all time highs as market volatility continues to drop. the sliks at its lowest level since 2006. the nasdaq higher in today's trade. retail the big stand out so far. the etf and xrt gaining more than 1% and up 5% over the past five weeks. way fair leading the group of stocks up 22% after reporting better than expected numbers. the stock is on track for best in a year and a half. back to the gang downtown. the start of "squawk alley." hi, carl. >> thanks, very much. good morning. it is 8:00 a.m. at amazon headquarters in seattle, 11:00 a.m. on wael street and "squawk alley" is live. ♪

good tuesday morning. welcome to "squawk alley," joining me is jon fortt and sara eisen. also joining me walter eisen and a lot to get to with walt this morning. among it, apple, as berkshire's warren buffett nearly triples his stake in the company to more than $19 billion. stock hit yet another all-time high this morning. walter, let's take a quick listen to what buffet said amid all of his mea culpa's of miss in amazon and missing alphabet why he is increasing his stake in apple. >> the shares when we bought them were much more reasonable in relation to current earnings. apple didn't have to do a lot better in the future than they were doing at the current time.

when you get into a google or amazon, you are paying for the future more. the future may be more than justified. >> so, walter, here we have a very smart man who laments missing a big chapter in tech, doubling down on this one. what does that tell us? >> well, it tells us that apple is a very secure, stable, good company because warren buffett is incredibly smart. he goes with companies he knows will be doing fine in five, 10, 15 years. i think he is right about that. apple is no longer the most -- in my mind the most innovative of companies. it doesn't surprise us with new products but it surprises us with execution, diligence, the ability to make really good things that people want. >> no longer the most innovative. who takes that mantle? >> well, we're going to be talking about it in a minute, but i use, you know, amazon echo and google home at the moment.

i have tried out cortana. i think the battle for the living room or the kitchen counter or whatever it may be where i can say, you know, hello alexis, call my father or, you know, i can say "okay, google, voe me the map of how to get to city hall," those are the type of devices that seem to be growing at 20% a year. i think innovation is coming in that virtual assistant market. i think siri is well positioned to get into that market, meaning the apple virtual assistant, but they haven't done so yet in the way google and amazon have. >> walter, i wonder though, this virtual assistant market doesn't strike me as something that's going to be huge in terms of units, and they are bit into the phone. so in a way might this not be amazon's consolation prize? i mean they don't have their own phone platform, that flopped with the fire phone, so now they have to do echo? i can just talk to siri.

granted, it doesn't work perhaps as well as amazon does but they are in this game. >> well, i mean amazon and the google home play my music for me. you know, they connect to things like that. i think that it is not so much the piece of hardware that's going to be the thing but whether you build apps on it. i guess it was in 2008 when apple's iphone and steve job opened up to an app store, i think as more and more apps are being bit for this home device that allows me to get all of the video i want on demand, the exact songs i want played, call the exact people i want to have, keep my calendar, that will be a device that has things bit upon it that you and i, or at least i haven't imagined yet. >> so, walter, it is hard to find a bear on apple. there aren't a lot of them out there these days, but some of the bearish cases point to the fact that emerging markets -- china was still a disappointment

in past quarter and that could be an uphill battle. services is a fast growing increasing chuvg of the business but is very competitive and everyone is waiting for the next big thing beyond the iphone. which of those do you think long-term could be a challenge for apple? >> i have always said it is the next big thing issue. you could have a great company -- and apple is a great company -- without having really a next big thing, but it isn't in apple's dna to be that way. whether it is a watch -- there's so much that could happen. you can have augmented reality. they could get into cars, they could get into the home just like we talked about. maybe because i'm not like warren buffett and, you know, just sort of hard core financial guy, i'm looking for the excitement of the next big thing, that makes me look for where will apple go next. >> well, certainly the apple and amazon stories dove tailing today, walter, as you already referenced. amazon this morning unveaed a

new echo device called the echo show an released video with which to sell it. take a look. >> with echo show he can stay connected, even when his hands are full. >> mom would like to talk. >> alexa, accept the call. hey, mom. >> hi, honey. how are things? >> the show brings traditional echo features together with regular capabilities including phone calls, youtube, camera and more. available for preorder, $230, will be available on the 28th of june. shares of amazon did hit all-time highs earlier this morning. walter, to your earlier point about innovation, some viewers did wonder whether or not apple should have already had a product like this. >> you know, tony fidell used to work at apple, he helped create the ipod and he went on to create nest, which as you know what nest is. it handles your therm stats in

your home and something i never felt was that great. i didn't want my coffee pot to go on remotely, but, you know, it is a useful thing. but that ties into a larger ecosystem. google or apple that has now acquired that, what are you going to do to integrate the home? as i say, i think alphabet or google, as i still call it, and amazon have gotten a leg up in that market. what may be a surprise is if microsoft of all, you know, companies -- i love what sanja o'dell is doing there. i try to use them all and try to figure out which one figures out the scores first, that type of thing. this cortana is licensed to other builders of hardware, you have then a three-way battle. i can't imagine -- i cannot imagine that apple would seize that market because, as i said, it is not about the device.

it is about what all sorts of third party developers can build on top of it. i mean i'm -- uber now. who would have thought uber would come along had it not been for an iphone allowing third party apps. >> i got to tell you, everybody is singing the echo show's praises. i have to take the other side. $229 for that. you know what else is $229? amazon's fire hd 10. it is a 10-inch tablet with alexa bit in. you can talk to it. it is higher resolution. this thing you have to keep plugged in on the counter and i'm supposed to call my mom with this thing as long as she happens to be standing in the kitchen. it is like the land line reborn. why not call her cellphone with face time. this is good for amazon, who doesn't have a platform bit in, but i'm not sure it is something everybody needs to be doing. >> walter, just like their

streaming content service, it is not about selling the devices, it is about getting you to order more bleach. >> well, absolutely. by the way, i need bleach, or at least laundry detergent. people say well that's, you know, horrible, they're gathering your information. i like to be able to just walk in and say, you know, here is what i knee. if amazon is able to create an ecosystem where i can make my phone calls get my video, know exactly what, you know, type of new orleans jazz funk i like and be able to tell it to play that when i walk in, and then also order some laundry detergent for me, yeah, it may not replace ice cream but i know i'm using it. i'm the only focus group i can have. i have one of these things in my apartment a couple of blocks away. i walk in, i talk to it, i get what i need. i like it. >> i agree with that, the necessity, walter. >> i even have google home, too. i let them compete. >> yeah, you're really into the smart home thing. jon, the point is though that

for investors and the stock they're willing to give jeff besos the credibility to spend on all of it, on devices, on ai and robotics, on prime, fulfillment and building out the system. that's the story of the stock right now until they're not. >> good for him, yes. >> and that's working. do you like it or not? >> boy, look at that stock though. i mean every day that stock seems to hit new highs. >> it is amazing. one big reason the overall indices are doing the same. walter, good to check in with you on these things even if they surprise us. we'll talk to you soon. >> walter isaac son. a number of media companies out with results this morning ahead of disney's results due out after the close tonight. julia boorstin is going to watch all of that. >> reporter: hey, carl. the question for disney whether success of the movie theater grows at theme parks can overcome challenges at network

divisions and espn in particular. analysts are looking for their plan outside of the traditional bundle this year and for update on how many digital and skinny bundles are including espn. how the rise of digital tv and cord cutting will impact disney's bottom line. still down from 7% from a high in 2015 after the first concerns about espn, and disney's stock dropped recently with concerns about weak advertising and impact of cord cutting and skinny bundles on media giant. morgan stanley now sees upside in espn and inclusion in new bundles saying espn could do a 180 saying the distribution revenue growth rate could nearly double from fiscal year 2016 levels to fiscal year 2020. some analysts are still concerned. just yesterday securities rated film estimates due to dooney & bourke but lowered estimates

given weak network ratings. revenue of $13.4 billion in earnings per share of $1.41. both up about 3 1/2% from the year ago period. i will be back with disney's after the closing bell and we will have a first interview with disney ceo bob iger. back to you. >> have to ask him if he's thinking of running for president, julia. >> reporter: of course. >> thank you. julia boorstin. want to check in on the markets here because the s&p and nasdaq hitting record highs. doesn't take much these days, fractional moves, but record territory. all are positive. the dow lost an earlory 30 point rally or so, up 6 points. apple still the biggest contributor to the dow's rise. mean tike the so called fear gauge on wall street falling to its lowest level in more than a decade. watching shares with pandora. the company posting narrower than expected loss and revenue below consensus but announced

kkr agreed to invest $150 million into the music streaming service. while pandora explores strategic differences. down though. >> a cnbc exclusive with john wald r waldron. and then later facebook, google, apple, twitter, all making big bets on original content. we will talk with one producer helping lead the streaming push when "squawk alley" comes back. ♪

dow up about 11 points. send it to wilford frost live from goldman sachs's second annual director's symposium in chicago with a special guest. take it away. >> reporter: hi, sara. good morning. thank you very much. i'm with the cohead of the investment bank at goldman sachs. good morning to you. thanks for joining us. >> thank you for having me. >> still announcement in terms of leadership changes including you have two heads of investment banks. what's the rational. >> we made a third move yesterday to reflect next generation leaders stepping into new roles across the division. obviously two new coheads of investment banking, so i will get some help which will be much needed and much desired. we bring somebody in greg lumkoff from the merger franchise and mark nachman so it

is a balanced structure. mark will go to london and pay a role. below the two of them we promoted a number of other executives into important leadership roles, again i think highlighting the depth of talent in our business and the breadth of the talent we can bring to the table. >> and before today's director's sim pose ya', exactly what is going on here today? >> well, this is second time we have done this director symposium. we have increased engagement with directors over the course of the last number of years in smaller formats around the country and actually around the world. we decided starting last year in chicago and again this year to bring the directors that we've been engaging with more broadly together in a bigger format so we can talk about some of the issues on the table affecting their roles at governs of the company. >> so lots of big companies represented in terms of your clients, but also you roll out the big guns from the goldman sachs perspective yourself, goldman, the president and ceo and of course the chairman and

ceo as well. was there a need for you to roll them out to reassure these clients given there have been leadership changes, not just yesterday but six months ago as well? were clients needing that reassurance that the leadership is still strong and committed? >> no, i wouldn't characterize it that way. all of us spent a lot of time with clients. our franchise is defined by our client relationships and the advice we offer to clients. whether lloyd, david, myself, greg, others, we are constantly interacting with clients. the leadership changes are coincidental in terms of the timing of the symposium that we've been planning for months. >> talking about in hopes of it jumping after the election, have you been overwhelmed. >> i think there was enormous optimism coming out of the election in the united states you know at the tail end of last year and predictions of lots of deal making that would come in the back of that optimism and the sentiment shift in the markets. we certainly got off to a slower start in january and february than we would have expect. but if you look at the volume,

up 10% year-to-date so we're trending higher in terms of buy ins. i would say we would have expected stronger at this point, but if you think about the transaction flow it is building. i think as the markets chew through some of the challenges out there, whether it is the french election, you know, some of the policy issues in the united states, as they chew through that farther you will see optimism build and certainly see more activity coming in. >> when we talk about some of the deals this week, think of acquiring tribune, seems clear after an fcc rule change. does that indicate the power deregulation has in terms of sparing the more mna as and consolidation? >> i think there's no question if we got more deregulation across the united states, policy apparatus, we would see more opportunities for deal making. the fcc would be one example and there are other examples in other parts of the economy and market. i think there would be more deal making as the deregulation plays in the system.

we're not planning for it to happen tomorrow. we are certainly running the business as it stands today but there's room for upside. >> what about in terms of potential tax changes and the much-talked about possibility of companies repatriating cash from abroad. would it significantly drive mna? >> you think about the amount of cash overseas. if you brought a significant portion of that cash back to the united states it would be used in multiple ways. i don't think it all would be used for mna purposes but certainly a portion could be used in deals. we would expect if you were to get significant repatriation reform you would see more mna activity as you would see other activity around share buy back and dividends, you know, and capital. >> quickly, do you have a final question in terms of outlook for ipos, is that more optimistic? >> we've had a good year to date performance in ipos around the world. more predominantly with transactions with significant scale we didn't see last year to any great degree. we are certainly more optimistic

about what has happened and what will come and there's more backlog building, so i think you will see a more robust calendar for the year than we've seen in the prior year. >> great stuff. thank you. >> thank you for having me. >> back to you. >> thank you. we look forward to your interview later with the ceo and chairman lloyd blankfein in the 2:00 p.m. hour. strong words from ibm after its watson product was called, quote, a joke. later hear how ibm respond. he is helping lead the charge when it comes to streaming original content. ben silverman back on the show. "squawk alley" back on the show with the dow now negative 8 points.

because geico was a heavy user. the answer is we missed it. i never made a trade in a stock based on gdp figure. every smart guy tempted by leverage, and some of them are broken by it. i never called the president in my life, never. we have not made significant acquisition for 15 months or thereabouts. >> getting a little itchy. a li. some strong words for ibm from social capital ceo and founder just days after warren buffett says he slashed his stake in big blue. he is taking aim at the company's watson product. >> watson is a joke.

just to be completely honest, i think what ibm is excellent at is using their sales and marketing infrastructure to convince people who have asymmetrically less knowledge to pay for something. >> ibm released a statement this morning. watson is not a consumer gadget but the ai platform for real business. watson is in clinical use in the u.s. and five other countries. it has been trained on six types of cancer with plans to add eight more. the statement continues does any serious consider saving lives, enhancing customer service and driving business innovation a joke? to that, he added that he would love to put his company's technology against watson any day, although he did say maybe i should have been more careful with my words. interesting to have a company of that size respond to a single investor on one day. >> yeah. i think it is fair to say ibm with watson has let the marketing get ahead of the results as far as watson being a business. and this is the price you pay for that. now, granted, they do have a partnership with sales force

einstein now. perhaps we will start to see real results from that. despite all of the trials and these experiments they've been doing in medical, they haven't really shown the ability to consistently drive revenue in a way they can call out from watson. those results will end up speaking for themselves also. >> i think warren buffett talked about it, made a strong case for it. said there's loads of potential, said revenue is growing from a small base. he said the real value in watson -- and this was interesting to hear it from warren buffett -- is that it could replace jobs in a big way, and one example he cited is reading x-rays faster than humans. by the way, watson is not going to ask for health care benefits and higher wages. this is sort of the robotics thing we heard. >> but he is selling two thirds of ibm and tripling in apple. >> correct. but still holds ibm. >> 152 on big blue. >> it is having a bad few weeks and it is in stark contrast to the strength in other parts of technology with apple adding

most to the dow again. it is a few minutes to the close and you're up. let's get back to hq. >> reporter: hi, sara. european stocks rebounding on the market decline as investors move from the french election. for now macron likely to get more attention in june during the parliamentary elections. talk about what is moving today. basic resources among the leader, helped by higher metal prices. they lead in the gainers in the mining sector. earnings in focus, germany's commerce bank posting higher than expected quarterly product despite weakness in core corporate and retail operations. the bank ceo says it will take time for growth to silgtly outweigh the impact of negative interest rates. other movers including italian spirits company, higher after beating. adecco with higher than expected results saying it expects the macron presidency to boost

france's competitiveness and add jobs. but denmark based jeweller pandora, not the online news company, down sharply. weaker sales growth in u.s. and the uk over shadowing an earnings beat. lastly, the akzo nobel saga continues. has filed a petition with a dutch court seeking to oust the chairman and force them to hold a special shareholder meet. akzo reject three takeover offers and refuses to enter talks. elliott by the way is among the shareholders backing the build. you can see shares up fractionally on the day. jon, back to you. >> thank you, seem ah. straight ahead, facebook, google, apple, twitter, all making serious bets on original content. we're going to speak with one person helping to lead that with

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♪ good morning, everyone. i'm sue herera. here is your update at this hour. south korean liberal candidate moon jae-in claiming victory in the country's presidential election after his rivals conceded. if the results are confirmed, it would end a decade of conservative rule in south korea and could result in a change of

policy towards north korea. french president-elect emmanuel macron arriving at party headquarters as he got to work before his inauguration on sunday. his party is expected to emerge as the largest in upcoming parliamentary elections. the chairman of the joint chiefs of staff general joseph dunford beginning a visit in israel. a new yale university study says despite premarket testing one in every three drugs ends up having a safety issue. this after looking at medications approved by the fda from the year 2001 to 2010. however, the study also said that few of those medications needed to be taken off the market. a little bit of good news there. that's the news update for this hour. back downtown to "squawk alley." carl, back to you. >> thank you very much. what to do facebook, twitter,

netflix, apple and google have in common? all making a big push into original content. next guest partnering with twitter and apple for new programming. joining us to discuss that content push, ben silverman, now founder and ceo of prop gate. good to have you back. good morning. >> thank you, carl. good morning to you. >> this is getting really interesting here. this new universe of content. what mailed you decide you deci this leap? >> well, i feel like the internet has been bit and now it is a media and video platform. all of these big companies are differentiating using narratives and story telling to bring in new consumers and also to keep the consumers they have excited about the platform. >> what defines success now in these early days? i mean we've got so many brand-new pipes and on each pipe so many brand-new shows. are expectations for viewership being held in check?

how many people can reasonably watch? >> well, i think that the utility of what we're doing for our partners and how they are really spoke for the platforms is unique. they're not just making linear, traditional 44-minute dramas or 22-minute sit coms. they're making different kinds of show. the show we're doing for twitter, for example, "what's happening" is really building the daily show for twitter. everyone else has appropriated their content, whether it was on "the tonight show" the "today show," and i for five or six years have been going to san francisco saying all of this information is on your platform first. why don't you create an organizing principle around it. so it is really bespoke for them. and with planet of the apps, which i'm so thrilled about how it is coming together and our team has really done an unbelievable job on the content so far in putting it together, is really all around the app ecosystem that apple enabled.

so it is not like we went to twitter and said, let's do "game of thrones" or went to apple and said, you know, let's do "mad men," we went and bit content for their platform also. >> ben, i understand why it is good for content creators. they're a tech company throwing a bunch of money around, but what is going to make one of the companies better than all of the others when all is said and done? is it engagement, people just watching long term these shows on a platform? how will we know who is really winning? >> there's so many different models for how they're going to define success. twitter is in advertising platform, and clearly advertising revenue is the driver for them and they're leaning in hard to the advertising community and i think have done a great job engaging with them. and then companies like netflix are driven by subscription revenue and we're making a-list premium content for them, you know, linear content, and

they're looking and i think doing a great job at going after the more traditional story tellers. and then you look to other companies like the cable companies and they have two models. they do advertising and subscription revenue. so i think it is really horses for courses. you're looking at different companies with different agendas about what content can do for them, and i'm really excited for when we can truly unlock interactivity and where technology and story telling start to merge a little bit and we actually build new genres and new ideas that only these platforms can view because they're two-way streets. >> but then can twitter really do it? as you reference, everyone else is doing it, facebook, youtube and amazon and netflix and all of those companies have a much bigger financial cushion to poor into content than twitter. do you think it can make itself a destination hub for live tv? >> well, it is right now a destination hub for live news,

sports and information. it is just not organizing it all for the consumer in a way that it presents it like a show. that's what we're doing. but i know i'm turning to twitter more and more for news and information, and i've got to give on their behalf a big thank you to the white house because it is obviously being used in a way it wasn't used before. and if you watch any other shore on television, you will see tweets defining a news broadcast, a sports cycle or an entertainment show. and what we're doing there is really saying, you know what is happening first, let's put it together into a cinematic. we brought in c.b. robinson, an incredibly talented comedian with a strong point much view, and she is different than any of the other people hosting those kind of shows right now. she looks different, she has a different point of view, and i think that's really fresh too and they're willing to take that

risk and go for new talent. >> believe me, as people who are on tv for a living were watching how talent is selected, last thing, ben -- >> you're paid better, carl, don't worry. >> how nice. a lot of time on twitter. >> a report last week looking at court cutting. their charge is not encouraging for cable companies. it has a record decline and a rapid acceleration in the rate of decline. do you see that changing? >> i think what is happening that's fascinating to me is while the cord may be cut from the traditional subscription package, all of the smart cable companies with really great brands, great brands like the history channel or great brands like lifetime, are navigating this water really intelligently. they're going more global with their brands and they're also leaning in to these new platforms as youtube starts to go over the top, as hulu starts to go over the top, as amazon --

they already are over the top, but if they start to actually provide mso-like services in virtual versions of what the cable companies did, the brands that really work in this moment, ones that are defined by really clear agendas are also going to be really strong as we move over the cliff. i think the big strong brands as we're heading over this transformational period actually are going to be -- they may have a broken arm, they ma loy look e the david by michael anglo with one piece moving, but still the largest statues in the room. >> that's important. got to know what your brand is about going into the new chapter. ben, we look forward to having you back onset as soon as you can make it. good to see you. >> thank you guys so much. always a pleasure. go cnbc! >> ben silverman. straight ahead, the price of bitcoin as you know soaring, breaking $1,700. we're going to break down the rally in that digital currency.

with the dow essentially flat, rick santelli, what are you watching? >> i'm watching all of the stories about the vick. there's a group that predicted markets would have very little volatility. you know who they were? i'll tell you after the break.

let's get straight to steve liesman with breaking comments from kansas city fed president. >> esther george saying in a california speech she supports a path of gradually higher rates,

very much in line with the center of the committee here, though she does warn policy cannot move too gradually. the reason is she focuses on the unemployment rate, 4.4% which is below the fed as long-run rate. she is concerned about unemployment. she notes other times when unemployment has over shot, hasn't gone below the long run rate, it has risked or caused rescissions. on the critical issue of the balance sheed she says the fed should reduce the balance sheet and begin doing so this year. she said the balance sheet run-off should be on autopilot. that means she doesn't want the fed to adjust the balance sheet up or down with different economic circumstances, announce a plan and stick to it. on the question of the economy, she said she sees a significant amount of noise in first quarter gdp and the economy may have more strength than is apparent. some indicators flash yellow, she says, others are soldier i had green. just one very quick note here. esther george was once considered an extreme hawk. it is a sign how much the fed

has changed that these comments are really not that hawkish relative to others. carl. >> it is a good point, steve. thank you very much. steve liesman bringing us those comments from george. let's get to the cme group in the meantime, get the santelli exchange. hey, rick. >> hi, carl. you know, everybody is talking about it, the vicks near a quarter of a century low. but it really is not the vicks that's the issue. a few seconds ago i told you there's a group that predicted ultimately a computerized worlds of trading, markets would come to a halt and volatility would be very low. you know who that group was? human floor traders. i can remember many meetings in the early '90s where the notion of floor trading moved to the electronic media would in many ways end up with a stalemate. now, what does that mean? i'll tell you. i can go back to the early days of computer trading here in chicago, and what everybody did

was bought these huge mounds of data on disks, data in everything. you know, all of the treasury data, soybean data going back sometimes to the 19th century, okay, and they put it all in the computer and they would start back testing. ultimately they would come up with algorithms that would be profitable. think about the world we're in now. is there any doubt in anybody's mind, for the most part, most algos are highly kocorrelated, hence we come the a point in time where the focus is on the vicks but it is just a surrogate for market volatility. that's the issue. is it good? is it bad? i will tell you this, most of the time when markets get what i call tunnel vision it rarely ends well. let's think of a couple of cases, kind of a sub set of tulip bubbles. think about when markets were completely preoccupied with issues like y2k or totally preoccupied with issues of how markets would get past certain

issues post crisis, and we always see that markets gravitate and everybody jumps on board. so what you end up with is basically markets that aren't moving because everybody wants to do the same thing. it is almost also like life insurance. you know, i buy life insurance, pay for it every month, but i never ask myself -- i haven't died, why do i pay it? that's kind of like hedging. vicks is somewhat tied up in that same notion. so these tunnel vision issues become triggers. so when we jump out of this range, what's going to happen is many people are going to hit the buttons on their keyboards and do the same thing. that's why it is not going to end well, because when we had humans here they were slower than computers. computers can create very liquid, large trunks from markets to trade, but when everybody is the same thing there's only one thing that can happen afterwards, and that's big chaos and big, volatile moves. jon fortt, back to you. >> we will watch for volatile

moves. thank you, rick santelli. straight ahead, call it the smart home wars. how amazon, micro soft and even apple are fighting for your living room when "squawk alley" returns. ♪ [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

>> welcome back. apple surging to a new high as it becomes the first company to top an $800 billion market cap. this as we got a new hardware announcement from amazon, a new devied called the echo look that works by voice command.

we're joined by goog enhypothetical's partner managing director of research. good morning to you, robert. a couple of things make me feel nervous about apple. one, it is more reliant than it ever has been on ichb impb earn and revenue, especially when you count the revenue services then this cycle for the iphone has a ton of uncertainty and high expectations. why are you not worried about that? >> well, the fact that iphone is such a big part of apple's revenue has a lot to do with the fact that smart phones are the biggest tech market out there. so, given apple is big on smart phones, it makes sense that's a big driver of their business. that shows me apple is in the right place. in terms of this upcoming cycle, no doubt that expectations have been increasing. there's two things we're looking

for. one is pent up demand given we're coming off a couple of relatively weak cycles. so, you have a relative ly biggr one coming because like our math for example is about 40% of, when the 6 launched, only about 2% of users were less than 2 years old. then you have a new high-end phone coming. >> we've got a conference coming up from apple in the next few weeks. the most important event when it comes to software and services. i would expect to hear more about making siri compatible with other apps. what are the most important things you want to hear? >> right, well, i mean from the

siri standpoint, alexa is turning up the heat. i would imagine apple feels siri is is their way of doing it. i would just as a consumer, if nothing else, like to have a siri books similar to an echo. between machine learning ai and natural voice processing, these are all increasingly the anti of of being in the gauge at this stage. we want to hear more about siri and sort of the functionality within ios, not just kind of the new funky hardware features. >> how do you look at the services business within apple? i feel weird about that because on the one hand, part of it is just transactional, not exactly

services. it's just transactional, happening through the app store, then it seems to be b a lagging indicator of how well the iphone has done. sell more iphones, more people on the revenue, service revenue goes up. aren't those two things more tightly tied toegt than people are saying? >> i think you're right. they're tied together. i think the reason they've been calling it out is just to show that there is some recuring rev now stream to their business. in a lot of ways, one can look at their iphone sales which are recuring because you have most people who have an iphone will buy a new one. but the services revenue is truly a recuring stream, which people like to see. but to your point, apps are the majority of it. they're the vast majority of the services profit.

i don't expect them to habe a services company. >> it's a nice revenue line none the less. thank you, robert. >> thank you very much. >> pandora has been under pressure all day. down almost 9%. faber made his way back to post nine with new ons that. >> just waned to follow up on our discussion we had earlier where we talked about this new investment conceivably. i did fail at the time to mention a few things that large holders are very much focused on. the key being they have 30 days in which to take down the money, so the investment of 150 million might go to 250 million is not immediate, but has 30 days. that 30 days could be key, at least for the large investors i spoke with who are hoping this will be the 30 days in which pandora will be successful on

selling itself. as i reported last fall, the company began a process that ended up going nowhere until this point. it has now given itself an insurance policy and some leverage in trying to do that very that i thiing. the change seems to clear the way for any potential deals should they get there. what's the name that comes up? it's sirius. i spoke to the chairman last week and this is what he had to say. >> i think fs a company to great reach that hasn't really monotized as well as it might, but there are a lot of xals. it's a tough space in subscription streaming up against apple, amazon, google, guys with big resources who get paid other ways, there's pluses and minuses in everything. >> nothing is clear here, perhaps we'll know in the next

20 or so days. that with window that the company is p pursuing this attempt that it has been for a long time. >> you covered it extensively as the overal picture is not standing still. spoti fy continues to make end roads. >> without a doubt. in terms of their own streaming service, there are plenty of question marks there in terms of where that will stand and you heard him raise some of those pluses and minuses. >> one of the amazing things to me about the streaming music market, it seems young, but it's acting really mature. i think panpandora's product is really good, but doesn't seem to be showing up in the results and that acts to me like a mature market. >> it is early, i guess, but is it? it's only been out for a fairly short time. >> i was just looking at the market cap, david.

with the stock declined, more than 2 billion. i'm surprised you're covering this. >> i am, too. but sometimes, when you get something not right, you feel obligated to come back on, thank you for raising that. and so, i just wanted to -- do i wish we had mentioned it at all? yeah, probably. >> always good to have you back on for squawk alley. >> and it's a name people like, yes. >> thanks, david. to real estate now where technology is opening the way for a virtual offices. landlords turns out are making real money on office spaces that clients don't actually use. diana olick joins us from washington. >> no wo corks with a good thing, but that gives way to virtual offices. paying for the address, the phone number and services even you're not in the space. one company is making big money on virtual, banking on the boom in boutique businesses that want the high-end address without the

sky high cost. on the 85th floor of one world trade center, there are receptionist, spaces but it's rather who is not here that matters. >> virtual offices, really people who are working from home. >> australia based serve corp. has operations in 23 county trips, but entered the u.s. in the recession when rents slu slumped. they took space in several prime location, including one world trade center where they're subleasing the space and address. >> we have had 40,000 customers who don't rent space from us. they can use the space on a casual basis. they can use the infrastructure and tell xhecommunications technologies. >> jordan is ceo of a small tech consulting firm in oregon. just seven employees, but you'd never know that from his one world trade address. >> there's a good deal of prestige that comes along with being here. it's the most recognizable

address in the world. >> starting at 250 bucks a month, clients can get the five star address, secure e-mail and receptionist who answers for the committee and can accept real mail or faxes and serve corp. says 40% of its revenue is is currently coming in virtual office clients. back to you guys. >> thank you for that. fascina fascinating. dow is in this tight range. less than two tenths of a percent, i should say. that remains the case. some pockets of movement, travel for instance is remarkably strong. marriott is your biggest gainer, american air and some others. >> it was a good quarter for marriott and the retailers are having a good day topping the dow right now. walmart, nike, apple continues

to remain strong. don't apologize, carl, because even though they're tiny moves, we're still in record territory. looking at a record close. >> is there a little blue pill we can put in the market? get something going? i don't know. >> let's get over to the judge and the half. our top trade this hour, what the bond king said about stocks and why it matters to your money. with us today, joe, josh, jim, so is john. let's begin with the trade. double line capital, jeffrey pitched at the sohn conference, a pair trade that has investors talking today. shorting the s&p 500 etf going long, the e mernling market going left, the eem. here's why.