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♪ no i'll stand my ground won't be turned around ♪ good morning happy friday welcome to "squawk alley." with me, morgan brennan and david faber. carl is off today. dow bouncing back from its 151-point loss nasdaq is up over 1%, the best of the averages. unemployment rate below 4%, but the labor participation rate, labor force participation rate still having trouble all in all not too many signs of inflation, which seems to have the market pretty happy. >> some wage growth but not enough to hit expectations coming into the report that seems to be a very big focus. with all the talk on focus and trade, it's been the talk with trump administration in china

for those talks, transports have been the biggest underperformer of the week. they've been selling off those are exposed to any kind of trade changes. >> that points to perhaps the expectations that not a lot will come out of these discussions, the chinese kind of signaling that there weren't a lot of preconversations to lay the groundwork for actual action here we'll have to see what, if anything, comes out of it. >> speaking to wilbur ross a couple of days ago before he departed on this trip, the commerce secretary, seemed to indicate the desire to come back with at least something firm in some way not necessarily a signed agreement. it's not clear to me where things really stand. except we now know that wall street journal as much as $200 billion and on the intellectual property front that this administration is asking for, we'll have to wait and see at least for today, the market seems to be taking this as possible. >> one big company with something on the line that

doesn't seem to be struggling is apple. berkshire hathaway bo bought more shares of apple he spoke to becky quick and explained why they upped their stake. >> i liked what i saw, too there are surprises -- it is an unbelievable company if you look at apple, i think it earns almost twice as much as the second most profitable company in the united states it's a wide, wide gap. i mean, it's an amazing business i mean, there is a company that whatever the earnings are, 60 billion or whatever, you can put all their products on a dining room table. >> have to be a big table at this point at this point he said he sold out completely of ibm. we'll bring you more of becky's conversation with warren buffett in a few minutes joining us this morning, paul

meeks, chief investment officer and portfolio manager dan morgan good morning to both of you. >> good morning. >> paul, there was a lot -- a lot of consternation and anxiety heading into this apple quarter. people were worried that iphone units would miss in a way, they did but the iphone x was strong. people were worried that the iphone x would not be strong what is the takeaway now that we can see apple at all-time highs, buffett having bought in q1? where does apple stand >> the way i look at it is probably just a hold among the top ten holdings of my tech portfolio it's essentially back to its all-time high, one of the things, jon, i was disappointed in, frankly, in the quarter was unit growth of iphone. we're now essentially two quarters in to the iphone x

ramp with the iphone x ramp you have a big jump in average selling prices in two more quarters once we anniversary that. if you continue to have in the iphone franchise unit growth of 2% or 3%, and you've anniversaried the pay increases i'm more worried as we get out there as to future revenue growth meantime i think it's a hold here, not a buy, not a sell. >> are you worried? tim cook said they brought down channel inventory in the quarter they just reported and specifically at the high end you can read through that they brought down inventory of the ten. they sold through more tens than were reflected in these numbers. that's why the asp was a bit lower than some analysts were expecting. is that a problem to you or do you view that net cycle as potentially good because the net cycle in the ten does seem to have some legs >> we're still positive on the stock, jon obviously, as you were commenting earlier, asps were a

little bit low unit volume a little light on the last quarter three new phones coming out will be larger sizes in the second half of the year that's a positive. i think we kind of need to change, too, our thoughts about apple going forward. we're so focused on iphone univolume, what suppliers are doing. as you guys have talked about, it's turning into a different story in terms of services and all these different things that they're doing that will be part of the future growth going forward. i think it's a changing story with apple at this point we want to focus on the phones but i think we need to look at some of the other things we're doing with apple music, wearables and a host of other areas that will be a bigger part of growth in 2022 than they are today. >> what's the read through to chip stocks, paul? ahead of apple's results we got a number of cautionary comments, disappointing results from a number of the semi conductor companies. how should we think about that sector now in light of these

results? >> it's interesting to me. it's actually my favorite industry group within tech some of these semi conductor companies that are directly related to the supply chain for apple or indirectly related have come down, in my view, too far, too fast a company like broadcomm, for example. but i do think, no doubt, whatever apple says or not, we are getting to the stage, at least in the developed world, where you're seeing a saturation of smart phones. i disagree with tim cook's comments there in the last conference call. so i continue to watch these companies. i think the supply chain partners directly tied to apple have brought some good opportunities, probably better opportunities than buying apple itself. >> how quickly the story can change i mean, so much hand wringing, just a week ago. what is apple going to do? but today, doing just fine dan and paul, thanks so much for

joining us. >> thank you. >> thank you. >> again, to another story this morning. the tech world has its eye on, and the automotive world, too. tesla, ceo elon musk, controversial performance on the company's latest conference call phil lebeau is in chicago with that phil >> after bottoming out at the end of yesterday acres couple of tweets elon musk put out this morning, talking about why he acted the way he did on the earnings call the other day. first it's important to know that tesla is the most shorted, meaning most bet againststock on the market and has been for a while. that's true. nobody is disputing that his other tweet -- there are about four or five this morning. the two questioners i ignored on the q1 call are sell-side analysts who represent a short seller thesis, not investors they do not have a short seller thesis, the two analysts, by the

way. tony saganaki has a hold basically on tesla and there are far more bearish analysts out there, believe me. the question is what's going on with the model three those were the questions he didn't want to answer. musk points out they have half a million reservations, more than 450,000, they're saying officially he says it will take at least two years to meet demand so people should not be focusing on whether or not they're going to go down to steer in terms of deliveries if you take a look at shares of tesla, keep in mind that for tesla, the key metric that they're focused on, hitting 5,000 per week in terms of model three production in about two months many thought that, you know, their original target, the end of june, is when it would happen by tesla said in about two months it may not happen by the end of june they're saying whether it's july, late july, that is their target for model three production guys, back to you. >> all right

phil lebeau, thank you. twitter alerting all 363 million users that they should change their passwords i haven't done it yet. what exactly happened here you'll gentleman boorstin has more from los angeles. julia? >> reporter: david i just changed my password. i recommend that you do as well. anyone who opens twitter will see this alert that the company identified a bug that stored passwords in readable texts rather than having them disguised or encrypted quote, we have fixed the bug and our investigation shows no indication of breach or misuse by anyone but out of abundance of caution, asking people to change their twitter passwords they're also recommending that they change password on all services where they used that password and that users activate

two activation data security lapses, twitter agreeing among other things to audits every other year for a decade later this month the european union launches its new privacy law, which will fine violators of that law. twitter shares dipped as much as 2.7% this morning before bouncing back. you see them back in the green ceo drew criticism for tweeting, quote, we didn't have to, in terms of alerting users, but believe it's the right thing to do he later walked that back and jack dorsey, quote, believed it's important for us to be open about this internal defect privacy risks could drive adoption of some of these password manager services, generate and save for different accounts, 1password, dashlane, last pass and enpass i haven't changed my password on other services but i do use two

factor authentication and am looking to these password services and plan to sign up for one of them today. david, guys, it's an issue that will only become more important, going forward. >> yeah. >> i did change my password, by the way. don't reuse your passwords, various services password lockers are a good way to manage them. >> thank you for those tips, julia. we appreciate it at least until those password storage possibilities are compromised. julia boorstin in l.a. a big show coming up next, the ceo of gopro joins us, those shares up 7% right now as we go to the break, dow and s&p remain negative for the week, on track for a second straight weekly decline. that said, dow is up near session highs, 222 right now "squawk alley" will be back in a moment

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wifi's ordinary. basic. do i look basic? nope! which is why i have xfinity xfi. it's super fast and you can control every device in the house. [ child offscreen ] hey! let's basement. and thanks to these xfi pods, the signal reaches down here, too. so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. welcome back you may recall a couple of months ago i talked about an activist but i was speaking of dan lobe third point releases a letter to its investors in which it spends a good amount of content in the overall letter talking about its

position in united technologies, $1 billion or so position. it simply calls it a significant stake. in the investment letter it goes into, in some detail, its belief that utx and its share price will benefit greatly from splitting this company into three component businesses, otis elevator, with that huge business in china, the carrier division, which we can remember, of course, having dealt with those job losses in some of its plants in the trump administration and most importantly aerospace led by gtf, geared turbo fan. so glad you're here, morgan, to talk about some of these things. the belief overall, as you know, when you break up one of these conglomerates you'll get a higher model than is afforded the overall company that it gets from investors right now

greg hayes talked about this, almost got ahead of himself, one investor told me, and talked about it as something that they were going to do doesn't seem that mr. loeb needs to push very much to get gtx down this road it expresses its views on the company's portfolio structure, including several points the company has already discussed in the past and it strongly disagrees with several of the assertions but is always open to the input of shareholders. they go on to say, morgan, they will conduct a full review of their portfolio after they close the rockwell collins deal. >> which is what greg hayes said earlier this year, that they were going to undergo this strategic portfolio review and have answers by the end of the year it's not that surprising to hear this there had been a lot of expectation, including last year, that loeb perhaps had been amassing a stake in this company and a lot of speculation that they were looking at a portfolio

review and possibility of breaking up. it speaks to this broader sector trend we're seeing of the deconglomeratization we're seeing it across the board, including in companies like ge. >> the possibility. >> the possibility. >> that we discussed many times that ge will choose to break itself apart to a certain extent honeywell went down this road. >> yes. >> in part pressure by mr. loeb, decided not to split the company and did choose an investment path for certain of its assets. >> absolutely. there's a number of other companies that have done this as well dover comes to mind. there's a number of them that are looking at this. >> loeb saying he think as three-way split would unlock 20% of the current market cap of utx. it's something we'll be paying close attention to, particularly after they close that rockwell

colins deal. if not fully behind it, it appears mr. hayes was thinking long and hard about it, given his previous comments on the overall matter. >> shares are higher right now thank you, david. >> sure. take a look at gopro, speaking of shares higher, earning beat due in part to these excess of gopro entry level hero camera, shares up 7%. nick woodman is the ceo of gopro. he joins us exclusively now. great to speak with you today. >> thanks for having me. >> i want to start with this new entry level camera th lot of focus around that first quarter makes it clear that gopro is at the right price. is $200 the right price? >> at the right price, that statement applies to all of our products we've gone back to our proven

good, better, best strategy of selling hero cameras for $199, $299 and $399. it's resonating with consumers, just as it did during our strongest years. and the sell-through momentum we're seeing in the strength of our first quarter is driven by strong sales of all of our products, including our new entry-level camera we've driven march inventory levels down to lows that we haven't seen since our ipo year, 2014 so, this really bodes well for our q2 and for the rest of the year so, we're optimistic. >> and i'm reading here that gopro, in april, also announced some huge discounts. trade-up programs for its premium products it seems to me that there's potential for a slippery slope here how do you fuel a return of sales without falling into a spiral of continuing to cut prices on your products?

>> no, no, no, we were not overly promotional in the first quarter at all we ran a $50 off promotion on our hero five black camera, a seasonal promotion we do run promotions on our products, price promotions at certain times of the year, which are typical for any consumer products company in fact, we ran fewer promotions in the first quarter of 2018 than we did 2017 so actually our products are selling much better at full price than they were a year ago. and it's not going to be an overly promotional year for gopro. >> nick, it's jon fortt. big pick question for you. fundamentally, the story seems to be the action camera category is smaller and lower margin than gopro at least initially thought. social media, growth was 4% year over year. that seems to be booming at a

different level. there's a market in an adjacent area, security cameras that gopro doesn't seem to have explored by logitech and amazon are in that. once you get this core business stabilized that you've been focused on, what's next? do you try to branch out again i know you shut down the drone or do you just stay in this action camera segment which doesn't seem to have explosive growth ahead of it >> i think there's a lot of low-hanging fruit for gopro in the overall digiting category. combined with gopro we're looking at a $13 billion total industry the gopro category is roughly $2 billion of that. and when you consider the strength of our brand and that we are known for enabling some of the best, highest image quality capture of any camera on the planet, gopro has been the

best-selling camera in north america for 17 quarters straight that's four years and three months of being the top selling camera we clearly have a strong brand in di, digital imaging and we definitely have an opportunity to grow there. we don't have to go very far afield to grow our core business. >> there have been reports since the start of the year that potentially you could be considering going on a sale block. is there validity to that? >> well, what we've shared since the beginning of the year is that if there is an opportunity to team up with a larger, strategic partner that can help us realize our vision for gopro and unlock potential for the company faster and help us grow and realize our vision, we would definitely take that seriously but, as you know, i can't comment any further than that. >> well, nick, thank you for

joining us nick woodman, the ceo of gopro. >> thank you so much still to come, kelly slater, the 11-time world champion surfer and early gopro investor joins us live to show us his artificial wave machine that could change the sport as we know it. and a programming note on monday, microsoft ceo satya nadella will be on cnbc 11:00 a.m. eastern ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

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welcome back to "squawk alley. brian sullivan is in washington at the event. >> nra, 80,000, 100,000

attendees. they'll hear the vice president and the president tonight. the biggest meeting ever and arguably the most contentious as well after the parkland shooting, of course, there's been a renewed debate about guns bill in congress put together by democrats, hr 5087 the assault weapons ban hasn't gone anywhere. contention around this industry as well. we're here to talk about the business side of this industry, guys if you think about it, you've got about 6 billion in direct spending, 21 total billion, 150,000 jobs that are created by this tonight, the president is going to come back here. he will try to continue with the support of this very important organization for the gop in fact, remember, after the parkland shooting, the president making some moves, talking about outlawing so-called bump stocks, which would make a rifle effectively an automatic weapon. the president did that, took some heat from even his nra supporters he will come back tonight, try

to reinvigorate his base from the stock side, guys, three of the four biggest gun and ammunition related companies, their stocks actually higher they all dropped after parkland. but since then, the majority are up one exception, you see federal premium over there that's part of vista outdoor, vsto, one of the largest independent ammunition company, meaning nonmilitary, morgan. spotlight on business, jobs and the president and we are here in dallas all day for you on cnbc >> lot of news coming out of that, brian sullivan thanks now let's get to dominic chu at hq with the european close. dom? >> jon, as you can see behind me here, largely positive european stocks poised to extend their weekly winning streak to six, wrapping up a busy week of earnings as well some of today's gainers, ferrari shares, better than expected quarterly results, helped along by an increase in their

12-cylinder model sales. raising guidance after posting the best quarterly results in its history. british airways parent company iag, 75% jump in their quarterly operating profits. also seized 2018 bookings over the previous year as well. those shares all up. meantime, norwegian air down sharply from the previously stated iag, saying it undervalues the discount watching those shares for sure many of the major banks falling today. hsbc, a 2 billion stock buyback, not helping the shares there french banks moving lower as trading revenues disappointed some investors banks very much in focus airline companies in focus and, of course, ferraris, morgan. back over to you. >> dom, thank you for bringing us that. dom c huchhu at hq >> apple shares at a new

all-time high today. becky quick sat down with the oracle of omaha and joins us next stay with us

good morning, everyone i'm sue herera with your news update

white house denies seeking troop reduction on the peninsula of north korea. hawaii's kiluea volcano erupting overnight, shooting lava into the air in a residential neighborhood and prompting mandatory evacuation orders for nearby homes. hundreds of korean airline employees staging a rally in seoul, saying they can't take any more abuse from the company's founding family. the criticism dates back to 2014, when the family's eldest daughter threw a tantrum on board a flight recently the youngest daughter was accused of hurling a cup of water at another person during a company meeting. the nobel prize in literature will not be awarded this year following sex abuse allegations. the 2018 prize will be given in 2019, the first time since 1914

that award has been delayed. >> thank you, sue. berkshire hathaway is buying more shares of apple warren buffett spoke with becky quick, who joins us now on what is a rapidly, escalating enormous position. isn't it, becky? >> it is david we talked about this the last hour. it is very shocking. berkshire owned just over 29 billion of apple shares. add up an additional 75 million shares they now own and you are talking about a $43 billion stake in apple that is, by far, berkshire hathaway's largest position in any outside holding. i caught up with warn buffett in omaha, first thing i asked him is what he thought about apple's most recent earnings report. >> i liked what i saw, too

they -- their surprises -- it is an unbelievable company. if you look at apple, i think it earns almost twice as next as the second most profitable company in the united states it's a wide, wide gap. i mean, it's an amazing business here is a company that's -- whatever the earnings are, 60 billion or whatever, and you can put all their products on a dining room table. i mean, that is not the way it used to be in this country. >> there were a lot of doubters on wall street before those numbers came out this week were you in the camp that was a little worried about what was happening? >> well, i -- we don't -- it is incredible to me how you read the investor conference calls after reports or -- you read all the analysts reports and talk about what's going to happen next year. nobody buys a farm based on whether they think it's going to rain next year or not. they buy it because they think it's a good investment the next

ten, 20 years. when you look at investment in terms of buying a stock, where will it be in ten, 20 years, it may be that you don't know, in which case you don't have to do anything but the idea of spending loads of time trying to guess how many iphone xs or whatever it may be are going to be sold in a given three-month period or something, it just -- to me, it totally misses the point it's like worrying about the number of blackberries ten years ago. what really counted was what was going to happen over the next ten years. >> so the shares sold down before that, heading into it do you like the stock? have you bought more of it do you think that's another place you want to be >> well, i don't know about what it's going to do, but our 10 q is coming out saturday morning they can figure it out by looking at the footnotes in there. we bought quite a bit more apple in the first quarter, first calendar quarter this year.

>> more than you had reported in february when we got the s.e.c. filings? i think it was 163.5 million >> that's what we had year end ing, i think something like that. >> february figure. >> that was probably a report on february 14th. i think that was as of december 31st and i think it counts our pension holdings, too, maybe you're right, we had 160 odd million shares at berkshire. >> so you bought a lot more in the first quarter? >> quite a bit more, yeah. >> you own a lot already when you say a lot more -- >> well, it will come out saturday morning so it will be reported and we're not going to be -- you'll see it, i bought 75 million shares. >> that additional purchase, the 12 to $13 million that warren buffett spent on the quarter

caught us by surprise. i started wondering what apple's management might be thinking about this today i e-mailed tim cook, who just got back to me he said we are thrilled to have warren and berkshire as a major investor on a personal level, i've always greatly admired warren and have always been grateful for his insight and advice by the way, folks, apple shares hitting an all-time high earlier today of 183.65. it's been a pretty good week for tim cook based on the earnings and in this news, too. >> not a bad week at all it's picking up steam right now, becky. a lot of people seem to believe he will continue to buy more i know he didn't necessarily indicate that to you. >> no. and the one thing i would say is he didn't tell us one way or the other on that. one thing i would say if you ever watch warren buffett, he buys more when prices come down, not when they go up. hard to say. the more everybody else loves it, the less he will step in when people step away, as they

did in the first quarter, that's when he jumps in. >> as you say, there was that opportunity. thank you, becky busy weekend ahead for you for more on buffett, a new documentary premiering tonight warren buffett investor, teacher, icon. that airs here at 10:00 p.m. tonight. the second day of meetings between the u.s. and chinese officials as they aim to ease tensions over a potential trade war. our eunice yoon is in beijing with more. eunice >> appears we're having an audio problem with eunice. sorry. we'll try to get you that news when we come back, svete liesman will break down the jobs report. for all he's done for you.

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to help you keep rolling with confidence. go long™. ♪ i'm scott wapner here is what's coming up at the top of the hour can the market get moving now that apple has found its footing? your money's best bet and our call of the day calls for clouds will the sun shine through for your portfolio that's all at noon jon, see you in about 15. >> scott, thanks. second day of meetings between u.s. and chinese

officials, that they aim to ease tensions over a potential trade war. let's get back to eunice yoon in beijing with the latest. eunice >> thanks, jon secretary mnuchin and his team have left beijing for washington it's unclear what they accomplished when they were here the team did not hold a press conference or issue a press statement. we have learned that the white house is going to be issuing a statement probably later today now, in an unusual twist, we heard more from the chinese in the state media, they were saying that the talks were candid, efficient, constructive and that the two reached a consensus on some issues such as needing to maintain close communications and setting up a mechanism to keep talking. they also said, though, that they were still far apart on a lot of other matters and the commerce industry said that the chinese side also raised the issue of cte, the telecom gear maker banned from using american components and they said that the u.s.side has agreed to

escalate that to president trump. now, we did receive a document that is a list of the demands from the united states to the chinese side and some of them from the chinese perspective would appear to be quite aggressive here are some of the highlights. demand that china agree to measures so that the u.s. trade deficit would be cut by $200 billion by the end of 2020 that by january of 2019, china would eliminate policies and practices that would force technology transfers and another interesting highlight is that given china's own industrial policies, they have asked beijing to commit not to retaliate against u.s. restrictions on chinese investments in sensitive industries in the united states. now, the analysts who have been looking at this have a split read on this there are some who are more positive, who say that this at least means that the two sides are going to keep talking and so we could potentially postpone the possibility of a trade war

but then others are less optimistic, saying that there are no concrete steps here and that that wouldn't do much to reduce trade tensions. guys >> eunice, thank you for bringing that. eunice yoon from beijing it's worth noting that it comes as china builds its military might. you can read it on cnbc, installation of missile defenses in the separately islands and use of the laser in africa against u.s. military. all of this very much in focus meantime, we've got sara ei sechlt sen back on set with us. you have news on nike. >> the speech that ceo walker gave to employees yesterday. there was a rare all-hands meeting at nike's campus in beaverton, oregon, yesterday they didn't actually report what was inside that conversation now i can tell you what mark parker told employees, according to sources familiar.

he said this has been a painful moment for me, personally and painful for many of you, who i have spoken with he also said -- and i just took some random excerpts from this speech -- our purpose has become greater through all of this change we and i missed something. while many of us feel like we're treated with respect at nike, this wasn't the case in all teams and if all of our teammates don't see the same opportunities, we just can't accept that. so it gives you some of the idea of the language that parker was using in terms of the mea culpa. he said i apologize to the people on our team that were excluded and i apologize that some of those same people felt that they had no one to turn to. finally, i picked this out i think this is the most important for investors. i'm in 100% and i'm counting on you to be all in, too. in other words, he is committed to this company and its leadership until 2020 as outlined in a press release about a month ago.

he has a very personal speech, talking about how he was first hired 40 years ago and the team environment that happened back then and how they haven't managed to fulfill that right now. >> is this about gender bias have they ever specifically acknowledged what it's about >> it seems to be about a number of issues, including complaints, hr complaints as it relates to pay and promotion and they are starting with transparency actions on that, beginning with women and people of color. it falls into all sorts of things, harassment, bullying policies it led to the number two at company having to leave, trevor edwards. that was a huge deal. >> right. >> and a number of executive departures since then. here is parker, coming out to employees, saying we will do better we've implemented a number of policies and, you know, telling them that we're still the best it's very parker in terms of how competitive it is. as far as shareholders' reaction, nike has been an

outperformer so far on the year. i think the commitment that he is making here to the future will be key. >> thanks, sara. >> you're welcome. >> for keeping us up on that important story in many ways stocks, back to them for a second they are rallying post job reports. steve liesman is live at stanford university. he will break down the numbers stanford, really, steve? nice. >> david there's an annual monetary policy here at the hoover institution i will say among the economists and policymakers, just behind me, inside there's quite a lot of debate about the april jobs report, seems to be raising more questions than it's answering. let's take a look at the headline numbers here. we can talk about which of the questions are and what the answers are here again, coming in below the estimate of 195, revisions upward average hourly wages very anemic for a job rate thought to be tight and unemployment rate falling because people left the

workforce. going down, speaking against unemployment market that has joined people back into it talked to john taylor who was a contender, to be the fed chairman he said he thinks there's more room to grow there's more room to grow the labor force participation. >> i think there's a debate about labor force participation because it came down so much in the recession. it still has not completely recovered. i think there's more opportunity for growth continuing than people realize >> now, take a look at these volatile jobs numbers. you tell me where the trend is a strong 324 in february a bounce down in march and then kind of a bounce back up and there's the three-month archl, 208 you can understand why economists are having trouble finding out where is the trend in the job market. we can see where the jobs are. and it's pretty broad-based, this number for april. 31 thrown in education manufacturing has been strong,

leisure/hospitality strong only a small decline in wholesale. it keeps the fed on track for a rate hike. and we continue to debate the third or fourth of the year. they have seven months or so to figure it out. they're going to take their time and look at the data we'll be able to talk about this later today. we have an exclusive interview with john williams his first interview since named the head of the new york federal reserve bank, and robert kaplan, always interesting on issues of trade and the economy. he's coming up at 2:30 back to you in new york. >> all right, thank you, steve liesman. when we come back, you know about doing the wave at a stadium. but josh lipton is taking that to a new level, right, josh? >> jon, he's considered one of the greatest surfers of all time, kelly slater, the 11-time world champion, and now he's

developed what you're seeing behind me here, a wave system that creates these perfect, consistent manmade waves he thinks it could help turn surfing into a stadium sport th'somg nt at cinupexon "squawk alley.

welcome back to "squawk alley. coming up on monday, microsoft's build developer conference kicked off, and we're going to have microsoft's ceo satya nadella, his insights on what's next for the company, cloud, there is a lot to cover there. and as we head toward noon, look at the major averages. holding on to most of their gains. the dow up almost 1% same for the s&p and the nasdaq up a little better than 1% now, surfing legend kelly slater starting a new venture stadium surfing. he joins our josh lipton live at the new facility josh >> jon, i'm here with kelly slater, the 11-time world champion surfer. thank you for joining us >> thanks for having me. >> we're here at surf ranch in california you helped develop this wave system we're seeing right behind us here that creates these perfect, consistent, barreling waves. how did you first get interested in this technology

was there a specific moment or wave >> there was an old coach of mine, matt kickly, he said there's this idea, i think you should follow it up. i think you could bring some wave technology to life. and anyway, that's the short of it but i got involved in about 2005 started going after this idea. and worked on it since then. we developed this wave we started in 2014 in the summer and had this wave built in the end of 2015. from there, it's just been nonstop improvements this is our prototype, but getting people through here, all sorts of walks of life coming in to surf. and mostly, you know, die-hard surfers but also people from the military and people who have never surfed before, and some special needs people and you know, a lot of different people coming in here. some pro athletes recently it's been fun. >> some people watch this, they say, listen, these kinds of artificial wave pools, they

already exist all over the world. what makes the wave you created different? >> that's the real difference between us and other wave pools that have existed. this is -- our goal was to go and create a wave that was like an ocean swell it's not like a sort of novelty or a low-energy wave it's a strong wave you wipe out and feel it a friend of mine broke four surfboards in here yesterday, one of the tour surfers. we had a couple little minor injuries, nothing bad. but the wave pushes you around and that's the difference. you stand up on this wave, and everyone expects before they get here it's going to feel different because the water is freshwater, no salt. but the riding the wave is about plaining surface, not about buoyancy once you get up and get plaining and the waves as fast as this is, it feels like you're in the ocean. >> i think you had a question for kelly, morgan. >> i do, thanks. kelly, a couple years ago, i headed to the beach to do a story on the business of surfing

and i realized how difficult it is to quantify this business when i look at a project like this, the idea of making waves more consistent, i would imagine there's an incredible amount of opportunity in terms of more competitions, more sponsorships. in terms of streaming and broadcast rights what do you envision this business becoming? >> yeah. obviously, that's your forty here on the show and i think hopefully that comes in to create more opportunity for surfers and stuff, but it's really not my forte. i'm into designing and riding these things building all the ancillary things around it isn't sort of where my head is at so much, but i do think there's a lot of opportunity there. it's something totally unique, it's a controlled environment that we don't really have in surfing at this point. it's a lot of that is to be seen >> do you think, though, kelly, this could help turn surfing into much more of a stadium sport? >> possibly. when i hear stadium sport, it

sounds funny because i don't consider it necessarily a stadium. it's like a long lake. but that idea of having the seating and having that interaction from close range, that kind of thing, that's something that hasn't really existed in many places in the world. they have a pipeline in tahiti, those waves are where the crowd can get close to the action, and this is the first time other than that that it's been able to happen a lot of waves are from far away, not really at arm's length, you're at a few hundred yards. >> thank you for joining us today. >> good to see you >> back to you >> those are just amazing visuals, josh. and kelly slater, completely a legend taking a look at the major indices, heading into the halfway part of the trading day, the dow is now up a little better than 1% s&p and nasdaq also higher of course, apple, a big part of that, particularly on the dow. having a great day, hitting all-time highs and pandora, who saw that

coming it's up nearly 25% after earnings a bit of a different take than what we saw from spotify >> ibm is also higher despite comments from buffett saying he sold >> yes, indeed yeah well, that will do it for "squawk alley. have a great weekend, guys to the judge and the half. welcome to"the halftime report." i'm scott wapner our top trade, the buffett bombshell, the famed investor buying even more apple shares. a position now worth an astounding $40 billion what it means for the stock, which just hit an all-time high. with us for the hour, josh brown, steve weisz, rob, and one of barron's and forbes top 100 financial advisers, michael farr is here, president of farr, miller, and washington, a cnbc contributor as well. great to have you here with us today, michael let's begin with the biggest company by