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>> good wednesday morning. welcome to "squawk alley." i'm carl with morgan brennan who is back, jon fortt at post nine of the new york stock exchange a lot to get to. dow up 14, tech stocks coming off their worst day since april dragged down by the likes of alphabet and amazon. as we learn about the hedge funds are playing fang in the first quarter for more let's bring in larry, managing partner who just closed two funds to expand investments and block chain and robotics and our senior markets commentatocommentator mike stanley at post nine as well the degree to which tech is moving on semis or something beyond that? >> semis are helping the balance is there yesterday, big tech was the under performer and i actually took heart in the fact that on a most mostly down dow big tech was leading. it's the definition of profit taking year to date, month to date, multiple years to date, that tells you literally being used as a source of funds and not something like a bad economic

signal even though yields was kind of the catalyst, i do think that's mostly the dynamic now. >> if we look bigger picture, amazon, alibaba, facebook, up all more than 10% in the past month. microsoft hit a 52-week high earlier this week. what's going on, do you think, in that segment of kind of large, cloud players globally and how is that effecting the innovation ecosystem. >> well, they're continuing to expand their business. the business model accessible in the cloud, accessible to everybody, is, you know, still hasn't run its course. they -- most of them went up about 50% last year and still going up this year, the power of big tech is right there. in terms of stifling innovation or the possibility of stifling innovation, that always exists it existed under ibm and microsoft and at&t and so on i'm a big believer that these things run their cycles and that

maybe the next big tech platforms won't be the ones that are in place today. >> mike, we have a flurry of quarterly filings from hedge funds in the last couple days showing their positions on tech companies on the big fang names. how should we i guess view that and what's the read through to continued dominance of these names? >> it's interesting. if you think about coming into this year if you were a hedge fund that owned the fang stocks, the fang-like stocks, your decision was not so much do i still have an edge here in facebook or do i still have an edge in thinking amazon will be the dominant company, it was strikingly do i want my portfolio to look more like this, do i think more of the same is going to be the good story for 2018 as it was in 2017 so i think you had the opportunity for massive profit taking and let's rotate out of this stuff in january and then facebook gave you a chance, because it got shaken out on the cambridge analytica stuff for people to say get back in. it nets out to churn in these stocks except for apple outside

of fang did seem like it had hedge funds as net sellers, why? because the company it itself and berkshire hathaway were buying 200 million shares between them hedge funds themselves like that. >> the european parliament has said zuckerberg has accepted an invitation to speak in brussels, so we'll look for details on that you crossing right now. want to talk about your two funds you closed on, block chain and robotics we've seen incredible at least plans over the past few days on 5g, right, talked about the possibilities there, boston robotics, musk tunnels in california what do you see happening and what are you trying to capture >> well, as you know we're the most active early stage investors based in new york and we primarily invest in new york-based companies in terms of the block chain and robotics, what we're seeing is that because new york is really great at applications and services built on existing

platforms we're seeing a community of block chain developers, community of robotic developers, establish themselves in new york, looking at building really great services on these existing platforms and we're going to be dedicating a part of our efforts with this new funds to towards that. >> based on things that are available now? >> like the block chain, for instance what's interesting new york has a nascent 3d printing technology, we were early investors in makerbot, for instance, out that comes commoditized hardware that people who design robots are utilizing and you can build incredibly useful robots for 5,000, $10,000 that would have cost $150,000 just a few years ago. >> closing this fund now facebook just last week announced that it's putting a small team together, headed by the former paypal ceo, who had been heading facebook messenger to explore how to use block chain within facebook's ecosystem. why now with this push

is it a coincidence? >> well so there's a momentum going on the block chain is still a very, very nascent and very hard to use technology you really have to be really nerdy to build anything on the blockchain but it's -- it reminds me of the early days of the web, the tools are just not there back in the mid '90s as it were. we're starting to see better tools, better ways to build software and i think this is what facebook is looking at as well. >> yeah. eric, mike, stay with us whole foods announcing this morning that amazon prime customers will receive an additional 10% discount on sale items as amazon tries to convert whole food shoppers into prime members. deadria is with us now with more on this story. deadria? >> hey, morgan starting today, that 10% discount will apply to prime members in florida and rolls out to all whole foods this summer the point, you touched on this, get more prime members shopping at whole foods cnbc has reported that according to a source, about 75% of whole

foods shoppers are already prime members. but, less than 20% of prime members are whole food shoppers. so if amazon wants to be a bigger player in the $800 billion grocery market it can start by enticing its base of 100 million prime members to start shopping at a whole foods. now some of the additional deals on top this week, half priced halibut steaks, pound of organic strawberries, $3, for one cases of sparkling waters. one of the first orders of business of amazon when it acquired whole foods was to cut prices across the board. this time only cutting for prime members who got hit with a 20% price hike in their membership fee. but this laters perk joins a growing list of whole foods prime benefits free grocery delivery in ten cities and the amazon rewards visa card, 5% back on whole foods purchases. the question is going forward, will amazon's targeting of prime members help it win the grocery wars or at least a bigger presence walmart, keep in mind, has been

investing in keeping prices low, experimenting with delivery options and increasing its focus on private brands, instacard and others whole foods still has just a sliver of the grocery market, though, amazon is experimenting with different formats like cashier-less convenience store which we found out is expanding to chicago and san francisco guys >> deadria, thank you. deadria bosa in san francisco. eric, the question deadria just posed, is this going to help amazon win the grocery wars? >> it will help amazon expand. i don't know if it's going to win the grocery wars such a big market. >> yeah. >> this is really a typical example of how technology eliminating all kinds of friction in a system is able to lower prices in a very significant fashion. this is fantastic for consumers. i'm a prime member i will definitely go to whole foods more than i will go to any

other supermarket and it's also a -- it shows how if you're not a tech -- if you're one of the other grocery stores and not becoming a tech company it's going to be difficult to compete. >> eric, when i think about how this is going to play in indianapolis, i'm not sure like half priced halibut steaks are going to win you the grocery wars versus walmart and kroger is this really about data? because it seems like if amazon can entice every whole foods shopper to scan in, then they know exactly what people are buying and it will be able to correlate that to their amazon behavior how often they're buying it and optimize around that too. >> absolutely. it's all about data. they already have your prime data when you buy and you get free delivery from amazon. they're just extending that platform to the actual grocery store and they will say, you know, why don't we just deliver for you. why are you coming to the store. we can order and deliver et

cetera so, we talked about this before, about how amazon wants to own the home and the grocery part, you know, replenishing your pantry, replenishing your refrigerator is a big part of their strategy. >> that makes more sense my first question was, less than 400 whole foods stores, if this works they have capacity issues. if all these prime members start -- so really it has to be about some kind of multiplier on the other hand. >> 483, but at 1% of the market. >> exactly. >> but, i mean, you have 100 million incentivized to go and show up at the store that's a lot. >> that's where the fly wheel cliche we talk about can't say amazon without saying fly wheel every five seconds. >> that's right. all of these stores can become warehouses they're starting to already become warehouses. >> well, lastly, how much of this is also about bringing more members on to the prime platform >> well, look, the prime platform, they hide their prices

20%, i think it's $120, it's an incredible value you get free movies, free music, they keep throwing free stuff at it free delivery. you recoup your prime membership quickly. >> yeah. jpmorgan justpriced the value of prime yesterday at $785 a year >> wow. >> the value >> if you wanted to replicate it. >> 6.5 times the actual cost according to jpmorgan. take that for what it's worth. good to see you. >> thanks. >> mike santoli. >> up next, chips, with no dip, the analyst behind my kron's upgrade joins us as chip stocks continue their surge this month. see, that's where i was going. more "squawk alley" after this ♪ micron is gigantic it can move a lot of stocks. global markets, bef 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.

welcome back to "squawk alley. a news alert here on fox julia boorstin has breaking news >> carl, fox announcing its leadership for the new fox, those are the assets of 21st century fox not selling to disney lachlan murdoch will serve as chairman and ceo of the company. rupert murdoch will be cochairman and the cfo will take on a broader role as fox's chief operating officer. no role for james murdoch, now expected to go it alone, likely more entrepreneurial it was reported he was going to

do something like venture capital investing at one point discussed whether he would have a role at disney at this point doesn't seem like james murdoch is going to disney when that deal goes through. while 21st fox entertainment aspect go to stock and disney, this new fox will be focussed on news and sports including fox news channel, fox sports, fs1, big ten network, and as well as nine of the ten largest stations in the station groups in the u.s. so cable broadcasting and interesting here to see that lockland will be taking the lead this was pretty much expected whereas james likely to go it alone. back over to you >> julia, thanks. >> a couple years ago not expected lockland would be the one with the executive role and james looking for something else to do. interesting how these things can shake out with this m&a environment and everything else. thank you, julia boorstin.

>> let's take a look at micron right now up 4%. rbc initiating coverage there with an outperform the analyst who made that call, joins us now from one market good morning >> good morning. >> so what's the story in memory right now in nan flash in general. there are always concerns about what's going to happen with capacity and the effect on pricing. things look pretty good? >> yeah. i mean, you know, you're right, the fear is always it's a boom/bust cycle. i'm at the peak of the cycle and going to flip over at some point soon and that's the fear on this our take is, if you look at the fact and the structural changes in this industry what i don't think cycles are done, we think they will be muted as you go forward. if you look at things like only three players left in the market versus 15 a decade ago, are the technology advances have become so difficult that cap x doesn't drive the same output anymore,

the price may not be as severe as in micron's case think about mid-cycle around $8, on a 10 multiple the stock should work comfortably in the $80 price point range versus trading at 55, 56 right now >> i mean, is crypto the new gaming and to what extend does this work that various companies and investors are doing on blockchain going to benefit the chip manufacturers and chip designers do you think, the semi industry in jgeneral? we had eric hippo on about a fund he's raised for blockchain. facebook is working on blockchain related technologies. do they need the same amount of computing power and chips to do those kinds of efforts as are necessary to mine bitcoin? >> yeah. you know, so today at least, cryptocurrency or mining is a small part of the story but what they need if you think about it

from a process perspective example, more gpus, more speed, low power, so gpus get more use versus the intel processor, for example, right on memory you need more d-ram versus anything else so it is a bit like a souped up gaming machine they deploy, but it's more in media, in some d-rams driven. >> going back to your comments about where we are in the cycle for chip stocks do you expect qualcomm and xpi deal to go through and how do you expect that to play out given the consolidation we've seen take place? >> yeah. you know, i think everyone is watching the deal with a lot of focus. now, logically, i would tell you this deal should get done, right. no overlap, no customer overlap or end market issues this deal should have sailed through and gotten approved six months ago i've been dead wrong so far on this seems to be stuck in the u.s./china trade war scenarios the fact that the u.s. might be

willing to give some concessions could be a starting point for this deal to get done. if it gets done it's a huge positive for qualcomm to get 1.50 out of it, right, but more importantly, it opens up the m&a spike spig gut in the semiconductor industry and that could be a positive as well. >> with replacement cycles lengthening for smartphones, smartphones, you know, they've long been the new pcs as far as so many different technologies and semi technologies going into them how do you expect that impact to the semiindustry going forward over the next 12 to 18 months as we begin to understand how this shakes out between unit slow down and average selling prices in some cases going up >> yeah. no, that's a great question for apple and its implication, to memory and semiconductors broadly. what i would say in isolation, that statement alone, apple

being somewhat weaker or smartphones weaker, is a negative, right. apple consumes by the way 20% of the nan industry, bit, 5 to 7% of the d-ram bit. things like servers, grow much faster the non-tech market, autonomous cars, cryptocurrency you're seeing new growth that should take some of the slack away as smartphone cycles do elongate and go forwardp >> all right that's good intelligence thanks >> thank you. shares of gamestop are flat after a surge on the news that tiger sent a letter to the company calling for a turnaround plan leslie broke the story and joins us with the latest on a busy day for 13 f snoos. >> shares rallied 15% in the premarket but are now as you mentioned trading a little lower. that's on a letter sent by tiger management to the company urging them to launch a strategic

review as you know that often entail an evaluation to determine whether a company should sell some or even all of the business in the letter written by portfolio manager crawford hawkins, tiger pushed gamestop to reiterate its commitment to stop dilutive and destructive acquisitions and incen waited gamestop should buy back stock, noting their decision to pay back debt sent the wrong message about confidence in the company. before today gamestop shares have declined about 45% over the last year. that's amid a management upheaval on friday gamestop announced that its ceo michael muller resigned abruptly after only three months on the job, within days of his appointment in february the company fired two top-ranking executives including the coo. now that leadership turnover was a key focus of tiger's letter which emphasized the lack of confidence investors have as a result now these types of letters are

common among activist investors. we talk about them all the time but they're rare for the three decade old tiger management led by julian robertson. however, the firm noted they intend to remain a passive shareholder and have no intention of actually becoming an activist runner running a proxy, et cetera if gamestop fails to implement a turnaround plan they will simply sell their shares and redeploy their capital elsewhere to other opportunities. guys >> leslie, thank you for that. at hq. when we return, why airlines across the globe are experiencing a pilot shortage. more on what companies are doing to compete and what it means for the price of your next flight. more "squawk alley" after this c, the sun goes down. you run those miles, squeeze the toothpaste from the bottom and floss to set a good example. you fine tune the proposal, change the water jug so no one else has to,

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hello. give me an hour in tanning room 3. cheers! save up to 15% when you book early that's confident. but it's not kayak confident. kayak searches hundreds of travel sites to help me plan the best trip. so i'm more than confident. forgot me goggles. kayak. search one and done. airlines across the globe are experiencing a shortage of pilots phil lebeau is in phoenix with more on that story

good morning. >> good morning. we've talked about things quite a bit especially with a growing number of the existing pilots approaching mandatory retirement at the age of 65 you have to retire as a commercial airline pilot after that age that's why you look at the total number of pilots that will be in demand over the next 20 years, look at these numbers. 637,000 in total, in particular, pay attention to the biggest number, the region that will need the most pilots, china. the reason we're here in arizona because there are a number of flight schools out here that are training these pilots. we've talked to some of the pilots yesterday many of them are getting hefty signing bonuses to sign on with an airline, particularly here in north america, but increasingly, there are chinese students who are being brought over here to the united states to train before they go back home >> the major airlines will contract with companies like ourselves, send their cadets to the united states to train from anywhere from 12 to 15 months,

and once that requirement is fulfilled they will return to china and begin flying within one year of that time. >> and carl, i know you've been to china and know how much demand there is for air travel in china internationally, we've seen the impact of these pilot shortages, emirates had to announce earlier this year they were cutting some of their flights, not a huge impact, but some of the flights. ryanair as well. we'll see this with other airlines and the regional carriers are already in some cases suspending or curbing their operations, simply because they don't have enough pilots. bottom line is this, guys, this problem is not going away. and it's going to be extenuating the circumstances for certain carriers, for charter operations, cargo operations, this is going to be a problem over the next five to ten years because as quickly as they're training the pilots they need more and more. back to you. >> yeah. you know, you know phil, we had generations of industry pilots get their training in the

military. >> yeah. >> essentially for free. not so much the case anymore the question is can schools make up the difference. that's going to be a challenge. >> it will be a challenge. now they can make up some of the difference, but if you see the growth in travel worldwide by commercial airlines, there's no way that all of these schools can make up the amount of travel and a number of flights that are going to be added over the next 20 years >> yeah it's a great piece glad you're doing it for us today. phil lebeau in phoenix today. >> carl -- >> trucking too. >> absolutely we're seeing it across the board in transportation and as you mentioned we are seeing the pilot shortage play out in military as well huge issue >> meantime europe about to close in about 90 seconds. as we are starting to drop in advance of that, seema at post nine. >> a lot of news to get to let's take a look at the european markets a mixed session and the sell-off in italy all about politics. italy's anti-establishment

five-star movement and league parties could complete a joint program by the end of today, paving wait for a coalition government this month's trading action in italy has been volatile as you can see from this chart. you have the italian 10-year yield hitting a two-month high above 2% on reports that these two political parties, the five star and league, plan to ask the european central bank to forgive a quarter trillion our ross of italian debt the league insists the debt forgiveness is not in the official program an interesting story in luxury retail burberry helping to lift london's ftse higher thanks to stronger profits for the fiscal year as comps rebounded in the u.s. as the new ceo implements his turnaround plan. retail stores make up 80% of the company's u.s. sales in the uk, paddy power betfair rising after confirming it is talks to acquire fandeal shares of uk gambling companies

have spiked following the u.s. supreme court ruling effectively allowing state regulated betting on sports. now, let's talk about emerging markets currencies a big story over the past couple days the turkish lira has been hitting new lows every day, pairing losses after the central bank says it will take action to prevent a slide in the currency. this comes as president erdogan says he wants to take more responsibility for turkey's monetary policy and that comes ahead of turkey's snap election on june 24th, a mix of politics, government, intervening as the stronger dollar weighs on a lot of emerging markets currencies the big story. >> seema mody. coming up macy's on pace for its best day of the year it's at a new 52-week high following a earnings beat and strong sales growth. shares are up 9% we've got a deeper dive into their quarter xt ayitusne ♪ where you can stay forever.

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good morning once again. here's your cnbc news update at this hour. white house press secretary sarah huckabee sanders telling reporters that north korea's threat to cancel the upcoming summit was something the administration fully expected. >> the president is very used to and ready for tough negotiations and if they want to meet we'll be ready and if they don't, that's okay too. and we'll continue with the campaign of maximum pressure if that's the case.

>> palestinian protesters hurling stones at israeli soldiers who responded with tear gas during clashes again in the west bank. the protest driven by anger of the relocation monday of the u.s. embassy to jerusalem. and an emergency meeting of the arab league getting under way in cairo following the killings of palestinian protesters in gaza 57 palestinians were killed by far the deadliest day of violence since 2014. you are up to date that's the news update back downtown to "squawk alley." morgan, back to you. >> sue, thank you. sue herera at hq macy's surging on the heels of its strong earnings since november of last year, first beat and raise since 2011. shares up almost 9%. for more let's bring in matthew boss, equity research analyst at jpmorgan thanks for joining us today. >> thanks for having me back >> so you have a neutral rating on macy's given the results we saw this morning, sticking withist that

>> this was a solid quarter across the board we made the call into the print to buy this name we raised our price target, raised our numbers and boy, macy's delivered the bottom line was a 4 plus comp on top of 70 basis points of gross margin with more coming from the merchandise margin. what's most interesting, this stock still down 50% if you dial the chart back three years. so you look at macy's down 50% past three years, multiple is still reasonable and amid single digit dividend yield with a number of initiatives on tap for the back half of the year. we think the setup is opportune. >> and the xrt retail etf is higher today as well how much of this is specifically a macy's story with new management, new branding strategy that seems to be taking route versus a broader read through to consumer activity >> it's a great question look, i think you started to see an inflexion in the back half of

17 3 q the stabilization in brick and mortar, 4 q the strongest holiday season in five years i think a lot of that momentum on the underlying consumer has continued into the first quarter. macy's has their own company specific initiatives, rolling out a number of different company specific strategic drivers in the back half of the year but this underlying consumer is stronger than investors realize and i think you have legs here i think, you know, as we look forward the weather was actually a negative this quarter. i think you're going to get really solid retail numbers out of a number of different global brands as well as off pricers. i think some of the larger picture, the tourism has now turned to a tailwind after being a headwind more fashion, there's more newness. there just seems to be a lot of underlying positives that for the past couple years have actually been negatives for a lot of these retailers >> if the quarter had been bad, we would be talking about the amazon effect. so what is it going to take to

get you beyond neutral on a name like macy's? what do they have to do to be a buy, to be great, omni channel, does it have to do with tech savvy closing stores, what >> yeah. so you're talking right now to who probably two years ago was the most negative on the street on retail. we've softened our stance. i think we've upgraded three names in the past six months the bottom line part of that is the consumer and part is the companies that are investing for the future i think macy's is investing for the future we want to see if this consistency can continue and i think where the cross hairs and the cross currents right now are the strongest brick and mortar versus e-commerce it's the department store space who has the winds at their back? it's the global brands, off pricers, value and convenience remains paramount. so i think macy's is doing all the right things we want to see that this can

continue, you know, for more than a quarter or two. but i think they have the right people in place and i think they're thinking about the department store and the brick and mortar backdrop in the right way. so, you know, more than a encouraging start here and with the underlying consumer tailwind the sector sets up pretty well. >> on that tailwind, matthew, you know, the skeptics pointed out coming out of the holiday season that the q4 spending spree was driven by revolving credit, right. we saw spikes in that. now they're talking about gas prices taking the wind out of their sails in the summer. how do you respond to those two things >> gas prices are worth watching the move between 2.50 to 2.90, you know, i think the real psychological breakpoints are more $4 and $2 $4 being negative, $2 being a nice tailwind. so i don't think that this so far is changing consumer budgets, but i do think it's something to watch i think the bigger dynamic is this underlying stronger

consumer with a better employment picture, stronger wages with the minimum wage increases and the tax reform which i don't really think has even pack factored into consumer budgets but that builds as the year progresses. tourism, moving to a headwind versus a tailwind. that's the picture happening in consumer right now >> and matthew, just before we let you go here, we got more news today that amazon is looking to cut some prices at whole foods for amazon prime members. as these ongoing grocery wars continue to evolve and shake out, what does that mean for some of the other retailers that we're awaiting results from like walmart and target and others? >> actually, i think the environment, everybody is making their surgical moves walmart is testing a number of different initiatives in different regions in certain koergs we upgraded dollar general more recently and i think they put up a very strong quarter, who was talking to the most rationale

backdrop at the low end that they've probably seen in three to five years. so, you know, look, the competitive dynamic, the promotional environment, it remains at a peak, but i don't think it's any more promotional, i don't think it's any more irrational than what we've seen in the last couple years and i think it stays that way. i think the winners emerge, those who can adjust to, you know, this new world of retail that's brick and mortar and digital, but i don't think that it's amazon end all be all or the death of retail that for the last couple years that really was the primary story line here. >> matthew, thank you for joining us matthew boss of jpmorgan >> thanks. now back to d.c. as u.s./china trade rhetoric remains in the spotlight president trump tweeting again this morning about zte kayla tausche is there with the latest kayla? >> john, the president is on the defense about his potential

concessions to zte after 33 senate democrats wrote a letter saying that our national security in their words should not be a bargaining chip in trade negotiations the president in a series of tweets this morning saying that nothing has happened with zte except as it pertains to the larger trade deal. he goes on to say we have not seen china's demands yet, saying that china has seen our demands and there has been no folding as the media would love people to believe. the chinese delegation will have an opportunity to share their demands. they are here in washington, d.c., beginning a four plus day trip here on capitol hill this afternoon, meeting with members of the ways and means committee and then later meeting with senator orrin hatch who chairs the senate finance committee there's a group of 15 of them from china led by who is being called a special envoy, leo ha and we'll see what they say in the meetings and what they communicate about what exactly they are looking for from the white house. the white house has not said who

will be in its delegation or what agenda for the talks later on this week will be we do know that there is also a group of u.s. executives as part of a u.s./china business dialog that are currently on the ground in beijing among those executives, is a licensing executive from qualcomm interesting development considering that perhaps the approval of a qualcomm merger with nxp is going to be on the table. we'll see what we get. back to you. >> tangled situation there, kayla tausche, thank you and coming up, over a million dollars of fine wine stolen, an escape to italy an appearance in court, why goldman sachs president david loisoong for a new personal assistant more "squawk alley" after this your company is constantly evolving.

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pnc brings you the resources of one of the nation's largest banks, and a local approach with a focus on customized insights. so you and your company are ready for today. i'm scott wapner top of the hour, we're debating rates and the dollar and the fallout for the bull market. if both keep climbing is that the doom's day scenario for stocks plus what macy's big beat says about retail stocks, are they safe to own again? the brothers najarians scoping out unusual activity and what they found at noon eastern jon, that's 15 minutes away. >> all right scott, looking forward to it. let's get to rick santelli in chicago at the cme for the santelli exchange. rick >> thanks, jon fortt like to welcome my guest today jim karen, thanks for joining us today. >> good morning, how are you >> listen w very impeccable

timing on having you as a guest. yesterday we had a close above 303, a significant technical area for 10s and continuing to have momentum in terms of a sell-off pushing up rates. 30-year bonds stopped at 322 twice. that's a high for the year, looks like it's going to it go through. my question to you, is, jim, there's a god reason for tritsz go up and less got reasons for rates to go up which do you think is going on here, a percentage or a little bit of both. >> probably 75, 80% good republicans. better economic strength we have to remember the first quarter was very, very noisy we had tax reform, people didn't quite understand it, took a while for it to filter into people's pay chexs we saw raelts sales very strong, consumer very strong, consumer confidence rising, investment moving higher, earnings moving higher for equities. all are good things. it would be natural -- it would be unnatural if interest rates were to fall in this environment. the bottom line yes rates are

going up but can the economy sustain this level of interest rates or even higher interest rates. i think at this point it can however, i do think there are some limitations i think at about 3.25% in the 10-year yield it's going to be very difficult to break above that and stay above that could we get there in a shock move absolutely could we stay there, we would have to see more growth. >> you just hit a key point, key point. you say not too far above where we're trading, call it 20, 25 basis points, it's going to run into resistance. my contention is, i think that's a really good issue and i think that reason i see that is because a lot of huge institutional traders, like hedge funds, are short and have been short some say record short in treasuries. as the market sells off, jim, aren't we going to recycle them back in as they cover their shorts maybe that's one of the reasons the market hasn't sold off in a more aggressive fashion. your thought >> the higher yields go, particularly risk-free yields the more of a diverse fier they

become to other asset classes. if you're worried about equities or higher rates or geopolitical, when 10-year yields are around 3.2%, 3.25, you will find buyers coming in. i don't see the rise in yields as running away uncontrolled i see this as a reflection of better economic data and i do agree there are going to be willing buyers and it becomes a diverse fier fixed income becomes a diverse fire at these yields. >> excellent always a pleasure to hear your thoughts on the fixed income space. can't wait for you to join us again as we talk more about the yield curve and can the fed fit two more tightens without inverting the curve. carl, back to you. >> good stuff on a day like today. rick santelli. the personal assist tonight goldman's david solomon is scheduled to appear in court today after alledgedly stealing more than a million dollars worth of fine wines from solomon's collection aditi joins us with more on what

to expect today. >> hi, carl. he once worked for one of the most powerful men in the banking world, but today, nicolas de-meyer will come face to face with a federal judge investigators say de-meyer, who was the personal assistant to goldman sachs' president and chief operating officer david solomon duped the bank executive. authority says de-meyer stole $1.2 million worth of fine wine from solomon between 2014 to 2016 investigators say de-meyer's job involved receiving wine shipments at solomon's manhattan apartment and then taking the bottles to his east hampton estate officials say de-meyer stole hundreds of bottles of wine including seven from the legendary french estate domaine de la romanee-conti. that's monk the most expensive in the world authorities say he sold the wine to a north carolina based dealer he found on-line solomon became sole president and chief operating officer of goldman sachs last month and is considered a frontrunner to replace lloyd blankfein. his wife told investigators back

in 2016 de-meyer admitted to the solomons he stole the wine he was supposed to meet them at a bank the next day to pay them back but fled the country. de-meyer was nabbed by authorities in los angeles this year and sent to new york to face a judge back to you guys. you guys >> thank you, aditi. >> i can't help but think when you talk about application of blockchain for things like diamonds, does a case like this make the argument for blockchain when it comes to collectibles as well we'll hear much more about that. when we return, more on what the supreme court's ruling on sports betting means for your taxes >> more "squawk alley" coming up after this

states already racing to capitalize on sports gambling following the supreme court decision clearing the way just earlier this week. our eric chemi joins us with more eric >> that's right. one of the big reasons why a lot of people wanted this to get legalized is because of all the state and local and federal tax money that was going to come in to these cash-strapped government budgets, buttocksferred economics were commissioned by the gaming commission they projected $3.4 billion in state and local tax revenue and about $5 billion in federal tax revenue. that's just a tiny bump relative to the $5 trillion that's already raised in taxes anyway that's really not going to move the needle consider new jersey, where that's leading the way this state is leading the way in all of this sports betting

stuff. the governor's office, new jersey governor phil murphy, they said they're not considering the tax revenue to be a game changer or a panacea, and the governor himself is still trying to raise income taxes and sales taxes for all the positives, though, that's going to be the thing to watch if people's taxes still go up, despite this new revenue stream and what they do with that money, that's going to be something to watch back to you guys >> eric, i'm curious, what do you think the chances are tepper timed the announcement of this panthers sale to come right after that scotus decision >> i don't think it was timed because of that, because you never know when the supreme court thing is going to happen we know he was working on this late last week and we know the nfl, the panthers, they wanted to get the deal done before their meetings with owners in the next week or two the supreme court could have waited until june. i think it's just one of those convince dnlss i wouldn't read too much into it >> well, what are the odds >> yeah. >> eric chemi, thanks. >> when allowing reporters into

its annual shareholder meeting for the first time contessa is there live in las vegas with an update on wynn's courtroom battle >> less than ten minutes to go now, and i'm heading in. there's been a break in the battle for the board for the time being the target of elaine wynn's newly found activism as the largest shareholder of the company, that director has stepped aside just two days ago along with the longest serving director, noformer nevada goverr bob miller what does it mean next for elaine wynn? she has a chance when she goes in today and may be given more time to explain what her priorities for this company now, she has launched an initiative called renew wynn. we're going to hear from matt maddox, the big investor concerns, of course, is revenue in macao, what the las vegas development plans look like and what his plans are for the new phase of wynn resorts. we're likely to hear, i'm told, from the board director now heading up the investigative

committee without john hagen book, who was the third member of the team. she says the committee will finish its work with two board members now and she's likely to give shareholders a brief update on that as well. okay, some of the other issues that investors will have to consider the city of new york pension fund is pushing shareholders to vote the way that they have encouraged them to, which is to disclose all of the political spending that wynn resorts does, both direct political spending and indirect spending. and speaking of new york city, new york city will join new york state pension funds and they will become the lead plaintiffs in the shareholder lawsuits against wynn resorts these are regarding the failure of fiduciary responsibility to protect investors having to do with these long-term allegations against founder and former ceo steve wynn those are allegations steve wynn has called preposterous. we'll see if whether any of the shareholders bring that up a lot of shareholders who will

show up today are locals we got to hear from them what they think is important. >> thank you very much, contessa brewer in las vegas. big wynn story today >> dow up almost 11 points here. trying to hold on to se in "squawk alley" is back after this ♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind,

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but retail continues to lead macy's on top of the gainer board ahead of walmart today, jcpenney and other names as we get closer to the end of the week >> materials higher too. also industrials up 1% today >> yeah, with all that, let's get to the judge and the half. welcome to "the halftime report." i'm scott wapner our top trade, the great rate and dollar debate, and what happens to stocks and this refueled rally, if both keep rising joe is here along with jon and pete, he's one of barron's and forbes top 100 financial advisers kevin o'leary along with us as well a cnbc contributor, and also with us on set today, cnbc senior economics reporter steve liesman. let's begin with the