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tv   Squawk on the Street  CNBC  May 9, 2014 9:00am-12:01pm EDT

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>> how old will i be? >> sitting in costas' chair by then do you think? there's going to be a job opening then. >> going to be there for a long time. >> careful with the eyes. >> thank you. >> rob, thank you very much for coming in. >> appreciate it. >> that does it for us today. have a wonderful weekend and happy mother's day's to you my mom, mother-in-law, grandma. see you on monday. ♪ good morning and welcome to "squawk on the street." i am brian sullivan with jim cramer. david faber and carl are off today. we are live from the new york stock exchange. hi, everybody. here is your friday setup. stock futures indicating slightly lower open today. again watch small caps. more talk, the little guys, the ru russell 2,000 may be pulling the market down, closing below its 200 day moving age for the first
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time since 2012. maybe stocks are slowing because of the hunt for yield, the ten-year treasury note below 2.6%. what's that sound? it is realtors dancing as mortgage rates are likely to fall back again. europe as you can see with the exception of what looks to be switzerland or lichtenstein is down. our road map begins with apple and one very large acquisition. talks to buy beats headphones, don't forget the streaming service for $3.2 billion and create the first hip-hop billionaire, we will address some skepticism from the street. and getting divorced before they got married. publicist and omnicon calling off their merger. ugly breakup in the ad industry. somebody call john ham. ralph lauren and the gap out with results. ralph lauren beat, warning about shrinking margins. ralph waging its global expansion at the begin of margins. >> we're calling it straight out
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of cupertino. apple in talks to buy beats, the streaming music service founded by producer dr. dre and jimmy i owe veen. surprise tag said to be about $3.2 billion. apple's biggest deal yet. beats launching a music service that could increase apple's presence in that area. jim cramer rocking the beats headphones. i own the portable boom box blue tooth which i found crushes bows, sound quality great. did they overpay? is it a done deal? >> no. it's not a done deal because they have so much money. it's a rounding error. they need to be cool. one of the problems i think that apple has it's not cool. it used to be. you always expected that. look, these guys are the definition of. now the fact that i have them, is a bad sign because like there's obviously my age group, you don't want to see my demo with these. this can be defensive because they need to be in cars, this is a way to get in, augment car
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play against harman and they need to be offensive because we know that itunes business is actually on the decline. not a slower growth. but actual decline. you need something. i would have if i were -- and i'm not -- tim kooshg, i would have bought pandora for $6 billion and harman for $10 billion, $16 billion coloss sass to own streaming music and 250 million cars. maybe i'm just a big thinker and put my headphones on and go home. >> i want to talk about lab lala, not carmelo's wife, i was a member of, unloaded my music to in 2009, the first cloud based music platform. apple bought them in december of 2009 for i think $400 million. promptly shut them down. launched icloud. you mentioned pandora. why shouldn't apple still go after pandora, also spotify because you have google play which is expanding, amazon's discussion about streaming, buy
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pandora, buy spotify, become the behemoth, coloss sass of the streaming world. >> that's why this deal is difficult to size up because there were other people they could buy. we don't know if it's a done deal. second, we don't know the real price. it's true that they do have revenues. it's not like they're buying some either company. we've seen that going on. i want my company to be in the infotainment business and own the deck inside a car. that's what harman's done so well. it's one of the reasons i like harman. harman will be down here. i say if harman really gets slugged, it will -- >> down because decrease the valuation of harman. >> people will say these guys are in chrysler and fiat. now by the way if you go to the chrysler -- if you go to the home page you will see that you can also get harman. many people should realize harman is the big speaker company for all the major cars, particularly the japanese and germans. for $7 billion, $7 billion
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company, they are in every car. even car play, apple's product laid on top of harman. interestingly enough, htc, sprint and harman announced a deal a couple weeks ago which made it so your cell phone has harman style sound. is this not an appl apple/itunes/iphone defense against android, sprint, harman. there's the whole thing. >> all right al pacino. i'm going to counter this, be the private school head master and counter your beautiful speech. volvo is getting car play. i don't know if that -- yeah. not going to help. >> don't come to me with some frayto rap. >> poor hc, can they do anything right? the founder investor in beats. 50%. if they would have held -- they sold. if they would have held on they would have made over a billion in profits. >> that's another rounding error for htc. >> poor htc here. when you look at sort of this
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deal and i heard joe kernen talk about a billion in revenues, this is three times sales. >> three times cool. three times cool. >> trading three times revenue, apple stock, apple shares. if people say you overpaid for beats, aren't they also in some ways suggesting apple's own stock is overvalued because the multiple to revenues is the same? >> it's really -- >> i'm not saying that. >> it's hard to come up with a theory about apple being overvalued after that previous quarter. that previous quarter was very good. they introduced new product, get nice leverage. the new -- new chief marketing officer who can combine with coolness. cool does matter. okay. and look, who am i to declare what's cool and not. i'm like a guy probably like history. i do know that this is what a lot of young people listen to. you know it yourself. you bought the box. i used to think bose was cooler. i like these more. i like my harman headphones more. >> the fact that you're rocking
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the headphones and i have the portable speaker does mean they have a -- >> image identity crisis. >> speaking of the deal. it may not be done. somebody seems to think it is done. this video with tyrese gibson and dr. dre posted to facebook last night, watch this. >> the "forbes" list just changed. hey, it came out like two weeks ago. they need to update the forbes list. it just changed. >> in a big way. >> understand that. >> oh, my. >> the first billionaire in hip-hop right here from the [ bleep ] west coast. believe me. >> oh. >> shout out to the lbc. dr. dre saying -- >> who's going to argue with that? >> he's a billionaire. one of the founding investors in the guy it's named after thinks the deal is done. >> you know, i'm sure there's a board of directors, tim cook, it will be interesting to see. maybe they like that video.
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>> you know who also -- >> doesn't seem to be in keeping with the apple -- this is a brand new apple. >> according to reports, dr. dre was spotted on the apple campus last month. may have been in the works. who else will get very rich off this deal, another entertainer, we interviewed him, will.i.am, he has a big stake. >> 50 is not in this one? >> pure entrepreneurship. built a company, invested a company, selling it getting rich. god bless america. >> if you're apple i would like to see why not spend $7 billion and get pandora. upped it by a billion. pretty excited. harman is what you once. you want -- car play is not dazzling people but the market that you really want is the car market. and harman is an inexpensive stock. >> move from dre to charles dickens. a tale of two retailers. ralph lauren reporting fiscal fourth quarter earnings of $1.68
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topping wall street estimates. warned its operating margin would decline as it wants to expand its stores. the gap sees current quarter profits above street forecasts as comp sales rose 9% in april. the gap is doing well, the gap up -- i won't say very well. outperforming ralph lauren. ralph lauren down 13%. 9% comp sales. pretty good for the gap. >> gap is good and old navy leading it. they were helped by late easter. you'll see ralph lauren down badly because they guided, remember the forecast means more than the number, they guided down 300, 350 basis points for margins and that's not what you want to hear. roger fairer, vice chairman is retiring. a lot of people feel he's done a fantastic job. ralph lauren's stock has lagged the group. i don't know how much i want to look at ralph lauren and add toomey and decide those trump
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gap. i do think it's a mixed picture. and i think that ralph lauren is a great company but periodically disappointed in a forecast and then beaten the forecast. >> i want to throw out an audible, omaha, talk about a different gap, the gap between ralph lauren and michael kors, kors up 13% year to date, ralph lauren down 26% spread in the price performance over just 5 1/2 months. >> kors has big china business. coach has kind of fallen apart here. kors and fossil very strong. fossil very big in the wearables. people forget that. i think that kors, our friend herb greenberg had questions about their asian business. kors has -- the people have -- lone pine, steve mandell, someone who taught me about retail in the '80s has a big position. the disparity is remarkable. >> it is here. in general is this a case of ralph lauren, do we care about margins when spending the money and compressing your margins to
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grow your business? bad uses of capital and good uses of capital. >> yes. i think what's happened is we simply -- we start worrying, what's the deal, inventory problems, why do they guide so big down when we know they've got a good european business. not seen bad numbers from vf corp. and no guide down like that. very difficult to figure out the valuation here. >> quickly, overall market, we referenced small caps at the top of the show. surprisingly, the dow is the only major index that is up this week. 0.2%, s&p, nasdaq, nasdaq 100 and the russell, are you concerned that small caps could bring this down? can a feather drag down a super tanker? >> you have to go back to march 8th 2000, to march 15th, and see a dramatic shift out of russell into s&p 500 and dow stock names, the year, the fulcrum year everybody is worried about. no, it's completely on target with what happened that year and don't forget, the s&p can,
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indeed, separate. they are the russell was dominated by companies like fireeye which has become the posterchild, soon to be joined by rocket fuel and what happens is, you know what, the money comes out of those and goes elsewhere. dow stocks, a lot of good dividends in there, balance sheets and companies actually making profits, buying back stock and raising dividends and that's what this market has become. >> all right. good a block. we're going to move to the next episode. all right. coming up after the break. alibaba preparing to go public and a former board member of yahoo! will offer his perspective on what could become the biggest tech ipo in history. futures on a friday. 18 minutes before the opening bell. come back a little off our lows indicating a slight down open there. >> it's europe. >> can you hear me with those headphones? >> these are amazing. i can hear you and i have mozart. you and mozart not that -- >> nor can i wear those headphones for obvious reasons. more "squawk on the street" live from post nine at the nyse when
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♪ no price hike for two years. netflix announced it would be raising prices for new customers from $7.99 to $8.99 a month. this morning it e-mailed customers saying a guarantee is
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out their plan and price will not change. read my lips. for two years. matter? >> netflix likes to underpromise and overdeliver. this is the thing you say these guys are good, reed hastings gets it, about doing what's right for shareholders. i wanted apple to buy netflix when it was at 70. so much for that. netflix is caught up in the vortex al la tesla. can you value them on subscriptions and subscription sign-ups? that worked for a long time. not working now. i have to tell you this will not have impact. it's just nice -- >> from a shareholder's perspective wouldn't you want the price increase. i'm going to quit facebook -- or quit netflix, nobody did. if they jacked the price by a buck that will help margins. >> i wanted prime to raise prices, amazon to raise prices for prime. they did that.
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what good has did it do? these stocks don't trade on expected earnings per share. they trade on growth. and this may be -- now people will say hold it, maybe they were going to drop -- maybe growth was going to drop so let's like change that. so -- and when netflix does these things where they go back on it, people will be confused. netflix is a cult stock. people driving tesla, they like tesla. that really worked until the last week of february. it is not a strategy now, it is hope. >> i hate to use the term momo, it's overdone. >> i don't mind. >> the momentum stocks, they're sort of declination -- >> it's the wrong word, isn't it? >> the draft was on last night. it's early this morning. >> yeah. >> eagles didn't draft until 11:40. killing my night. >> marcus smith. >> the momentum is no, that's why you watch rocket fuel today and say well wait a second, how did rocket fuel know to be able
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to sell a huge number of shares at a very high price, $61, 218, look at that. they got 5 million shares on january 30th. well that was very smart. but the company does have $218 million cash position. they managed to raise a lot of cash. doesn't work immediately there's big competition in that. we've got a bunch of exchanges. that's the kind of thing that happened in 2000. >> is fireeye just fireeye or a bigger metaphor for this market in any way? >> it is the ultimate metaphor. i call it sharp stick in the eye because i like to have fun like the software as a disservice stocks. but yeah, i think rocket fuel, you have the $82 secondary that clearly didn't hold that was filed after the stock had burst up to 96. they didn't care that they sold at 82. yet $90 million coming off lockup on may 22nd. if that stock gets hit again you really say, okay, that stock is year 2000. i surrender. not all companies are year 2000. many companies could show a
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profit, a la zillow if they wanted to tomorrow. the notion of growing without worrying about profit is now out the window. now you got to worry about profit. a lot of these companies we're using an amazon model, meaning hey, i don't need to do profit. the market has changed. >> not that many -- there's not that much room for too many amazons probably. >> turns out there's room for one amazon. >> up next, it is jim's mad dash as we count you down toward the opening bell on a friday. we are indicating with a slight drop at the open, not big, but a slight drop here. we're watching bond yields, gold, the dollar. that's had a rough week by the way. more "squawk on the street" and the mad dash from the nyse straight ahead. tall the building is, or how ornate the halls are. it doesn't matter if there are granite statues, or big mahogany desks. when working with an investment firm, what's really important is whether the people
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♪ all right. as the animation says, time for cramer's mad dash. you may have noticed something unusual about this segment, jim -- >> this is my -- johnny football. look, this is what he needs if he's going to star for the browns. okay. all right. here's reality. >> this is not my fault. >> it's soy milk didn't do the thing. stratty sis. a stock deep momentum stock, reports a number today, reported earnings 8 cents but as we were talking off camera, that makes it an expensive stock and the market doesn't like expensive
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anymore. it likes inexpensive. strat ta sis with its buddy ddd and foxle jet have captured the imagination of investors but not captured the earnings per share. >> i'm going to slam an a lists on this one. >> you are? >> i am. >> look at that 89 buck, the stock down 30% year to date. the average price target of the analysts on strat ta sis is $143. you either start cutting your price target or somebody -- somebody on the sell side has to start to come to a defense down 517. >> they tried, ddd, a big stand made on it. happened to be a former mountaineer and climber of the all adirondack 46ers, i see a pattern that is k2. >> you don't need to be a technician to understand that pattern as well. >> here's what i want to focus on for strat ta sis. this is a company that a lot of people go to the videos and say holy cow. this is the coolest thing ever. you go to youtube and see like wow. the actual ones at home don't do a lot of things people say they
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do. >> not yet. >> strat ta sis is a good manufacturer, just overvalued. that's part of the problem with this market. there's nothing wrong with strat ta sis. it's a great company. the stock got inflated. the company is a good company. that's what we're seeing over in this russell 2000 world. really good companies. >> plastics my son, plastics. >> exactly. >> if you go back to mrs. robinson f that was filmed today, he might say 3d printing, i think it's the most interesting and disruptive industry but the stock 100 times sale. >> you will not get a fight from me. it reminds me of north american rockwell in 1964. they had game two. so did xerox. take a look at the way the stocks trasdsed along with admiral. those were the hot stocks. and texas instruments. >> 200 publicly traded radio companies in the '20s. >> collins. remember when rca peaked, 480? right before the crash. >> there you go. >> all right. >> what a buy. >> thank you very much. good stuff here. the opening bell a few minutes
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away on friday may 9th. futures indicating a slightly down open. a lot more to do here at post nine for you bulls, bears, and the bell, coming up next. female announcer: when you see this truck, female announcer: it means another neighbor is going to sleep better tonight
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welcome. you are watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell set to ring in just a couple minutes here. i am brian sullivan in for carl and david. two for one here. as we approach we are looking at jim, mildly down open. the dow as we mentioned the only of the major indexes higher on the week. >> we are going for stability. for a couple days looked like ukraine, back off, i don't want to lose sight of ukraine. every time you do it slaps you right in the face. but the international stocks do quite well when ukraine gets off the front page and then they go down when ukraine comes back on. this was a week where we paused and ukraine, you saw the multiple expansion go to the big cap stocks that have the great balance sheets and dividends and buybacks. >> why do we assume what is bad in ukraine is bad for us as well. could we not see which we saw a few years ago the u.s. a safe
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haven trade? >> a lot of our companies have big businesses in russia. take a look at pepsico, alcoa, adco on this week. tractor business. reminds me of the tractor factory in stalin grand the last stand they made in 1942. >> i know martin here a little bit. >> i like him. >> straight shooter, german guy living in georgia, whatever. the ad space in general, did you throw that out there because you like it or a metaphor for russia? general. >> i like it. deer reports next week. i always tell people when deer reports they -- the stock always goes up and then they manage to throw cold water on the conference call. be careful there. adco is a good company, doesn't have momentum right now. >> i worry, i don't think people are making enough of this commodity inflation coffee hogs beef wheat sugar corn, and for some reason, we're not talking about it. >> i totally agree with you. some of the companies have sold forward at the same time obviously a paer in ra has to be worried about it, talking about
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it. when dominos says -- dominos almost entirely franchised, cheese prices from 1.50 to $2 we are wrong not to focus on it and you are right to bring it up. chipotle same thing. >> if herb green burg is watching probably in his jammis in san diego, i bet him coffee would outperform gold from july to july. i am destroying herb greenberg in my bet. joe is up 78% just this year. >> frankly the -- >> herb greenberg out there put that in your cup of coffee. >> just made it difficult for me to think about it. coffee, remember, howard schultz sold for a lot of his covffee next year. coffee is 10% of the cost to goods sold. >> that's a surprisingly low number. you would have thought it higher. >> howard does a lot of things right. >> the opening bell, the real time exchange on cnbc here at the big board, dorian a gas
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shipping company celebrating its ipo. at the nasdaq, a datcom an on-line leisure travel company in china celebrating its ipo. >> oh, perfect. >> chinese ipos. that's what we need. i told you alibaba i think will mark a top if this deal is done anywhere near the numbers that -- >> even if only a billion or $2 billion in stock, isn't there enough liquidity to absorb that? >> no. there isn't. the momentum guys are so on the ropes not getting money in. they need money in. money is going back toward the more conventional picks and the people in those stocks have to sell that because alibaba has a better profile on a lot of different things. >> coming back from the conference, one of the takeaways was great, lng, lick fide natural gas, dorren ringing the bell today, we talk about ukraine 34 billion cubic meters of gas imported to germany from russia. 34 billion. germany needs russian gas. no way around it. only thing people talked about,
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jim, we've got an excess of natural gas, we could help stabilize the region, make it less beholden economically to russia. the problem is we can't get the gas there. lng the only way. lng terminals finally opening up. >> shah near energy will have the first plant to export. the highest executive paid -- >> $134 million last year. >> remember it's always the first train is spoken for, second train. no natural gas going to europe other than some in spain. the next train is not going to be ready for 2018, 2019, no other liquified gas terminal finished by 2020 with the possible exception of dominion's because that's another reverse. do not count on our natural gas ever getting to europe within this decade. it's not going to happen. >> what you're saying is the hope is hopeless? >> it is. >> these plants are costing them huge, difficult to build, difficult to get siding. freeport trying to get one. bunch of guys trying to get into
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it. you're not going to get it. >> then germany and much of western europe will remain beholden to vladimir putin and his natural gas supply. >> absolutely. >> and the sanctions will be feebble. >> the state department said we can export it -- look, they just talked to shareef, we flair more natural gas than we use which is why if you're up in space looks like there's two big cities, one is in north dakota, the bakken, another city is in texas, that's the eagle ford, the two brightest lights in this country because we flair so much, but we can't get the stuff out of here because there's only one new terminal being built and we hope that comes in on time because beck tell is doing it. i think it will get done in time. lng stock is too inflated. >> it's a mother's day fried heading into the weekend, i shouldn't be snarky but i would say we know how easy it is to build pipelines in this country. we have this gas and can't get it anywhere. you've been to williston, north dakota so have i. >> trinity has been red hot.
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not recommending it here. the pipeline is the only way to get the oil out of the permian, the hottest place on earth right now to get oil. it was tapped out in the '40s be thought. no going to introduce 1.5 million a day. it's a rather remarkable field and eog, it's sim ma rex and pioneer symbol. >> pioneer good morning. >> we talked to the ceo in october we went out there. >> i like sheffield. some people feel when he says it's the second largest oil field after saudi arabia he's being too impulsive. i know mark papa who built ieg did not like that characterization. that said the permian is the t hottest area for oil in the country. eog has the hottest basin. >> we have some trades settling down. apparently i mispronounced ralph lauren. >> yes. no one is going to hold it against you. >> i don't shop there. >> the worst performing stock in the s&p 500 right now -- >> their guidance has been suspect so many times. >> what else is surprising, which is down, cbs.
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cbs they're down 2.5% right now. you thought the numbers were decent last night. the commentary from moonves, i don't know. >> you know, the comp -- when you go over the quarter, i mean, he used the phrase back end. no one wants to hear back end. talked about entertainment than up front. it was not a great conference call but the buyback is for real. those who bet against him have historically done poorly. i'm not dropping my interest in cbs one bit. >> i'm going to go, again, kind of going on a tangent, marisa mayor, speaking at tech disrespe disrespect, she talked video. if yahoo! wants to be a video company shouldn't they be valued like a media company. cbs at 18 times earnings. yahoo! 26, 27 times earnings. >> look at it this way, no one has moved into video more aggressively in terms of program attic ads than tim arm strong who bought a couple million
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worth of stock, we heard that, bought 55, but his stock has been spindsled and mutilated because people feel like the cash flow short term isn't good enough. trying to get the exact amount he bought. i think he's making a statement, upset with the way the stock has acted. who wouldn't be giving the pull. that is the company that's doing the most in video and the segment and it doesn't seem to matter because it's always on the -- chief armstrong buys 55,000 shares for $2 million. >> 55,000 shares. tim armstrong. vote of confidence. you like to see that? armstrong felt the quarter was misinterpreted didn't think the cash flow number was nearly as important as the video. he does have the best video program attic offerings and that stock has gotten cheap about us this is a market if you miss the cash flow you're history. >> what cbs should do, start offering an e-mail product and couple apps now you're yahoo!. if everybody is getting into video, right? cbs they're a digital corporation. then you add 5 points to your
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premium. >> when you go over the conference call, he said listen under the dome is doing well, the packaging series, but cbs has been a content company for a long time and don't change your stripes and decide it's about the up front. >> you have done well under the dome. >> my friend dean norris has too. we put our heads together, i'm not going to finish that joke. he is a big watcher of our show and also hank and we had a be [ inaudible ] while at the white house correspondents dinner. >> i hate to be negative. we hit the worst performer which is ralph lauren. >> it's coming back. >> ralph lauren. all right. the best performer, a name i don't think i've talked about in a year. cse, up 4.5% right now, computer sciences the best performing stock. >> raised price target, a lot of people feel it's going to get taken over. earnings story with a new management. >> who's doing well, news corp, rupert murdoch, fifth best performing in the s&p, your
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buddies at the gap, second best performers, wynn doing well and the market likes omnicom publicist not going through. >> a lot of people felt that. good to see wynn bounce back after the communist not liking that mobile car people were using. publicists, a lot felt that was a defense against the giants who were in -- >> sterling cooper. >> yeah. >> sterling, yeah. he's back. he's willing to take orders from a lot of people he shouldn't. >> i gave up after season three. >> wrong do that. this season is existential. >> you keep telling me i need to watch "breaking bad." i watched four episodes and gave up. >> why do i have to determine what you watch? >> bob pisani is out there somewhere, very crowded floor this morning. bob pisani just apparently was just trampled -- >> in the middle of it. that's what we do on the ipo business. it's still choppy on the ipos. respectable open from cheetah yesterday but we had a postponement. radius health which is a biopharmaceutical firm postponed
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overnight. the biotech pharma group has had a tough time in the last couple weeks. did price three ipos, one coun here, pbf logistics. one of the mlps. they lease and operate crude oil. ilines. -- pipelines. 19 to 21 the price. priced 23. look at the indications, 25 to $28. that's doing well. energy ipos have done well. gas log did well, dorian did very well. we got a couple on the nasdaq as well. mention an on-line provider of package tours, they priced 8 million shares at $9, the low end of the range. 9 to 11. very choppy out there in ipo land. so the two issues dominating the market the dow down 28 points, only two issues, when is the slide of momentum stocks going to stop and bond yields bottom. we see them go down with new record lows with countries in europe today. look at the major sectors, the biotec
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biotechs. to be weak, the etf down 5.6%. the nasdaq internet index, your momentum names right there, that index down 5.4%. the russell down 2.8%. right as the open right now. this is a small cap correction that we're getting. the s&p 500 is fine. we're down 0.3%. there's a one-week chart of the s&p 500. take a look at the earnings. want to point out what's going on with the builders right now. william lions had a terrific number overall earnings report despite the poor weather. beacon roofing, want to know how bad the weather was? they had a huge miss on their top line and bottom line and said severe storms had impacted them, but they're optimistic about the spring season that's looking a little better. a company that would be most impacted. could not lay down roofs throughout the winter. a couple others, you mentioned what was going on with ralph lauren. weaker there. there's hilton, had a terrific number overall. they increased their rev per available room numbers, eps
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guidance, adjusted ebitda, cash flow, terrific report and most importantly, the guidance was really good. there you see the nice move we've seen up in hilton in the last few days. you were talking about ralph lauren. again i won't belabor that point, the guidance the weak point there and that stock is down notably. i want to note india remember the stuff going on with india, the election process is about to end there, going to end on monday. the results will be announced on the 16th. brian, this has been going on for months now seems like. the india market is at a new high. a new leader in india. by the way, pbf logistics opened here at $28. that's a great price. remember, priced at 23, after the indications were 19 to 21. just opened here, oil, mlp, at $18. guys, back to you. >> thank you very much. two things here, i feel like bob kept pronouncing lauren correctly to throw it back at me. india up 9.5% over the last three months.
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investor optimism returning. could be good for gold. >> their appetite cool for that. the gold buying season coming up. i believe that market is fully discounted this change in government. some people feel i'm being too cherry there. hilton joins marriott and starwood the great quarter. if people are traveling like that you can't be too negative. let's talk to simon, he knows the hotel space better than anyone. >> we will in the next hour. let's right now go to the bond pits in chicago, joining with our good friend rick santelli at the cme group. >> it continues to be a very interesting albeit one direction market in treasuries and that direction has mostly been priced up, yield down other than wiggles on the yield curve. look at an intraday and two-day of 10s. i like these two day charts. the intraday we can see yields have popped a little bit. you look at a two-day see it in the context of yesterday's range. remember, that 161, we're actually very close to unchanged on the day.
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and if you look at it from the weekly standpoint, we're up about three basis points on the week, 2.58, which by the way was the lowest settlement outside of the lowest settlement of the year which was february 3rd, only one basis points difference. 2.57 versus 2.58. let's look at some fx relationships, primarily the dollar/yen. i know the euro is importa important we'll get to that. year to date of the dollar/yen versus 10-year note yields that continues to correlate tight and gives you kind of a risk parameter trade. remember japan had a lot of days closed. closed monday and tuesday, so that accounts for a little of the tracking here. here's the one that's fascinating. the equities versus the dollar/yen. they rhyme a bit but aren't as tight as the ten-year against it. we need to pay attention to these relationships. to the currency that is the volatility star the last 24 hours. the euro, whether against the dollar, pound, doesn't matter. we'll pick the dollar. you look at the euro versus the
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dollar n two days we've basically gone from close to 140 to under 138. i have to give technicians credit. technicians said we don't know what draghi will do before the meeting yesterday. 138 and 141 the levels they were looking at. 1.38 a good technical pivot. all technical bets are off on weekends. weekends in geopolitics, the weather or the treasury and fx market, be careful. but as for forp rates -- foreign rates in europe, look at this ten-year chart of the boon yields versus ten-year yields the relationship at the widest in a decade. one good reasons u.s. rates aren't likely going up any time soon. back to you, sully. >> rick, thanks very much, buddy. coming up jim stewart on alibaba's ipo, chinese internet companies in general and morgan stanley's renaissance and giving the packs an okay to translate
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in btc. jared po polis who says his campaign will begin accepting bitcoin when "squawk on the street" returns. when folks think about what they get from alaska, they think salmon and energy. but the energy bp produces up here creates something else as well: jobs all over america. engineering and innovation jobs. advanced safety systems & technology. shipping and manufacturing. across the united states, bp supports more than a quarter million jobs. when we set up operation in one part of the country, people in other parts go to work. that's not a coincidence. it's one more part of our commitment to america.
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with the first pick in the 2014 nfl draft the houston texans select jadeveon clowney. defensive end, south carolina. that was nfl commissioner roger goodell announcing jadeveon clowney as the top pick in last night's nfl draft. much of the events and buzz continue to surround johnny manziel, the heisman trophy winning quarterback a bit stunned after he fell to the 22nd pick where he was taken by the team expected to take him, but just in their earlier pick which is, of course, the cleveland browns. i did not like the fact that the nfl's own twitter account sent out the #sadmanziel theme showing him. i thought that was low. >> i think that the nfl has gone from making -- having a very small scale draft thing to having a great drama and i -- the -- i have to hand it to the nfl they know how to make money.
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espn doing a terrific job. cred writ credit is due. i believe johnny football thing was compelling story. on twitter we were following it. the idea that cleveland had to move up and get the eagles' pick which made it so that the eagles didn't have anything to worry about it, was pretty interesting. the shortest quarterback blashgs what what, they do all that stuff, but in the end the browns really -- i think the browns and texans did a lot in the last 24 hours to make their teams better. >> the last quarterback that we saw sitting there sort of awkwardly for hours, the cameras kept -- was a guy named aaron rodgers. he's had a recently decent career. >> the great 30 for 30 marino when you go in and look at that elway/marino and marino passed over, and passed over, and hof. it's hard. >> we're just showing, by the way, the latest nike ad for once, defenses know where he's going. a picture of manziel with what looks to be a browns jersey, nike knowing he was going to the browns. or they photo shopped it in or
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took it last night. johnny football. >> where are you? who are you going to get? i think -- that's a momentum stock -- >> the browns could get more than two yards of play might be a decent team. >> browns defense was okay last year. weeden -- texans get weeden. the whole draft i thing has become like the combine. a 24/7 thing. my friend up at espn constantly working. almost 3 million twitters and adam schefter has defined this period basically saying because of fantasy, he doesn't quite say fantasy, because of fantasy 50 million people very much involved in football year-round. immediately thinking i got to adjust, maybe cooks will be a early round pick for me. >> i predict the aloe wets will beat the stampeders. >> the chargers your team. >> we got a quarterback. i was hoping we would get kyle fuller. the bears took him at 14.
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>> hokies -- >> glad to see fuller go up. >> hokie players have been good in the nfl. >> up next, it is stop trading with jim. let's take a look at your markets on this friday as well. the dow like we said before, was the only major index coming into this morning that was actually higher this week. dow jones industrial average i'm going to give you a live quote if i can, i'm just trying to slow, don't do this show much, down 37 points, the nasdaq and russell 2000 are down. back after this. about speeds and feeds. it's all about latency. it's all about how fast does it run. i often sit with enterprises who ask me about how mission critical and how's the performance of the cloud. and i tell them, if you can maker gamers happy, you can make anybody happy.
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major holes in the market along with software as a disservice to your portfolio, cloud stocks and anything involving internet advertising. on a positive side, i like to have a positive side too, white wave, thought that quarter was amazing, stock up already. if you're an arms dealer to the companies that are getting into the natural and organic business including walmart, white wave has it, that's horizon milk, a lot of almond milk, soy milk, when i serve breakfast at the inn as i will this sunday, they want more almond and soy milk than regular milk. >> it tastes terrible. very sweet. white wave is good. >> hain is doing well. the shorts want to kill hain. they can't. irwin simon is more clever than they are. >> remember the rap group from the '80s, house of hain. wanted you to jump around. >> can't wait to watch you at 2:00. i will be doing it like this. >> you and everybody else. >> listen to bay toe ven so i will be able to hear you. >> was that a clockwork
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reference. the durango 95 purring along. >> i'm going to listen to the do a cheering up there. >> all right. speaking of -- what's on your plm. >> shutter stock, which has been decimated. they compete against getty but not really. it's actually business. this is a new york silicon alley stock. located right now in the empire state building. we want to learn about it. i bring on companies like rocket fuel, i want to learn about them. >> tough year. >> down 24% year to date. >> typical of what's happening. the destruction of capital at the ends of people who are momentum buyers realize after february 28th when salesforce.com opened at 68 and sold down, the pirouette, that model is over. you have to show profit profit profit and that's why you own stocks like, you know, dow stocks. >> they should go easy on getty, underrated actor from the '80s
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also. >> thank you for taking it easy on me, popping in trying to replace four big shoes. >> people say do i get along with him? you know why that is? we're friendly as i am with carl and david. people think i don't like david and that's totally wrong because he happens to be the only person i'm the same height as. >> i wore my eagles tie for you. simon hobbs. >> johnny football better have a box. >> you're coming up, brian, staying with us for the next hour. jim stewart, pulitzer-prize winning journalist to talk about alibaba and morgan stanley has come back, gene monster why he thinks apple buying beats by dr. dre is a bad idea. the ceo of adidas is kicking it in europe. hour two of "squawk on the street" heading into the weekend. that's why i got my surface. it's great for watching game film and drawing up plays. it's got onenote, so i can stay on top of my to-do list, which has been absolutely absurd since the big game.
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welcome back to "squawk on the street." breaking news. march wholesale inventories up 1.1%, more than we were looking for and last month, now up 0.7%. keep an eye on the sales to inventory ratio. if we look at march wholesale sales up 1.4, better than the 1% expected.
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last month had a 0.2% revision, up 0.7 to up 0.9. inventory moving you and this is a march number. we'll adjust our first quarter gdp that was so poultry and as for the number everybody is waiting for, march job openings and labor turnovers, here it is finally, a whisker over 4 million. so 4.014 million positions waiting to be filled and that continues to hover at the best levels we've seen. since early 2008. these are decent numbers on the job scene. simon, back to you? >> thank you very much, rick. we have breaking news with steve liesman from the federal reserve. steve? >> thank you very much. simon, the federal reserve announcing at this time it's ratcheting up the testing of a fa icility called the term depot facility. it's eventually designed to eventually lock up excess reserves when it comes time for the fed to tighten policy and
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the fed saying this is a test. it's only a test. it's akin to a certificate of deposit. put the money in and lock it up for what will be seven day terms. the fed will do eight tda operatio operati operations, is. we wouldn't be talking about this except it's a big increase in what's the award per bidder. used to be about 1.25 billion per bidder now the fed is saying through the eight operations it could be ratcheted up to 10 billion per bidder. the tests have have no implications for monetary policies as this is only a test. but previous tdf awards were only a maximum of $15 billion to the whole banking system. when they ratchet these up, these could go as high as several hundred billion. the size of the total awards will be based on demand from the banks. guys, this is a test. i think that that's accurate. but when -- we'll see how high these get eventually these could be a primary way the fed drains
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excess reserves from the system. >> steve liesman, thank you krech. your top corporate story is this, apple negotiating a $3.2 billion deal to buy headphone, speaker maker and streaming beats international. what part of the business is catching the company's interesting, john steinberg, john fortt with us on set as well. we've got sara eisen rolling her eyes at something. we'll find out. john, you and i were talking before the 9:00 show, i thought this deal is a spectacular deal. i thought it was more about streaming than hardware. you politely disagree and know more than i do. >> let me say, arguments for, apple can maybe afford to waste some money $3.2 billion is a lot of money for anybody to waste. apple could buy bigger streaming players later, but that doesn't make sense driving up the
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smaller one. some would say beats is cooler than apple but in what universe, outside of the u.s. is not. jimmy ivan would be a nice addition to apple, maybe in theory, but culturally no. arguments against. let me skip down there. apple doesn't buy brands generally, especially not hardware brand because it dilutes their brand. potential negative value here. apple should buy the biggest or the smartest in the space, beats is neither. apple should be making overseas acquisition where its cash is and where its growth is. these headphones are products that apple wouldn't make itself. it's not like they figured out some brilliant new innovative way to make headphones. >> hang op. >> they're stylish. >> the company exists because apple's headphones were so bad. that's the gap in the market. and apple never done anything but ear buds. >> i find myself in an odd situation. don't you think there's a hip-hop african-american cool about this that apple may not have achieved in other ways? if you look at apple's
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advertising spends it's $350 million in this country alone last year. this acquisition is peanuts, 10%. >> it is. >> apple is a global brand. it doesn't need to acquire hip-hop african-american cool. >> apple does things their own way. everybody including me wanted them to buy drop box, twitter. they do high-end hardware. this products are high margin. they have 60% of the over $100 headphone market. it's a perfect -- >> force about -- foibts forget about the headphones. >> these are not high-end chic. they have plastic head phones that cost a lot of money. >> the blue tooth speaker that i possess, which i don't like the look of, but the music quality in my opinion is spectacular. who knows if there's ip, intellectual property. >> the three they sell in the apple store, the beats is not the best sound quality. >> these ears, i know sound quality. >> john steinberg we should know predicted several weeks ago
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after last quarter that apple was going to make a big acquisition in the consumer products space. was this what you had in mind? >> tim cook said on the earnings call we are going to make some acquisiti acquisitions, some we try to keep quiet and some will be impossible. what kayla and i were saying, it has to be a consumer type thing. i thought it would be a drop box or something like that. >> i made this argument about valuation and price. everybody says okay, this is an expensive deal. beats does a billion in revenue. talking three times -- >> 1.2. >> three times revenue for the company -- >> hold on. >> what else trading at three times revenue, apple stock. trades at three times revenue. if you say this deal is expensive, you're almost sort of inadvertently saying apple stock is expensive. >> $1 billion about eight months ago. >> that's true. carlisle. >> should we play the video. >> the facebook video from tyrese gibson. >> play it. >> the first billionaires in hip-hop. take a listen if we can. >> the "forbes" list just
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changed. hey, it came out like two weeks ago. they need to update the "forbes" list. [ bleep ]. it just changed. >> in a big way. >> oh, my. >> understand that. >> oh, my -- >> the first billionaire in hip-hop right here from the [ bleep ] west coast. believe me. >> oh. >> and "forbes" says he would be valued at $800 million, not a billen. >> that was taken down from facebook earlier obviously with his how mys. >> it confirms the deal which is actually now only been reported, not an official transaction. you a principal in beats international, dr. dre, named after him saying the deal is done. >> isn't this material to apple stocks. shouldn't apple have come to the stock market? >> less than 2% of the cash they have on hand. i'm not a filings expert. maybe not. the deal is not done yet. >> is that video an sec violation? >> no. >> when stuff like this gets out kills deals. this could kill the deal.
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>> not everything dr. dre says is historically accurate exactly. he has been known to take some artistic license. >> he's an ar snoois okay. so if whether wants the consumer products or fancy headphones or streaming access why wouldn't apple buy spotify, more of a market leader, cool factor. >> how dull. >> and growing like gang busters. >> you're making my point with me. i was looking around for some other things that i think might be better use of apple's cash. cheg, at least you get the student market. social. you get to tap into that. yelp, local is important. they already use a lot of yelp. >> i agree with yelp argument. >> pandora. >> gene munster said they should buy yelp or twitter. he didn't like this deal. >> apple sells things increasingly would want to sell things to kids and when you open up one of these products you can have the same emotional reaction as an apple product. that's intangible but important if you're designing for younger generation. >> spotify point, apple has a distribution.
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they have all the people that already have the itunes accounts and they could negotiate the best possible terms they want with the labels. i was with greenfield last night from btig. he said they're not buying it for the licensing deals. >> everybody forgets, i think i was the only person that used lala, five years ago, a company called lala, didn't last long. unloaded your music, first cloud player. took 18 hours to upload my music. apple buys them for $400 million in december of 2009 and did what? >> shut them down. >> i wonder if they would buy pandora and spotify and now this the old mog which i thought was the best of the streaming music services, own the space ahead of google and amazon, three-headed munsters again, apple, amazon and google. >> so far from the steve jobs' script. lively xfrgs conversation. thanks for joining us. brian sullivan has opinions on it as well. send it over to dominic chu now for a quick market flash. dom? >> all right. how about a traditional consumer
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products type company. ralph lauren, the stock really is expected -- expected its global revenues to rise between 6 and 8%, that's not what investors are focusing on here. the stock has take an hit after the company warned its operating margins those profit margins would decline as it spends more money to build out its network of stores. those ralph lauren shares off session lows down about 5.5%. in today's trade. >> that disappointing forecast from rfl ralph lauren. at the time called a disaster and botched offering. since the ipo investors have been rewarded and so has morgan stanley technology team been redeemed. jim stewart taking that up in his latest column in "the new york times" and later, hear from the ceo of adidas, and an exclusive interview on competition against nike. "squawk on the street" will be right back. let's put some music on. woman: welcome to learning spanish in the car. passenger: you've got to be kidding me. driver: this is good. woman: vamanos. driver & passenger: vamanos. woman: gracias. driver & passenger: gracias.
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high profile technology stocks holding on to gains but downward pressure hasn't stopped investors. despite what many called a botched offering with facebook's ipo almost 2 years old morgan stanley continues to be a central player or is now a central player in the tech ipo arena. how has the team been redeemed? joining us jim stewart, columnist for "the new york times" and, of course a pulitzer price winner. >> good morning. >> redemption. >> it's pretty amazing. you know, i actually noticed there at the top of the lead
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tables for tech ipos, m&a, tech m&a, wait a minute they were down for the count after the facebook deal. went back and looked at the press, it was horrible. it was devastating. everybody saying it's the end of the morgan stanley era and they hung in and bounced back. what people underestimated was, number one, it really happened in the facebook deal which now looks like it was prized pretty well. secondly, the amazing depth they have and the decades they've been slogging away in silicon valley, bringing apple, cisco, google. >> this is michael grimes. >> yes. >> now 47 in the article, his team in particular on the west coast. >> he's been at morgan stanley for over 20 years. his team also, they have decades of experience. they know everyone, know that industry inside and out and have the personal contacts and they just put their heads down and kept slogging away. they did critical deals after facebook that went under the radar but were successful. >> they are underwriting alibaba. are you a fan on what you know so far? >> i'm a big fan of
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alibaba we'll see where the pricing is, but, you know, i think lately in the tech sell-off, investors have been not distinguishing between the companies that have solid revenue and real earnings and growth from those that are very, very speculative like a tesla. i think alibaba is in the first category. amazing revenue gains. did you see those numbers? compare that to amazon. much better. they have profits and a genius business model. >> wonder what the prize is for the investment bank underwriters. the fees are tremendous, going over the alibaba fren zishgs the notable ones that aren't on the list, bank of america, ml and ubs. everybody else has a piece of it. >> well you can imagine if you're not on there, you're licking your wounds. >> yeah is. is like -- this is so big and they spread it out. they didn't pick a lead underwriter which is unusual. everybody wanted a piece of that. >> you are one of the most owe bane people we have on the show. let me throw you a curveball. what do you think of -- jack
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maher has built this company proclaiming his love for china. why does he come to this country to fill his boots with american investors. >> why is the company based in the cayman islands. >> this is a editorial from the journal. those who buy into alibaba's share offering won't have direct ownership but only rights to profits that alibaba pays to an offshore vehicle and china can close that loophole at any time. is this country being coned? >> i wouldn't go that far. >> potentially. >> i don't think we should pretend that alibaba is coming to america because they think oh, we love the united states. they have concrete advantages here. american listing rules enable them to have governance provisions that they can't do in hong kong which is ironic that hong kong would have stricter requirements. >> they were rejected by hong kong? >> i think hong kong wouldn't change the rules to accommodate what they want to do. let's be fair to alibaba.
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u.s. technology companies do the same thing. i wouldn't exactly call google a model of corporate good eveningance. shareholders have have little to say about it and many other companies in the united states like that which we have decided we're going to tolerate. >> while on the subject, early stage investors. i mentioned the carlyle group. apple potentially buying beats, carlisle raised about $500 million according to the wall street journal, valuation of this company, more than a billion then. carlisle could cash out big here. what do you think of the apple/beats deal? >> absolutely. >> po teshlg deal. >> i don't know enough to talk about the valuation there. we are seeing high private deal prices. whatsapp another morgan stanley deal takes the cake in terms of like an eye-popping number. but until you raise the hood on this, i don't think we can say for sure. and there may be synergies with apple. >> do you own a pair of these headphones? >> no. >> can you be seen on the subway
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late at night. >> amuses me apple has sleek sophisticated image and the dr. dre set i see is the fashion statement. >> dr. beats i keep calling him. >> i'm not a headphone person. >> they got a streaming service and the portable speaker which i do own by the way. it's great at parties. good battery life. amazing sound quality. compared it against bose. >> get a better one in the apple store. the vertical that's green. >> the beats headphones don't get top notch apple type. >> no headphones. >> they expand though. >> too big for headphones. >> you look good in them. >> compress -- i push the ears down. listen here's what i pointed out earlier, 1.2 billion in revenue, $3 billion deal if it happens. three times revenue if not less than that. apple stock trades three times revenue. can't call this expensive without calling apple stock expensive because the growth rate on beats is faster than the growth rate on apple. apple is saying also when you make a deal like this, it's we
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will now -- not be afraid to buy innovation. we don't have to do -- >> are image. >> or image. whatever it might be which is a big jump from the steve jobs' era. >> definitely. i think that's more important. the numbers are not big for apple. kind of a rounding error on their cahoard. >> as cultural transition for the company it is significant. >> i think -- they're an independent subsidiary said tim cook. i think they're going to be kept over here. it's not announced. >> i told you earlier dr. dre needs to buy dr. shoals. kicks for your beats. >> kicks and beats? perfectly integrated. >> fun to see how the entertainment technology media fashion, they're converging here in ways who would have guessed a few years ago. >> absolutely. >> thank you very much. great to see you. >> jim stewart from the "times." >> up next, bitcoin is coming to political campaigns. the fed approving the digital currency for political donations this week. we'll talk to one of the first
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members of congress to turn to bitcoin for his campaign. jared polis joins us live after the break. being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. when folks think about wthey think salmon and energy. but the energy bp produces up here creates something else as well: jobs all over america. engineering and innovation jobs. advanced safety systems & technology. shipping and manufacturing. across the united states, bp supports more than a quarter million jobs. when we set up operation in one part of the country, people in other parts go to work.
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just want to mention hilton stock is trading to the upside, in a market that is flat overall. it came through with a beat on the results today, the management franchise fees and time share more than offsetting softness in other parts of the business. the best beat within the sector according to patrick at sun trust. ubs is noting their revenue per available room one of the key metrics is going faster than marriott and starwood, particularly in europe, but also in asia. partly, of course, because they're later to the chinese game. so they're still expanding in the big citys. >> investors seem to like it. call it the new age of money and politics. the federal election commission has given the green light for political campaigns to collect bitcoin contributions. in a unanimous vote the fec said political action committees can accept donations of up to $100 worth of the virtual currency
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but must convert it into u.s. dollars. one of the first members of congress to turn bitcoins is colorado democrat jared polis joins us for a first on cnbc interview. good to see you congressman. >> good morning. >> why are you accepting bitcoins? because you yourself are a bitcoin believer? >> well, look, as somebody who runs for political office, i'm a believer in accepting help from those who want to help me and if some of them support my work in support of digital currencies and use digital currencies they ought to be able to support me with digital currencies. >> the reason i ask because of your background. you were an internet entrepreneur and you have a number of businesses related to the cloud and sitlycon valley. i wouldn't be surprised to hear you are a supporter yourself. >> we've been doing development work, getting ready for the decision, ready to go live within hours to accept it. i exhibited bitcoin atms in congress and have been working on raising the awareness of my colleagues with regards to digital currencies.
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>> the one thing is, there are risks associated with digital currencies. about a month ago eric holder did say he's worried about bitcoin and the potential illegal activity that it could help facilitate drug trafficking, money laundering. are you sure it's a good move to associate yourself with that kind of behavior linked to the virtual currency. >> the attorney general ought to worry more about dollar bills, especially $100 bills, the currency of choice of criminals, overwhelming majority of illegal transactions occur and actual physical dollar bills. and bitcoins are a lot more traceable than unmarked bills in paper bags and brief cases. >> equally congressman, people may look and say this is a gimmick. this has more to do with stamping an image on what is the maximum here, $100 that has to then be converted -- $100 of bitcoin that needs to be converted immediately. what is wrong with the u.s. dollar? why make this change. it is a trojan horse to get more in congress.
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doesn't congress have better things to do than this? >> let me be clear i still take dollar contributions to my campaign as well. not about to stop any time soon. the fec regs only allow countrybutions to $100. the same reporting requirements with dollars. ask name, address, occupation, employer, all of those same attributes are reported to the fec for any contributions done in bitcoins. >> do you not think that people who have bitcoins have dollars? couldn't they contribute in dollars? why go through with this and waste time on nis. >> just as an increasing number of americans are using digital currencies for their on-line transactions and buying and selling things on-line so too many want to engage in the political debate using bitcoins as well and we're giving them that opportunity. >> i wonder if it's play for younger voters as well. do you have any sense of who might be contributing to your campaign in bitcoin? >> in the first day alone over $1,000. we have all the information obviously it will be reported in our fec filing.
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people of all ages are turning to bitcoin and can reduce transaction costs. it has its own inherent risk as do dollars but more and more people seem to be using them for on-line transaction and guess what? political free speech and contributions a tiny subset of on-line transactions and we're happy to be in the space. >> do you have any investment in bitcoin? >> i bought $10 of bitcoin at an atm a few weeks ago. haven't figured out how to spend it yet. >> good to see you. thanks for joining you us. interesting move. colorado congressman jared polis there. >> all right. straight ahead, one of the street's top analysts on apple thinks rumored beats deal is a bad idea. an exclusive interview, the ceo of adidas, right there, we are back right after the break. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office.
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trwith secure wifie for your business. it also comes with public wifi for your customers. not so with internet from the phone company. i would email the phone company to inquire
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as to why they have shortchanged these customers. but that would require wifi. switch to comcast business internet and get two wifi networks included. comcast business built for business. big news out of cupertino, california. apple in talks to buy beats for $3.2 billion. shares of apple in a market slightly lower as well. analysts on the street many of them are not loving the news. we want to bring in gene munster managing director and senior research analyst with piper jaffray. what's the matter, gene? >> i think if you take it at face value this doesn't make a
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lot of sense for apple for them to buy another brand when they have a great brand and really not a lot of intellectual property. something they could replicate. i think that face value it's a lot of money to spend for a hardware accessory business. i think the bigger story that's kind of emerging here is jim and if he is an industry baller that can radically change apple's media business this makes a lot of sense. still, remains to be seen what his role will be. >> okay. talk me through that. i mean just explain that statement to me. >> well, you know, the products themselves i think again are less relevant here. i think apple has struggled trying to get real content on tv. they've obviously the music side is where i owe vine's strength is. if he could somehow do in tv content, video content what he's done in music, i think that could make this make a lot of sense. so talent is expensive.
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this would be an expensive accu hire essentially but it actually kind of maps to a bigger issue that apple has which is trying to crack the content code and that has implications across many parts of their business. >> hey, gene, brine sullivan. they have the streaming side of the business. do you think this would necessarily prevent them from also going after a pandora and/or spotify, create this sort of major streaming munster to take on a growing google play, and a growing or expected to be growing amazon streaming service? >> i think this is probably their play. i don't think they're going to do spotify or pandora. i think the reality is, the music segment is not that exciting of a segment. and so i'm more interested in how i owe vine can -- what he can do outside of the music segment. that unlocks other things beyond into the living room too and so i think they can -- i think they have what they need on the streaming music side with beats
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but what he does and brings, i owe vine brings to the table, is critical to understanding why apple would ever do this. >> apple makes its own headphones as we mentioned the ear buds and music service, not necessarily streaming but has itunes. make mess wonder if we should be asking the question why can't apple develop this internally as it has done with so many other different categories? >> i agree. and that's why our initial take on this is this is a bad idea, is that they can do all this themselves and that's why i think this whole theme about i owe vine's role in this takes on a bigger aspect and so if you look at it at face value, it's just a bad idea. if you take it a step further and think about the -- what it adds to their management team it starts to make sense, albeit a very expensive accu hire. >> let me ask you, separately about this report that's come out of asia from taiwan's economic daily news which i understand is a bit hit and miss on these things.
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a new 4.7 inch iphone 6 will arrive in august, a month earlier than expected and the bigger models will launch in september. does that change your view on the stock in any way? >> no. it's all part of the kind of the fall time frame. those have been the size screens that are generally expected and so i kind of nauts all within general confirmation it's going to be kind of a fall phone line. >> just to bottom line it, we're trading at 582 at the moment. where are you calling apple to? >> we're at 640, so despite the confusion around the beats acquisition this is still a great story to own because of the products in the back half of the year. >> good to see you, gene. thank you for joining us short notice, gene munster on apple. >> can we also add, it is important to do this, this deal is not done. it is reported by numerous sources. gene's putting out notes on it. we're acting like it's done. >> dr. dre putting out facebook -- >> dr. dre and tyrese gibson
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putting out the video on facebook and then taking it down, the deal is not done. what if the deal doesn't happen? then "forbes" will have to rewrite. >> that is one hell of a hangover if they had been drinking on the video to discover you've ruined the whole deal putting a video out. >> dre is not a principal in a publicly traded company. beats is private. >> as i pointed out to you earlier. >> either way, you don't -- from a -- i'm sure dre's lawyer needed to call him and say, hey, apple is a public company, there are rules here, right? just chill until the next episode. >> i see how you did that. >> what's that? >> working in the lyrics. >> want to talk about the adidas, because the ceo -- >> i made a valid point. >> of adidas is speaking out with the world cup 33 days away. both nike and adidas have been spending hundreds of millions of dollars on the event marketing, sponsoring, launching new products, both say it's going to pay off with a marked sales boost and the fierce competition
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between adidas and nike it's really adidas that needs the world cup boost. the company just reported profit dropped 34% last quarter. 20% in north america. got hurt by a weak -- a strong euro. so did tailor made golf business suffering in the u.s. russia, ukraine, weather, you name it. nike ceo told me nike is seeing a bump in sales from the world cup. i asked the adidas ceo why the leadup isn't helping his bottom line. >> as always in the world cup year, the best quarters are the first quarter the year before when we start to launch the jerseys and official match ball. last year in the first quarter, you have seen it, and then the second quarter which is just before the world cup. let me make it clear we grew our football business in the first quarter by 2%. >> now the -- 27%. >> the back story which could make it worrisome for adidas, nike's market share in europe is
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growing. and lately it's been seeing double-digit increases on adidas' home turf. it's been ramping up sales of soccer cleats and jerseys, challenging adidas' dominance in this sport. so we asked the ceo of adidas about the threat from nike. >> it is definitely a two-horse race and we are battling about market share. this is quite clear. when you see in europe and also in the rest of the world, we are fighting a very tough fight about market leadership overall in football, we are by far the market leader because we are achieving 2 billion euros in sales this year in football and nike has announced it's going to do 2 billion in u.s. dollars. we are clearly ahead of them. >> obviously in the two-horse race he's keeping score. just to mention, report in a german weekly, quoted an adidas shareholder investment chaining about mr. hainer and management
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saying they're losing faith in the company because it has failed to narrow the gap with nike. check out the stock in the last year, adidas has significantly underperformed nike. hainer says he's optimistic heading into the second quarter and expecting high single digit growth, world cup will be a factor. we'll see if it will be a temporary one or if he can turn it around. >> refreshing that you're so concerned about german stocks. >> i knew you would. >> we are down 26 on douts. send it over to dominic chu for a market flash. >> turn to the drug market the stock is moving lower as its diet pill faces a generic threat from activist. viva will move to enforce its intellectual property rights. the activist shares down 1%. vivus down to session lows about 4% to the downside. back over to you. >> all right. dominic chu, thank you very much. up next one of the most foremost experts on the federal reserve says it's fueling.
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10:41 on a friday. happy friday. let's head down to the cme group rick santelli with the santelli exchange. >> thanks sully. on wednesday, hearing by the joint economic committee, there was an op-ed that same day by professor alan melt zer and the congressman really liked to allude to this op-ed as you can now see. >> in this morning's "wall street journal" alan meltzer, mr. meltzer said. >> the meltzer article. >> mr. meltzer. >> meltzer. >> meltzer. >> meltzer. >> as you can tell the congressmen were fascinated as we all were because there's a lot of issue going on with the economy and professor alan meltzer, welcome, i know you
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don't do much tv seems as if your op-ed went in a different direction than janet yellen did in many cases. the congressmen were all republicans. do you think there's inflation or this inflation is the bigger boogieman in the closet at this point in history? >> there isn't much now but there will be more. janet yellen responded to what the congressman said by saying we learned a lot in the 1970s. then she proceeded to tell them she hadn't learned a thing. >> well, in the '70s as you pointed to we basically sewed the seeds. now am i correct to say that these excess reserves trillions of excess reserves are like inflation in waiting? to use a computer analogy. like a virus quarantined. aren't they going to break out at some point? >> yes, they will. that's what the challenge for the fed will be. what are they going to do? if they break out rapidly they will have a big impact on the world. food prices will start rising
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and it's going to have countries like china where food is a big, big part of their inflation they're going to start having inflation that's going to affect exchange rates all over the world because of food prices rising and we are seeing the beginning of food price rising. so that's the stock. back in 1966, food prices started to rise and danny, who was the head of research at the fed told me, don't worry about that, alan. he said it's just food prices. well, here we are again. >> another issue for our final minute, all medicine has side effects. listen to any of the commercials. does the medicine of the federal reserve basically easy money, what are the side effects in your opinion we should be concerned about? >> there are two. one is, if they let it continue, we get an inflation. if they try to stop it, the interest rates, we're talking about 2.5 trillen to 3 trillion
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dollars worth of excess reserves. we've never seen anything like that before. crystal ball is not very good about saying exactly how that's going to work its way out. but it's hard to see that it won't take rather high interest rates to get banks to hold them rather than lend them? >> you know, the president or janet yellen, neither want to take credit for the record highs in the stock indices. i think the president really doesn't talk about it much because his base isn't really part of the group getting the benefits. janet yellen's case do you agree with her, professor? do you agree the federal reserve has had a very little influence on the pace and the level of stock prices in the united states? >> no, i think the fed happens been driving the -- has been driving the stock market only average and hasn't worked very well. when it drives up the price of stock market stocks, it gives a signal to the market that we should get more investment in
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new capital. that is, it makes the price of new capital cheap relative to the price of the existing capital which is priced on the stock market. that isn't happening. i mean, investment is the weakest part of the recovery. that program isn't working. it isn't working as far as the labor market is concerned because most of the decline in unemployment is a result of people leaving the labor force. it's not just the old people who have been dropping out for years. it's the young people, 18 to 34, that are leaving the labor force because they're discouraged. >> professor, thank you for your insights as a very famous fed watcher. lifblgds to have you -- i would like to have you back again. have great weekend. >> you too. >> back to brian, brian sul lay van, thank you, buddy. >> rick santelli, it's my pleasure, sir. hope you get that '64 shah vel or whatever it is in your garage running pelp with thank you. the markets, i want to look at and you want to look at
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something sara -- >> you want to look at something first. you go. you're the guest on the show. >> csc, computer science corporations number one best performing stock on the s&p 500 right now, top earnings, stiefel upping their price target to 68 which leaves, i don't know, quick math, another 12% on the upside. what are you looking at? >> i wanted to look at the major indices in terms of equities before the treasury market. we are seeing red arrows. the dow, s&p and nasdaq all in the red. nothing severe, dow down 35 points, s&p down about 0.3%. >> are you saying with a 0.2% of a decline we should not panic? >> i wouldn't speculate one way or the other. we are heading for a down week and if we do close lower on the week this is crazy, the cnbc market team crunched the numbers it would be alternating weeks of gains and losses for the last ten weeks. >> wow. >> a speaks to the volatility. >> as an optimist, watch cnbc
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every other week then. >> on the up weeks. >> what if you were in the wrong weeks? >> the dow the only major index higher this week. and by the way, hope lives. >> and lower yields. >> up next, jane wells and a thighmaster. apparently no other words are needed, jane. >> 31, 32, 33. >> nice. >> broke out the mom jeans, crop top, headband and the white reeboks to celebrate 30 years of half hour infomercials. up next, suzanne somers explains how to succeed in business when we come back. morrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through,
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we say: let's get to work. because the future belongs to those who challenge the present. at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control. ford technicians are ready to find the right tires for your vehicle. get up to $120 in mail-in rebates on four select tires when you use the ford service credit card at the big tire event. see what the ford experts think about your tires. at your ford dealer. you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be,
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well, what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business. retail sales numbers for april showed improvement, but it turns out they don't even include products sold as seen on tv. or as seen by r.j. well, who got some sales advice from an infomercial legend, for a hint. jane wells, the only reporter who would go on live tv with a thigh master in her '80s clothes. a perfect story for you, jane. >> well, this is my era, i'm sorry to say, sarah. it has been 30 years since the fcc relaxed rules so you could
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have half-hour infomercials on a tv, and it's 24 years since this made a fortune for a famously fired starlet. the thigh master turned suzanne somers kicked off "three's company," just been inducted into the infomercial hall of fame. still has legs at age 67, great legs. and she said her entrepreneurial spirit was with her even when she played chrissy snow. >> i went to the producers, and i said, you know, this character is some flamboyant, and i said we should merchandise her. we should sell chrissy hot pants and t-shirts. i kept going to them, and they would get mad at me and say, this is not a business. this is a show. and i would think, mm, not really, it's called show business. >> imagine how it was back then. these days the network would love her ideas. now, she oversees an empire focusing on aging, health, and
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beauty. >> the public is smart, and they can smell b.s., and so your eyes have to tell the truth. and that's why i said i can't sell it if i don't love it. i'm in a narrow but -- narrow but huge demographic, and my demographic has money, and they like this message, that there's a new way to age. >> best business advice you'd give somebody? >> never write anything in an e-mail that you don't want to hear being read aloud in court. >> that didn't happen to her. she saw it happen to someone else. by the way, the thigh master started out, when she first had it pitched to her, as an arm thing. she said, no, could it do this? and a fortune was made. infomercials are changing, guys. the youtube world, a new generation may not be willing to sit through a half hour of tv. we'll talk more about this later today. back to you. >> and so, a fortune was made, jane.
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i love it. she looks amazing. >> she -- she is -- and she's so genuine. she really is. she says, i can't lie. that's why she's so successful. >> and a new career for us all to be inducted into the infomercial hall of fame. >> brian sullivan is a big suzanne fan. what you can't see, is he has a picture of himself -- >> with suzanne somers, you know, just name drop, rolling through fridays, you know, me and suzanne somers. >> yeah, you and s.s. >> i'm he waiting for the reunion. >> hey, you look great. love the new hair style. >> hey, are they acid washed? they'd better be. >> hey, look, i'll stand up. these are real mom jeans, back in fashion. these came from urban outfitters, american apparel. see, you know what works? they work on women who aren't really moms. like me. >> i'm going to see you at the foreigner concert, baby. >> looking good, jane. >> "as cold as ice." >> with her thigh master.
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great story. >> and so a fortune was made. still ahead, the former president weighs in on the rumor -- actually, just confirmed they are in talks, obviously the deal isn't done. we'll talk to recode's cara swisher and see what she thinks about that. >> i got really excited about that. that's keeping you from the healthcare you deserve. but if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. i got more advice than i knew what to do with. what i needed was information i could trust on how to take care of me and my baby. luckily, unitedhealthcare has a simple program
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honestly, the off-season isn't i've got a lot to do. that's why i got my surface. it's great for watching game film and drawing up plays. it's got onenote, so i can stay on top of my to-do list, which has been absolutely absurd since the big game. with skype, it's just really easy to stay in touch with the kids i work with. alright, russell you are good to go! alright, fellas. alright, russ. back to work!
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all right. here we are on the floor. i need a box standing next to brian. >> somebody talking? >> we want to check on the markets before we head out, because we're seeing red arrows across the board with the s&p and nasdaq in the red, heading for a down week, at least on the s&p. another week where you have the smaller-capped technology, momentum stocks underperforming. >> russell 2000, half a percent away from correction territory. down 9.5% from its high. >> amazing to see the lower treasury yields, as well. ending the week with a stronger u.s. dollar. what's coming up later on "street signs"? >> a little housing opium. we'll talk about what's right. a lot of people slamming real estate. herb greenberg will venture into the fray. he'll tell me how wrong i was on gold and how right i was on coffee. and also surprises in store. it's friday. always surprises could happen.
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>> always a right call by brian sullivan, right? >> and even if it's not, i'll change the call and be right. we'll get along just fine, eisen. >> i need a little height. >> these kids are taller than you. >> and so a fortune was made. guys, have a great weekend. thank you very much. if you are just joining us, thank you for switching on cnbc. here's what you've missed if you're just tuning in. ♪ well, you can tell everybody yeah, you can tell everybody ♪ >> look at the short-term headwinds, and you see tremendous long-term potential for this company. ♪ i'm the man, i'm the man >> -- demand that is growing all over the world. ♪ well, you can tell everybody yeah, you can tell everybody ♪ >> we were looking at costuming, and there was chuey. and what do you do when you have your iphone? you take a selfie. ♪ go ahead and tell everybody
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>> mike judge said, i don't know what you look like, but i could just tell by the -- ♪ i'm the man, i'm the man, i'm the man ♪ ♪ i got all the answers to your questions ♪ ♪ i'll be the teacher >> good morning, everybody. 11:00 a.m. on the east coast, 8:00 a.m. out west. happy friday. here's what's on tap. apple finally spending some of the cash lying around. it's in talks to buy beats electronics for $3.2 billion. cara swisher and the former president of mtv will give us insight into what apple is thinking. not the best disappearing act. snapchat settling with the government for lying about the privacy of user videos. is this just a black-eye for the company, or something much bigger for the tech industry? she's been called one of the sexiest ceos alive, and a new book takes a closer look at her success in the world of business. we'll talk to the ceo sophia ameruso later in the hour. we'll start with the "squawk feed" cara fisher with recode,
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and jon fortt joins us. we have to start with apple, in talks with beats. the headphone company owned by dr. dre, for $3.2 billion. neither apple nor beats has commented on the new, but rapper tie reese gibson posted a video on his facebook page with dr. dre seemingly confirming the deal. here's what it looked like. >> the "forbes" list just changed. hey, it came out, like, two weeks ago. they need to update the "forbes" list. it just changed. in a period of, what, oh, my! >> the first big hit in hip-hop right from the [ bleep ] west coast. >> oh! >> clearly some excitement in the room there. that was dr. dre in the background. that's really the only confirmation of any sort we have. we should note the video has been pulled from facebook. cara, we've been debating this deal all morning. what's your opinion, the rationale for apple to do this? >> first of all, it's not that much money for apple.
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they have $150 billion in money to spend on whatever they want. and they're sort of in a position where they have to start -- think about their image again. it's very important. it's sort of been problematic recently. they also get the music service. that's probably more than the headphones service, which they sell in their stores. they've been debating a subscription music service. and so, instead of building their own, they're buying one. >> now, kara, for me, a number of puzzling things. apple tends not to do subbrands, filemaker that's been around for a long time, a little bit of an exception. the product doesn't look like something that apple would design, and the streaming business, which they bought from mog for double-digit millions of dollars, does that really make sense to buy now for this price? there are other technologies out there apple could buy. >> yeah, absolutely. i think there's a cool factor here, to bring this in. i mean, i think apple does need to up its cool factor, and this is part of that. the headphones, they're not that
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well regarded by real music aficionados. and they're plastic, not really apple designed when you think of apple. but still cool and popular with young people. i think, again, the music service for beats has not been successful, compared to spotify, it's not successful at all. but i think it's kind after splashy deal. they've never done any, so to do one is not a big deal, it's de minimis on their balance sheet. >> i read they were not happy with the kind of advertising that they were doing worldwide with a view that perhaps samsung had stolen a march on them, and a chief marketing officer, senior vice president, who's under some pressure, kara. >> yeah, i think so. it's a play in a lot of ways. it's an expensive play, but at the same time, this is apple. they don't do a lot of these. facebook is spending $19 billion on a single app. it's not crazy at this moment in time. google does the same thing with ways and nest, for example, that
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sold 250,000 units in total. so i think this isn't about sales or things like that. it's about buying certain things that will help you in other things. >> kara, you're not the only one to weigh in on the fact this is a small price tag for apple. mark andreesen, also a viewer of the show, tweeting, the question is not why are they being addressive in buying beats. the question is, why are they so conservative in not buying everything else? jon may have an opinion on this one. >> yeah, i kind of quipped over e-mail, andreesen really hasn't seen any acquisition deal he doesn't like. obviously, andreesen horowitz gets paid seemingly one out of three times when anything gets purchased. but, i mean, if they're going to do a big deal, i'm still scratching my head over this one. there's speculation out there it's about getting jimmy iviaon who is big in the music industry. i have questions about how his
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personality would mesh with apple's current suite of executives. >> well, why not? iovine is very interesting, and there's a lot more going on at apple. they do need to bring in fresh perspectiving. bhi the way, he's one of the best dealmakers, so maybe this is what he convinced them. that could be that. >> kara, there is some executive reordering going on at apple. you talked about the pr chief said to depart this week. talk about some of the deck chairs being shuffled at apple and what they need to do to restore some of the rampgs to make sure they do have the best people there. >> well, you know, she's been there a long time. she's a very famous pr -- she's more than pr. so much more than that. you know, she's been there in the jobs era, and worked with him to create this mystique around apple, and i guess it's time for a change, i guess. she's been there a very long time and was quite integral among other executives in the turnaround at apple.
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so, i mean, i think it's interesting -- there's not that many deck chairs, angela is coming in. that's a hire we all knew about. it's still the same executives. >> kara, finally, on this topic, we're looking at pandora, which was up as much as 2% in the intraday. it's turned around with the rest of the market. the nasdaq now down 21 points. but the fact that pandora shares were up, this is one of the only publicly traded comps to beats. of course, spotify is not public yet. do you think that there's any impact that if this deal happ s happens, that it would have on further dealmaking in this space, someone needs to snap up pandora, someone needs to buy spotify? >> these things tend to follow each other, when executives get -- they're so insecure -- they're so insecure, they'll go, well, what do i need? so maybe a jawbone is another one, the one sort of standing that makes the wireless headsets and the wireless speakers and the health trackers. that's an interesting company. you know, all the health tracker companies. and then, there's pandora and spotify. spotify is really expensive and
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seems to be on an independent path. still, they've got to be thinking at some point when there's a price -- there's a big price, why not consider it? >> all right. up next, kara, we have snapchat. the company has assured its users that the pictures sent would automatically delete. that may not be the case after all. snapchat settled with the ftc on charges it deceived users into thinking those videos and photos would disappear forever after no more than ten seconds. we asked snapchat ceo evan spiegel about this a number of times. here's the most recent time and what he had to say. >> well, after a snap is viewed by someone on our service, we delete it from our servers. we store it until your friend pulls it down onto their phone and views it, and then we delete it. >> snapchat said on its blog this morning, while we were focused on building, some things didn't get the attention they could have. one was being more precise with how we communicated with the snapchat community. kara, it seems clear. they said it would delete. it turns out it doesn't. >> oops. >> it's still on the servers somewhere.
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what do you think this does for snapchat? >> it shows there is -- they're flying the airplane and building it at the same time. i think that's the kindest thing i could say. you know, i don't -- he's a young entrepreneur, and he misspoke. and that's -- again, the kindest thing you could say. i don't think it was -- we're trying to trick people. the whole premise of snapchat is that it disappears, and so, saying, hey, we delete it from our servers sort of is not as good a message as we delete it from our servers. >> yeah, it's kind of hard to delete something is one of the lessons would he have in technology in general, not just consumer technology, whether it's on your phone, your pc, or servers. but for the fundamental issue of what the company itself is for, doesn't this raise questions? is it a messaging company? is it just for kids to hide messages from their parents, who want to check their phone? what's it really for? >> it's supposed to be an ephemeral messaging service, and it's not so ephemeral. the famous like from "the social
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network," the things -- everything in the internet is written in pen, not pencil. you can't erase it very easily. and the premise of this company. that's the premise of this company. >> and am i missing a trick here? you're both being very kind about misspeaking or difficult to delete stuff. doesn't it -- am i wrong here that it actually has to allow independent privacy auditors to inspect the company for the next 20 years, therefore it has to keep them on its servers? that was always the deal? >> no. i mean -- i'm sorry -- >> well, i'm reading that they actually, by law, have to keep what's going on for a while. is that correct, kara? >> i'm not sure about that, so i can't say. >> okay. so the consent decree, kara, is something that has no fine from the ftc. it changes the behavior. we've reported on the show that snapchats can be retrieved for lawsuits, in divorces it's come up, insider trading, potentially. so there has been this inside -- idea that you can actually access them. i'm just wondering if that's been coming up, how can the
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company itself continually deny this? >> well, i think you have a very inexperienced ceo. you've got the things they're building. this has happened before, all kinds of things. they had another technology snafu not long ago. you know, i think the question is on a lot of the services is who's running -- no o who's running them, but a lot of the services has vulnerabilities. every one of them does. they don't like to talk about it. and they -- they're selling the idea of ephemeral messaging, and that's the center of the company, and a sideways version of that doesn't come across as well to users. >> yeah, it doesn't. it's kind of like saying you cleaned your room and hiding stuff under the bed. we make these messages really, really hard to find. >> find, yeah. >> but, yeah. i don't know. >> how good does this make facebook's previous deal look, $3 billion? should they have accepted it and become a part of the company and developed their technology? >> well, before yesterday, you might say, yes, but if beats can get three, then maybe there's still hope out there for the consumer tech companies.
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>> i think snapchat will do fine somewhere. >> all right rkt kara, have a great weekend. thank you for joining us. as always, every friday, you brighten our mornings. kara swisher from re/code. >> and our parent company, comcast, does have a minority stake in re/code, we should note. jon fortt, you'll be later back with us? >> yes, and we have a stake in jon fortt. >> yes, a minority stake, and that's a pun in my case. >> okay. do you want to invest in stocks? design your own portfolio, anywhere from stocks that went public last year to tech winners over the past six months. the ceo will be here to tell us how it works in a moment. and also, rick santelli working on the "santelli exchange." >> well, simon, i think today's going to be easy. but we're going to look at some of the big stories of the week. diana olick story about how all cash sales in real estate are becoming a much bigger norm than history. it's a giant jump in payrolls of athletes, and the gigabattery
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factory that elon musk wants to build. california might be open to it. what do all three of those have in common? you want to find out at the bottom of the hour. being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. can you start tomorrow? yes sir. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live...
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welcome back to "squawk on the street." check out shares of aol. the stock is moving higher on news that ceo tim armstrong bought 56,000 shares yesterday
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at around 36 bucks a share. this after weakness in the stock following its recent disappointing first quarter earnings report. that stock is just off session highs now of about 3%. again, aol ceo tim armstrong buying shares of stock on the dip. john, back over to you. >> thanks, dom. motif investing based on the concept of base stock investing. they create groups of stocks based on big ideas or themes called motif, and they allow users to invest in them for a fee. this week, motif announced 35 million in new funding from investors, including jpmorgan and in all motif, raised 86 million. glad to have you, hardeep. >> thanks. >> what do you need the money for? are you paying the people who create them that much? what are you building here? >> it's two things we announce.
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one is we're going international. that obviously required more funding. and, two, expanding beyond the traditional, individual, retail platform to offer it to financial advisors. a lot of the benefits of motif for the individual investors applies to advisors, which is i want to take a product that's low-cost, transparent, and idea can be anything, not like rob robot robotics, but it could be a trading strategy. we make it super easy for retail investors and now advisors to take advantage of the platform. >> when you say going international, i know you already have, like, the china internet motifs. what is the cost involved with going international? what are users going to see that's different? >> when we say international, it's about expanding the platform and making it available to a global audience. now, you can invest dploeblly from the united states. it's about opening up offices in different parts of the world. >> so your backers, jpmorgan as of this most recent round, but also goldman sachs, getco, i'm
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wondering what is it about your company that they can't build themselves? >> well, i think anything's possible. i think what we've figured out how to do is make investing super intuitive, super cheap, and very transparent. and i think a lot of the innovations that we bring together is the power of social. it's almost a crowd source phenomena as much as it is -- and these technologies are pretty complex, and we've done a good job of bringing them together. >> some are at a loss as to what you actually do. so what do you actually do? so if i want -- if i want to invest in -- how does it work? >> we're an online broker. >> right. >> instead of buying individual stocks, you invest systematic, water shortage, cloud computing. we take these ideas and combine them in a basket of stocks, that you can buy. >> and you put that portfolio together? >> so we have built 120 motifs, our customers in six months, have built 35,000 motifs. >> you have one interesting
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that's called obamacare. >> and it's where rich people, old people, trends, like obamacare repeal, will make their money. >> if you have one labelled motherhood or apple pie, they can invest in that. but for the investor to get a decent return, surely it depends on the stock selection at the end of that. >> absolutely. >> and that's not what you've really been mentioning through this interview. at the end of the day, you come back to being a fund manager. i'm not sure -- do you think -- >> actually, that's incorrect. one of the things we do, we don't believe you can pick stocks. >> who can pick stocks? >> anybody can pick individual stocks. what we do around any theme or trend, and it could be an asset allocation model, just about cutting down costs, we talk about themes. but what we do is create an index of all the stocks that are relevant and a motif is a simple
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that tracks the index. you have better exposure to a theme or idea by diversifying through a trend. very hard to pick individual stocks. >> we have a list of the samplings of the motifs. tech sector, online gaming, digital dollars, couch commerce, 3-d printing, but a lot of them don't have very good performance. 3-d printing down 27% this year. who is actually picking the stocks that are going into each of these themes? >> those are just a focus on the tech sector, which is going in. there are definitely areas -- a renters nation motif doing well. a lot of what we do, we give you ideas across the board. they're opportunities to move. there's a rotation out of tech into other areas. so those are just an idea to say when we talk tech, we shouldn't be talking about tank. motif is a lens into the market. tech motifs are doing well, tech motifs getting clobbered now. >> what's the best performing motif overall? >> right now, our clean tech motif. up close to 80%. >> and you have a big name like alibaba getting ready to come in, i imagine you're going to have to move a lot of things
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around, not only in china internet but in e-commerce in general. what's the impact of something like that? >> so every motif is rebalanced periodically. it can be quarterly. it could be monthly. if it's a trading strategy, it could be weekly. and as these ipos come out, we update our motifs, and those get -- those get deployed in all of -- >> like mini-etfs. >> like crowd sourceable, customable buzzfeeds. >> wow, so many words. no wonder goldman gave you 10 million. >> well, thank you. hardeep, ceo, co-founder of motif investing. when we come back, the median home price is $4.7 million and it's home to eric schmidt, meg whitman and sheryl sandberg. we'll take you to what is the most expensive neighborhood in the country. you won't want to miss this, when we come back.
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atherton is the most expensive zip code in the country. it's home to a lot of the bay area's elite, including meg whitman, sheryl sandberg and charles schwab himself. if you want to live there, it will be pretty expensive. josh joins us live from atherton. over to you, josh. >> reporter: yeah, simon, silicon valley real estate is red hot, but there is no place hotter than here in atherton, california. the average home price is now up about 40% year over year. brokers say last year there was this buying frenzy for homes in the $5 million range. that demand has now pushed buyers into the ultra-high end, just the first quarter seven sales in excess of $10 million. why the increase? because atherton is in the heart of silicon valley, which is thriving. >> we have a market here with high demand, low supply. and, of course, we are the
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center of technology. the tech sector is doing well. everything that drives the tech sector, the local economy, the venture capital, private equity, we are just the center of innovation here. and so, that, more than anything, drives our housing market. >> reporter: there are many exclusive communities for the elite in silicon valley, but brokering say atherton is the most sought-after location. and buyers are moving fast. ken de leon of de leon realty, sold a mansion for $14 million to a chinese buyer in just 72 hours. >> one of the reasons atherton is so hot right now is "forbes" named it as the number-one most affluent neighborhood in america. a lot of my clients want to be within the best area within all america. so that helped boost atherton's stock. >> reporter: now, atherton brokers say their buyers pay for
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their homes in cash, and some investors from china will actually pay for a mansion sight unseen. deleon is now buying a plane so he can show chinese and indian buyers the beauty of what they may be buying. the takeaway, guys, if you're a realtor, you might think of moving to atherton. if you're a buyer, be prepared for sticker shock. back to you guys. >> yeah, josh, a lot of eye candy, but also a lot of sold signs. the houses seem to go quickly, too. >> reporter: yeah, very quickly. i mean, that's one real difference. de leon said he had this $14 million mansion, and it would usually take three months, but he moved it in when three days. >> all right. josh lipton with an enviable live shot. thank you. with the dow down 30, let's send it to dominic chu for a "market flash." >> check out post holdings. the stock is falling after the
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cereal maker reported weaker-than-expected profits and sales. they have raisin bran and grapenuts. it's off session lows, down about 7% on today's session, kayla. back over to you. >> thanks, dom. coming up, she's been called one of the sexiest ceos alive, and today she's talking to us. she is nasty gal founder sophia amoruso and she will join us. we'll tell you what's moving across europe when we come back. a more enjoyable way to get your fiber. try phillips fiber good gummies. they're delicious, and an excellent source of fiber to help support regularity. wife: mmmm husband: these are good! marge: the tasty side of fiber. from phillips. woman: welcome to learning. spanish in the car.c on. passenger: you've got to be kidding me. driver: this is good. woman: vamanos. driver & passenger: vamanos. woman: gracias. driver & passenger: gracias. passenger: trece horas en el carro sin parar y no traes musica.
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driver: mira entra y comprame unas papitas. vo: get up to 795 miles per tank in the tdi clean diesel. the volkswagen passat. recipient of the j.d. power appeal award, two years in a row. can you start tomorrow? yes sir. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. when csx trains move forward, so does the rest of the economy. csx. how tomorrow moves.
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>> zm europe shutting down in negative territory. still, a lot of earning coming through for the ukraine worries. there's an interesting standout from reuters, they say we're now two-thirds through the earnings season for the stock 600, the big set that you have in europe. and around half of those, 50% of those, reporting in europe, have so far missed expectations, which is why it's been quite sluggish in europe again this week. today, it's the spanish telecom giant, telephoneica, but you can see it's down 3%, but also, again, it has the currency effects as they earn money around the rest of the world and take that money back into a very strong euro. the euro, of course, has continued to be a major story this week. we've actually fallen again
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today, down .75% as a result of what happened yesterday when mario draghi gave that news conference and basically set the clock ticking, say some, on the ecb actually easing at the next meeting, or as paul donovan at ubs put it more eloquently, a fine burlesque performance, and he basically said the ecb will ease policy without actually saying that the ecb will ease policy. that, of course, cuts to the heart of what's going on at the ecb, that they keep talking about it, verbally intervening. the question is if they ever will. the italian banks have led the losses, notably in negative territory, but they've been the stocks that have done very, very well this year because the cost of funding for the banks, particularly in the peripheral zones of europe, has fallen, and they still are -- most of those are up substantially on the year to date. on the subject of italy, we do have news coming through, of course. last night, here from sergio,
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the ceo of fiat chrysler, when it is pulled together as one company, it will headquarter not in italy, not in the united states, but in london. >> wow. very interesting move. a lot of people watching that company. giant company, juggernaut now that they've merged. but u.k. apparently. >> -- italy is the main point here, and there's always been this debate with the rest of italians, would he take more of the production resources out of italy and close down factories and shut jobs and for that end, this is not terribly good sign. >> yeah, that wrinkle certainly makes it seem that way. thanks. from the u.k. to the windy city, we want to get to rick santelli. you're talking about how everything is easier when you have big bucks, right, rick? >> yeah, and i know there's this big wand of success in this country, but it doesn't make sense to me as a free marketeer. i wish everybody would have big tax problems next year, meaning make a lot of money, pay a lot of taxes.
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i think it's good for the count are. there's not a smidgen of objectively in my opinion when we see the current administration talk about the wealth effect, because whether it's the federal reserve or, i think, many of the programs, those on the left of the aisle, i think that what you see is that being affluent is something that many of the current politicians in power actually push. and i'll give you a couple of examples. especially on housing. on housing, diane olick did a great report, q1, year over year, all cash deals, 42.7 versus a year ago, 19%. you know, come on. who has all cash? well, you know, the upper echelons. the other thing we had on yesterday, on "power lunch," that i liked with the big draft last night and yesterday afternoon, when broadway joe signed on the dotted line in 1967 $400,000. believe me, anybody who was around in '67, and i certainly was, that wasn't a small chunk
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of change. but in deference to what jack brewer said, the number-one pick last night probably will be in order to make on the line to make somewhere between 25 and 28 million. so i guess my point is, it's easy for this quote/unquote 1% to always be associated with wall street. but there isn't a lot of objectivity there, because i think whether you look at hollywood or you look at the sports figures or you look at silicon valley, a pretty big part of the left base is a big chunk of the 1%, and the policies. and i'll give you the cherry on top of the cake. and as i said, i have no problem with any of this. but i'm not pushing that this differential between those who have and those who don't have is a dynamic that i think we should spend all our time on. i think trying to give a fertile landscape of opportunity to everybody is based on education, and the money for education seems to be more of an issue for shoz retired pockets it goes in
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than whose brains it nils up. when it comes to tesla and the battery factory, it didn't look like california would get it. unlike small businesses, or in my neighborhood, just try to get a permit to build a dog run, it takes forever. boy, they'll rearrange these and cut a lot of the red tape trying to get mr. elon musk and the factory in california. the long and short of it is, is that current policies really do exaggerate that affluent have an easier time. i wish we'd spend as much time on small business and give them a little extra red tape cutting, because i think that truly would end up in a lot more jobs. back to you. >> i hear a lot of cheers there, rick. thank you. up next on the program, cnbc confirming that apple is in talks to purchase beats for $3.2 billion. so how will this deal change apple's music business? we'll ask michael wolff, yahoo! board member, next on cnbc. whent what they get from alaska,
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"halftime report," at the top of the hour. >> thanks so much, scott. busy hour coming up. we want to get back to today's top story, and that is that apple is in talks to buy beats for $3.2 billion. so what else do we know about the supposed deal? morgan brennan is live in annapolis store with the latest. are shoppers buzzing yet? >> it's still really early here. let's talk about the company. andre young, aka dr. dre, he may best be known for his music -- ♪ -- but his beats by dr. dre headphones are what could ultimately make him the richest man in hip-hop. so what is beats? it was founded in 2008. it's essentially two companies under one umbrella. one, my sources say, apple is likely most interested in, a flashy high-end headphones that are brightly colored, noise cancelling, and actually already retail in apple stores for anywhere from $150 to $450
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apiece. now, the second business, a mous music-streaming platform that launched just in january, with subscriptions ranging from a basic free service up to $15 a month. now, beats pulled in a reported $1.2 billion last year. it's a private company. but this deal may be mostly about the brand, and not just the brand of the products, but the brand of its famous co-founders. there's dr. dre. but just as important as jimmy iovine, worked with everyone from lady gaga to u2, and one of the industry's earliest adopters of the new media platform. he is in talks to join apple's team in a creative role. but they aren't the only ones to stand. he and dr. dre aren't the only ones that stand to make money. carlyle group invested $500 million last year.
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vivendi, and universal investors. we hear it could be announced as soon as next week. in the meantime, this gives new meaning to the dr. dre lyrics "still got love for the streets." kayla, back to you. >> all right, thanks so much for that, morgan. >> let's look closer at what the deal would mean. michael wolf is the co-founder of activate, former ceo of mtv and indeed former yahoo! board member. welcome to the program. >> thank you. >> so which side of the fence do you come down here? are you on the kind of intellectual side that this is about content and this is about music streaming? or are you kind of more on the imaging side of things, that this is about hip-hop cool and this is about reinvigorating a brand? >> yeah, where i see it is this is about a brand that resonates across age groups. yes, it's very hot with a younger demographic. but because there's a giant "b"
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on the side of the headphones and you see people walking around, it's something that adults also want. and we should remember that these headphones and these products are sold in apple stores, and in some ways, you could argue that the iphone and the ipod have made them successful. and finally, you can only imagine that sometime soon the music player itself will be inside the headphones, not a device you attach to the headphones. i think it makes sense. >> and i like the approach that you're taking, michael, because you, of course, at mtv networks, were in a position where you were running a business that was attempting to appeal to the cutting edge of youth. and i wonder if one of the reasons why wall street has such difficulty digesting this, is because it cannot think outside the box in terms of appeal, in terms of culture, in terms of imagery, which is usually left to the cmos? >> you know, when you look at t it, understanding what 14 to
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24-year-olds are doing, the only way you can understand this as an analyst, you have to look at it and say, i don't get it, and the fact that you don't get it probably means it's the right thing. >> then again, i interviewed bill conway, one of the co-founders of the carlisle last year, and he said beats was one of the best deals they did. they put in $500 million, and will have tripled their money in less than a year. there's some people that can find value. but $1.2 billion in revenues last year. does that surprise you that a company like beats actually makes that much? >> it's a premium price product. it's one that consumers really prefer over apple's own headphone. and it's got so many different product lines already. but ultimately, it's like every other branded product, it has a brand on the outside. and i think that it does provide -- apple needs to find a way it's going to remain relevant to this group, and beats is a brand that's not only
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relevant, but it's a brand in its infancy. >> it feels to me that beats was especially relevant about three years ago. now, there are a lot of competitors in this headphone space. i also wonder, and maybe you don't have specific thoughts about this, maybe you do, this is a very drastic change in strategy for apple if they, in fact, go through with this. having a subbrand, a completely different brand, they would have to position lower or at least differently in some ways from apple. what do they put out as a beats product versus what do they put out as an apple product? how are those things designed? how are they manufactured? might that confuse the consumer? >> i don't think so. i think that the increasingly, the two brands -- they're products that work along with each other. yes, today, they're beating by dr. dre, but there's nothing to stop them from being beats by dr. dre and apple. how apple manufactures and how the product -- beats isn't manufacturing their own product anyway. it's all been contracted out.
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nobody is better at sourcing high-quality product, and high-quality electronics than apple. >> okay, michael, good to hear from you. thank you very much for joining us. michael wolf, the co-founder of activate. >> pleasure. let's send it over to dominic chu back at headquarters for a quick "market flash." >> kayla, here's what's happening. you want to check out shares of allergan pharmaceuticals, after the company is reportedly rejecting the $46 billion bid for the company. remember, bill ackman, part of the consortium. the stock of allergan down 1.3%. as for valeant shares, trading down. again, the next chapter, according to the ft, a rejection formally could happen as early as monday. valeant-allergan back in the headlines. >> the saga continues. when we come back, a popular online retailer selling clothe, shoes, and a ton of other
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accessories, and its founder is out with a new book encouraging women everywhere to take charge of their own lives. now people are describing the book as the down-to-earth "lean in." what does the author think of that? >> i don't want the girls to be the anything of anything. i think it's a book that a lot of girls are already finding inspiring. and, hopefully, something that speaks to the part of the world who don't have the perfect education or maybe don't know what they want to do next and don't have a pedigree background. >> that is nasty gal founder sophia amoruso. we'll have more with her when "squawk on the street" comes back. s might have a song that he has in his head but he just can't get out. with the technology of cloud, we changed all that. i can sing something into my device. up to the cloud it goes. back down it comes sounding better. we break down the walls of creation, and we give music creation for the masses. ♪ ♪
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nasty gal is an online retailers popular among the twentysomething set, but the ceo started as an e-bay saler in 2006. over the years, it's transformed into a company that had $100 million in revenues and a legion of loyal customers who buy nasty gal's vintage-inspired clothes, shoes, and accessories. i spoke with the founder, sophia amoruso, about her new book and how she got her start in the business. >> i was working in the lobby of an art school for $12 an hour checking student i.d.s, and i had a lot of time on the internet, and this was back in 2006 before facebook took off. i was on myspace getting requests from ebay sellers using
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myspace to promote their business and checked out their auctions. they were selling vintage clothing. i wore pretty much exclusively vintage clothing at the time, and i thought, i can do this. so i quit that job. and bought ebay for dummies. and started nasty gal vintage, which was the early incarnation of nasty gal on ebay. >> so this formed out of an ebay store. you were an ebay seller. there are thousands, if not millions, of those today. how did you set yourself apart, your store, to actually becoming a brand? >> yeah, there was always a really unique point of view, from the brand voice and the language i used to the photography and the casting of the models, and especially the product and the styling. so i was taking vintage, you know, things from, like, many decades and making them new again. and putting in the context of modern fashion, modern dressing. and i always elevated the photos as much as i could. i have a photo background, and i
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handled all of the details. even slapping a label on a package could be seen as an uncreative act, but for me, it was not slapping, it was placing, like, very perfectly, like, squarely on the package. so i guess i would call myself a detail-oriented person, and all those things added up to something very specific, which became nasty gal, the brand. >> the first year, how much did you sell, in your vintage items? >> i did $250,000 my first year. $1.1 the second year. 6.5 the year after that. and 28 the year after that, and that was the year we raised venture capital for the first time. >> what was that process like when you were raising venture capital? did you go seek out the investment? did you receive inbound calls from people who wanted a piece of this? >> yeah, i'd been receiving inbound calls for a while, and, maybe you're too small, or we don't -- they wanted to meet, and i'd been given the advice, wait as long as you can, you can sell less for more. but i also just wouldn't have even known how to have conversations with investors.
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i'd never even been in a board room when these people started calling. so i waited until i felt like i had enough experience to be a peer at the table. and at that point, i was running a profitable business. it was -- they were, like, where did you come from? so they were all very eager to invest, very excited about a company that sells female -- like, clothing to women, and every venture capitalist, it was like they had discovered that women like to shop or something. and the investor i chose, danny rimer, index ventures, whom i love, you know, got on a plane after he met me and called me and said, i get it, you have a community. so a community is much more powerful than a retailer. a lot of retailers, we're not competing on stuff. it's not about stuff. there's something very special about nasty gal that sometimes academics can't quite define. >> but it's more than a community. and you're more than a peer at the table. people in the industry see nasty gal as a real competitive threat. a year ago, you got a call from urban outfitters.
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they thought about buying you. how did that conversation go? >> well, that was reported. we've never confirmed that. so, you know, we've had a lot of conversations. not very deep conversations. for me, you know, i want to take nasty gal as far as i can. i'm not interested in being someone else's employee. i wasn't good at that, and i detail that in "girl boss." i will wait as long as i can for that. there's no plans. >> $100 million in sales, though. where do you see this business going from here? >> we're building a global brand, and a community of like-minded girls. nasty gal is as much about fashion as it is a lifestyle. i've just gotten to the point where i've hired an incredible team of people who have way more experience than me, are actually smarter than me, and have better ideas than me, and i can't tell you how exciting that is. so the sky's the limit. >> you chronicle this journey in "girl boss" out this week. it's become a mantra for your following.
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what type of attributes does a girl boss have? >> really the boss of her own life. anybody can be a girl boss. guys can be a girl boss. i don't talk really about being a girl being the boss. it's about having big dreams and willing to work hard for them. understanding that failure's only failure when you don't get up and try again. that if you're learning along the way, you're winning. so everything can be a success as long as you're evolving. >> that was sophia amoruso, founder and ceo of nasty gal, out with a new book called "girl boss." she has 104,000 followers on instagram. people love her, flock to her. she told me, though, in her first year, the goods that she was selling on her ebay site, she actually bought on ebay, styled them better and resold them for more better. >> jon's been doing that for years. how can you expand a business like that, if you -- where does the vintage clothes come from,
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if you say you want to be at 100 million? where do you get it all from? >> when she first started, she would go to stores herself. >> like secondhand stores. thrift stores? >> yeah, other places on ebay. now they're designing their own clothes in the style of some of the vintage designers. >> if apple wants to tap into cool, that's the kind of cool they need to tap into. >> we shall see. >> uma thurman meets katey perry. up next, a chinese internet public goes public. it's not alibaba, but the stock is getting a nice pop on the nasdaq debut. "squawk on the street" will be right back. that's keeping you from the healthcare you deserve. but if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care.
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geico motorcycle, see how much you could save. an ipo at the nasdaq this morning, seema mody is there watching a one-day pop for a chinese internet company. >> yes, that's right, simon, the number-one online platform for china, tur. the offer price was $9, and it initially traded down by around 4%. since then, it has reversed losses, now up about 13%. so some details behind it, an online leisure company in china. it offers a selection of package tours, which many times includes chinese-speaking guides. the cfo, connor yang, told me
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that's a big sell for chinese travelers who sometimes have a language barrier. he also said they're seeing 60% sales growth year over year for the past three years. so we talk about why there has been this interest in many chinese ipos like alibaba, and one of the big selling points is just the incredible growth rate that a lot of the companies have been able to achieve. so that's tunu, up about 13% on its first day of trade. simon? >> thank you very much, seema. in the case of alibaba, the fact it's more of a mmonopoly play. >> they certainly have a lock on that market. >> -- consumers, right? >> that is all e-commerce. >> e-commerce. >> wow. >> we'll all be experts in alibaba by the 8th of august. >> my nightstand has the f-1 taking up all of the space on it. >> good show. what do you think of the markets? >> nearing the flat line now.
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i know a lot of investors are going through the data after we got the employment data last week. the market is inching near the flat line, down seven points. we were down near triple digits, so certainly seems to be a lunchtime turnaround under way. >> thank you very much. have a great weekend. that's it for "squawk on the street." as we hit noon on the east coast, let's send it over to scotty and the "halftime report." >> simon, thank you very much. you guys have a great weekend. welcome to the "halftime." here's today's game plan. small caps, big problem? with the russell 2000 close to a correction, is this the real area of the market to be worried about? hash tag bottom? after a rough week for twitter, has the stock found a floor? one would think so, which why it's our call of the day. >> wreck-it ralph. is lauren stock losing the luxury appeal? let's meet today's starting lineup, pete, josh, murph, dave

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