fall. for the week, not the full year. >> possible. but hope springs eternal. we've been cheery. >> very cheery on a friday morning. >> happens on fridays. i got in a good mood immediately with that guy from cke because made me think of a western bacon cheeseburger. >> we got to run. get yourself a burger. >> you may be able to get one around here. >> very soon. make sure you watch monday. "squawk on the street" begins right now. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. premarket in the green although dow in danger of strongest weekly losing streak in a year. gap, deere, updates on egyptair, europe looking to finish the week stronger. we'll get existing homes at 10 and g-7 finance ministers meeting this weekend.

a roadmap continues with the retail wreck continuing, gap, foot locker and ross stores all on the move after earnings. >> and more on the latest on the disappearance of egyptair flight. first up, stocks are poised to open higher a day after the s&p touched a two-month low on concerns the fed might hike rates next month, or in july. the dow and the s&p on track for its fourth consecutive weekly loss, that's the first such streak since october of '14. the nasdaq on pace for its first five-week streak in the red since 2012. >> yeah. >> interesting to put in perspective the month we've had. >> money pouring out of the market worse -- actually, these guys talking on "squawk box" worse than 2008 and 2009. people concerned it's not just one hike, it's multiple hikes. i don't know how that conversation comes back on. that's scaring people. earnings just so-so.

geez, it's just kind of a subpar picture, i think. >> really? even with the economy essentially the fed saying it's essentially strong enough to handle this. why is that a problem? >> well, that means the dollar goes higher so all the companies we bid up in the market are ones that the numbers will have to come down if the dollar goes up. we're not set for that. the only companies that are really reacting positively are the banks. and that's not big enough. the insurers, there's been big catastrophe losses. those numbers are coming down. i'm saying the numbers for many companies are going down, for a few are going up. and that really does determine the direction. >> would you rather have the inverse where banks were lagging because we were in this perpetual low rate environment? >> yes. if they would just speak in one voice. if we had a maestro, a conductor who would say one hike and then let's wait and see, we'd go higher. but right now if you're trying to factor in two or three hikes,

numbers come down. and that's what matters. it's about the two, three hike scenario. that's what's causing this weakness. not the one. the one we can do. >> so is it the tower of babble. >> yes, thank you. >> you're welcome. >> better than the musician thing i'm using. i thought the maestro thing had game. >> you going with that one? >> i'm stealing it for tonight. >> it's not generius. it's form of flattery, thank you. >> it's not going to end. tu ru lu is going to hit the tape if it hasn't already. yellen next friday, bullard two times next week. >> i don't know. bullard wants slower, about lower oil prices and it went the other way. why do they have to talk? >> why do they have to talk? i don't recall -- then again the world we live in right now is one of endless information coming at you in so many

different ways, some of it true, some not true. >> well, they might as well tweet. >> they might as well tweet. that's where we'll get, i guess. we'll all be trying to figure out in 140 characters. >> they do not need to talk. because they all talk we have what we have. they don't care about the stock market, but the money coming out of the stock market is directly related to the fact no one knows what their doing. >> so you say they need to pull guidance, pull monthly retail sale -- >> no -- retail? i just want them to talk and the rest of them to say i'll see ya and let yellen talk. i was once in training camp where an offensive line coach deviated one little bit from the head coach, that never happened again. these are offensive line coaches. these are defensive line coaches. these guys are like, you know what, they're linebacker coaches. they're embarrassing to me. you have a head coach, you speak, you let the head coach talk. i don't want to hear about -- >> and you're saying they should not be giving the presser after

the game. >> some of these guys are just kicker coaches. they're special teams coaches. i mean, some of these guys are -- you know what they are? >> what? >> they are guys who are training and conditioning coaches and they're speaking. and they're contradicting the head coach. can you imagine this? the nfl is so much better run than the fed. >> true. >> but it's a bigger business. >> i like that on the jets who tripped a guy when he was trying to return a touchdown. >> so he should join the fed. i'm making him -- he's going to succeed dudley. who are these unelected people that are offensive line coaches that can grab a mike repeatedly and contradict the head coach? what is that all about? >> all right, but to your point in terms of the broader market and the lack of participation from a lot of hedge funds and the like and then the algorithms that we talk about all the time, all the ph.d.s and mathematics who know nothing about the stock market and don't care.

i mean, that's the world we live in now anyhow. i think there's a redemption cycle going on in the hedge fund industry maybe leading people to sell rather than buy right now. and it's hard to meet anybody who's particularly sanguine on things. >> nobody. oh, well, tesla, they priced the offering well. >> they did price the offering. >> amazon. they like that. >> they like amazon. >> yeah. salesforce. >> that does lead us to retail. let's get to that quick. sharing the earnings spotlight gap reporting profit in line, cautious full-year outlook announcing plans to close 75 old navy and banana stores mostly outside ofhis country. foot locker earnings matches estimates but revenues and comps down and ross stores down sharply on a quarterly revenue miss and weaker guidance for the current quarter and full year. >> where do you want me to begin? >> let's do ross. comps up 1.2, but looking at eps

64 or 67. >> california bad, florida bad, womens apparel bad. ross stores, womens apparel, home goods -- look, they'll give you something. they all have a category that's good. shoes were good. shoes were good. okay. but midwest business was good. but i didn't see anything i liked and i didn't like the forecast 1 to 2%. i don't need that. forget that. foot locker, i think the problem, helping from the street, steph curry, not enough room for under armour, too much nike at under armour. >> comps did miss. >> too much nike, not enough steph. steph is a hero. he's helping nba 2k sales staff. steph is under armour. very good speech. dick's looking good because sports authority going under. and then gap stores, art peck,

he says they're doing great, could be delusional. >> he could be, although he does seem to be speaking pretty straight about amazon and the threat there. >> yeah. and navy. old navy closing japan. but there's a line in the conference call that really made me laugh a little. someone from the retail family, old navy, problem, too much fashion. well, what does he want? unfashionable stuff? too much fashion? i thought that was interesting. they pulled the tv ads for old navy, deeply disappointed. guess what he appointed, a chief customer officer. what'd they have before? isn't that like a ceo? >> if you haven't heard gap stores down three, banana down 11, old navy down 6, and as far as the guide they say they're not affirming but 192 would make sense -- >> oh, i'm cutting numbers. i think they have to after this

weekend. the word disappointing was used more in that conference call than i've ever heard. >> we already got a preview of this, right, a couple weeks back? you're talking about a stock that was 30 bucks not that long ago. >> elle brands cut numbers after two weeks -- >> right. >> but the word disappointing google, gap, disappointing, it's very disappointing. but athleta was good, good read through to columbia sportswear. athleta is strong, not disappointing. and art peck's not delusional. i didn't want to hurt his feelings. i just read it and said, wow, to me that's a little delusional. >> we'll dive deeper on gap and some other names in a little bit. we want to get to the investigation into the missing egyptair jet. the egyptian military says the debris from the plane which had 66 people onboard has now been

found in the mediterranean sea. we're live in paris with more on that. hey, hadley. >> reporter: hey there, so several developments over the last several hours, certainly here we've been following the investigation very closely. we know french authorities are on the ground in cairo. we know an airbus expert is on the ground with them as well as working with egyptian authorities trying to figure out just what happened to egypt air flight 8804. the european space agency came out and said one of their satellites picked up what looks like a potential oil slick about two miles long in the area where the plane is thought to have come down in the southern mediterranean. no confirmation on that from egyptian authorities, but what we have heard that they are absolutely sure pieces of luggage and piece of fuselage found about 180 miles from alexandria were part of egypt air flight 804. bigger question going forward is what exactly brought this plane down. there's a lot of speculation in paris here in terms of security of this aircraft.

we know prior to from taking off from charles duh gal was flying 24 hours previous to that. landing in tunisia, egypt, as well as in brussels. a lot of questions surrounding the safety of that aircraft and prior to final departure and if in fact this is terror we have not heard any chatter from groups like the islamic state, groups like al qaeda and islamic state in sanai as well. a lot of conflicting reports continuing to come out of this investigation. remember we have authorities from the united states, egypt -- trying to work together here, but still a lot of conflicting reports, guys. >> hadley, thank you for that. we wait for developments out of that story. quick look at xerox here in the premarket. executive officer ursula burns will serve as chair when xerox splits in two. she will not serve as ceo of either, although she'll remain in her current position until

the spin-off is done expected by year's end. >> geez. >> that was known. i remember hearing that from somebody. >> okay, really? >> maybe that was news and i didn't recognize it when i was told it. >> that last quarter was not good. right now on the foot locker, basketball comps down mid single digits. >> basketball. >> basketball. and basketball is the hottest sport in the world right now. that's nike. steph curry, they don't have the right shoe. not enough space for under armour or foot locker. and also of course mall traffic. but down mid single digits, basketball. i mean, geez, basketball -- everyone's watching basketball. >> well, just because you're watching it doesn't mean you're buying the shoes. >> you have to contradict me. >> i wasn't contradicting, i'm just making a point. >> every woman's watching tesla and buying teslas. >> apparently. y >> you can't get a tesla. >> goldman sachs is talking -- >> we'll talk more when we come back on the morning's movers

including yahoo, take another look at the premarket. today is the anniversary of the s&p's all-time high 2134 today last year. we're back in a minute. hing a r. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing

welcome back. shares of yahoo look down this morning, this on a "the wall street journal" story indicates bids for the company's core yahoo unit, which is up for sale, are coming in below what had at least been previous estimates. journal reporting according to its sources bids may be between $2 billion and $3 billion. what i can tell you about this story after speaking with numerous people with the knowledge that the process is it's news to them nobody has seen numbers of that type. in fact, what i will tell you as well, and this has been confirmed by a number of people is the numbers being cited by the journal of $2 billion to $3 billion would be lower than the lowest bid that yahoo received in the first round of bidding. now, that does not mean that bidders won't lower their bids in the second round. we're expecting another round of bidding to take place and bids to have been received by let's call it early to mid june. it doesn't seem to be a hard and fast day deadline there.

but at this point, again, people with knowledge of this process tell me that number would be lower than the lowest bids the company received in what people are saying is a fairly robust auction at this point. of course verizon has made no secret of its interest in the yahoo core business from the earliest days when the cfo talking on conference calls saying they were interested. could it be verizon would love to have it out there the idea it's coming in lower so it can conceivably game the situation, i don't know, i'm speculating on that. but what i can tell you again from having spoken to quite a few people they're characterizing this at this point in their opinion completely wrong. we'll see whether it ends up being wrong. again, you have no idea where second round bids are going to come in. will they come in far below what was bid in the first round? that is not typical in these kinds of situations. jim, you are talking about a business with over $600 million

in ebitda, by the way that includes parts of yahoo that are losing money. so when you per forma some numbers, you might end up with a higher number, that multiple would have to be very, very low and the expectations would be you would see significant demunition in that over time. does include royalties from japan, about $142 billion last year in 2015. that according to who i'm speaking to is still part of this stream at yahoo as of now, not yahoo japan the ownership stake, but the royalties paid from yahoo japan, so we'll see where this evolves. an important point for many investors out there is whether it's three, four, five, six billion, you're talking a company that has almost a billion share outstanding, so you can do the math. only a buck a share and kwhen you apply 35% taxes to it you get even less.

so it doesn't really move the needle as much as you might think as does any movement in alibaba which of course they own, what is it 384 million shares. so that's -- >> boom. >> -- the key. >> i'm glad you clarified it. bob peck came out from suntrust basically saying the same thing. saying what are they really selling, where do they get this number? david, untrustworthy. >> "the wall street journal" is a great publication, they do incredible work, but on this one at least my sources are telling me something very different than what theirs are. >> i think it depends on what they're really selling. there are pieces that could be that, but not the whole thing. >> it's the core business. that's it. it does not include yahoo japan stake. it is the core business, it's what conceivably doing about 600 million right now as i said includes royalties from yahoo japan. that's where things stand. we'll see where things end up when we get to the second round. how many bidders are still standing and whether or not there would be, as i said, there

would come well lower than the lowest bid they already got to get to this range. so it does indicate that we are closer to the four to five let's call it at least that we anticipated. >> okay. the issue according to peck is what is core? core assets, intellectual property, core. >> i think so. >> so stay close to this. there's something going to happen. >> we'll stay close. by the way, the inclusion of jeffrey smith from starboard on the committee that is of course dealing with the sale on the board committee dealing with the sale of the core business, interestingly there had been a back and forth would he fight to have to get on, he gives cover to the entire board now. because jeff smith, who i'm told is intimately involved in this process in every way, if he says, no, it's not enough and they walk away and decide to go another route, nobody's going to question their judgment. >> no. and i know rick hill, who's on part of that team thinks he can turn this around. wouldn't mind a failed auction. >> the point they continue to

make with these bidders. >> yeah. >> i think there's a lot here, but i am concerned about alibaba. my friend herb greenberg -- >> that's more important. alibaba moving significantly up or down has a much bigger impact. >> i'm worrying about it. >> okay. he checks off. >> yeah, i know. when we come back we'll get cramer's mad dash, one more look at the final premarket of the week. more "squawk on the street" from the nyse straight ahead.

♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

yes, mad dash for a friday. always nice to say friday.

hope you rest that voice over the weekend. >> oh, of course, are you kidding me? >> where are we headed? >> all right, david, are you tired of china being weak, hearing those stories? >> a little bit. >> how about china is probably our strongest region? the momentum just keeps building, multi-year wave opportunity applied materials may be one of the most bullish calls i have heard in years. they have fabulous business, record revenues in china. they are doing 3d flash. they're doing organic light emitting diodes. >> thank you for telling me. >> unbelievable. david. >> yeah. >> this call i finished and said, halleluijah, this is like the old days where you used to go through a tech call and say china's good, u.s. is good, business is strong -- >> does this have a read-through to anything else? >> semiconductor, it's a whole new cycle. remember, this was tokyo electron trying to steal this. >> yep.

>> but this company -- this conference call, if you want to feel bullish. >> chip making equipment makers. >> gary made me feel so good, david, even my throat didn't hurt when reading this conference call. >> really? >> felt like i was having dinner with you and like the old days. it's like gandhi 2 if they had done a sequel. >> i don't know what to make of that so i'm going to take it to the break, i think. >> yeah. >> it's interesting, it was flat on the year until today. >> i know. such a happy day for a-mat. it's a happy day. >> well, a lot more happiness here of course on this friday on "squawk on the street." look, applebee's, makes you happy. >> new hand cut steak $13. go there with me this weekend. they found out who's been hacking into our network.

who? guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them. how did we do that? we have some new guys defending our network. new guys? well, they're not that new. they've been defending things for a long time. [ digital typewriting ] it's not just security. it's defense. bae systems.

the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.

you're watching cnbc "squawk on the street" live from the financial capital of the world, the opening bell in about 90 seconds on this friday as the dow is on track for a fourth week down. we've covered some of the retail earnings, got covered some

yahoo, talked a little a-mat. >> yes, a-mat was really good. you know what, we really should talk about i just think campbell's soup we have to mention. i know the stock is going to be down very badly. i have hormel on later tonight. this has been a great turnaround story by going more natural and organic. so be aware, you tell it down, could be higher a couple weeks from now. >> it did raise their full year guide. >> exactly. >> but organic sales down 2 on lower volume and more promotion. >> oh, boy, 7% more in promotion. i was surprised at that, but i have tremendous faith in this turn. i don't think it's over. and i got to tell you this denise morrison she should do tv. she should do tv. she is an unbelievable spokesperson for the change from the pantry to the natural. she's very good. don't write her off. and don't sell. >> we're watching cpd today for sure. let's get to the opening bell in a few seconds here. look at the s&p at the bottom of

your screen. down here at the big board today it's dineequity celebrating the re-branding of applebee's. ceo on with jim last night. >> yep, i love her. highest yielder in the category. and they have the money to pay. highest yielder in the category. i think the turn can help. hand cut steak. >> yeah, not to mention pancakes and the nasdaq as well. >> revenge of i-hop, look out, she's coming at you. >> gordon parks foundation preserving the works of african-american photo journalists. speaking of campbells does lead us to walmart and discussions today in the journal that they're one of the few retailers that can afford to take a hit on margins to gain share. >> yeah. the hidden story on walmart, the 40 regions, 40 districts where you go in your handheld, say

what you want, go to the supermarket, the guy brings it to your car. everywhere they've done this, it's been killing it. the numbers are up huge. they're going to roll it out nationally. look out, kroger, this is really difficult to compete with. and it's the scale -- here's why i love it. it's perishables, carl. so if you order amazon and you're not home, do you want your perishables outside? >> to sit outside, right. >> you want that hand cut steak outside? no way. walmart's got something here. this is big. it's big. >> this morning on squawk saying they don't need the best in-store experience. they just need the lowest prices and a good enough store, that's how sam ran it for years. >> yeah. >> and that's how he argues doug is running it now. >> i think the manager turnover drastically reduced because they're getting the money, training better, walmart is a crouching tiger. it was a hidden dragon.

and now it's springing. i think this walmart is still alive. >> how about mcdonald's? sounds like mcdonald's a year ago. >> you're getting on board, man. >> i'm on board big. i'm begging for one where i live. >> really? >> yes. >> walmart is to mcdonald's -- or walmart is to amazon as mcdonald's was to shaq, is that what you're saying? >> no, they're both disrupt tors like they used to be. mcdonald's was a great disrup tor, they're back disrupting. and doug mcmillan, kudos. okay. not enough internet, oh, please, i want a walmart. i want one in summit, new jersey. and i want it now. i hate getting out of the car, i hate getting in line, i hate it. time is money. >> time is money. you spend so much of your time just walking around stores. think about that. that really a good use of your time? >> is it a good use of my time?

>> yeah. >> maybe i have more time than you. maybe you play video games all day. remember who you are. you're just a simulation of me. that's all you are. >> that's true. >> every time you get cocky, every time you want to faber someone. >> yeah. >> remember who you are. >> okay. >> open the pod bay doors, david. >> yeah, who knows, it could end at any moment. apparently on that the whim of jim's mind. >> 50% chance you're a simulation. >> i thought it was 40 last week. >> it went up. >> you mentioned tesla, this reuters story talking to some suppliers who say they think these production targets are not feasible, that even the biggest car factory in the country has trouble doing 500, which is getting close to where -- i mean, they're getting close to that in their production. >> i agree with that, but deposits keep coming. the stock offering well over subscribed, people believe in this car. they're not waiting in line for gm car, david. when i go shopping for cars, i am shocked there are -- there's no cars at tesla.

there's no cars. >> right. >> the brooklyn -- try to find a car. try to get one off the showroom floor. >> i didn't know they had showrooms really. >> beautiful showroom in brooklyn. >> yeah? >> van brunt, right where i got married. >> nice. that's a nice part of town. >> yeah. >> you're notd a simulation. that's a joke. >> i'm aware it's a joke. >> my late father would be calling on my cell saying you better take that back, he's not a simulation, just a chance you're a simulation of his. my father loved david. he loved you, going to football games, loved him. he would say why are you criticizing? why are you doing that? you better apologize to david right now. >> he lives on because you're still hearing him in your head. i wanted to mention mont san to shares the day of course after the market had an opportunity to digest to a certain extent buyers bid for the company. don't know what the bid is. haven't been able to come up with that yet. people keeping pretty tight

lips, but monsantos up. they're still a buyer, but many of their shareholders may not want them to be. the stock is hanging in there today, hopefully we'll show it to you. but yesterday it was down sharply. and everybody trying to figure out what the dilution is going to be. a lot of that depends on what the offer will be, but as we said many times even before the bid was made the expectation has been there's no way they can pay all cash, they'd have to use a significant amount of equity as well. how much would that be? how much can they issue without actually needing a shareholder vote? and so this becomes as important if not more to the story. their own shareholders and what their thoughts are about this potential deal. as for monsantos, the last i heard the board wasn't expected to meet until june. we'll see if they move anything up there in terms of getting a response from them to the offer from a buyer.

by, you know, jim, a lot of the analysts that follow that company, say solution would be had. >> citi says it has to go 130. >> yeah. >> journal good article about farmers. >> yeah. journal made your point yesterday which is market power argument even though the antitrust argument is not particularly strong because they're not, but to that that you'd only have three companies controlling all the seeds in the world. >> the farmers are powerful worldwide. by the way, they may be powerful but they're not spending because we have not even talked about deere. >> oh, deere. >> we have not talked about deere and down beat forecast. >> the forecast seeing equipment down for the fiscal year. >> we have to hear about ag co.

this was a very downbeat message. and the farmers they don't have as much money. >> the other part of their guide is on construction spending. i mean, we talk about the mall all the time, that's a big piece of commercial real estate. >> bummer, oh, my. ag and turf is a lot better, construction forestry down 16% and they're predicting down 13% despite a highway bill that i was told would be material. >> right. >> i don't know. deere is a conservative company, but this was not good. and the farmers -- i know you think the farmers probably get a lot of money from the government and stuff, but farming is a worldwide business. brazil, trouble. brazil keeps coming up as trouble. >> we'll see where it goes, but if monsanto decides to resist, they may have some powerful tools to do that with including these arguments that they're worried that the deal would simply not pass the muster for regulators worldwide. i did want to get to gannett and

tribune. it's small, but it's important. and this morning gannett continues this fight. remember they raised to 15 bucks a share. and they are really trying to get their voice heard or that of shareholders by a withhold vote at the june 2nd annual meeting. coming out with a letter today in which they are imploring shareholders of tribune to withhold to show their opposition to the opposition of tribune to gannett's offer, which is led by its chairman michael pharoah. in their latest letter, tribune says in reference to a meeting that did take place on the 12th of may between tribune and gannett that mr. farrow stated a business composition between the two could make sense as long as mr. farro would have a, quote, significant role at the company post closing and was its, quote, largest shareholder.

went onto state he's unwilling to engage in the process unless he would personally get and this is another note at least according to gannett, a piece of the action. >> come on. >> it's getting nasty. they don't have a path here at gannett. they can try the withhold vote. the 15 bucks is a pretty big number by many estimates. >> a huge number. for a company that might have gone under. >> seems like it's falling on deaf ears. >> this is crazy that they're not just saying, hey, i want it. this is the opposite of energy transfer. >> energy transfer. oh, god, it's bloody. it's just bloody. >> that's like a -- >> that's like a quentin tarantino movie. >> i got to tell you this is ultimate -- that's ultimate fight club versus just regular prize fighting. >> yeah. e.t. williams ultimate fight club. or the end of "enemies of the

state." remember end of "enemies of the state" where they all kill each other. >> oh, yeah, everybody. >> except will smith. he lives. i don't know who plays his character. >> dow with a 75-point gain though nike the worst performer right now. let's get to dominic chu on the floor. >> good morning. happy friday, carl. just talking about what you guys were saying a lot of these things earnings wise to focus on today for traders on a modestly higher day, if you take a look at the stock market overall we are seeing some signs of strength. we'll see if it holds right now. we are near our best levels so far early on up 75 points for the dow, 10 points for the s&p, up by about 30 for the nasdaq composite pacing the advancers over here. if you look at the way things are shaking out in terms of sectors overall we are noticing utilities are lagging a little bit here in the trade overall, but materials and financial stocks, tech and industrials, these are the more cyclical names, the ones that perform well when the economy is doing better, presumably those are helping to lead the way higher. 0.75% to the upside for some of

those guys. that's the sector breakdown so far. if you take a look at some of this perhaps global scheme of things, we are seeing strength in asia. we saw those markets close higher overnight. we are seeing some signs of strength in europe. the cac in france, spain, germany, italy all up about a percent or so, interesting moves to the bullish side. and then to kind of cap the whole thing off you guys have spoken so much about the earnings pictures and it just speaks to the tug of war that's happening in the stock market right now. there are great stories in the market, and there are not great stories in the market. deere and ross stores, ross stores had been seen as a relative winner in the retail space, off price side of things, gap, we know how bad it's gotten for those stores and those particular sales numbers showing perhaps a bit of bounce here on oversold conditions. the interesting one for me as you talked about as well is applied materials. they make the stuff that makes computer chips, so it's seen by some as a leading indicator for technology and the computer industry overall up big here today in the early trade.

so a lot of things to watch out for, guys. i would also note on the retail side of things across the atlantic a big luxury goods company out in europe, the parent company of cartier has big concerns about the luxury market. retail still driving a lot of the trading. back to you guys. >> thank you very much, dom. watching oil pretty steady here today. jackie dangless at the nymex. >> that's right, prices turning higher in the last few minutes in fact trading over $48 a barrel. looks like the seesaw week we had for crude oil little more than a 5% gain. momentum certainly to the upside. yes, you have the dollar strength that's been a little troublesome, but that negativity is being outweighed by the factors supporting crude right now, those are strong gasoline demand. we saw that in the d.o.e. report on wednesday and also the fact gas prices are relatively low going into memorial day weekend. in fact, a record number of travelers expected to hit the road. also, you've got those global output concerns.

they still are on hand, especially nigeria is where most of the concern is at this point. meantime, here in the u.s. production dropped, again, it's been slow but steady. that's a positive sign for crude oil under $8.8 million barrels day. not able to top 50 in the june contractor, but traders saying next week maybe it's possible if all of these factors and conditions stay the same. back to you. >> jackie deangelis, thank you. when we come back, pulitzer prize winni inning columnist ji stewart whether apple should be viewed as a growth or value stock after buffett has taken a stake in that company. dow up almost 80 points on this friday. back after a break. there's a lot of places you never want to see "$7.95."

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with free wi-fi and live acoustic music. angela says it's not just about a store design but creating a community for customers and visitors. they're saying it's a new chapter in the retail. >> i've been waiting for her to make her mark. maybe this is it. tim cook was viewed by 300 million people when he did that interview with that cricket match yesterday on espn. >> wow. >> 300 million people he told a good story about the iphone. jim stewart, that fabulous piece, can't wait to hear what james says. but be aware that there is a charm offensive worldwide by tim cook. and if she makes her mark, the stores are tired. you don't think so? >> i don't have an opinion. >> they're the same. alan on squawk this morning talked about the need to refresh. got to make the stores exciting. >> not specific to apple. >> oh, no, and they do great sales. stores are upmost lucrative stores in the world. >> yes. >> but that store looks great. i want to go there again.

i like to go to my apple store to see what's new. >> sure. >> well, this would be a destination. just like the new starbucks destinations. destinations, so when we shop together it's even more exciting. >> this week the 15th anniversary, i believe, of the first one. >> wow. >> been around for a while. >> there aren't that many in china yet. india, look out. india 300 million people watching. >> and coming to the white house if not next week in the next couple of weeks. >> president bone up on cricket, a lot of people like that game sfwl really? >> yeah. i want to sponsor a team. >> you want to sponsor a cricket team? >> yeah. "squawk on the street" cricket team. >> we got to learn the rules i think, first. >> it's hard. >> when we come backstop trading with jim, dow hanging onto a 75-point trade. don't go away. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking

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time for cramer and stop trading. >> dom chu with a great report, winners and losers good theme, urban outfitters, great call. morgan stanley staying hold to buy.

bbc says time to buy ralph lauren. new management. there are winners and losers, and if you have too much womens apparel, unless you may be a zara as well. by the way, on that foot locker call which continues, adidas is back. >> yes. sarah's been on it talking about a adidas. >> sarah of course. under armour is going down, i don't get chatter on the call is so good. nike came back but i'm worried about nike -- >> so you're not buying peak sneaker? >> no. that's only for people who don't really know the sneaker. >> you are not oversneakered? >> we are not oversneakered and we are not overvideo game. last night more and more time being devoted to video games by older people. younger people play while they're talking to you. have you ever noticed that? how do they do that? >> it's a millenial gene.

>> my father would have beaten the -- >> our generation has polio and smallpox, they didn't get the gene. >> my father liked to yell and when that didn't work there were other ways, but he wouldn't have liked it. i remember the hitting fondly. >> yes. >> it was only twice. both times i deserved it. >> i'm sure. he was a gentleman. given i've hit a couple of the situations i've been following whether it's tribune or m monsanto, last week noted sanofi would say it was going to be as soon as this week, around the middle of next week according to people familiar with the situation. they've identified all eight of the directors that they will nominate just a brief update there, but that continues. of course medivation trading 61. the question is will there be anybody else there if they do go to auction mode. >> right. >> and what price would sanofi be willing to pay. everybody says, well, you have to pay at least their 52-week

high, which is 66.40, again, moving ahead middle of next week we should hear who the eight directors they are nominating. >> scott sheffield filing early, might be interesting $26 billion, stay focused. >> i will try. >> you mentioned urban and the gains it's had this year. >> yes. >> versus l.b. is now the fifth worst s&p name of the year. >> leslie is going to fix victoria's secret. it's extraordinary, but i thi thinkless -- lesley understands. do not give up on les, nine lives. this level kind of intrigues me. he won't rest until victoria's secret is fixed. and he will fix it. he is tough. he has an eye and he'll get it

done. this level's interesting. >> even in this incredibly difficult environment? >> he needed to shake up management of victoria's secret. they weren't delivering. he's doing it. don't give up on this man. he's too good. >> it's a good story to watch. what's on mad tonight? >> hormel, we talk about a company reinvented itself. i know, david, you probably think it's spam, it's not spam. remember those guys? >> what is it? >> hormel is now jeff ettinger bought applegate farms, what we use natural organic, it's better. genuine turkey. >> jenny-o. >> what a great manager. he's turned that company around. that's a growth stock. stay tuned for hormel, very exciting story. very. >> very exciting and hormel, two things i didn't necessarily expect to hear next to each other. >> well, spam like velveeta,

test it right on easter island, nuclear war comes out, spam, velveeta, cockroaches, all winners. >> post apocalyptic -- >> there were signs of life when it's all over they'll find that. >> we'll see you tonight. >> don't forget at geno's this weekend. when we come back former sandridge ceo tom ward. >> wow. >> dow's up triple digits. s&p back to 2052.

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good friday morning. welcome to "squawk on the street." i'm carl quintanilla with sarah eisen simon hobbs and david faber at the new york stock exchange post nine. dow is down something it's not done in about a year and a half but for the time being looking at mild gains. dow is up 109, s&p working its way back to 2053. oil not helping in the red slightly. it will be not only a busy day as we digest some of these retail earnings and campbells soup and a-mat, but over the weekend we'll get this g-7 finance minister meeting, guys, a lot of discussion what it

means for japan policy and the like. >> they're talking negative rates, they're talking about japan's currency problems like the strengthening yen though. doesn't look like we'll get any sort of consensus from the g-7 countries when it comes to growth, but potentially market moving headlines because the world's most important finance ministers and central bankers are there talking about the issues of course that we care about. but there's this discussion on what to do with fiscal stimulus and how much to intervene or not intervene on currencies. >> ahead of that existing home sales right now with diana olick. diana. >> reporter: carl, existing home sales in april up 1.7% to a seasonally adjusted annual rate of 5.45 million units. that's slightly better than expected. street was looking for just 5.4 solid. sales up 6% year over year, march revised up slightly. the most interesting part in this report was really the regional differences. we saw sales in the midwest up 12.1%, sales in the west down 1.7%. what's up there?

prices. plain and simple. the midwest is the most affordable region of the country, the median price there for a home $215,000. compare that to the west where the median price is $365,000. median price nationally 232,500, that's up 6.3% year over year and realtors saying home price gains are reaccelerating. and this is due to a housing shortage, inventory 2.41 million homes for sale that is up 9% month-to-month. we usually see that increase in the spring. it is down, however, year over year down 3.6%. the problem is we're not seeing a lot of sellers put their homes on the market, not a lot of new listings. if you want more on that we did a piece yesterday. take a look at that. we are seeing investors move out of the market a little bit just 13% of total sales in april. good news, first-time home buyers moving in a little bit, up to 32% share from last month. now, we have not seen first-time

home buyers strong in this market. they're usually around 40%. so that's your good sign, again, sales up month-to-month 1.7%. diana, thank you very much. overall it's been a fed-driven week for the market as summer interest rate increase looks more likely if the economic data remains strong over the next six weeks. but what exactly does strong mean to the members of the federal reserve? that's a good question. our senior economics reporter steve liesman is back at hq with the answers. steve. >> well, i wish i had the answer but i have an answer, sarah. all the focus will be on what it will take for the fed to hike in june. the fed appears to have a lower standard than the market when it comes to job growth. this difference will be critical in judging whether the fed will hike in june. while markets see that 200,000 mark as the measure of healthy jobs, fed officials have a lower threshold, the fed doesn't have a single number, but here's what boston fed president said recently of how much job growth is just enough. quote, given broad demographic

trends, normal or trend payroll employment growth is now between 80,000 and 100,000 jobs a month. so take a look at what various fed officials have said over the last several months about job growth needed to keep the unemployment rate steady. that is where job growth equals entrance into the work force. we put the median or average in the ranges, san francisco it's 80,000, meser at cleveland 98,000, kaplan from dallas 125,000. there's janet yellen, 100,000. when she says job growth at 100,000 should be enough to keep the unemployment rate steady. the next chart shows the job growth badly lagged the growth of the population during the recession, but for most of the expansion job growth has run well ahead of it and fed officials just don't expect that to continue. deutsche bank says the big difference between the fed and market right now is the fed thinks in terms of full employment and capacity of the market, it looks at job gains, earnings, hiring and wants growth. but if you want to know what the fed is going to do, well, better

lower your standards and think of job growth the way the fed does, simon. >> good way of putting it. thank you very much, steve liesman there. in the meantime up 100 points on the dow. so a decent rally this morning. let's bring in christian oppenheimer funds chief investment, and analyst from j.p. morgan. somebody wrote overnight it's almost like they're calling their bluff, are the markets calling the fed's bluff? >> i think the fed has had some -- the communications have been a little bit back and forth. some of the messages we've heard from janet yellen over the past few months has been quite a bit more dovish than what we heard from the minutes earlier this week. so i think there is, you know, i think a little bit of back and forth. communications is never going to be a perfect science. you know, we're kind of working our way toward an agreement between the market and the fed, but it's never going to be easy. >> would you agree, christian,

that the -- as jeffrey gunlack put it, the basis has changed, they've shifted away from needing stronger data to raise rates to a position where they just don't need the data to weaken. is that an assessment of where they say they are? >> i think so. i think that's what the minutes are showing you. if you had listened to janet yellen in march, that certainly wasn't what she was saying. >> right. >> i think while they can blame the markets for not getting it, they are to blame for the markets not to get it. >> i mean, there's one very important question here, are the markets factoring in the rate rise here? i'm assuming they're not. i'm assuming markets fall in rates are going up to a ig beer extent. >> they're incorporating some of it, but i think they are not incorporating almost 100% probability by any measure. and i think it is still open for debate whether the probability should be 100%. i think given brexit and other issues june may be live, but it is not certain. >> so just as a quantity, if the

fed fund futures indicated 100% probability, where would the market be? >> i think market would be lower than where it is right now. >> by what sort of order of magnitude? >> i would say a couple percentage points perhaps. >> okay. >> i wonder for the economy if it really matters whether we're going to get an interest rate increase this summer or this fall or this winter. i mean, we're talking such small moves on interest rates but such sharp reactions from the markets. >> i don't think it will have a huge impact on the economy. obviously it will strengthen the dollar somewhat and we've seen that over the past few days and weeks, but i don't think it's going to, you know, be a major factor. i think coming back to the earlier point, the disagreement between the fed and the market right now i think on 2016 isn't that huge, but when you get out to 2017 and 2018, the differences become really enormous because the fed next year and year beyond is looking for heights in '17 and '18 and the market has nowhere near that right now. i think the longer term view right now the fed and market are

totally at opposite ends. >> isn't that why, michael, what happens in a sense is so important? because you're bringing the tail of all that forward. you're saying dare they, will they, are they going to push it, will they upset the markets, yes, now we have a precedent, off you go into those other discussions. >> right. well, i think that's why the emphasis on the communication recently even if the market hasn't hurt it's been data dependence. you know, sometimes the fed has to hit the market over the head with, you know, where they're going in the next meeting or two, but i think the emphasis whether the market wants or not is going to be dependence, if the market falls apart because of one hike, then the fed will not move next year. i think that's a longer term view that's going to change how we see this. >> in the meantime, you get this very subtle riskoff move, talking six-week outflow from equity funds, it's small this week $6 billion, technology, health care, other people talk about a potential summer of shocks we should be aware of

brexit, interest rates, so on and so forth. where are you on where the markets are likely to trade and importantly how you position obviously? >> i think in these probabilities of rate increases kind of increase and we have what michael was alluded to which is effectively a regime change, you know, sustained rate rise, i think risk-off comes back in vogue because the dollar would appreciate meaningfully on that context -- >> can i ask you order on that magnitude as well? >> i think if sustained a 10% drawdown in that sort of context is not out of question at all the way we saw it in february. you know, perhaps slightly less, but i think that order of magnitude is very much in the cards. i think the key point here is it's really not the cyclical situation of the u.s. economy that matters. i think we are where we are and we have been here for quite some time. it's really what the impact of this would be on the dollar and what that means for the rest of

the world. and that is still an open debate. so assigning 100% probability to that may be too premature. >> good to see you both. thank you. meantime, donald trump back on the campaign trail taking up his position on trade at his first rally in nearly two weeks. have a listen. >> these dummies say, oh, well, that's a trade war. trade war? we're losing 500 billion in trade with china. who the hell cares if there's a trade war? china is killing us, and so are other countries, with devaluation of their currency. and they're making it impossible for our companies to compete. and they're doing it more than ever and worse than ever. we're like a big, big sloppy bully that gets punched in the face and goes down. >> a big sloppy bully. trump also taking aim at american companies he claims are taking jobs overseas. listen. >> i'll call the head of

carrier, and ford and these others, and i'll say let me just tell you something, you've let go of thousands of people, every unit you make that you sell into the united states, you're going to pay a 35% tax, okay. 35. very simple. very simple. now, here's what's going to happen. now, some conservatives would say that's not free market. i mean, we're losing our shirts, folks, we're losing our jobs, we don't have a choice. >> trump economics there. the question is, guys, whether he's bluffing or not talking about a trade war who the hell cares about a trade war. what's interesting is that the chinese media has been relatively quiet and restrained on some of donald trump's comments because china's no stranger to being beat up on the u.s. campaign trail. the question though is if donald trump continues to gain momentum, whether these threats become real and become a real worry for the markets and the economy. >> although this week you did see the united states put tariffs on steel and the response from the chinese was actually to, i think i'm right

in saying off the cuff, is to increase tax breaks in order to compensate some of those chinese exporters. so there are moves, there are subtle moves going on behind the scenes, but it's a long way until november, i guess. >> also he doesn't mention that the cost of production in china has gone way up. and that's why you're getting a lot of production going to other countries. >> and they're not devaluing their currency anymore. >> they haven't for some time. even though they may be very quiet right now, i can guarantee you the chinese are watching this very closely. they're listening to everything. and at some point they will make their move, but i think they have to wait. but they are very concerned, at least according to any number of people i've spoken to who have spent time over there and talked to people in the government. >> i'm sure the japanese are as well and some of our other big trading partners in asia, thailand, all of those countries. >> as are ceos of multinationals that are u.s. companies. >> when we come back we'll get a live update from paris this morning and the former ambassador to egypt will join us, talk about this downed

egyptair plane. and then the takeaways from a busy few weeks from retail. new numbers from gap, foot locker, ross stores, what that all means and why gap's in the green when we come back.

back to the egyptair crash over the mediterranean. egyptian officials are now saying a terror attack is the more likely cause than a technical failure. our hadley gamble is in paris

with the latest. hadley. >> reporter: well, hey there. right now what we're following is the ongoing international investigation that's taking place from egypt to the mediterranean to here in paris. what we know right now is at least three french investigators are on the ground in cairo. they're working together with egyptian investigators as well as an expert from airbus to try and determine what exactly happened to egypt air flight 804. we've heard from multiple authorities today including greek finance minister and he said at least one body part, a piece of a body, a part as well of the plane and also luggage has been found, but that hasn't been confirmed as of yet by egyptian authorities all they've been able to say so far for certain is that they're absolutely sure that some of the luggage and part of a plane's fuselage that they found about 180 miles off the coast of the alexandria does belong to egypt air flight 804. they are facing tough deep sea terrain as well as choppy waters in the mediterranean, so it's not exactly an easy

investigation. it's not going to be a quick and easy operation in terms of getting the debris. and one of the things they've been focusing on throughout the day here is the plane's flight path before it landed here to take that flight to cairo. we understand it visited several countries before that and there are a lot of questions surrounding the security of the aircraft. we know that they were in brussels, that they were flying to cairo, they also flew to eritrea. we also understand of course from egyptian authorities say terrorism is most likely the scenario here but haven't given us much more information than that and security experts have been quick to point out there has been little chatter from groups like al qaeda and isis as to who is responsible. hadley, thank you. for more on that we bring in ambassador frank wisner, former

u.s. ambassador to egypt, india and zambia. thank you for joining us. >> pleased to be with you. >> if we start with a working assumption that it's terror, what does it say to you that this is coming so soon relati relatively speaking after metro jet? >> i think it reminds us how extraordinarily as a rule nvuln international air travel particularly in that part of the world can be, despite the precautions taken this flight had security officers on board, it took off from probably one of the world's best managed and most secure airports. and it reminds us we have to be extremely vigilant. this is a tragedy for egypt, but it's a tragedy for the entire world. we have a lot of work to do. >> when you say we, are you referring to egypt, to the french, to planet earth? who needs to do the hardest work here? >> well, i think obviously in

the most immediate sense you have to get to the heart of what happened in this particular incident, try to find out who the malefactors are. when i mean we, i mean the international civil aviation community. we're all vulnerable. united states has particular intelligence and security assets it can deploy. we have some deployed in assisting in the search right now, but we're very much involved. millions of americans travel by air. >> yeah. >> we can't walk away from any single incident like this. >> with your expertise in the region and some of the terrorist groups there, do you find it unusual that there's no word of any group claiming responsibility at this point? >> you know, i simply don't feel qualified to comment on that. it's early days. i've seen past incidents in which it took, you know, two or three days and then one or another group comes forward, rightly or wrongly claiming

credit for the event. we'll have to wait and see. could be there are a lot of explanations for a delay, but at the moment let's stick to our knitting. let's find this plane and begin to dig into what happened. then we'll know better where to take our efforts against those who perpetrated the act. >> until this crash some had tried to write a narrative that isis was being if not in retreat then contained by air strikes, running out of money, increasingly reliant on cyber crime. first off, did you believe that? and does this change that if you did? >> i think there are two separate narratives and neither of them are incorrect. isis has been heavily hit. isis is in trouble in its core battle front in northern iraq and in eastern syria. that said isis still has networks. it still has the capacity to

inflict individual acts of terror. so it has a long tail to it. even when the heartland is under heavy attack, the rest of the system can still function. >> ambassador, you served under clinton, under bush, under reagan, you know the diplomatic community extremely well. for the speed and veracity with which donald trump reacted to the plane, i wonder the prospect of having donald trump in the white house and the style, how that is playing out in your community, understanding the desire for who is at the helm of this country to be more vocal and reactive as events progress. what are people saying behind closed doors? >> well, in this case i think the greatest lesson the united states has learned over the past 16 years is that we're part of an international community.

we have to listen, we have to cooperate, we have to engage in joint strategies if we're to deal with complex threats like isis. it's not all about puffing our chests up and doing things on our own. it's how we operate smartly inside an international context to bring multiple pressures to bear and thereby be able to crush those who are engaging in perhaps including this egyptair 804 incident. >> mr. ambassador, i wish we had you on for a different reason, but we hope you'll come back. thanks for your time. >> thank you. pleasure to be here. >> frank wisner. the cdc is reporting this morning that 157 pregnant u.s. women have tested positive for the zika virus along with another 122 in u.s. territories. it should be noted that this is not a sudden surge but an expansion in the way the cdc is reporting zika-related pregnancy data.

the president is set to receive a briefing on this this morning, but obviously that's making headlines all around the world. up next on the program, is consumer spending good or bad? we've seen conflicting figures over the past two weeks and it may depend on the type of consumer and of course the type of spending. that story next on cnbc. and then a look inside the oil and gas industry. found chesapeake energy with aubry mcclendon. the former ceo of sandridge, tom ward, will join us onset.

a tale of two retail markets, walmart soaring yesterday on strong earnings but today weakness from gap, ross stores and foot locker. courtney reagan is wrapping up what's been one hell of a week. >> no kidding, simon. tgif. foot locker reports in line earnings but light revenues and disappointing comp sales still up 2.9%, but on the call ceo said comps are steady unlike others. also reaffirms comparable sales forecast for the coming year counting on the new jordan

school to lift may comps. while off price has been a standout the trend did not follow through for ross stores. posted in line earnings for revenue and comparable sales disappointed. ross points to mtds issues in ladies apparel for the disappointment. the bigger issues for investor though were the weak q-2 guidance doesn't bode well going forward branded with inventory department stores. unfortunately for gap inc. challenges seem far from over. match revenue sales may 9th but retailer couldn't confirm guidance but falls within a reasonable range of potential outcomes but trends would need to improve from the first quarter in order to achieve it. the retailer also said its existing old navy business in japan is going to be closed, that means 53 stores will be gone, 22 mostly international banana republic stores as well. that's still a small fraction of

its 3,300 global stores. s&p downgraded gap's credit to junk reflecting its view of gap's weakened competitive position in the challenging apparel space. walmart though still wears the crown as the week's winner proving the consumer isn't dead, just picky about what, where and how they're buying. >> i wonder if that's what it proves, courtney, or if it proves they're just getting aggressive with price cuts. because we did hear that phrase from walmart. i mean, you reported it. >> yes. >> investments in price. >> right. >> are they getting really hungry on their turnaround and starting to lower price at the expense of margins to try to take business everywhere else, which doesn't say much great things about the u.s. consumer. just says they want cheaper prices. >> that's true and that could be possible, sarah. remember, amazon has follow thd theory for a long time. doesn't matter what the margin looks like, they want to make sure you're buying from them. and that possibly could be some of the game that walmart is getting into, but wall street did at least reward it for this week. go ahead, simon. >> let's be clear though, aren't

we saying that the consumer is strong? despite the fact we keep having apparel -- fashion apparel retailers come through with problems, the consumer overall, all things considered is still strong in this country? >> that's what my belief is based on everything that we've heard these last two weeks. i mean, the government sales number was really strong. you had strong reports from the likes of home depot and lowe's, a lot of the off pricers, except for ross, were pretty strong even in order strom results, remember nordstrom main stores were weak, but its off price that nordstrom rack very strong. i think it shows the consumer is buying but being very careful about where they're buying, they don't want to pay prices they perceive to be too high, so that may mean margins get more squeezed going forward, if you want to win that shopper and how they want to buy it. you've got to be offering free shipping, easy returns, the ability to buy in-store and online, i mean, that's a lot for retailers to climb, but that doesn't mean the consumer isn't strong, is willing to buy when you offer them an equation that works for them.

>> court, thank you for that. and speaking of what consumers are buying, when we come back, should apple be viewed as a value stock now that buffett's embraced? jim stewart will explore that in his latest "new york times" column and talk about it at post nine after a break. ck by compromise, businesses need the agility to do one thing & another. only at&t has the network, people, and partners to help companies be... local & global. open & secure. because no one knows & like at&t. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be.

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good morning everyone. i'm sue herera. here is your cnbc news update at this hour. greece's defense ministry says debris from egyptair flight 804 has been spotted in the mediterranean. it consistents of two seats, suitcases and a body part. the items were found in the search area slightly to the south of where the aircraft vanished from radar signals. separately a european satellite spotted a potential oil slick in that area.

secretary of state john kerry meeting with his po lish and turkish counterparts on the sidelines at the nato foreign ministers meeting in brussels. topping the agenda security issues facing that alliance. and finance ministers posing for a group photo ahead of the g high pressure-7 meetings in japan. and the man who climbed over the wall and wandered the grounds of buckingham palace while queen was -- is a convicted murder. he pled guilty to trespassing. and that is the cnbc news update this hour. sarah, back down to you. sue, thank you very much. watching shares of apple here after warren buffett took a $1 billion stake, we learned, in the company this week. apple shares are higher. they're set for a 5% gain this week. our next guest says it should now be official that the tech giant is now a so-called value stock. and joining us here at post nine

to explain, cnbc contributor, pulitzer prize winning "new york times" columnist jim stewart. great article as usual. >> thank you. good morning. good to see you. >> so buffett on apple, you sid e did say it was a decidedly mixed blessing. >> well, that's true. particularly like apple you haven't been a value stock for decades, you are moving from having been a huge growth stock into the value category, growth being the high, high p/e, high earnings growth stocks, value being kind of the dowdy, low p/e, the best days are behind them stocks. and when you look at technology companies in particular that have moved from growth to value, it's not very encouraging. we're looking at cisco, ibm, intel, microsoft. not terrible, but if you're looking for like a real outperformer, this is not where you would be going. >> you know, we should say that according to our own reporting and many others that this wasn't actually a warren buffett pick. it was picked by one of his lieutenants, he does have two

former hedge fund managers running the big stock portfolio. and i just wonder if it says more about the changes inside berkshire hathaway than about apple. but clearly you have to wonder given their portfolio. >> i'm sure it wouldn't have happened without buffett's stamp of approval, but it's a good point because the hard core buffett crowd is saying, oh, this is not really a buffett stock. it's not even really a value stock because the real value people, and buffett was always in this camp, look at asset value and whether the market cap is close or even below the book or asset value. technology companies never fit that profile, which is why for a long time buffett didn't invest in them. and apple certainly does not -- it has still a much bigger market cap than an asset base. so the real question is does it have a defensible profit margin? are there bearish entry? is there a mote that's going to keep competitors out especially if it's key smartphone market. >> and you did talk to other

mutual fund investors and advisors. >> i did. >> what did you learn? >> it's one of the great conundrums of investing right now, like what is this stock? i mean, interestingly 40% of the so-called growth funds still own it, only 20% of the value funds own it. so if this is a really shifting, there's a lot of movement going to take place there. but you have growth people buying it. you have value people not buying it. and vice versa. and i found at vanguard they have both growth and value funds that have big positions in it. >> one of the things that's really interesting, i know it's probably not a stock that's covered more or spoken about more than apple. i mean, it's there, front and center for most people. just a brief reading of the article here looks like other people took a second look because buffett had decided to buy and buffett had decided to buy in. so he puts a billion dollars into apple, the stock rises 5%, doing the math, that's a $25 billion increase in market cap. >> right. >> a, the figures are huge. and secondly, the impression that buffett is interested can

move a stock of that research nature i find extraordinary. that it's all about perception still. >> well, it's a combination of both huge impact of buffett and the fact that apple is still the largest market cap company in the world, which means it is a huge factor in all of these both mixed, blended and style indexs style being growth or value. so when buffett moves like this, i mean, everybody has to take a look at this. the value people have to say am i missing something, the growth people are saying am i behind the curve here. i think it's just a trigger for a broad reassessment of the stock. >> didn't apple go from value to growth on the heels of a product? right? a revolutionary product? >> yes. >> that's the debate now. they might have another one, but if they do they're not telling us what it is. >> well, some of the growth people like it because they've increased r & d spending significantly in recent years which gives you the possibility of a hot new product. but then other people are saying, well, but if you look at the size of apple, it needs a

monster product, or it needs a monster improvement to an existing product to really sort of move the needle after this massive home run of the smartphone. and the real worry is ten years, twenty years from now which is how value investors like to look at the timeframe, are we still going to be using smartphones, or will it be something entirely different we can't even anticipate? you're absolutely right. the r & d spending has given people some comfort. and if you're not too caught up in this growth versus value thing, i think it's worth noting everybody seems to agree it is cheap. i mean, the p/e ratio is barely 10. and if you strip the cash out of it it's somewhere down around 8. i mean, that is a cheap stock. >> down 27% in a year. jim, good to see you. >> nice to see you. >> jim stewart of "new york times." new measures to boost security of bank transfers laid out today. cnbc's eamon javers in washington covering that story. >> good morning, sarah. think of the swift system as the central nervous system for the global financial system. swift is the electronic

messaging system that banks around the world use to send authorizations to transfer money. it's used in hundreds of countries around the world, by thousands of different financial institutions, and in recent weeks we have learned that there are cyber vulnerabilities associated with the swift system that have allowed hackers in at least a couple of cases to steal millions of dollars. well, this morning swift, which is an international consortium based in brussels, sent this letter out to its customers around the world telling them that they are tightening up security procedures. and reminding them that they need to share information about cyber hacks and thefts with swift. they say we specifically remind all users to respect their obligations to immediately inform swift of any suspected fraudulent use of their institution's swift connectivity or related to swift products and services. now, the challenge here, guys, for people who are customers of swift, a lot of these big banks do not want to reveal if they have been the victims of cyber attacks or cyber thefts, even of

millions of dollars as in the case of bank of bangladesh, we saw $81 million walk out the door there. a lot of the banks around the world would prefer to sweep this under the rug rather than deal with it. this letter this morning, sarah, is a cry for help really from swift saying to its customers you've got to tell us if this is happening so we can take some steps to tighten up security. it's really important for bank security around the world. >> it's a good evolution in that story, eamon, thank you very much. eamon javers. when we come back, tom ward, former ceo of sandridge energy, co-founder of chesapeake with aubrey mcclendon is going to join us onset to talk energy and oil. e. ♪ the all-new audi a4, with available virtual cockpit. ♪ images, videos, social updates. we call it dark data. 80% is invisible to most businesses. the ibm cloud has tools that can help see dark data and put it to work.

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today on trading nation, we take a look at two old, boring sounding stocks but have seen very excitining returns, get the names, how to invest in them on tradingnation.cnbc.com. more "squawk on the street" coming up. there's no one road out there.

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u.s. drillers? and how has it reshaped the u.s. oil and gas industry? joining us now at post nine chesapeake energy's co-founder tom ward, also founder of sandridge, now he's the chairman and ceo of tapstone energy. nice to have you here. >> thank you. >> let's start with tapstone, because of course all oil fields are not created equally. many people tell me the acreage you have in oklahoma, specifically the dewey county area west of there is extremely value. are they right? are you seeing high quality production? and do you believe there will be more to come from there making it even more perhaps valuable? >> we're hopeful that it is as good as the acreage that's just to our west in king fisher and blaine county, so we bought basically 170,000 acres of land and have three rigs running. so so far our results have been very favorable. >> yeah, people want to know what are those results looking like to get a determination just to the quality. can you give us any sense? >> oh, sure.

they're equal to basically what we're seeing to the west of us that's made the market prices have moved up fairly considerably in the last couple of -- in the last few months. >> so in a market of let's call it 48, $50 oil, this will be profitable? >> it's one of the rare places. and that's why investors have moved in to this area. it's one of the few places in the country today where you can actually make money at these prices. >> well, explain to people why that is. >> well, it's just the advent of horizontal drilling as we know, and drilling in tight reservoirs. this was an area that had been overlooked for a number of years just like the bakken had earlier and as we learn more about reservoirs we're able to inject soft science and find oil and gas where hadn't been found before. >> you say one of the few places. what percentage of u.s. production is profitable at 48? >> i think most people believe that we need much higher oil and gas prices to be able to be

consistently profitable. what we do know is that $100 oil is we can actually increase production and have access to capital, and as it moves down below $50 into where we were earlier that you don't have access to capital and production could climb. so somewhere i would say in the 70 to 75 range. >> is where production responds to price? >> to the entire country, yes, but it always shoots to the downside and upside -- >> what about oil prices at $50? does that make sense to you given your view of the supply and demand dynamics right now? >> well, the issue we have is access to capital. so as the banks have retracted and want companies to spend within cash flow, that's causing what we know is that in our business the dirty little secret is you can't really spend within cash flow and grow production. so in my career since the early 1980s, we've always outspent cash flow, x majors. so in the united states

whenever -- we have to have access to capital in order to grow production. and right now the capital is moved away from us. >> so this talk of 50 production responding at 50 you just think it's not high enough? >> no, it's not high enough. >> you mentioned the majors. you know, given the value potentially of the acreage you have and or the perm -- how much is being done there, the majors are not big players in some of these areas. a lot of rumors around but do you think we'll see consolidation where they make their play to get more acreage in this key area? >> you could. so these are the types of plays that have enough acreage that you can make billion-dollar investments. and majors are one of the companies that would have that ability to come in and put enough rigs to work to make a play like this work. >> we haven't talked natural gas, which of course is also you have a long history in. you seem to think prices are actually going to start to go higher, why? >> well, again, this one is a demand issue.

so over -- from 2015 to 2020 we should see close to 20 bcf a day of demand. and today we only produce about 72 bcf a day in the united states. and the demand is most of that's on the gulf coast. so you have to have the ability to produce more in the u.s. >> you're saying something, mr. ward, that's really important for the rest of the oil market here. the international perception is that now producers like yourself on oil are the swing and as the price to which carl referred to earlier goes past 50 that you'll increase the volume of production massively to cap the price. you seem to be saying that people are mistaken if they believe that is the case. it's really important for everybody else who is watching why have they got that so wrong in your view? >> well, what we know is we're moving towards a more balanced market. so if prices overshot to the downside, we see companies retract, rigs moving down and production is -- takes longer.

so whenever you make a decision to stop drilling, it takes a number of months or years in order for that decision to actually impact the market. but the market always wants you to go faster. so what happened is as the market moved down, as oil prices moved down, we continue to move to a place that contracted capital. and it will take a number of months or years on the same way as we move up. so my belief is you always overshoot to the downside and you always overshoot to the upside. and we'll have a correction that will be much higher in the years to come. >> of course oklahoma -- oklahoma a key area for you. a lot of talk about earthquakes there. it's my understanding fracking actually may not be responsible as much as those who take water out, remove oil from that water and reinject the water, but it's an issue. will it become an issue for you as they try to stem these earthquakes that seem to be occurring quite often? >> well, i think that the

geologists then and seismologists have determined that if there is a connection, there seems to be a connection, it's within injecting waste water in the very deepest formation. so as production naturally declines and more waste water goes into other zones other than the r buckle, earthquakes are diminishing. >> so you're not concerned that they're going to come down on fracking in any way? >> i'm not, no. i think that we have to watch very carefully how much water we're injecting into the lower depths of the r buckle. >> apparently there's a big fault there too, right? that's part of the problem. >> right. >> mr. ward, thank you. appreciate you're coming by. tom ward. up next on the program, meditation for the masses. check this out, new york's equinox preparing to roll out what they call headstrong classes with changing lightbulbs across the country. plus, the latest on sole cycle from harvey spevak. two founders cashed out for $90 million a piece last month. t the trader offices.

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the battle for the fitness dollars are taking a new turn. equinox is rolling out guided meditation across the more than 80 gyms across the country complete with light changes.

the zouheir i have spee vac is joining us here at the exchange to explain the commercial reasoning for what they call the head strong classes. >> we think it is definitely fits in, and it is a combination of training your body and the mind and not one or the other, and so we are trying to bring the two together in a thoughtful way. >> your industry is under a huge amount of disruption at the moment with barry's boot camp, cross fit, and slt and the people can book a class for $30 and bikt when they want and where they want, and the whole thing is changing. are you under pressure as a full pressure gym, and you have to expand because you are owned by the related company, but are the revenues under pressure? >> no, we are strong economic brand on the equinox world, and also we have the soul cycle, and we are with the upscale of equinox where we are leader as

we well. >> but the price points are coming down, and for one of the fee, you can train at 8,000 locations 5 or 10 times a month, and that is a low price point relative to where you are, isn't it? >> well, a couple of things. one, the demand for equinox is not stronger, and take manhattan the biggest market, and opening up six locations, four in manhattan and sorry are, brooklyn this year, and this is the biggest growth ever, and why? we can't satisfy the demand, and one of the biggest complaints is that we are too busy, and more people are participating in the fitness than ever before, and the demand is stronger than ever, and soul cycle is leading the charge in boutique fitness in new york and around the country. in terms of the class pass, it is interest, because it is bringing more people into the funnel, and once again expanding the marketplace, but they jacked the prices to equinox levels and we have done nothing, but the social media says, why would i join class pass when i have equinox with much more and best

classes and i can come as frequently as i want, and i will get all of the equipment and the service, and the amenities and the luxury touches that equinox is known for. >> and you mentioned the soul cycle ipo and we have been waiting an awful long time for it, and it was first put on the property last summer, and where are we for that last summer, and what should we make for the fact that the founders basically quit last month? >> and one, we are in the quiet period, and so there is nothing more than, are there is only so much i can say, and quiet period, and soul cycle is explosive growth, and big believers in the business and the markets have not been good and so we won't force the soul cycle out on the ipo and when we do, we will have the markets feeling good to us, we will consider that. in terms of the founders we appreciate everything that they have done and the vision around soul cycle, and they are still involved in the company as board members, and still on the board, so it is more of the really any changing. >> true that you bought both of them out for $90 million apiece.

>> it is public information. >> it is true? >> yes, last year. >> harvey spee vac is the man at the helm of equinox, and also the soul cycle ipo and this area of fitness in general is a key battleground. >> i like the meditation. that is my gym class, laying on the floor. but seriously, that is the intere interesting growth opportunity for them considering that everything else is so strenuous. >> and they have the space is the argument. >> and he would not bite on the soul cycle ipo. >> he is not allowed to. >> it is out, right. so. >> and so, now, jon fortt with a look at what is coming up next on "squawk alley." good morning, jon. >> facebook is getting higher up in somebody's list of important stocks, and we will tell you who. and the yahoo bids are not coming in as high as expect and what is the future of that company, and finally, apple has a new redesigned flagship store, and find out what that means

strategically for that huge company, all of that and more coming up on "squawk alley." oft, we can enable a banker to travel to the most remote locations with nothing but a phone and a tablet. everywhere where there's a phone, you have a bank. now a person is able to start a business, and employ somebody for the first time. the microsoft cloud helped us to bring banking to ten million people in just two years. it's transforming our world. [phone buzzing] [engine revving] [engine revving] [phone buzzing] ♪ some things are simply impossible to ignore. the strikingly designed lexus nx turbo and hybrid. the suv that dares to go beyond utility. this is the pursuit of perfection.

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squawk alley, and we are live. ♪ ♪ the only thing i will ask of you ♪ ♪ you have to promise not to stop when i say when ♪ ♪ she says welcome to the "squawk alley" for friday and joining me as always is jon fortt and kayla tausche, and kara fisher as well. good porning to you. and goldman is saying that facebook is the most important stock for hedge fund, and 113 funds are long fb and shares are up 45% in the past year. a far cry are