"squawk alley" is live ♪ ♪ good monday morning. welcome to "squawk alley." morgan brennan that has the morning off. we're kicking off the hour with big tech tim cook over the weekend speaking at stanford university's commencement, saying that silicon valley needs to take responsibility for their actions. >> lately it seems this industry is becoming better known for a less-noble innovation. the belief that you can claim credit without accepting

responsibili responsibility we see it every day now with every data breach, every privacy violation. every blind eye turned to hate speech fake news poisoning our national conversation the faults miracles in exchange for a single drop of your blood. >> joining us to discuss this morning, rico's editor at large, cnbc contributor, kara swisher, fresh off of code con last week great to have you back >> i'm glad to be here >> we were discussing off-camera how the evolution of cook's rhetoric began in an interview you did with him a long time ago. >> we were doing an interview for nbc and i asked him what he would do if he was mark zuckerberg and he would say, i wouldn't be in this situation, and went on from there, talking about privacy. which is a good thing for apple to talk about. it's good on lots of levels, a marketing thing, it's what

they're like they've made commercials about it since and this is him continuing to talk about that topic. he's been ratcheting up over time, which has been irritating a lot of people in silicon valley, largely because they have no, i don't know what they don't have any defense, and yet they're aggrieved that he's mentioning these things. and i'm sure they're furious today. >> this seems like a big jump for him. a couple of turns of phrase especially jumped out to me. this industry. he's not pointing to just social media. he says, this industry and then he says, every day, there's a headline >> right, right. >> these are the things that people who are accused of being anti-tech are saying and now it's tim cook saying it. >> tim cook is the most anti-tech tech executive, right? i think they're -- it's both a good thing for apple to talk about this, and at the same time i think he genuinely cares about it this is an issue -- i hate to say adults care about, but what's interesting is, you know i've been on this for a while. it's the same thing, the chaos, the amplification, the weaponization. and i think anybody who has any

sense of like, there's a problem here, has to say something and i think he's one of those people i think what's happened is a lot of tech people on the other hand, let me just say, if you think they care, you're wrong. they still are not getting the message. they still don't care. a lot of the major executives in silicon valley, including people on boards, are just like, why you bothering us this is ridiculous this is pc this is -- it's just -- they exhaust me with their lack of ability to take responsibility >> because they care about what instead? >> money, i guess. i don't know i don't think it's money, because they're so rich. inu i use that expression, you're so poor, all you care about is money. and they say, we'll do things until it's not legal and that's very different from this is probably bad and probably problematic rather than, we'll do it until you pass a law. >> even the code, the instagram guys and facebook guys were sort

of arguing, well, this apple thing that you're doing to sign in with apple, i don't know if developers are going to want it. it was more of a question of, are developers going to want it than, was it the right thing for the users. and apple is forcing developers to take it if you're signing in with anything else, like google or facebook. >> this is an ethically challenged kind of thing that they don't want tyke responsibility for the benefits. they would like to point to the benefits that we get, but we get great benefits from tech it's that they have to start thinking harder about these things and they find it more of a, are you going to lecture us again, tara, or, tim is such a scold. i've heard that said about tim cook and he's not saying anything like any normal adult wouldn't say, you can't eat all the sugar and not end up an insane position >> i know they can be, in talks

about humanity, what solution is he providing other than "buy apple. >> and apple has done a lot of things that they have problems with and to be fair, they have tried to correct some of the stuff that they've done. but nobody who is a corporate citizen is free from their own issues and so that's what makes it hard so who is someone that's going to fix this, if not the people within and at the same time, some of the people within, they all have different quandaries that they have and i would agree with you, it's in their best interests to push this >> but this year, for the first time, i feel like apple is not just adding privacy features, as sort of like a nice to have on the back end differentiated privacy. i'm using the wrong term differentiated i forget how tim cook and fred rici put it. but they're upping the an te an

daring the industry to care. >> that's the question, do users care and should user s have to care your water, you assume, is clear, unless you live in flynt, michigan you assume a lot of things you shouldn't have to go out and do for yourself with lots of things the question is, is the government going to step in? that's who really is responsible for this kind of stuff so i think he is -- like a lot of people are saying, this needs to be regulated and by the way, these people need to think twice about what they're doing. but i think that's a lost cause. when i listen to some of them after all of this, they're still astonishingly whiney and victimized i just literally have never seen the world's richest people feel like victims >> they obviously do it in private. no one's saying that in public >> i get texts and e-mails they don't like any of it. like, oh, you're such a bummer if i hear the word "bummer" about myself one more time >> don't your kids say that to

you? >> no, my kids are more adult than some of these people. they'll be like, i don't want to that's different >> meantime, several companies hit narcotic last week including cloud strike and fiver and chewie beyond meat is still getting a lot of attention that stock is up 500%. the wave continues with slack's direct listing and david solomon was at code last week and talked about how he's valuing some of these growth names take a listen. >> i don't think we're looking at equity market valuations for tech that look like what we saw in 1999, 2000, 2001. i do think, because of the massive amount of monetary policy around the world and the fact that basically interest rates are zero, or the risk-free rate is zero, less than zero in some places, people have been looking aggressively or moving out the risk curve and looking for risk assets. and people have been willing to pay a lot for growth and in that context, i think there are a number of technology companies, we're talking about that in the context of being

here at the code conference, where people are really paying a lot for the future prospects some of of the these businesses. >> you think about this? what these ipos would look like if the world weren't being challenged in a lot of different ways >> i think that's what happened, a lot of these companies went to the moon now the company is looking at the bottom line of a lot of these things so at slack, it's a great company, but a very small amount of people account for a lot of its revenue, problematic they've got losses they've got challenges and so i think people are, you know, putting just putting a lot more scrutiny on these companies. >> a couple of these ipos left me sclaratching my head for a particular reason. zoom has just gone to the moon and i was talking to the founder and ceo, he was a little nervous about how much -- how highly it had been valued, even where it priced i mean, he must be, you know -- he must be changing his underwear often now.

and then chewey back on friday, here this company is, that was bought by a brick and mortar retailer and is now worth more than the private company that owns it. the street is ascribing valuations to some of these things -- the fake meat. is that what -- >> yeah, beyond meat, too. where it prices versus where it trades, something seems to be -- >> yeah, i think a lot of people are liking these silicon valley companies as a group and in this case, slack doesn't have to go on a road show to discuss it so i'm sure stewart butterfield loves that but i think people will be looking at this and judging some of these companies quite fairly. like, what's the risk here what's the risk-to-reward ratio. i always thought slack would get boug bought i still do >> do you think this week or after it's publicly traded >> i don't know, like, it belongs with microsoft and belongs with google, i guess you know, there's a bunch of companies it could belong with >> with after google looker and

salesforce tableau, do you sense that m&,a spirits are starting t really boil? >> i do. i do it depends how this goes out i may also be the people who run slack. stewart may want to run the company. it's a challenging environment for him to move to the next level. the standoff they'uff they've d amazing. that was another company that was dead and i love slack. it's a great product but it's a lot of things uber's a great product, but there's economic issues. >> i was surprised, maybe not surprised, struck at code how few times snap and snapchat got mentioned. i think it maybe got one mention by mary meeker and otherwise it was like it never existed. >> well, thank you, facebook i don't know what to say i think they're doing pretty well they're sort of getting their stride a little bit more they have a big presence in cannes >> he usually does go to -- >> yeah, he has this very creative, they're doing with

alex israel, an artist, you know, i don't knock them out ef-. like, twitter and they are doing okay building their businesses but i think it's a very kraft product and my kids use it continually still. >> has do mine >> have not shifted. >> and the stock's up 150% >> i feel like he's a creative guy who makes great stuff. he's got to get the business in line and has executives and no reason that can't do fine. >> i like seeing you every few days can we do that >> do you miss me? >> and the traders love you here, too. >> i'll be in london, next week. no, i'll be in paris >> all right zbl >> i'll have a croissant >> thank you coming up, companies pushing back the trump administration is saying it's perfect ll lly happy slapping further tariffs on china if no deal is reached. we'll go down to d.c. where hundreds of companies both large

and small are weighing in. "squawk alley" will be right back how much more can we possibly absorb? and i think the general rule is, it's going to have to be shared. it's going to have to be shared either through some of the manufacturers and our suppliers in china it's going to have to be shared amongst all of us that have all of these small family businesses and some of it is going to have to be passed on. moving is hard.

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the united states trade representative holding public hearings on the proposed $300 billion in china tariffs our kayla tausche joins us with a look at what's ahead kayla? >> reporter: hey, john, executives from best buy, roku, and the semiconductor industry will be among the hundreds of witnesses in seven days of hearings, more than 50 hours of testimony, describing what the new 25% tariffs on the remaining $300 billion in chinese imports would do for their businesses. the lion's share of those businesses are expected to argue against these tariffs or for their products to be exempted if these tariffs go forward this last round of tariffs is expected to his business's bottom lines and main street much harder than the previous rounds last month, steven mnuchin told ko congress, quote, the way the tariffs were designed, the last tranche was really the consumer issue. we are monitoring the situation

carefully and there will be some exceptions, end quote. lisa trofe says if tariffs goes forward on babies products, it would not only hurt price, but hurt quality >> we believe that baby products are integral to the safety of raising healthy american families and these tariffs are taxes on american families and american businesses. and we believe that the businesses and families should not be subject to a trade war. >> reporter: after the hearings conclude, the administration must allow at least seven days for follow-up comments before putting these tariffs in place that means july 2nd is the earliest that president trump could act by law, even though he says there's no deadline john >> kayla, thank you. now, for more on the impact of tariffs on big tech, we are joined by evercore tech analyst, kevin rippey >> thanks for having me.

>> good to see you huawei is quantifying the impact it's seeing to some of these moves, $30 billion in seefrvera years. is the street factoring in the downstream effects of that because that's some billions of dollars, of course, worth of components that they're not going to be buying if they're not making those sales >> i think the huawei question is interesting as far as the big internet companies go, the facebooks, the googles of the world, i think that's probably less of a concern. what we're really talking about is consumer internet, right? and whether the handset manufacturers face some incremental headwinds, that's an open question. but for the facebooks, googles, amazons of the world, they should be relatively insulated from those kinds of issues >> let's talk about alphabet i believe a couple of weeks ago, you cut your price target on alphabet, google's parent from 1250 to 1200 on anti-trust that still suggests a 9% roughly upside from here that's really all the cut you

want not so big a deal? >> it's a good question. you know, i think one of the key points to keep in mind is if we're thinking about google, alphabet on a sum of total parts basis, you have search in excess of 70 to perhaps 75% of the value. if we think through where we think alphabet's most exposed to anti-trust, we actually think search should be okay. and we think through the 2011 to 2013 ftc investigation, which largely gave them a clean bill of health. where we think there could be exposure in actually the android play store a smaller business, but one that's fairly visible o, you know, certainly consumers. so from that standpoint, we think, you know, that could see compression. you know, the app store take rates. that's about 5% of the value of alphabet so i think investors should be, you know, wary of that but not overly concerned and i think that informed the 1250 to $1200 price cut. >> in apparel, we're seeing hard

evidence of supply chain migration into countries outside of china intoation but i've seen conflicting evidence when it comes to chips. some argue that we're not seeing the capacity editions in other countries that would suggest they're getting ready to absorb ex-china manufacturing is that your view? >> well, i think there will be all sorts of dynamics that play out as it relates to the migration of labor what i would be primarily focused on with respect to the u.s. internet companies however is, are we going to be able to maintain the same smartphone ecosystem. and the answer there seems very clearly yes. >> when you're looking at the trends that are determining the ability of some of these internet companies and consumer companies to continue momentum, what are you looking at? say, amazon wise, and google wise, facebook wise, throughout this year, is it just general traffic trends, the health of the consumer >> yeah, the health of the consumer is really number one,

two, and three, right? if we think through amazon skan ecommerce, largely entirely consumer driven. and by way of that, online advertising. so the consumer and the broader trends there are what we're really focused on. a lot of the big-picture shifts, those have already occurred. we need to see real organic growth in consumer spending and those sorts of things. >> when are you going to see the first hints of danger or lack thereof for netflix, as we're looking for a number of premium content services to launch at the back end of this year. apple's got appletv plus, disney, of course, has disney plus is it going to be early next year before we see those effects? or are there earlier signs >> i think the market's doing a pretty good job pricing that in, actually, right now. we put out some data checks last week that pointed to perhaps actually some slower growth for netflix subscribers here in the 2q and i think, you know, as investors worry a little bit

about the disney plus rollout, that will be something that gets priced into the stock. we take the view, unfortunately, is that those really aren't very close substitutes. the netflix content and the disney content don't overlap in such a way where we think investors should be overly concerned that one is going to cannibalize the other. but netflix has traded largely sideways over the better part of a year, year and a half. and we think some of those anxieties are well reflected in the current stock price. >> just got to wonder if it ever comes down to people having to budget their streaming dollars, what's going to be the must have perhaps, eventually, we will see. kevin, thanks for being with us. >> of course thank! >> when we come back, the big busy behind "baby shark. we're going to break down the numbers from that obviously catchy tune, as we go to break, take a look at shares. trimming their forecast for iphone shipments today back above 194

dow is up 68 session highs. back in a munn b

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♪ baby shark do-do-do-do-do ♪ baby shark ♪ mommy shark >> hit children's song "baby shark" capitalizing on its success in some new ways our contessa brewer joins us now with more. what is it, contessa >> carl, i want to know what's happening with your hands right now. are you doing this everybody knows this, right? it's infectious, it's addictive. you know you've had this earworm stuck in your head, "baby shark. if you haven't, you're one of the fortunate few, because this is huge. nearly 3 billion views on youtube. let's show you it's the ninth most viewed video in youtube history in fact, it beats katy perry's "roar. 700,000 cover videos worldwide and you know, why not? google trends indicates more

searches for "baby shark" than elsa of disney's "frozen." just let it go pink phong, the creator of the viral video is aggressively capitalizing on its success with more than 35 merchandising partnerships in the u.s. alone there's books, there's toys, and the merchandise can sell out in hours at retailers like walmart and amazon in fact, now viacom's nickelodeon is looking to capitalize think just want a piece of this licensing deal, really it's inked a partnership to bring "baby shark" to tv in an animated series. nit says it will expand baby shark consumer products across multiple categories and retail aisles that's the dance if you don't know it, you should so great is the financial upside that pink fong has partnered with the round room for a live performance, a hundred-date

north american tour. so here's the question, has it jumped the shark >> no, i don't believe this is a fad. i think this is here to stay and i think that we're going to have multiple iterations of this live tour. >> now, look, around here, people are talking about singing "baby shark" by the campfire when they were kids. it is a global sensation if you lived in a bubble of ignorant bliss until this moment, well, the bubble is about to pop even without me digital live consumer products, "baby shark" is devouring everything in its path, you know, somewhat like jaws guys >> contessa, i remember when "baby shark" was playing small venues like the 930 club in d.c. i'm only partially joking. i remember this in the late '80s with the hand motions everything and. this is a song, it's like a common song, and someone puts a techno beat to it and all of a sudden it's a brand.

>> and the people who are responsible for the merchandising say there's a stickiness to it that you don't get with, say, "row, row, row your boat. and when you think about it, you've got adults -- once it hits the celebrity instagram circuit, you know that it's a big deal people are doing this dance at weddings now, which is why people who are investing in it think that the potential upside is huge. i, for one, am going to put my money on "twinkle twinkle" being the next pop hit >> bringing home a baby bumblebee, contessa. mark my words, that's the next one. except it gets smashed >> that's what happens when we have to wait 48 hours since the fed decision >> hey, this is big business over here? >> contessa, thank you >> meanwhile, european markets closing in just a minute and a half dom chu joins us with more on today's action >> i went through that phase with the "baby shark" and i'm just hoping it's over at this stage, guys, because i just can't stand to hear it anymore

but anyway, my daughter liked it for a while. markets across europe generally mixed in trading investors will await that federal reserve meeting. technology stocks leading the gains for those major averages in europe. among the big stock movers of the year, you have lufthansa, germany's biggest airline falling sharply after slashing its 2019 full-year outlook that stock set to post its worst day of trading in around five years. that weak guns idance is weighig on shares of others as well. you have easyjet and air france also under pressure from that flight side of things. meanwhile, shares of deutsche bank are actually moving higher. the german lender plans to create a so-called bad bank to hold billions of dollars of non-core assets. that move is reportedly in conjunction with an overhaul of the bank's trading operations, which could include shutting down its u.s. equities business. that's something to watch here

for deutsche despite the move higher today, deutsche bank shares are down 35% over the past year, dipping below six bucks for the first time ever, earlier this month in new york trading and finally on the macro front, investors are continuing to watch developments out of iran the country warning it would soon breach the landmark 2015 nuclear deal unless nations helped alleviate some of that economic pain. back over to you >> that's a lot to watch, thank you. let's get a news update as well with sue herrera back at hq. >> good morning, carl. good morning, everyone here's what's happening at this hour iran says it will preserve the strait of hormuz, only if its oil will continue to be exported iran's chief of staff of its armed forces says if they decide to block the strait, they have to do it in a way that no oil passes through syrian insurgents fired rockets into residential parts of the government-held northern province of aleppo fighting has raged over the last seven weeks in northwestern

syria as government forces pressed an offensive towards the last rebel stronghold in that country. back here at home, secretary of state mike pompeo welcoming italian deputy primary mateo salvini for talks at the state department salvini will also meet with vice president pence at the white house. and gloria vanderbilt, the poor little rich girl hareiress has died the announcement made by her son, cnn anchor, anderson cooper vanderbilt was 95 years old. an amazing life. that is the news update this hour back downtown to you, carl >> well said, sue. thank you very much. when we come back, we'll get a check on some of the year's biggest ipos so far. you know the big ones. beyond meat leading the pack up more than 500% since the debut what happens next? we'll talk about that when "squawk alley" continues the cnbc trend tracker live

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hot ipo market creating a lot of buzz on wall street, led by, what else? beyond meat up more than 500% above the ipo price. that's a big reason why the ipo etf is vastly outperforming the broader markets this year.

joining us to discuss the road ahead is pwc's leader and former nyse's head and brian hamilton good to see you both >> is this all going according to plan? you think the way it's been priced and this sort of general buzz is what we've all been after? >> i think so. i mean, i think coming in this year, people felt like it would be another good year and frankly, we've had a tremendous ipo market, particularly in tech, since '17 really with just the exception of the fourth quarter in '18 so i think this is going according to plan. we had a little bit of a wobble with a couple of deals where people thought we made retrade on valuations going forward, but so far, so good. we're ahead of last year's pace. we're ahead on capital, because we've had a lot of chunky ipos we've had six $1 billion or greater ipos this year versus four last year that's noteworthy. a little more capital being raised in the first half the question is, can we sustain it or close out the year in the same way we did last year. >> what's the answer to that

>> well, i think there's some risk to that a lot of the volume right now is coming really from two sectors you see it from tech and health care and a structure in spaks. that accounts for 81% of all deals right now that that's a lot of concentration we've had notable successes outside of that in industrial and consumer and other areas like that, business services, but not as much as i would like to see more diversity is a better chance of us having a strong end to the year. >> brian, on the details, this is not at all how i would have expected this year to go, particularly, i mean, uber and lyft i would have assumed as goes uber and lyft so goes the rest of the market. or they would do really well and the others therefore wouldn't, because the oxygen would be succeed out of the room. what do you think the details of how this ipo season have gone so far, say about the health of the ipo market

>> yeah, it's a great question let me go back to david, though. it's going way better than planned, massively better than planned. you look at slack to get real detailed they're going out this thursday and will be trading at 41 times trailing sales there's a little known company called facebook, when they went out, they went at 24 times trailing sales and by the way, radical, facebook was actually making money. so here's the deal this market is correlated very strongly to the overall market there's some good companies, but boy, they are overvalued there's no question about it >> overvalued at this moment or overvalued upon issue? >> both, period. you know, look, some good companies are coming out no question about it slack is growing well, about 70% growth rate. pretty good. negative 30% margin. not horrible in this market. i would love for them to make money. but the bottom line is, do you want to buy a business that's

going to be trading at 20 to 50, sometimes 100 times trailing sales. so going back to david's point, the market is incredible frothy. there's no doubt about it. if the market holds, i'm going to look like i don't know what i'm talking about. and by the way, i should have never sold my tech company last year i should have kept it and gone public but my point is this why do tech guys like me get a pass on basic fundamentals like sales growth, like profitability? it's amazing it reminds me, you know, news flash, it reminds me of the year 2000 with regard to specifically tech companies i think they're overvalued if you're establish on this overall market for a year, maybe you go in, but you are not buying at a discount, no way >> david, something tells me you take issue with some of this but what do you make of the problem pricing these things when zoom goes like this, chewey

goes like this something's funky with valuations >> i don't know thatsomething' funky with that. we have a tremendous foundation in the market right now. the ruffle, which is our primary ipo benchmark is up about 13%. when you have that kind of foundation and low volatility, we'll see good ipos and relatively rich valuations, if we look over time. that's to be expected. i think it's harder at the moment we're doing those deals to judge the valuation let's see how they perform how do they do with that first quarter out of the dpegate and e second quarter out of the gate historically, when we look back, for sure, we see better ipos in terms of long-term performance you look back at a 2016, some of the tech companies that came out then they've done tremendously well for investors. >> so we're in a good market right now and i understand his point there. but what surprises me is how focused we are in just a few sectors, given the strength of

this overall valuation in the market why aren't we seeing more deals from private equity like levi's or beyond meat and others and say, we have a very favorable market, let's go >> brian, your point >> well, my point, going back to david's point. david, i know you know this, obviously. but you're not buying a market the market is made up of what's called companies, tons of companies. you've got to look at each one and i know you know this, obviously, but this company called microsoft, where they came out six times trailing sales, google, 19 times trailing sales. and now we have slack coming out, 41 times trailing sales it's a good company, the margins are getting better, they're losing a ton of money, but are they really worth that here's the deal to me. it's really simple right now all of us are buying a market i agree with you that the market is good, but the party has been going on for a long time and sometimes the music does end i hate to be so negative, by the way. i'm giving you my input, by the

way. >> that's why we have you guys on >> i'm excited to see what happens in the direct listing world. i don't actually think we know where slack is going to trade, because of the way that structure is built and the way it comes to market and i'm excited to see what happens there. particularly with spotify in our rearview mirror and let's see whether that becomes a trend or just a data point or two each year i think there's some debate about that >> we've got our eye on that pot. that's for sure. >> and a quick programming note, as we go to break. our deirdre bosa will be sitting down with the founder and ceo of huawei exclusively just the day after tomorrow the company slashing its revenue forecast amid continued u.s. pressure, but first, rick santelli, what's ononyour mind >> what's on my mind is manufacturing in and near new york city, gotham. it seems as though the empire strikes out. we're going to talk about that after the break. johnson & johnson is a baby company.

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i'm scott wapner here's what's coming up, "halftime report" at the top of the hour stocks, the fed, and your money. we're debating what will happen this week and what it might mean for the june jump for stocks plus, jim cramer chairs the investment committee for today how he's setting up for the rest of the week. and stephanie link is here she's making more big moves in our portfolio. she'll reveal what she is buying and what she is selling at noon

at the half. carl, we're 15 away. let's get to the cme group in the meantime. the santelli exchange with rick. >> thanks, carl. you know, everybody, of course, is talking about the empire striking out this morning and of course, i'm referring to the june read on the empire manufacturing index, which came in at minus 8.6. and last month, it was 17.8. the absolute valued difference, 26.4, well, that dropped as the biggest since 2001, we'll call it 18 years, and the number is the first negative number in this series since october '16 and the lowest number sings october of see '16. so what are we supposed to do with this number we have a chart that should show you. it's hard to ignore. if you take a look at some of the other region surveys philly came in, but that was a main number, and it was kind of strong on its may read at a little over 16 but if you look at all the other may reads, whether it's kansas

cit city, which was close at the week at positive 4, and look at some of the other regionals, for example, the ism let's take ism manufacturing we did that release, i brought it to you live it was 52.1. that was the weakest since august of 2016 i guess what i'm talking about is, this isn't unique, but now we're starting to see the near term, the realtime as we flip from may to june reads and empire is one of the first, and this is something we have to take serious most say the respondents point to tariffs and uncertainty, lack of business confidence, lack of capital spending, all of this we've heard before the issue is, why does the market look at it in a much more optimistic light and if the markets are looking at it in a more optimistic light, therefore, so are investors. we're 3% from all-time highs in the dow. how do we reconcile this many analysts will say, well,

tor the other shoe is getting ready to drop, what you see the markets and investors responding to, the isms and some of the regionals are giving you a glimpse into the crystal balls of what lies ahead and that may be try, except for one thing. the real issue here is how long it will take to resolve and once it is resolved, it will be a good enough deal that whatever cost we have or nervousness we share right now from a manufacturing perspective, will that be more than offset by gains as some new-type deal progresses i can't tell you the answer. but i know one thing, like an option, there's a half-life to the goodwill of investors showing up in the marketplace. and that goodwill is really what we're all betting on john, back to you. >> rick, thank you when we return, slack is taking a road less traveled en route to the public markets with its direct listing we'll take a look at what difference it might make when it starts trading later this week

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we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. slack is set today back to you this week with a direct listing following spotify. >> a direct listing is on a unconventional method for a company to go public it involves buyers and sellers coming together.

>> a direct listing differs from the more traditional public offering in a few ways no underwriters. in an ipo they will find investors, market shares and set pricing. these bankers provide advice about the process and help with the discovery of opening price spotify direct listing cost about a third of what the company would have spent on an ipo saving the company about $100 million two, no cash instead of raising money, the primary purpose is to create a public marketing for a stock by allowing early investors to sell and newer investors the buy. three, no road show. traditional ipos require executives to spend two weeks on the road visiting with investors to pitch the deal and drum up demand direct listings require one day.

usually a few hours for executives to webcast the pitch for any investor who wants to tune in. if direct listings continue to be successful, they have the potential to supplant what would have been ipos >> i have to imagine all these stories about is it the new big trend, you're skeptical of that? >> i'm not i think we could see more of these direct listings. a lot of people look at it as a risky problposition if you have a big brand name, you don't need capital and you don't want to deal with the fuss of the road show and raising the price once you're on the road and the things that go along with the more traditional ipos then a direct listing may be more appealing to you. if slack's deal does not go well it could prevent other companies from wanting to take that route. >> the big brand name is key

>> it is you need the find buyers from the stock. without the mayor road show to market this deal, it's a lot harder to find investors if you're a much smaller company, less used by investors slack is used in a lot of corporations it's a pretty big brand name >> i loved your point on squawk. it's the pressure and the way it's showing up in s1s we got to pay our people and we're doing that through stock sf that's a huge trend especially in the-few years where you've seen this inflection point where all of these silicon valley companies have been able to raise ample capital and have no incentive to go public and need to let their previous investors, their venture capital investors cash out. you accomplish those things without -- you don't raise capital but on the flip side you don't have to go through the

fuss that goes along with a traditional ipo. >> people thought they left x amount of money on the table is there any advantage to a company like that. say people knew about them what would the advantage be? >> the advantage is they wouldn't leave any money on the table. they wouldn't be raising money in first place for some companies it's really important. the flip side is you don't make money that you could invest in your business. that said, the underwriter fees are a big consideration for a lot of companies sp spotify saved $100 million, which isn't nothing. >> i could go for $100 million >> we talked to the guy who said we don't know where it's going to open. is there any way to guess in advance? >> that's the concern. the job of the financial advisers is to give the company some sense of where it could

open it isn't a hands off process it isn't the same market making you could see. they could estimate where it could open but there isn't that same benchmark that's set with the price range that you would see in a traditional ipo that's where the key list is with the direct listings you have to find the price to compel enough insiders to sell their shares if the price isn't high enough, they'll say i need to wait until i can make some money on this. >> no indications on this one. >> no. we'll see you later in the week. i'm sure >> i'll be back. when we come back, elon musk deleting his twitter account we'll explain the latest behind elon musk. squawk alley is back in three minutes. dow is up 48 me tremendously. the flexible class schedules allowed me to go to work full time, run my catering business and be a mom and parent. when i reached this accomplishment,

it was like, it's here, it's happening, it's now. we at southern new hampshire university are the ones who succeed. we are the ones who break through.

tesla did not respond to a request for comment but all 7,000 tweets are still there >> he did not delete his twitter account.

he changed his profile image to like a black just two and a half months after the release of rip harambe >> is that what musk is, just another tweeter meme with a hashtag. >> i think he's having fun shoost havi >> he's having a good time >> we'll see if that changes and whether or not the board is okay with this fun version of elon musk on twitter. we'll do a bit of marking time ahead of the fed decision on wednesday. really pretty tight range here maybe 50 points or so on the dow. 2892 on the s&p. between paris air show we'll have a lot to watch. >> we will >> this week we get a couple of big tech companies with their report oracle and adobe out of the gate those will be interesting to watch as well.

>> in the meantime june continues to be a good month best month since january and despite be back and forth and news volatility maybe not market volatility, got two straight weekly gains for all three major indices. keep those in mind along with the ipo market let's get to judge and kramer and the half i'm scott wapner the great rate debate. with the holding your money in the balance, will it signal a cut is coming. what happens if the market doesn't get what it wants. it's 12:00 noon. this is the halftime report. >> we are 50 hours way from the fed decision at 2:00 p.m. wednesday. what happens if the market doesn't get what it wants opinion t the debate is on today the new assault on big tech. >> if you built chaos factory, you can't dodge the responsibility for the chaos a facebook founder weighs in >>