check the futures one more time before we head out of here. >> suddenly the question of june for the fed is a real issue. >> good news should be good news. so are we up 100 by the end of the day or not? >> i'm not taking your bet this time either. not doing it. >> that does it for us today. right now it's time for "squawk on the street." a big day here at the nyc, highlighted by a billion dollar ipo from u.s. foods. cup see the banner hanging outside. good morning, welcome to "squawk on the street." i'm carl quintanilla along with

cramer. you can see the dax, which is not having a great year is up. france and the ftse is down ever so slightly. 10-year note yield and wti right at 50 bucks and brent a bit above that. the yield at 1.854. let's get to our road map this morning. it begins with more painful retail. we're going to break down all of the big earnings that are out this morning on that front. and is the ipo market back? there are six companies making their debut today. u.s. foods we just mentioned here at the nyc, set to be the second largest initial public offering on the year. i think mgm properties will be the largest still. and what role will apple play in the future of television? the deal, i don't want to say it, we're going to talk about

this fun story. >> it's fun. >> it's never going to happen. >> kim jong jim if you haven't seen that one. i don't think of you as the fearless leader. >> no, and i haven't spent a lot of time with dennis rodman either. >> crude surpassed $50. stock futures also up following on the gains we've had recently. all three major indices now in positive territory for the month. jim? oil has often been the story. $50. >> this was supposed to be the time when canada came back on line, the wildfires are behind us, they are going to be flooding us with oil. a lot of people -- there's more driving, just more driving, more demand. they make that very clear on that conference call, they're

nationwide. china not pumping like they were. we're dropping like flies now. 20 counties where you can make money pumping. you'll hear people come on our network and that he will say we can make money at 50, 60. i want to say to them, yeah, but you're losing money right now. don't give me this 50, 60 stuff. go on the conference call. you'll hear pain. >> 50 bucks in terms of how much supply has been taken out because of fracking, there are parts of oklahoma that are still very good and others that aren't including the bachan. >> at 50 you're going to see tremendous futures selling. i've been using a target of mid 30s.

at 50 they can sell off the curve and pay back the bank of americas. >> this is much more of an equilibrium. >> where we've gone from 9 to 8 barrels a day or is it 10 to 9? >> it could be 9 to 8. saudi arabia did everything they said they were going to do. they crushed the prices, they then got the market share back. they are in charge. i got to hand it to them. they're great business people. they are. they're great business people. they wiped out the marginal producers in this country and then they took the share. >> nigeria has issues, iran is pumping. >> not nearly as much. that was a lot of sound and furry that signified nothing. iran is not producing a lot. what's important is demand is up. a lot of what we thought is oil really a precursor of demand, demand's up and supply's down. >> we hang around, with that be

a healthy thing? seems as though it might not be a bad place to be. >> gasoline is at a decent price for the dollar trees, dollar general. that has been the right trade and it was even more right today. i think it's stayssis. we've already had that. the areas that went down went down. i'm doing work with a company outside of denver and it's on the margin. >> we talk so often, we'll see deals and consolidation, you really haven't. you've seen some one-offs, bankruptcies and restructurings, there are more that will still come but do you start to see some of the major say now's the time? >> they have not. they have been sticking by that theme they're not going to. exxon $90. they're basically saying talk to the hand.

we heard occidental. chase is no longer the ceo. he was sort of 80 bucks is where we hear. >> we keep hearing -- range resources bought. there's oil and there's natural gas. everyone is saying if it stays this hot, you'll get the glut burnoff. and the trains will start shipping. we're not on such with natural gas in the northeast, we're brimming with excess. we need to have the air conditioners going. natural gas has to go to 250. you see chesapeake going up. freeport, people feel that's no longer a situation that is dicey. >> that is fraught? >> fraught. >> they're off the intensive care list? >> no, they're in intensive care. it's no longer paddles, clear.

but it's not pacemaker. >> we can leave for a while, we don't have to worry that something's going to happen while we're at lunch. >> $50 is a nice level. you don't have to worry that every minute bank of america is going to recriticize their portfolio. the consumer is not shopping at some places and other places that consumer can't live without, including the dollar stores. >> dollar store and costco as well. costco was 1.23 a share. comps were flat for the first time in six years. dollar johnson and dollar tree, both discount retailers did post higher same-store sales. where do you want to start? >> i got to tell you, the dollar tree, david, we often times we

laugh -- the family dollar, brilliant. >> dollar general wanted in on it and there was anti-trust. they completed the deal and there were divestitures and you're saying it was a good deal? >> it was a great deal. a lot of it is consumables. these places have done much better for food. you see they have smaller packages but people feel it's a bargain. when i go to dollar tree, david, i feel like i'm worth a million bucks. >> well, you are actually. >> well, you like to feel it. >> it's nice to feel it. when you walk in, i don't think you're exactly feeling exatted. >> then you haven't been to -- you can eat off of the floor of my dollar tree. memorial day weekend, you got to get there before to get all the flags you need, all the different accoutrements for your

picnic table. plus they have glasses. they have readers for like a buck 50. you ever see the font that i send you? >> yes, i have. it's big, very large. i have to tell you, cost co is a big mystery. >> same-store sales worth 3.4%, increased 3.4% in the prior period. >> did you see the net income of these guys? >> 3.3% same-store increase this time. they are declining, same-store sales growth is coming down. >> you know what? look, absolutely everybody's is. but the amount of money that they're making at both dollar tree and dollar general is extraordinary. look at this, $418 million versus 232 million? david, that's a business you and i are going to be in. if you and i are going to open up a lemonade stand, we're going to charge $1. >> let's move on to costco.

>> the reason why costco has nothing to do with the comp sale numbers, nothing to do with the better-than-expected numbers. this was the quarter we were saying good-bye to american express and going to vvisa. when we went to costco, they said you're going to get a lot more points next time, wait till visa, don't come back until u get visa. when they tell you at the register, about to get a much better deal when you come back next time. david, do you feel like having two carts at costco or one? we're a two-cart family because we have storage space. we're one cart until visa comes in. charlie pulled that deal off right underneath american express's nose. they said i don't know why american express didn't pay up. it's going to be huge for visa. victory. >> now we're in it now, right?

>> and what happens is is that -- you know, really these people are great, i happen to love costco more than almost any store. and you know i like stores. i love stores, okay? >> we're aware of that. >> i buy my zana. i get it at costco. you can buy it there cheaper than most men's stores can buy it from zana. >> you don't have to buy like a hundred of them at a time? >> i once took all their north face. i took every they had. ask jim synagogue was there. they had like six vests, why not. six purple vests. gave them to everybody. the credit card switch is going to be humongous. that's why people are buying costco. not because of the same store. that means nothing. this is about the change in credit card. have i made that clear? >> you made that clear. we'll get to sears later. >> we have to get to sears.

adjusted ebidta is up 14 million. adjusted for this that, this that, this that, this that. i will not shop at kmart and that is a benchmark. my first suit when i walked in was from kmart, cord roy. >> i would love to see that. >> we'll talk about the apple before-session winning streak. and gearing up for the summer season. some high tech thrown into the mix. we'll talk about the u.s. foods ipo coming up here. there's another look at futures. we're back after this.

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u.s. food began trading, its -- the company earned just over $24 million, the second highest of the year. they will trade under the ticker symbol usfd. we'll have an exclusive interview with the ceo of the

compa company. there was quite a deal and it was abandoned on anti-trust ground. >> that may have been a precursor of what happened. >> this is a delevering transaction to a certain extent. there were buyers of this company back in the heyday of lbos. this was 7 billion, it barely made a headline -- i'm kind of kidding but you had the huge deals, txu or hilton, so many of them. this was a $7 billion deal though, jim. not a winner. >> not a winner. >> they're taking it public. they're not selling shareholders, that is the private equity guys who will

continue to control us foods. >> we usa the walgreens -- >> kkr, nxpi i think there was some selling, i think it was kkr, free scale. a carl english piece, it's amazing how they're all trying to get these secondaries in, david. they really need to raise cash or -- >> they want to get out. exits have been the rule in private equity. there have been purchases. they don't make headlines because they typically are smaller. >> the one that no one should have let go is dollar general. it's been such a win. they did a great job. and i have to love those guys. i know this ipo market has made things difficult but, gees, they've had some wins, too. if you bought from them in some cases, you did quite well. and they like that. >> they do.

we'll keep an eye on us food shares. apple looking to extend a winning streak now that is four sessions so it would be five today. and an incement -- incremental 5 billion spent by apple on r & d. >> i pushed netflix hard. >> last fall there was a lot of talk around silicon valley and some interest in media companies and i made calls as well as a lot of other reporters on time warner, didn't get the specifics about this meeting and they were talking about programming deals

or content deals or something and he brought this up. it never even made it to a conversation with cook. and they saw each other afterwards. they didn't even discuss it. so it wasn't going anywhere. even though i didn't have details, i had enough to say this wasn't worth continuing to pursue. >> in the new era where everybody's a journalist, everybody can write, there's no editors. i recommended netflix last night on "mad money." it want because i thought that would be a great revenue stream for apple. that's not the way apple works. they don't come in and say we're going to buy netflix for $60 million. >> there were no conversations about it other than this initial one. >> so what happens? you're a journalist for many years. do they get punished? >> i don't know. we're talking about it. right? it's a fun story. people are talking about it. i got a few calls on it, e-mails, so it works.

>> but is that -- do they go and buy the options, they gun it and liquidate it? is it bgl? >> i don't think it's that. >> it's just guys looking to make their jobs relevant? >> exactly. why not. >> you're talking to the guy who did report gm and chrysler when they were talking -- i was like this is a ridiculous deal. >> as somebody who studies the craft and has rigor, do these stories bother you when you know that two guys talk? >> a little bit. i would contrast it -- i did a story a year ago on sales force and microsoft and i did that story even though it was after the fact of talks because they were extended talks between the ceo that involved advisers and the board of directors, a structure of a deal and i felt like the marketplace would be better off knowing, even though they were no longer talking. now, in this case it's very different. you're talking about one

conversation, hey, wouldn't it be funny if we bought you? >> business insiders happen to love it. i did this interview with marc benioff last week where he put to rest the idea that he was going to sell the company. >> did he put that to rest? >> yes. >> and the article comes out the next day that can cramer makes benioff. i had a raspy voice that day. mark did not answer it. i had to answer it again after the tea. the first answer was ambiguous. i couldn't talk. i shouldn't have been at work. i should have been at home and i should have been having chicken soup and my wife should have -- because of that they said it was

a sell. everyone else made tens of thousands and i got a hack. you think i'm a good businessman? i'm an idiot. >> you were an idiot on that one. >> you didn't have to verify that. >> you could still be getting residual checks. i get them on wall street, too. >> if they had made it with louis c.k., i would have gone into it. >> take a look on futures. looks like they we are at least going to start off with another positive session. more "squawk on the street" right after this. everybody knows that business today is built on data. the thing is, most businesses aren't getting the most out of it. the ibm cloud is uniquely designed for all kinds of data. like data from the weather company for 2.2 billion locations. or billions of health-related data points. even social sentiment in real time

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time for a mad dash as we head to the opening bell. a lot of people from u.s. food here, too. they have a big crowd for an ipo. you want to talk hp ink. this is the printer and pc. this is one of the funniest conference calls i've been on for a long time. first of all, he was just a great guy, talking about 3d printing. nike and others are partners. personal systems are on down 10%. consumers down only 16%, printing is only down 16% and deon says what i'm most happy about is we did exactly what we said we'd do. now, tony, who has now become

the big critic of our times, he's not just an analyst. >> he's tough. >> he's tough. he says -- and i happen to love the guy because he's really smart mee smart. he has a new way to do it. he wonders about the things that you stabilize, he says it's not transparent to me. it's saying stick a fork in it, you guys are done. >> so what is it? >> it's push me, pull you. this is how a stock stays unchanged, they buy back stocks, more than 20 million shares, they're paying back dividend. ba but the fact is no growth. and i'm with him. i disagreed with him on apple. but i agree with him on this. but he was wrong on that. >> opening bell for us foods ipo

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the applause building here as we get close to the opening bell this morning at the new york stock exchange. of course here as we've said, us foods listing its ipo. we're going to speak to the ceo of what is the second largest food distributor. when that stock opens, priced at 23. and participation in red nose day, raising money to lift kids out of poverty. mr. cramer, what is the key? >> the key to this market? >> to this market. let's get right to it. i am thinking that the key to this market will be the action, guess this, in ibm. >> ibm? >> because this is a level where if it can break out, we can say all of old tech with the exception of intel, the westinghouse prize and then len shiver picked up for regeneron.

it was so great for regeneron. >> good for regeneron taking that on. >> ibm does a lot for awards, too. i've taken the winners out for dinner. we've been seeing techs doing better and better and better. meanwhile, dollar tree, dollar general, what's it say about our market today? what's it save? what is happening in this country? this is the middle class actually really suffering. all these politicians talk about it but when you go to the stores, i happen to like dollar tree very much because i am a candy guy. jim, go into cvs for candy, papa said it's a sin. does it really matter at this point that i have diabetes? he said i want you to buy them at dollar tree. >> dollar tree is up 9%.

it diverges from what we've seen in retail. to your point, jim, yeah, there's huge disparity in income in this country and we're seeing that reflected perhaps on the frustration on the part of both left and right and very strong same-store sales from the likes of dollar tree and dollar general. >> the stuff is cheap. if you want to go have a holiday and get stuff to dress up your picnic, you go to one of these two stores. and they do have very fine merchandise. dollar tree has excellent managers in every one that i go to. i think people have to recognize this is not your father's dollar store. they're very nice. but it says something about america. and i think that the candidates have to see this because it crystallizes a lot. >> talking about retail before we get also to pvas but sears is up 11%. same-store sales at kmart with

only off 6.1% overall. kmart same store down 5% -- >> kenmore, craftsman, die hard, they're all on the table. don't forget lands end. >> they only lost $471 million. >> that's an improvement. >> so things are going in the right direction. >> david, that's pay dirt. >> you can see the stock is up. we're talking with a company with a market value of $1.4 billion. >> still 5 billion in revs. it a huge company. >> as is jcpenney, which has a big presence and a lot of employees but a market value of about $2.5 billion at jcp. sears we've been talking about for years. what would eddie lambert have been like if he had just stuck to his hedge fund? >> happier? i don't know. >> i'm sure he's happy.

>> david, the sears, i'm not kidding, lands end reports next week. they spun off lands end, they raised money there. >> houdini was good. >> he was great. >> and then they got punched in the stomach. that's why he died. terrible. he might still be with us. he'd be 150. >> who else would be executives massa son? >> he had a 150-year plan. >> you can't have a run of up 6 in this market but pvh is an international story. people continue to relate it to macy's, which macy's.com is very good for them, to kohl's, to

jcpenney, no. this is tommy hilfiger overseas. there's a line to get into tommy hilfiger and the calvin klein in china paying off. stop relating this company. he's made this company far more -- it's no longer hostage to the domestic same-store sales. europe is very strong. >> it's one of the largest apparel companies of the world. apparel has been doing terribly so i don't get it. >> the heritage stores, the ties, the shirts are doing not that well at all. that's true. it's the smaller part of the country. they bought overseas. they're making a killing in calvin klein underwear. it's their strongest selling product. i'd like to show you what they have if you're willing to let me show you. because i'm a calvin klein

underwear guy. maybe too much information? >> no. >> no, i have it on. we don't have to go. >> that's great. >> now we can always just cut it out at the end of the show. >> if you want to do that, sure. >> let me think about that during the commercial break. >> maybe when you go to rick santelli, i'll decide whether i should show you what i have underneath. >> we have a bit for you about his comments about the consumer. >> this is the mall you're talking about? >> our mall and our own retail stores. we're feeling the pressure. both tommy and calvin are some of our fastest growing base. our macy's.com business is on fire. it's critical with given our brands, the nature of our brand and how they resonate with the

consumer, we need to be where the consumer shops and that's what we do. >> the mall is no longer the be all end all of pvh. europe was killing them and now that's very strong. it was a brilliant move to buy hilfiger. when he first bought it, people thought he overpaid. this time calvin led, had fabulous numbers. it's a good company but it's a very tough industry. >> you mentioned china. i did want to know shares of ali baba down rather sharply yesterday on their disclosure about the sec taking a look at a number of different things at the company. it doesn't mean anything is going to come of it. it doesn't mean anything won't come of it. stocks up today after being down almost 8% yesterday. >> i never want to don't worry when i hear accounting and sec. some of this may be related to singles --

>> the way they account, adjustments made, their delivery business, how do they account for that, why aren't the losses included? some questions raised by the likes of herb greenberg. >> greenberg is taking a cruise somewhere. cruise ships downgraded by morgan stanley, royal and carnival. there are some concerns about soft bookings. very interesting. >> shares of apple, jim, are down for five sessions. you've been focused on it, you know. >> when you hear these stories, it's going to be down. are they going to buy netflix for $70 billion? do you want to be in the stock where people are saying they're gag to buy netflix, which is not going to happen, by the way. >> computer sciences, this is a company that's going to double ebidta.

from there it's going to grow pretty dramatically, csc, and the market responded yesterday with an incredible move up. hp shares had hit a high of 18 1/2 but are done from there. >> a lot of people were shorting computer science and suddenly they become excensure, which is incredible. >> i have to tell you, every kiss does not begin with kay today. >> no? >> a lot of people are questioning whether this is a jewelry company where you buy

credit or is this a credit company where you buy jewelry? it's a battle ground. >> biotech had shown a bit of life lately. >> it's all because of you and sanofi. >> they are well, well off their highs. >> then you have an important drug that glaxo smith klein doesn't want to do a phase three. you've got a lot of different currents. but the main thing people want to hear is that gilead is going to buy something. >> but their history has been they'll buy a big dollar thing but not a company that has a lot of employees. they don't like that.

it was 90 employees when they bought sivaldi. they like to go down that road. >> david, the thing that concerns me. >> they like to go down that road, we talked about the balance sheet capacity that gilead has but their history has been more to buying those kinds of things as opposed to making a big, big purchase. >> you're absolutely right. if you talk to alex gors can i, who i think the world of, his claim to fame, he did not blow miss head of buying one of these big biotechs and you don't want to buy a big biotech and being saddled with huge infrastructure. >> gilead doesn't have a lot of employees, even now. >> i do think medivation made

people think what's going on here. >> nothing to report on medivation yet. at some point they'll begin the con isn't with sanofi. >> why are european companies being so aggressive? do they think the dollar is going to soar? >> i think their borrowing costs are virtually nothing so why not. they don't have top-line growth and sanofi needs oncology. >> so astrazeneca has to do something and basf and don't they all have to move to take advantage of this one-time gift from central bank? >> we keep saying it's a one-time gift but it keeps going on, the gift that keeps giving. >> are these european countries constantly talking to bankers about taking advantage? >> the bankers are constantly talking to them about it. >> what do you think about

activists working with passivists, meeting with the fidelities of the world and -- >> that's gone on a long time. >> that's not done. >> subject for another day. we have to get to mary thompson. >> why, man? over the weekend? >> maybe. whatever you want. mary? >> we're seeing a modest gain on wall street on what is a busy preholiday thursday morning, we got better-than-expected data on durable goods. the earnings bag mixed and importantly oil above $50 a barrel. we're watching a number of ipos. i'm standing in the post where three of the ipos will trade today. let's look at the s&p 500 index. going into the end of the session today, we have the fed governor speaking tomorrow setting up the fed speech tomorrow by janet yellen.

investors listening to see whether there are any clues given as to whether the fed will raise interest rates in june or july. this is the busiest week for the ipos and the biggest will be trading at post 8. that's us foods. it's priced at 12 at the higher end of the range, making it over $1 billion ipo, the second largest this year. behind me over here is gypsum management supplies. and to my left at post 6, we have cotiviti. it priced at the high end of the range at 19, expected to open right now, indicated between 20 and 21. it looks like a healthy open for two of the three ipos.

let's look at some of the sectors we've been watching today. we have wto trading about $50 a barrel. we're watching the energy sector. retailers also in focus. a number of them out with earnings and of course we saw strong resultswith dollar tree, dollar general but disappointing numbers from costco and weak guidance from williams sonoma. guess and abercrombie and fitch reporting results below estimates and weak guidance and we're watching the tech sectors, hp's results and netapp was under pressure and is expected to be under pressure today. >> thank you very much, mary thompson. let's head to the bond pits and join rick santelli at the cme

group in chicago. rick. >> david, markets are pretty smart which mean there aren't really a market personality, it's all of the traders involved. look at the intra day of ten-year note yields. granted, the headline data today up 3.4 on durables preliminary april read was really good. but the market saw past that and concentrated on the fact that aircraft was up almost 65%. now, what that left you would, that aircraft, transportation, was up .4, which is sill better than we're anticipating. there's quite a spread between the shock value of 3.4 and .4. nothing against aircraft. it's vol tiff and that's why they pulled it out. everything starts with a crawl. we are seeing just a bit

steepening. it seems as though the perception, what happened to all markets, whether it's the dollar rate or the curve, seems to have paused here. if we look at what's going on in europe, the spread between our much hotter economy based on yields versus theirs and all their policy issues really starts to show up. look at a year to date of tens minus bunds. the fact that we're hovering as this 170 level is critical. we can consolidate. it means our markets are handicap and economy are higher rates in europe, they're being depressed, think mario draghi. if we're concentrate on tens minus bunds, you can see the divergence. the other thing that's changed is the dollar. let's look at the dollar since the last fed meeting in april. aggressive. now let's look at it sense the

minutes just last week. seems to be rounding a bit. expectations may be changing for the nearby meeting and that's significant. david, back to you. >> thank you very much, mr. santelli. let's get a closer look at oil prices, an important component of our mark action. almost of day jackie deangelis joins us. jackie? >> under $50 a barrel now but we did cross that for wti. we're up 35 where is year to date in wti. some of the reasons we're seeing for oil prices to be supported at these level, we do probably have some short covering going into the holiday weekend. typically people don't like to hold those short positions. but also still concerns about those global spupply outages, te canadian supply, what's going on in nigeria. those worries have not gone away

and you have the refinery strikes in france to consider. seasonality, summer driving and the dollar is backing off just a little bit today, some saying maybe the move in the dollar was overdone. yesterday u.s. inventories drew and we did see production grow again. >> we're waiting for us foods to begin waiting. looks at 24, 25. we'll talk to the ceo once it opens for trading. 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.

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all right, it's that time to stop trading. >> abercrombie, please stay away.

williams-sonoma is one stock you should by. laura alberts did a fantastic job. they are very technically oriented. westhelm up gigantically. laura albert, congratulations, was not willing to tolerate that minus .2 pottery barn last quarter. came back, made the pottery barn numbers good. google says they know how to use data better than anybody. they are one fabulous e-commerce user. and i'd love to have laura albert on the show. >> what do you have coming up tonight? >> louisiana kitchen, this is a tough business, the restaurant business. not like mcdonald's because they cut price. they hurt a lot of companies. i want to find out if they hurt

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oil cracking 50 for the first time since october settling back to 49.7. >> breaking news on pending home sales. >> good morning. pending home sales up 5.1% month to month in april, to the highest level on the national association of realtors pending home sales index in over a decade. this is the third straight month

of gains. we're now up in april 4.6% year over year. the realtors say this is despite the very short supply of homes for sale. we did see available homes rise but they were eaten up very quickly. pending sales down 0.6%. in the south up 6.8% for the month and in the west, the highest, up 11.4% month to month. now the realtors are concerned that interest rates could be rising soon but they do point to these very low interest rates we saw in april as a factor behind that growth in sales. again, this is the highest in over a decade so it does bode well for closings that we may see in may and june. remember, this index is based on signed contracts in april up by .1%. >> diana olick, thank you very much. we have breaking news.

let's go to ammann. >> sources investigating the hack attack in bangladesh confirm the investigation is now focused on as many as a dozen banks around the world. the source telling me that the focus of this investigation is on banks in asia, but the source would not say whether these were necessarily other central banks in countries in asia or whether these were private banks in asia, but the news here is that the investigation into that hack attack now focusing on up to a dozen banks. so that's a big expansion what we knew so far, guys. >> eamon, thank you very much for that. >> oil prices continue to climb. investors waying the possibility of that would be june hike. for more on where investors should be focusing their attention, we turn to tom purcelly and eric.

let's take the short turn to start, eric. a good week. big, round numbers. is it time for a breather? >> look, i think the market is going to trade in the united states range bound for a while. the big issue for us on the year is going to be earnings. we've seen negative earnings in the last three quarters. we'll have to see improvement before you can see stocks move beyond kind of that range we've been in. it's probably going to be the back half of the year when they do that. >> tom, housing looks okay here? claims are muted, wages and -- what's not to like right now regarding the macro? >> you're preaching to the choir on that one. we've been saying that for a long time. i don't think that there's anything sort of standing in the way of fed hikes. we've been sort of fond of saying to clients that we're paid to tell people what we think the fed will do, not what they should do. the should part of that equation

is built on your fundamental view and that's supported multiple hikes this year but the will part is entirely predicated on fed rhetoric. if the fed wants to go in either june or july, independent not going to fight them on that. then so be it, they'll go in june or july. i have thoughts on whether june or july is more appropriate, but it certainly seems that those two months are in the cross hairs. >> i was going to say, what's not to like? you could pick apart this durable goods report a bit. non-defense ex-aircraft bookings dipped. it wasn't a sign people are wanting to invest in equipment. you can look at corporate profits. >> but has been the case at all during this recovery? the answer is no. here's another way of thinking of capex today. weaker on the proxy number. guess wlhat we had to do to our

capex. it took our top line gdp frofrom from .35 to .34. it it took it down a tenth. >> did i hear you right you thought there should be several rate rises but they've not done it? >> over the course of the last couple years. >> if as an economist you think there should have been right rises but there weren't, what are the effects on the assets markets? what are we looking at now? >> what i would say is this. the fed would argue they were in the right not to raise rates. we thought it was a slam dunk, there was inflationary pressure, jobs backed up, despite the issues going on around the globe. from the fed perspective, think what they're trying to show the market, they are exceedingly sense to. >> if they're behind the curve from what you're saying, you

might have second, for example, golds to have done better because that surely is inflationary but gold hasn't done well. >> this is a great question. it's akin to one question that we've been getting from clients with great regularity, what will make the fed realize behind the curve? the evidence is already there that they're behind the curve. so think about core services inflation. core services inflation is 60% of inflation. do you know what it's running at right now? it's running a the a 3% pace, a 3% pace.

>> first of all, it's a quarter point at a time that's not a big move. i think they are independent. we do think they're viewing the data dependency from a lens of we want to raise rates. -the-see the next recession coming in the not too distant future and they want to get as far away from zero as they can get and if they have the way to raise rates consistently, they will. i think you'll see the biggest effect be the fact that trade between the zero rate interest rate policy in germany with a bund at 15 basis points, rick was talking about earlier that spread between the bund and treasury yield is just not going to get very wide. i agree with tom that's going to have a limit to how high the u.s. treasury rate can get and that should alleviate some of

the pressure on other countries that have more leverage than they need it our debt doesn't yield a really high level. >> if i can just make one last point on this because i agree with erik. people think that -- people this you're in the midst of the hiking cycle and ten-year deals are going to ramp up. in '04 the fed put 425 basis points into the yield system. it rose by about 10 basis points. i see a same sort of scenario playing out this time around. >> we're almost to june. we'll see what happens in the coming month. tom, thank you very much. >> leaders are gathering in japan at the g7 summit today, abe shinze -- akiko fujita

joins. >> leaders appear to be in disagreement in where they believe the recovery stands. angela merkel saying she believes there is limited growth. shinze abe -- trade in the tpp also on the agenda here with the trade deal yet to be ratified. leaders agreeing to speed up the process, and taking effect next year. as for geo political risks, the territorial dispute in the south china sea dominating discussions but president obama saying g7 leaders also expressed concerns about the u.s. presidential election.

>> they're rattled by it. and for good reason. because a lot of the proposals that he's made display either ignorance of world affairs or a cavalier attitude or uninterest -- an interest in getting tweets and headlines instead of actually getting through what it required to keep america safe. >> president obama there talking about donald trump. tomorrow the attention will shift to hiroshima, where president obama becomes the first sitting u.s. president to visit the site of the nuclear attack. he has made it clear he will not make any apology, but today he said he would use the visit as a reminder to talk about the work that still needs to be done at reducing conflict and also nuclear war in the future.

>> i do think that part of the reason i'm going is because i want to once again underscore the very real risks that are out there. and the sense of urgency that we all should have. so it not only a reminder of the terrible toll of world war ii and the death of innocents across continents, but it's also to remind ourselves that the job's not done. >> as we've been listening to the president, we are getting a quote on us foods, second biggest ipo this year. mary thompson is over by post 8. mary? >> us foods opening at 24 1/4 and opened last night at 23. call it just up about 5% in early trading. 44 million shares at the

offering. again, this isn't the biggest or second largest ipos this year, us food is one of the largest food distributors. you can see the marquee name. another ipo that went public this morning, gypsum management supply. it's important that the mashes watch the premium. they want to see the ipos hold on to the prepamium above the i price. cotiviti is another company going public, it's priced at 19. it's indicated between 19 and 20. that indication has narrowed a bit and come down earlier, was indicated at 19 to 21. that's another stock we will be watching. u.s. foods, the marquis name

going public trading up at 24.22. >> it's a very active stock exchange today. second largest food distributor, us foods now trading. the ceo will join us shortly. and coming you, one of apple's major supplier arm holdings ceo will join us. "squawk on the street" will be right back.

. apple stock up 5% over the past week on reports of higher than expected supply chain order for the iphone center. it's said to be faster, thinner and contain a better camera. we're joined here -- if you look at your stock chart over the past year, it mimics apple on the way down and then it begins to jump. i wonder if that's because you have a message about where the future is and where you're going and it's about analyzing images and identifying those images and processing those images to an extent we haven't seen before. i wonder before we talk about apple whether you could describe where you're off to in a sense sp. >> one thing that people think about when they think about arm is the correlation between our

company and our company's performance in the smartphone sector at large. we're thinking about long term how do people use technology, how is technology going to impact people's lives and bring benefit to people's lives and part of that is we've seen increasing proliferation of cameras and a need for technology to understand what a camera is looking at and that's driving some of our r & d right now. >> so to identify a toddler from an adult and whether they're near a hot oven or a human-like figure in a secure area where they shouldn't be a human-like figure. is that about you supplying the auto driving smart cars? >> it's a technology in lots of areas. if cars want to be self-driving, if we want self-driving cars, then really being able to understand a scene and work out what's going on and what might happen next is crucially important. in smartphones people are looking for ever more

sophisticated cameras to again detect what is going on in security applications, in drones flying around. there are just many applications where cameras are going to need to get smarter and we're looking at a technology that -- >> it does beg the question of whether the internet of all things is going to be a lot of fairly simple devices or you seem to be describing, which is a how-like figure that looks through the room that, sees everything as essential computer and makes some big judgments on that. which of the two do you think it's more likely to be? >> i think it's probably both. the internet is a very, very broad topic area. we're going to see tiny sensors embedded in parking spaces, in agricultural fields to determine whether the crop needs watering, very sophisticated autonomous security systems analyzing what's going on in the scene. >> where are we in the meantime on the smartphone market? what are you seeing and hearing?

>> many people think there's no innovation going on in the smartphones and that's not true at all. we've seen 100 times more compute power delivered into smartphones. we think as interfaces get more sophisticated, as use cases for smartphones continue to evolves, there's going to be an ever-growing need for more and more performance, better cameras, more sensors, better connectivity into the cloud. we believe the smartphones are going to continue to evolve. >> can you tell us anything specifically about demands for more apple smartphones ahead of the key 7? >> i don't want to comment on any particular phone. in general we think smart phones are going to get smarter. the way you use for today is very different the way you used it it years ago. >> you're saying they're going to need more brain.

whatever the hardware sales do, the brain within that, the architecture which you create is going to be greater. can you see in realtime what's happening in the market or do people pay you royalties afterwards? can you see the ramp-up? >> the way our business model works, we license technology to people who build chips that are into products, we get royalty a quarter after the chips get sold so we're quite a while down that supply chain but we do spend time talking to people up and down the supply chain to understand trends so the r & d today delivered five years down the road is hopefully the right thing. >> us. foods trading up. the ceo will join us shortly. we've been tracking robert and kay's journey to the hamptons. robert took a helicopter.

>> i left at 8:20, i've been at the beach for about an hour, on my second rose here. i'm not sure where kate is. when we come back, we're going to talk about all the companies that are making money for the race for the rich to get to the beach and how much it will cost you coming up after the break and after this rose.

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let's just show you the chart of the day. us. foods ipoing here on the big boards. it opened up in the last ten minutes or so. priced at the upper end of its range, selling shares for $23 apiece last night, raising more than $1 billion. this is the second largest food distributor in the nation. memorial day weekend just around the corner, which means it is the official start of the hampton season. we'll have traffic to look forward to, unless you're like our very own robert frank, who

took a chopper there and is on the beach. robert, hate to interrupt your beach time but tell us a little bit more about the costs at play here. >> i left the wall street he heliport at 8:20 and got here in 40 minutes. it's about $600 for a one-way seat to the hamptons. i raced kate rogers, who is still in her uber. you can see the map. we're both going about a hundred miles. she's still out on the road. there a lot of services now making money from getting people out to the hamptons. you have the long island railroad, other helicopter services where you charter the whole chopper but blade in just two years has already flown 15,000 people in the northeast. look, it's expensive but i've already been out on the beach an hour and kate's probably stuck in traffic. let's check in with her if she's

online. >> hey, robert. i hope you're having fun at the beach. we are still in my beautiful uber on the way to the hamptons. we've been in the car for about an hour and 40 minutes. we have just over a half hour left in our trip. we told you earlier about surge pricing. originally our quote was $200 to $300. we wound up getting an uber xl but it was surge pricing, twice the normal fare. so it's going to be between $600 and $700. but our driver is putting pedal to the metal so you better save me some of that rose. we should be with you in just over 40 minutes. back over to you. >> you got it. so when kate gets here, we're going to calculate on a dollar per minute basis what you spent and what you saved from taking uber or the uber of helicopters. we'll bring that to you as soon as kate and i reunite on the

beach. >> kate says uber has dynamic pricing. does blade have dynamic pricing as well? in other words, is it $600 and upwards as you get through to peak season? >> it varies a little bit but usually no more than $5 or $10. tomorrow there are a few seats left but they're already booked. so there's no official surge pricing at blade. it's pretty much standard. one seat is 595. if you're going further out east, it's a little buiit more. there is no surge pricing. that's an advantage. >> thank you. us. foods shares today's ipo.

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

. i'm courtney reagan. president obama sitting down for a working lunch at the g7 summit meeting in japan. high on the agenda, the sagging world economy and what to do about it. iraqi soldiers were camped on the outskirts of fallujah as at the continue their efforts to retake the city from isis militants. the city, about 40 miles west of baghdad, has been under isis control for more than two years. mount sinabunk erupting again. it had been dormant for four centuries before springing to life in 2010. more than 4,000 people have been forced to flee. a pair of mellons sold in japan for a record 3 million yen. that's approximately $27,200. they are considered a delicacy in the country. i guess so.

now to jackie deangelis with the eia data. >> the eia out with its weekly net gas storage report. there's two issues to think about when it comes to nat gas right now. demand is going to pick up as temperatures are increasing across the country and certainly happily here on the east coast for a lot of people, but at the same time, overall supplies are still in relatively good shape. that's why there's a little equilibrium in that market. july is trading a little bit over 2 and the july contract has moved 6% this week and also moved 20% in the last three months. so right now we're moving in line with that seasonality and the expectations of more demands coming. as long as the supply stays stable, we are going to see that equilibrium continue well into the summer, especially if it

doesn't get too hot. >> thank you very much. a billion dollar ipo, us. foods, the second largest ipo of the year just started trading and it is higher now, more than 7% up, price of $23 a share on the upper end of the expected range last night and fresh from ringing that opening bell, we are joined by its ceo pietro santianio. you had a failed takeover by a competitor last year and now the ipo. why now? >> that history is why our folks are so excited about today. we relaunched the company in 2011 under a strategy we called great food made easy aimed at the independent restaurant bringing innovative products and technology.

since we relaunched in 2011, we've been growing at twice the market with those customers. we have a great track record that paused during the merger as can you imagine and right after the merger, we got back on track. >> i cited in the prospectus. >> first customers sat on the sidelines. they weren't sure which company they were going to join. was it the old uz foods, the new us. foods and that affected our top line. we lost some employees who were concerned about the uncertainty and literally after the merger was called off, our folks got back on track and you could see the momentum coming back into the business. >> we saw some strong growth, especially in restaurants in the first quarter, after a pretty much flat year last year. is that sustainable what we have seen in the first quarter? >> our growth with independent

restaurants has been at two times the market ever since the merger was called off. the market for independent restaurants is actually quite buoyant right now, around 2% or 3% and we're growing around 5% or 6% with those customers. >> you're not planning a dividend unlike your big competitor cisco, correct? >> not right now. our goal is to use our proceeds today and in the future to get our debt down. after that we'll reevaluate what the best return of capital policy is. >> where does the value lie in what you do, in an environment where online and internet disintermediatates everybody, it would appear, in a delivery system? is it proprietary? talk to me about how you embed the business in the economy and ensure the independents who can go anywhere, let alone the government, continue to come to you. >> we do a couple of things, which are really unique to us. we've built those capabilities over the last four or five

years. the first one is we bring innovative products that help the customer, the independent restaurant innovate with their menu. cauliflower. we've minced it up, comes in a package, it can be used as a substitute for flour and gluten free product. that creates real stickiness between our customers and ourselves. 50% of our sales go through our e-commerce platform. that creates tremendous stickiness. if i said i'll give you $50 to change to online banking, you'd say it's probably not worth it. >> if i can buy through amazon or i buy across the internet, i can go anywhere.

>> there are pal pallets dropped off at the back door. that's different. >> gluten free, flour free, is there supply for those foods? >> we have a really broad offering. whether you're a traditional bar and grill who offers a traditional menu with something that is more on the edge, we have a very broad offering. you know, we have a publication called "the scoop," which we use for innovative products and this summer it will be all dedicated to sustainable products. >> sara mentions m&a. do you trust deals that come on your desdesk? >> we look at competitors $100 million in sales or so, high penetration with independent

restaurants, which is our fit and that's who we go after. that's not on the regulatory radar screen. we've got three of those this year. >> what about your two private equity sponsors continue to own the vast majority of the share, they didn't sell today. what are your expectations in terms of their selling plans? obviously they're going to want to try to hit the market at some point. >> so we haven't determined over what period they will sell, as private equity sponsors in this business, they're terrific partners. we would expect over time they would sell down. >> margins have traditionally been extraordinarily thin. this a top line. you point out growth. is there anything you can tell investors how you reduce margins, i imagine gasoline coming down is helpful. >> we've brought a lot of play books from other industries to our industry. an example. most competitors will put a flyer in front of a restaurant and say here's a discount and that discount applies to all

customers, whether you buy the item or not. what we do is we personalize and customize that flyer. so if you buy something from us, you get a small discount. if you don't buy that item from us, you buy it somewhere else, you get a bigger discount. we're very thoughtful about how we grow and maintain our margins. >> what about food deflation? you're hearing it from kroger and walmart. are you seeing that? how does that impact your business? >> we're seeing a lot of volatility, particularly in the commodities like beef, it's really come down. the best thing for our business is slow, steady inflation and we expect that will come back over the course of time. >> pietro, thank you for joining us. congratulations on the ipo. pietro satriano is ceo of us. foods going public today. >> carl, the next chapter about

gawker's saga is being reported by dow jones saying gawker media is exploring strategic options, including what could be a possible sale. again, this according to dow jones citing a source familiar. the they also go ton to say they hired investment banker mark patrick to aid in this campaign. gawker not publicly traded, a privately held company but concerns whether it can stay viable given the award that hulk hogan got in his case. we have calls out to gawker media and its representatives f for comment. we have not heard back but when we do, we'll bring it to you guys. >> coming um tim westergren on pandora fighting off spotify. back after a break. it felt like i had just gone to the dentist.

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welcome back to "squawk on the street." one of the most heavy weighted index down fractional today. names like charles schwab, citigroup and regional financials. this could be the third month of gains for the financial sector. the last time that happened was the three months ended december of 2014 and for the year financials barely negative so certainly a sector to watch, especially given all of the fed anticipation next month. >> it's all about the front end of the curve. let's hand it over to rick

santelli of the cme. good morning, mate. >> mate, listen, i have a whole thing laid out. but you're talking about the front end. everybody's concentrating on it because of the fed. i just want you to follow me a second. this pit's pretty darn busy. they talk about pits being dead in chicago. this is an options pit on a short rate 90 day forward for the libor. the reason i bring it up, a lot of activity today. why is that pit so interesting to me? as i look up, the futures the options are associated with are up 3 or 4 basis points in price today. as i look at fed fund futures, they're up a little bit in the front but the further back you go, for example, as i look at october, it's up 1.5 points. what happens when these short rates move up and fed funds move up? it diminishes the possibility of a fed rate hike in the eyes of investors that are doing the trading. granted it could be that it

priced too far and it's short covering, they're lightening up. but no matter what the reason, if you're not as aggressive looking for fed tightening things change. why is this important? i'll go to the topic i was planning to use today. it's all about divergence, not the movie, central bank policy. we've seen a lot of guests today talking about things i like to talk about, the relationship between our yields and bunds, relative value trade, talking about various tightening cycles in the past like '04 to '06 and how much the fed moved versus how much ten-year rates moved. here's the issue with history and why that market's so important. market gps, okay? all these other issues in the past, fed balance sheet, european central bank balance sheets weren't like they are today. in terms of pricing and response, it's hard to divide how markets are going to react when so many policies have tried to control the outcome of things like interest rates and reflection of those policies and

the value of financial assets. so how this all reacts, for example, relative value trade pulled our yields down when europe's yields were going down. but if the policy diverges and the fed is the odd man out starting to tighten, will europe's rates put a lid on ours? it sounds like a good theory but the problem is it is a theory. we have the biggest divergent policy coming up in history at time when the global dynamics and financial markets have never had the current conditions or been experimented on to the degree they were. what will the outcome be? we can all debate it but the issue is nobody knows. back to you. >> we'll be watching the markets, especially foreign exchange on that divergence. rick santelli. ahead in the show, real roller coasters but with computer animated thrills and spills. why six flags is putting virtual

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>> oil the key focus for some people. earlier in the section we broke $50 a barrel. a lot of comments about what this means for shame producers and ultimately the saudis. we'll come back to that on and more on that later on cnbc. and the theme parks will be op opening this memorial day weekend and samsung is teaming up to put virtual reality headsets on nine roller coasters around the country. and joining us is john duffy the ceo of six flags. >> good to be here. >> and how does this work? you are going to be putting virtual reality headsets on people on a roller coaster? >> yes, you are transforming a ride into a 360-degree experience, and the riders will be able to get on the roller coasters and put on the samsung gear, vr headsets and have a completely new experience. so think about this where you are riding on the roller coaster, but you are basically fighting an alien invasion, and

you are a co-pilot in the fighter jet fighting the alien invasion soaring through the streets of a city. >> you know, some people might think that actually seeing yourself fly upside down and the trees and all of the rest of it would be enough. but you know, the realle roller coaster experience, and couldn't you put them on chair simulators and have the same effect, and why send them around the course? >> that is what is unique about the experience, because we are actually syncing the visual with the physical. so while you are soaring through the streets, you are actually getting air time so that you are really feeling like you are in the fighter jet, and one of the beauties of what we do is that because it is synced precise ly the visual and the physical is synced precisely, there is no nausea whatsoever. >> and this is important, because since the bankruptcy, you have had a phenomenal record and the stock is up over the last 12 months, 21% in a market

that is not doing well, and what is exciting the investors here is that you can take a ride that arguably might have to be replaced, an older ride that people are less interested in and quite cheaply transform it toub something that the kids will cue up for. and that is the point as the investor here? >> that is the busy of the virtual reality, because we can take the older ride which may not get the through-put that it once did and transform it into a great new experience. >> and can the new innovations be a price increase for something that some investors are looking into? >> well, it rolls into the overall capital strategy of having something new and exciting at our parks ever every year, so what it does is to bring the people into the park, and then it is all about giving them the great experience at the park. so virtual reality is is one piece of that. >> and give us a ball park figure, and how much do you replace a ride at each site each

year, and roughly how much does it cost and cost to retro fit something in virtual reality? >> well, we are not replacing the rides every year, but we are adding new rides and adding the capacity to the pa every year bying having something new and exciting every year, and so the ro roller coaster can run anywhere from 15 to $20 million. but vr is a fraction h of the cost, and less than $11 million, and we can actually add the vr to one of the existing roller coasters. >> and what about are you doing with the business and the international expansion, and where are you with that? >> well w are excited about the international, and we have announced three deals date. and we have announced a deal to design, build and ultimatelys assist in the running of the park in dubai, and we have announced a deal to do multiple parks in china and then we announced a deal to do a water park, and theme park in vietnam. >> and do you own them or desip

them as the brains? the blueprint? >> well, that is the beauty from the investor standpoint, we do not own any of the parks. we are partnering with people who will invest money and find investors to come in, and so for us, it is a franchise model and lucrative and ongoing revenue stream to get every year. >> i was going to ask about the u.s. consumer, because it is a mixed picture now, where they are not spending at department stores, but they do seem to be spending on the experiences. how would you characterize what you are seeing as far as the health of the u.s. consumer? >> well, there has been a shift away from the people wanting to buy things, and now it is all about having some great experience that they can share with their friends and their family. and i think that six flags, it is perfectly into that. that is one of the reasons why we have seen tremendous growth in our at ten dabs. we were up 11% in 2013 and up 37% in the first quarter of this year. >> thank you, john duffey

joining us, the ceo of six flags. we have breaking news on donald trump. eamon javers has that. >> well, it is official that donald trump now has the number of delegates that he needs to become the republican presidential nominee according to nbc news, and donald trump has crossed the 1,237 delegate threshold that we have been watching so closely throughout the entire primary process. that will make him the official republican nominee, and in july at the cleveland republican convention where they will offici officially do the deed, but according to nbc news, h this is now past the threshold that he needs to become the nominee, and meanwhile on the democratic side, hillary clinton is unable to seal the deal against bernie sa sanders, and she is at 2,304 delegates out of the 2,383 that she needs in order to become the nominee on the democratic side, and we will continue to watch that one which is becoming a little bit of a squeaker, guys. back to you. >> so he is from presumptive to

actual. >> and from presumptive to presumptive until cleveland in ju lieu lie, but now he has the delegates and officially over to the threshold, but everybody else running against him is dropping out, so it is a threshold that we have been pointing to all election season. and the ceo of pandora is coming up next on "squawk alley." stay with us.

day's scientists and medical research companies are blurring the lines between science fiction and science. who is cracking the code to your mind and body? "modern medicine" reports throughout the day on cnbc. it is the race to the h hampton's day on cnbc this morning. let's check in with robert frank who made it before everybody else to the beach this morning. hello, robert. >> yes, simon, and kate just got here. >> i maid d made it. >> and in two hours and 50 minutes, and something for you, the blade crew brought you the row say, and so what we have worked out is the time value of the money is that my trip was $500 more per person and her s is an hour and a half different, and so you can figure out if your time is worth $300 per hour to save on the blade or worth the drive? we have a scientific study and we will have our drink, and head back to the city.

>> that is the type of the scientific city that i love. thank you, robert frank with the race to the hamptons and for the entire team of sigh squawk on the street" and sarah is getting married this weekend, and she will be back. >> yes,ly be back from the honeymoon to give you updates on the vietnamese huang. >> she going to be missed. congratulation, sarah. >> and it is # 11:00 a.m. here on "squawk alley" and we are live. >>