was the end of that. you used to be able to ping-pong that back. if the government wants to know what that's like it keeps your rates down. if everybody is owned by everybody, that game ain't going to happen. if the same way you used to be able to pit u.s. foods sens sysco foods. >> we've been on the watch for fisher's comments. he does not address economic or monetary policy.

just fyi in case you're watching. a matt continues to be a big buy. >> they like the 3 d man. they're talking about capital allocation. i've always get the solar should be broken out. solar is doing very well. that's the way to play it for me. solar is good. nrgy, a big deal, 24.5 million shares. that's nyld. i want to see how that deal is doing. you're doing okay. that's a huge deal. raising more capital. people are building solar forms everywhere because the prices come down a lot. it's very reasonable. there are, remember when i've had solar executives on tv they

always point out that there are cloudy days. make that point. germany has big solar but it's not -- it's often cloudy there so it's spotty reliable. >> is it still a holy grail to find out a way to capture and it store it. >> tesla, the other tesla, they've gone at it and they never really nailed that one. >> what about the new tesla? >> batteries are the sticking point to a large degree. >> the new tesla can do no wrong. >> you had said nice things about carnival earlier in the week. royal caribbean is in the green. >> carnival cornered social media. they do so much that's good. by the way, building l&g ships in order to be able to lower their fuel costs which are huge. being able to shift roots, if you want to hear a conference call that's good now, a lot of people are trying to pin down arnold donald who's a terrific

ceo on getting like why aren't you raising prices more. he's one of the finest ceos in the country. think about the turn there. think about it. >> the costa concordia was not that long ago. >> and now the lines are big for ships and they're doing incredibly well and cruises are back and bigger than level. >> higher level for ccl since '07. facebook and netflix at all time highs. >> the queen launched for the last carnival ship. she has game. i know you're not supposed to say stuff like that. what's the matter? >> i got a nice lesson on what the previous name to windsor was. i'm learning every day. >> people are saying what did i say about the queen and an frank. she's going to the place where she's buried.

have a little more respect for the queen is what i'm saying. >> let me bring up facebook because it is up and all the other old media stocks are down. i think that's interesting. i continue with how tough the ad market is right now in terms of the up fronts they are not as important as they were. but they are some sort of a way to gauge demand. >> why don't you talk to the ceo of carnival facebook advertisement. he's got one of the biggest ad budgets in the world, facebook. facebook. >> wow. >> this is not something that the media companies are unaware of and they're fighting. it's not as though they're not selling ads, but the it is support noting. >> almost 88.41. >> netflix equal to all these networks all together. new versus old. you about facebook passing walmart yesterday. >> i remember 28. remember when facebook hit 28 and below? >> it is just the on board for when you're trying to reach

these, the meillennials watch facebook and netflix and at night they watch the phillies beat the yankees on their hand held. >> it's clear the mets aren't canable of capable of hitting. >> hit like the guy at the u.s. open. remember the putt putt situation. you have landed on moon. >> we had hope and it's starting to die. thank you for bringing it up. >> dow is down 54. and bob is on the floor. good morning. >> we're to the downside at nine of ten sectors down. utilities are up. europe a little bit weak because of uncertainty on the greece thing. surprise. but a nice rally in the nikkei.

shanghai is roaring back and the shenzhen roaring back. in the u.s. i was impressed with lennar. the beat was terrific and the beat was because the arch sale price was better than expected. i saw estimates that 3% people were guessing. they got a lot more for their homes than they expected. there are a few more incentives but nobody is complaining about that. look at the prices. lennar, the whole home building group is strong. these stocks are all starting to come back and i think they can withstand slightly higher rates nnlt on the sysco u.s. food merger, they haven't said what they're going to do but you can see the stock is holding in there. there are a lot of good things about the company as a stand alone. they have a great dividend. 3.2%.

estimating growth for several years into the future but the problem is there's no real plan b that i can see. i called around. i don't know what anybody thinks they're going to do. they can talk about more cost reduction. the business transformation effort they have. they own a lot of distribution facilities. with what we saw the other day with some companies talking about reits, there might be a way to unlock some of the real estate value. i don't see any other great ideas. this is a titanic week for ipos. it's finally happening. the next two days we'll get something on the order of 14 ipos but 8:00 tonight the big one is transunion. that's the credit company. that's a $650 million deal. that's a very big deal. but we have several others today including some odd balls.

milacron holdings. i don't remember the last time there was a capital equipment company. wane broilers in that. supply chickens to companies. we have three health care ipos. glaukos encreased the terms yesterday. catabsais and lanthesis. you think oil and gas deals are dead. think about. cnx coal tonight. this is a limited partnership in the coal business with a 10% dif vend. the business isn't dead. and by the way, last night free port mcmoran floated the oil and gas company as an ipo. they're working in the gulf coast formed in 2013.

no pricing on that but that's quite a surprise they're floating that one. finally, i want to note speaking of ipos, fitbit opened at $29 and it's held in very well. it's down a little bit. but it was 37 and change at a new high. ipos really hot. >> thank you very much. let's hop to the bond pits and check in with rick. good morning. >> good morning. there was no surprises. the revision was better on gdp but positively not positive. and of course we're keeping an eye on atlanta gdp now after personal income and spending tomorrow for may. they should update again. they're hovering at 2% and even though we're close to the end of the second quarter, we'll have all of next month to get the data from this month to put the pencil of the paper. look at a two-day chart of 30s. we're consolidating. look at the high field.

3.22 opened the chart up to date. let's look at october 1st of last year for the spread of fives versus 30. is this steepening over? it seems to be backing away from the 1.50 level. this is key. we want to see what investors think about potential rate increases before the end of the year. let's look at what's going on with bunds. if you look at a two-month chart, it's unbelievable that we've gone on a closing yield basis in two months from basically seven basis points to two basis points shy of 1%. you usually never see developed economies with this kind of move on their benchmark. and the three faces of the euro if you put the euro against the dollar you can see there's consolidation going on but look at the different picture if you pair audiotape the euro versus the yen.

we can talk about the yen's stock market being up but at one point they were at 40,000. we see a stronger versus a weaker currency but look at the other side of the coin. what other developed economy has the banks talking about tightening? the uk? the euro versus is pound. >> when we come back we'll talk with one of the earliest investors in tesla. hear what we has to say about the electric car maker and which startup he's investing in now. dow is down 58. about half of the losses are coming from goldman and boeing alone. we're back in just a minute.

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>> i've been watching that movie for ten times. when i'm frustrated i watch the movie. >> that was jack ma. his company announceing the first hollywood movie partnership, starring tom cruise. it's set to premier next month. he's made no secret of his interest in hollywood. people are concerned they would make a huge foray into buying a studio. he's made it clear most recently a couple of weeks ago in conversations we've had that that's not where they are headed. they are not going to make a large acquisition of any type like that. there is, however, a feeling that as time goes on and he typically deals in five and ten-year increments when he thinks about the future of his company, there are so many younger people in the alibaba

platform that spend hours there that there is an opportunity for them to start to learn and get into filmed entertain so they're taking the steps. some people say why. >> mission impossible? it's a good movie. it looks good but why. >> i think those are the reasons. they're trying to learn as they move along, they try to understand this because he feels like it's not just about selling things. though that is certainly the key to the platform but given the amount of time that people spend on that platform in china in particular there are other things that can be sold to them if you will and there time can be spent doing other things. and they believe home entertainment is one of them. >> the distribution is getting mashed together. a headline today that amazon studios is in final negotiations to acquire a movie. it's all getting put together in a big suit.

>> i'll tell you. it's exciting but listen to the companies we're talking about. i mean new media companies that want to get into a business. jack warner is rolling over in his grave. this is an all american business. everybody is everybody. >> and alibaba pictures which is their entity they've made a number of investments in hong kong movie companies and productions. >> comcast, that was the one, that was the movie of the summer if you haven't seen it yet, holy cow. >> dow session lows down. we'll get to stop trading with jim in just a minute. don't go away.

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time for cramer and stop trading. okay, there are a lot of people on twitter who are saying why is isn't apple coming up. you're talking about the resale value of phones. this is still a phone story. it's not a watch story. where i'm getting heat that it has to be worn at night. don't take it personally. this is a story about the resale

value as an indicator that phones are still strong and that is driving the stock as it should not the watch as much as i kind of like it. nice pictures of me eating and meeting with people. it makes me happy. when i'm bummed out, i look at this. this is about -- >> are you dictating messages back or anything. >> i got a phone call yesterday and i took it. people are like cramer it's like he's talking to himself now. he's insane. >> i can look at pictures of my family. it's so nice. >> i love pictures of my family and then chase southerly, this is where i told him to stop trading apple, just own it. >> i remember that. what's on mad tonight? >> we have two of the greatest turn around stories ever. i'll identify them and why they're going even higher turn arounds including a health care company i think everyone should be in. >> one of them not health care? >> the other one is anti-health care to some degree.

>> interesting. >> okay. >> bad for your health. >> it's not about pop-tarts or sell vee a but that's close. >> love the show today. thank you guys. >> a good one. when we come back adam parker on his teak for what happens next in the markets and then tom vilsack discussing the drought and a lot more in this country. for "squawk on the street" after the break.

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good we understanddnesday morning. welcome back to "squawk on the street." simon hobbs is off today. markets are weak as it appears a greek compromise is not going to be clear sailing into the end. we continue to get some con flilkt flikting headlines about disagreements. jpmorgan calling it no longer a pothole but a divot. not helping matters. the dow still in the red. >> let's get to the road maps. stocks lower on the discouraging developments in the greek debt talks. adam parker will join us live

with his take on where markets are headed. plus equinox is pumping up their brand planning to open their own luxury hotel brands. and the u.s. secretary of agriculture talking about the drought. we'll talk to him a little bit later on in the show. >> coming up later, an exclusive interview with sir martin sorrell his company teaming up with snap chat. he's going to join us live from the can lies festival. >> carl noted, first quarter gdp, consumer spending was a bright spot in the report. adam parker is with us. assume you're still a bull on the markets. did you get encouraged at all but what we saw in the first quarter gpd revision? >> not really.

i guess i would care about the first quarter gdp sometimes like that's september. >> it's old news. how does it set up for the current quarter? >> i think it's bullish. i think the bottom up numbers embedded in the consensus estimates are too low and that's somewhat unusual. i think the u.s. economy is going to be a little bit better in the second half than the first half and despite the fact the u.s. market is at an all-time high, sentiment is not high. it's lagged other regions of the world. setup is pretty good. the economy is improving. and sentiment is not that ef you lent. sounds like a winner to me. >> the most hated rally, the lack of conviction in stocks going hire. where do you think we're going to end up. are you keeping your target? i thought you were talking about

3,000? where do you see this year? >> what we've been talking about is that you just referenced. we think you're mid cycle. in order to make the call you have to see the economy and be worried about corporate arrogance, too much envenninventory. you can have a slow recovery and slow reflation and that cab positive backdrop. mid to high single digit returns this year. that's been our call. but just think about it as 4% operating earnings growth. 2.4% net buyback. that's a pretty good backdrop. it looks better than most bonds too. >> let's talk about your strategy within your bullish view on the markets. you mentioned bonds. that has give an lot of these industries direction. utilities finding themselves the on the top or the bottom of s&p.

what do you with do with utilities and reits that have done so well the last few years but beat up this year? >> our view is you're still overpaying for the high yielding securities. they'll probably do poorly in a rising rate environment but i crab collaborated with any colleagues and wrote a note about favored and not favored industries. we looked at dividend growth et cetera taxes, is to prefer alternative asset managers to tobacco and telecoms and in the middles, the reits and utilities to be stock specific. we provide kind of the winners and losers in a high rate environment. more generally, i look at 2014 last year and i think i learned two things. if you owned a hyper growth you

got hurt. if you owned oil related securities you got hurt. you couldn't beat the market. when i look now, i think the hedge fund industry has a -- we're clearly closer to the fed exit. and we're still overpaying for the high yielding securities. i think those are the two areas that get sold and i like buying financials and energy which i think would be the winners in that flow argument. >> a lot of people are liking that. generally the trend has been higher rates. how much up side is there for these bank stocks and do you worry about all that it's becoming a little bit of a consensus trade? >> so first of all, i've been a strategist since january of '08. the first time i went overwith financials it was april. i thought it was contrarian then. i think by definition whenever anything has been the best performing sector the last two months, all of a sudden it looks consensus consensus. our surveys of clients show

while they might be optimistic financials will do well they're not positioned there. my sense is there's a lot more up side particularly as we get closer to the fed lift off. with banks, they have been the best performing industry over the last few months. the next best performing is around 3. i think you could see much more of that over the next six to nine months. we like the financials. i think it has defensive attributes because of c car. it doesn't get affected by currency and then you have this offensive attribute of an economic business. i kind of like it in that kind of scary best of both worlds you know saying but i kind of think it makes a lot of sense for the next six or nine months. >> what do you do with health care? 26 health care. the standout m&a still going on. do you hold onto those stocks?

>> i think probably the best call i've had in the five years at morgan stanley is our biggest overweight from january 11th through december of 2014 was in health care. earlier this year we thought it might make sense to start selling down some of the stocks we've had in the portfolio that have tripled. we're just above neutral weight right now. i'm worried you'll see some of the rollup names get sold as the rates rise. biotech in particular has a lot more sensitivity to interest rates than anyone realizes. i think you have to start selling down some of the winners winners. i think it's too early to short some of the winners. the access to cash is readily available. i think it's time to start selling some of the winners if you're a buy low sell high kind of person. >> on higher rates. >> adam parker thank you very much. not too concerned about greece

here. huge super market deal to tell you about. ahold which owns stop and shop here, the big presence in the u.s. and also giant. agreeing to merge with delhaize. they're both european companies but half their business in the u.s. combined value at $29 billion. it will create the fifth largest super market chain in the u.s. this deal was expected for a long time. last month i had a chance to sit down with kroger the number two grosser in this country behind walmart and i asked how he would feel about this deal and creating a larger tougher competitor. >> we've competed with ahold a little bit. delhaize for years. both are good operators. whenever somebody merges it creates opportunities because you have to do a lot of work behind the scenes. it creates opportunities to take

care of the customer but we don't -- they're all already good sized. we don't think there's going to be that much economy scale for them. >> he doesn't feel threatened by them. i asked if he would have to do another big deal to try to compete and he said no. always generally on the lookout for smaller ones but they've had a big one and the results are showing. 46 consecutive quarter of growth. that stock has been on a roll. jpmorgan upgrading the company again. >> i know in a business where margins are thin. amazing. when we come back today, sir martin sorrell, what does he hope to gain in we have an exclusive interview with him live when "squawk on the street" continues in just a moment.

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at universal studios hollywood. health koshts travellers will soon have a high end solution to stay fit while on the road. equinox which helped transform the upscale jim experience has plans to open the first hotel on manhattan's west side. joining us to discuss the plans,

the ceo. why not just partner with another big company? why go at it on your own? >> great question. thanks for having me back. we've done a lot of research over the last ten years and what we've decided is what's happening in the hospitality. we've concluded it would be better for us to do it ourselves than to partner. >> who's your target consumer. >> i would say median ages early 40s but 25 to 55 plus. highly educated individual. >> also to be called equinox hotel. >> the name will be part of it. >> how many of these can you open? >> we think the number is 50 plus when you look at the world. we have a global footprint.

the first location is at the hudson large but we're looking at the major urban areas in the united states. >> i'm a customer. i have been for years. you run a great gym. i'm not sure if i want torder room service from you. what do you know about running a hotel in. >> it's not as complicated as you think but we have a lot of expertise. we have over 50 years of executive leadership over the hospitality company and we've hired a lot of successful proven individuals in the hospitality world to major the two experiences. will. >> are you more a real estate company than anything else? >> relate second-degree a majority owner. i would not say we're more of a real estate company. what we do is every day is a lot of real estate work. >> that's kind of how it started. in some ways related, i

remember you guys had some real estate that was of value to them and they developed it. >> that was a great memory. that was one location like that but it started more because of relationships between them and myself. >> how expensive is it a night? you mentioned wealthy klineclient elle. >> if you look at the industry, we have a lot of the ritzes, and four seasons 'issue and then you have the style. those are lifestyle hotels. there's a middle ground for someone to develop a luxury lifestyle hotel to kate tore someone who wants a healthy active lifestyle on the road. >> nothing yet? >> it would be below a four seasons but probably more expensive than a w. >> ever since the crisis we've pointed out that hotels have been pretty disciplined about new capacity right? is this a sign that you're jumping in a sign that that's

over. everybody is in the pool now. >> i think it's over but i'll point to a lot of me too product. this is the way people are living now. people when they travel want to be active and eat a certain way and they want to recover a certain way and nobody is speaking to that audience. >> i have so say i was in the weston in d.c. recently and they're doing this thing where for a fee you can rent gym clothes and sneakers. they outfit you to go to the gym. are you worried some of the bigger traditional players are also getting in on the fitness trend? >> not worried about it because even intercontinental has the hotels. nobody has our expertise. we have over 5,000 experts. weston hotel doesn't that v that authority and expertise. we don't have the expertise in room service. we'll figure that out. they don't have the expertise in delivering the experience.

then we have different disciplines in categories like sleep. >> i think a lot of our viewers have probably been to some crummy hotel gyms and you know how to do laundry. >> and we're in the service business. we operate long hours. we have a successful business of touching people throughout the day. >> i see you're wearing an apple watch. next time i'll ask you about wearables, but that's a pretty good indication about how you feel. >> harvey great to see you. the ceo of equinox. when we come back, a ton of buzz and we'll talk to sir martin sorrell.

you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records 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.

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california getting some relief from the widespread water issues. today announcing $150 million investment to improve the water system that will help farmers in cities across the state. joining us is the u.s. alture secretary. good morning to you. >> good morning. >> we've covered this pretty in depth. the tough times regarding the drought and now fire season temperatures are expecting to run hot this summer. what's this money going to do? >> it's a two-year effort on our conservation service and forest service to improve stream channels and restore meadows and work on easements and working forest lands in order to preserve the precious water resources we have in california and make sure it's used in the most efficient way. this resource is also going to provide help to communities to basically do a little better job of digging wells and making more

efficient use of the water they have and it'll help the ranchers as well looking at their storage capacity. all totalled, a great opportunity to build on what we've done in kra. multiple millions of dollars of assistance in help. >> farmers are taking on the chin in a public relations sense because there's this idea that they soak up obviously, they use more water than they're intitled to compared to residential purposes. is that fair and does that make this narrative worse? >> i think you have to be careful act water use. virtually everything in our economy uses water. i prefer to take a look at what farmers are doing in terms of making tough decisions in conserving water and we need to provide help and assistance. at the usda we're working on projects that will capture fog. this is going to spur innovation

and creativity and create opportunity as challenging as the times are, i think we will eventually get out of this in a better circumstance situation as we adapt to a changing climate. to carl's point, jane wells who has been all over the drought in california says it takes a gallon of water to grow one almond and 2%82% of the almonds come from california. maybe we shouldn't grow them in california. >> check how much water it takes to make your iphone or your computer. that's the issue here. it really isn't about pitting one aspect of our economy against another. those almond growers are supporting nearly a million jobs in the u.s. i think we have to be careful about that. the key is to make sure growers are using water in the most effective and efficient way. one thing we have learn

second-degree the irrigationed is the irrigation systems need to be improved. that's going to help some what as well. >> mr. secretary, i had an occasion to be at the hoover dam to see how high the colorado river had been and where it is now. it's pretty stark. sit your assumption that this is a new order, so to speak. this is a change in terms of expectations or how much water is going to be available to all the states that share in that important river? >> well there's no question about the fact that we're dealing with a change in climate, warmer temperatures are making it much more difficult to retain water. longer droughts more severe floods, more severe storms. this is the new normal. that's why we established seven climate hubs around the united states to begin assessing the vulnerabilities of american agriculture and to provide research projects and techniques for helping farmers adapt so we

can continue to have the rich diverse food at an affordable cost. >> what happens when those who border california say what about us? >> well obviously water issues are sticky and there may be some disputes between states but our focus is on trying to make sure the water we have is used efficiently. that's why we're putting resources in research and taking a look at new ways of irrigation and new ways of feed additives and so forth so livestock can continue to grow notwithstanding the lack of water, rotational grazing. a series of steps we're looking at to try to take agriculture adapt can. at the same time we're also challenging farmers to work to reduce greenhouse gas emissions so over time maybe we can get ahead of the process instead of constantly reacting to it. >> and finally, if anybody has been to california lately knows, this is changing the way people

live in that state. what's your best advice to residents of california and how they should approach water usage for not just this year but for the next five to ten years? >> well, no longer take water for granted. it's an asset. it needs to be protected and conserved and preserved. understand the important work that is played. that's why we've been impressing upon congress the need to. we can't rob from programs. we need to restore our forests. tremendously, a great opportunity. as challenging as the time is, as difficult as it is for everyone in the state. there's innovation and creativity at work and i think the country is going to benefit from the lessons in california. there's going to be new products and new ways to approach this difficult circumstance and we're going to make something positive out of this difficult circumstance today. >> the market is demanding some

kind of innovation in the years ahead. thanks for time. good to see you. when we come back. officials meeting in brussels right now trying to hammer out a greek deal. and sir martin sorrell, the ceo of wpp, will join us right after the break. dow is down 64. ♪ mamas, don't let your babies grow up to be cowboys ♪ ♪ don't let'em

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welcome back. waiting on the department of energy to come out with the weekly crude inventory report. the api set us up for a decline. crude oil prices are up about $0.40 at the moment at this point. as i said, supported. weir we're looking at this number waiting for the board to change here. seeing a little bit of decline in prices right now. only up about ten cents. not exactly sure what the department of energy said here but it seems to be a little bit bearish. also remember we had a little bit of a weaker dollar today supporting crude prices as well still hanging over the $61 mark. crude inventories have fallen uninterrupted since the beginning of may. 23 barrels are out of play within the system. that has been supportive of prices. i still don't have the current number for you but i can tell

you prices have come off their highs at this point. now over to the business news updates. >> thank you. and good morning, everyone. is is your news update at this hour. victims of the boston marathon bombings and the family members are currently describing the attacks impact on their lives. this follows right before a judge formally charges dzhokhar tsarnaev to death. iran is hardening the stance in the nuclear negotiations with world powers. he says he rejects a long term freeze on nuclear research and wants to ban search of sites? >> the french president calling an emergency meeting with officials to respond. the french prime minister says the the u.s. must act quickly to repair the damage from the spying revelations.

and if you think you have renovation problems queen elizabeth may have to move out of the palace. officials say it needs about $237 million in renovations. i'm sure he has other places to go. back to you guys. >> welcome back. grease's prime minister meeting with officials from the the imf and the eu in brussels today. optimism fades for the most recent debt deal to get done. julia chatterly is live with the latest. >> reporter: thanks. i think the key point to make for all the noise we've heard in the markets today is that the talks are still ongoing. there was going to be a lot of posturing particularly given the

difficulties, the tough negotiations that have to take place. what i think happened is the prime minister targeting imf. they've been playing hardball. we've seen this divide and conquer. the point he's made is how can we come up with proposals when you guys the creditors don't know what you want to ask from us. asking said that and i spoke to you about this on monday we could see the proposal details didn't have the pension reform that the imf want and toxic issue for the greek prime minister. the other thing is trying to enact tax rises at this point given the weakness of the economy. it was never going to bring the cash in. these were always going to be huge issues for the imf. i think what it's going to come down to because we can't not have the imf involved is whether or not the prime minister can compromise further, particularly with the problems in his own government. the geek finance minister in the last few moments trying to deny

that he's going to move against negotiations. i think what everybody can agree on is that given the timing a deal has to be struck tonight. we just have to wait and see what they see when they enter the meeting. no one expecting much spleepleep tonight. >> thank you allya. in the meantime snap chat making announcements with the company revealing it's forming with wpp and the daily mail forming a company called truffle pig. kayla is there with the details. >> our next guest needs no enter duction to the average cnbc viewer. you're a fixture.

>> for the last five or six years. it used to be a french enclave. it used to be when roger hatch well ran it we never used to come but it's the oscars of our industry. it's important not all clients but to many clients, to our people, it's very important, winning here. we've had a very good start this year in the first half of the week. we hope we hang on until saturday night, but we have a big lead in the points according to our calculations. a bigger lead than we've had for many years. we're thrilled about the festival but it is really important for clients and important for media owners and really important for our people. >> people keep saying i'm sure work gets done but it is beautiful, of course, and which is why we're all enjoying it. but you announced truffle pig, snap chat and the daily mail as well as a music partnership. >> with alex the kid. >> incubators of sorts to sore

content. >> both of them are content. we have three things we're interested in. one is technology. one is our investment in come school and audience measurement and dana ta. and the third thing is content. and alex the kid in music, who is what i would call with all apologies, the young rick reuben in terms of a music producer and you mentioned truffle pig which pays homage to david ogle by. the truffle pig always got the valuable knowledge. >> shouldn't that be the agency's job to develop and innovate for clients? >> it is but the world is becoming a much more fragmented and, in fact confused world to your point. so we're linking up with a media

owner, the associated news owner, and snap chat which is probably the hottest platform a 25-year-old billionaire. insulted him by calling him a 25-year-old billionaire, but he is now. he was 24 at the time. and ourselves. so what we're experimenting, to be honest. we have three ways of dealing with the web and the change. digitally it's 37% of our business. we want it to be almost half. three ways of dealing with it. you can get our traditional business to move faster. get our digital businesses to grow globally and then to invest. to extent cannibalize our business. i think eating our children is right thing to do. it's something that internet 1.0 around the year 2000 if you have a legacy business model, the disrupters on the internet attack the legacy business model. if you try and stop the waves,

you end up being swamped. i think we have to experiment. we have no choice. if you sit still, you'll get hit, and in our business the industry is facing tepid growth because gdp growth is tepid. it's facing a situation where there's little inflation and so there's no pricing power for our clients so they focus on getting to their numbers and committing the forecast to you and others by cutting costs. procurement rules, that can carry on for a long time. it means that we have to focus on experimenting on what reed hoffman called it a lotlytery tickets. they're not bets. they're educated bets. they're educated investments. it's like a strategic venture company. >> what do you make of what snap chat has unveiled. talking about vertical video, and facebook talking about a richer ad format.

>> facebook is interesting. they have some momentum. i was asked today would i choose between google and facebook as an investment, and i would have to say despite the fact the google's new cfo could take the market up by cutting spending and buying back stock, the momentum seems to be the facebook in terms of video and mobile. and you can see that in terms of the company behavior. we had our stream conference on one of the islands and we had them all there. snap chat twitter, facebook and google microsoft, alling talking about their latest development but the behavior of the companies sort of mirrors the issues. it was the softer side of google really being presented because of the regulatory issues it faces and because of the dominant position it has and the almost a challenger from

facebook. it's a duopoly. the media behavior of young consumers, people born after 197,19 1997, their behavior is different than the millennials. there's going to be a lot of fashion but like magazines of previous days. these platforms will ebb and flow. there will be always be strong platforms but they will ebb and flow. snap chat is a phenomenon, and we decided together with the mail jonathan, to try to put it together. >> sound like keeping your friends close and your enemies closer.

>> yes. >> always great to have you. >> good to be a fixture on cnbc. >> we are very honored. >> thanks. and quite a vote of confidence there on facebook and snap chat. coming up, shares of williams spiking earlier this week after rejected a buyout energy from energy transfer equity. the cfo of ete will be here to talk about the state of the emergency sector as a whole. "squawk on the street" will be right back.

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shares are doing something quite rare. find out what it is and why it might be more gains for apple. we do a live segment at power lunch but more "squawk on the street" coming up next.

getting a tweet from carl icahn who says quote, sold last of our netflix today. believe apple currently

representing the same opportunity we stated netflix offered several years ago. after selling really for the past several quarters some 16% in q 1. icon is officially out of netflix. we're back to look where he got in. october of 2012 when this stock was as low as -- i see a $57 in that print. $694 now. >> netflix still the best performer in the s&p. speaking of which, have a look at the tech sector at large. it's moving higher today in a flattish narcotic. >> the best performing sector so far. tech is competing with energy today. among the leaders, apple and facebook but some analysts upgrades are boosting the sector over yawl. and goldman also added applied

materials to the conviction buy list. technology is certainly a focal point today. up about a third of a percent. >> a multibillion dollar merger battle got underway in the pipeline sector. joining me to break down what's going on is jaymy welsh, the cfo, and m&a banker for years and one of the architects behind the acquisition strategy. let me start with the stock price. it is down rather sharply since you first announced the deal. is that a reflektction of your own concern with moving ahead? >> we've seen it down 6.5% in the last two days after the announcement of a $50 million

transaction. you know merger puts the the spread on and that puts a lot of selling pressure on anyone's securities. we've been communicating with investors. i think williams shareholders see the merits of what we have to offer. our stock price has a tremendous target price outlook. we outperformed incredibly well the first part of this year and i think this is a temporary situation brought on by a merger and by an announcement without a pending deal. >> and today it is up a bit but there's concern. people remember southern union and say this guy is in a bidding war and paying a big number. we don't want to see the same thing here. >> that's true. and last year we were rumored to be in a merger discussion where it got out from one of the other media sources. the stock price shot up and we

concluded that it wasn't worth our while, basically, moving forward with that particular transaction. i think we've learned a lot from the southern union experience. i think we're a lot more disciplined and what we feel we offered was a very full and fair offer with probably the platinum standard of the sector in the form of ete securities. nobody gets ete securities. >> you guys don't give them out willingly willingly. >> mr. warren doesn't give them out to anybody. >> you've been talking to williams for quite some time over six months and then they announce this deal to acquire their sub wpz, was that deal a surprise to you and do you believe that they did it specifically to avoid having to do a deal with ete? >> i can't really speculate as to who wasat was going on in the boardroom. we were surprised given that there was an ongoing dialogue between us and themselves that

there wasn't a reachout to say frame for us what you want to do and what will create more value for williams shareholders. that is what surprised us. the issue we have is we're a different structure than a typical flat structure. i think our viewpoint is we have somewhat of a complex structure but that actually from our spand point is a competitive advantage as we look to capitalize on differentials from a cost of capital standpoint. >> they have put themselves up for sale. many people tell me they don't expect there to be a lot of potential interest other than than perhaps ete. kinder is thought to be precluded from doing a deal. do you agree? are you the only logical buyer? >> i think our viewpoint is we're confident of their position.

we don't expect competition for this. we've offered something pretty full and fair. we've shown ourselves to be, i think pretty hardened in the context of we set our mind to this and we will endeavor once we've done that i don't think anybody wants to get in the middle of a situation which can be as messy as this. i think we have we have basically showed very clearly what we plan to do and we will continue to in fact increase the pressure as we go forward. >> how do you increase the pressure? >> i think you increase the pressure in the context of if we don't see that there would be a process that we think is fair and even-handed, obviously there is the potential to in fact have a reach out directly to shareholders, if in fact it's required. >> would you undertake a proxy fight. >> to would be next year the annual meeting. >> what truncates the proxy fight is their requirement for a williams shareholder vote to complete the collapse they had predicated their transakz in closing in the third quarter of this year. there will be a william shareholder vote which will be a

referendum. a referendum for management and the board as to the wishes the ultimate wishes of the shareholders. i think our viewpoint is we are clearly lining ourselves up with their shareholders. to say it's time for a fresh start. >> two activist investor who is hold significant stakes in williams are on the board. you stated publicly one is the a big holder of ete on swap. do they help you on your pursuit, what is the role they are playing in potentially creating a deal? >> i think they play a very constructive role in the board room. they have a tremendous amount of skin in the game. they're the largest two shareholders of this enter prize today enterprise today. one is a big holder of ete. as such he has shown with its investment in us it's belief in what we have done and what we continue to do on a daily basis.

we think it's probably a force for good and certainly will help make sure that the board has all of the facts at their fing irtips. >> jamie walsh, thank you for joining us. cfete. up next we're counting down the country's top states for business down to the top four. did your state make the cut? we'll check in after the break.

. today cnbc revealing the ninth annual top states for business. our own scott cohen joins us now with state number four and a clue for this year's winner. good morning, scott. >> good morning, carl we told thaw state number five is georgia. which was last year's top state for business. our study literally encompasses more than 3,000 points of data. so the states that we're counting down have accomplished something and deserve credit. let's move on and state number four. >> colorado the centennial state is number four this year. with 1515 out of 2500 points. colorado finished eighth last

year. colorado's best category? it's economy. one of the fastest growing in the nation. thanks to a long push for high-tech and green jobs. overall job growth is strong keeping unemployment well below the national average. colorado's worst category? the cost of doing business. utility bills, particularly natural gas are on the high side. the individual and corporate income tax rates are 4.63%. the state's sales tax is 2.9%. but local taxes can push it as high as 10.4%. colorado's largest private employer is lockheed martin space systems. the highest is real estate. >> colorado makes its first appearance in the top five since 2011. where am i? state number one, home of the bay, one more hint. home of the bay. our countdown continues during power lunch when the top state revealed during the closing bell

later today. top states.cnbc.com. >> jon fortt has a good idea let's send it over to him. for a look at what's coming up on "squawk alley." you're thinking of missouri? >> it was so far down the list last year that can't be right. we will see. but on "squawk alley," i do know what's coming up. we're going to talk netflix, a split in the stock and karlcarl icahn is spinning from the stock and facebook making a big splash at cannes. what they plan to do in the area of social ads. and an early tesla investor. are we in the renaissance of do-good investing? the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test,

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good morning, it is 8:00 a.m. at netflix headquarters in los gatos, california 11:00 on wall street and "squawk alley" is live. ♪ ♪