tv Squawk on the Street CNBC May 18, 2015 9:00am-11:01am EDT
today a pair of deals. endo buying parr pharmaceutical and for just over $2 billion. >> and potentially a third in the making i can confirm that they have resumed talks around a possible deal. we'll have more timely to help, tim cook tells graduates not to live lives on the sidelines while apple acquires a gps start-up. the dow and s&p just shy of new all-time intraday highs. the dow, as we said about 16 points away from record territory. people wonder if this is the breakout of the wedge we've been watching for so long jim. >> it's certainly possible. we saw things last week that were really kind of very positive for the market. one, interest rates were good. we need them higher because the
financials roared last week. the other thing that roared were the health care stocks. we still don't have the transports. i know that i was doing some work on the oil lines on the train lines for oil, with rbn, which is my energy source. there they're going to be challenged. so we need the rails, but the health cares, the fins stuff that goes into houses why is that important? stanley works. leg get and plath, so they're all breaking out. i'm thinking if those retailers report good numbers, we'll move higher. >> the dow theorists will have work to do. the transports 6.5%. >> they look terrible. when i went over the charts it was rather -- a downgrade by bush did ksu, the rails really looked tattered. a lot of that is coal. a lot of that is oil not being shipped, just big decline.
so that group could keep us. takeovers could make us. etsy coming out with first numbers. >> be careful. i think the home depot stock didn't even flinch during this decline in retail nor did lowe's. aseena showed me we were over -- home depot and lowe's are the hopes for this group. target this weekend, brian cornel pulls out some of the traditional packaged goods, cereals, he's moving all in natural and organic. that stock acted terribly last week, and kohl's had been up in a straight line. that groo group needs to reverse, starting with urban tonight. i think anthropology.
>> we haven't had a good number in quite some time. target -- home depot and lowe's have been sort of outside of that mainstream, if you will but people are still trying to understand and figure out exactly what's going on within broader retail as we define it. we just don't seem to be spending money. >> we saw a big breakdown against in pbh. and then went down. there are -- there are underoccurrence of housen that were policy. i looked at toll brothers this weekend, very strong. the housing complex is good, but there's john stump, the ceo of wells fargo saying it's a muted housing recovery. how long can we build so few homes? some of it is obviously zoning but in the end, the housing
demand has not come back yet, yes the refinance and rebuild and refinish and make your home better trade has been extraordinary. williams sonoma might be a good tell this week but they were hurt badly by the port strike and said it could be hurt again. >> and any expectations you have in terms of housing starts being anywhere near once -- maybe it was so beyond what anything ever should have been, it truly was completely false. >> but we're building as many homes and we were building in 1960 when we had less than half the population. >> that's a good statistic. i didn't know that. >> yeah -- >> half as many as 1960? >> in the '60s we built far more, when the country was in half. california had just become a state that is passed new york now one fifth of the economy, though it's dry there. >> seventh biggest economy in the world. >> a great piece this weekend how the state was uniquely not set up for the water drought.
>> how governor brown's father -- >> a great piece. some great reporting let's move on to deals this morning. the first one to chime in on involves altera and intel. "new york post" reporting talks between the two companies have resumed. what i can tell you is this -- there were principal to principal talks last week. that means not involving advisers, the investment banks that typically work on these deals, but ceo to ceo or senior management to senior management apparently altera's board has gotten involved to a certain extent s that said it's not clear where these talks are going, according to people who i have been speaking with if you remember, of course as i reported some time back intel had offered $54 a share for
altera, which was rejected by the company, and intel walked away. we do have a resumption it would seem, at least, of some conversations, principal to principal principal. whether that will continue is unclear. altera has heard from many shareholders and frankly those shareholders, when speaking to me were surprised how willing potentially to reengage but it had not until late last week. altera does allow for shareholders to act by written consent 121 days after the annual meeting. that took place, what was it last week i believe? last monday if i recall altera's annual meeting, then you still need 50 days after that. but you can, it only takes 20% of the shares to actually be presented to call the meeting to throw the board out. so they are operating at least with that over them but jim, you do wonder are they serious? or are they trying to create a fact pattern that would help if they were ever to go to a proxy fight? i don't know the answer.
>> i think the world of the ceo, he's doing a lot of great things but still constrain that centrally their business is still pc related. altera is a top notch telco supplier, so to speak. if you want to know why your cell phone can have such fabulous video, it's because of the companies like altera and zylinx. i don't think intel goes down. i think we go higher. >> will they be able to stay at 54 they did know -- they had been a bit higher then came down after due diligence, but more to come here. of course we'll update you if and when we get more. >> consolidation everywhere. just too many players everywhere. >> you're not kidding.
endo of course agrees to buy par pharmaceutical and then dress barn the parent of dress barn and lane ascena agree to buy ann inc. >> there's two other divisions, justice has not been good and some people cause it marreese maurice. >> you went from prince to -- >> i did follow that within. >> ascena needs to do this. this is a good acquisition for david jaffray. i feel like if he can pull this off -- this is a high-end play that they have -- lacked. >> endo is also got to be added to that list in that ever consolidating pharmaceutical area. what's interesting here you may remember endo came in with the
strange bids for sailics, it was stupid frankly. >> you call it stupid? >> it was stupid but it shows how i think aggressive endo needs to be or wands to be. 1.55 billion in stock the rest is in cash. most interesting, tpg, selling par farm sued cal 1.9 billion. they took it private. 50 bucks a lair for par. they turn around and sell it three years later for $8 billion. that's the way it's supposed to work. by the way, when you throw in the leverage that they used the returns on this we can figure it out pretty quickly, but let's just say they're going to be substantial. >> this is just a fascinating group. >> if that were to ever happen. >> there are too many generic
plays. the theme is where we're overstover, we're over-generic. obviously this endo is one of these -- it's an aversion -- >> endo is an aversion. that was paladin, and then they got together and decided to move entirely to a different place. >> endo will go up i predict, because again people want to have players taken occupy generics did well. it was great timing on the tpg. the patent clip was extraordinary, chug just a windfall. >> ptgd. we should make the point -- not the london-based ptg. >> yeah, who are they bidding for today -- >> and now word that the fbi is looking into it. >> the fbi does look into this. i once testified on behalf of another phony bit. you know the -- and it was 25 years ago, but the fbi is the one that really does a great job on these. they're fabulous when they're involved in securities
situations. they get their man, so to speak. >> we'll see how they respond again today. >> just fourfold for what this could have bat it three years ago. when we come back apple kreismt. ceo's if message to graduates and mill lane vich bullished -- and what's behind -- one more look at the free market. the low to high range on the dow for the year to date is the narrowest ever since 1896 if that holds for the first half. unbelievable narrow range. a lot moyer "squawk on the street" in a minute. it's part adrenaline and part adventure. it's part geek and part chic. it's part relaxation and part exhilaration. it's part sports car and part suv.
you feel you're pointed in the right direction. otherwise it's just a job and life is too short for that. >> sort of echos the stance he's taken publicly on things like laws in indiana, and as well as a bunch of other things. >> i think you always get -- this is a very inspirational speech. i just think that younger people need to hear it. i find a lot of younger people are a little too cynical. >> they may be but i think there's a sense on cook and other ceos in order to attract talent they were they need to stand for something, have values as a corporation, if you will because those are more important to the audience they're speaking to 30 20 even 10 years ago. >> i think that's right. the guys who are head quartered in minneapolis, a lot of those companies, target general mills, 3m feel that way to
attract new people. but i was talking to mark bennie about this, they are uniquely we will do this for you, if you do this for us we will give this much away. the one thing i would say that tim cook would know if you're in comp sci or comp engineering, you have ton a computer science major to be able to crack it out there and be at the top. >> absolutely. speaking of apple and cook last night we got our first look at the new steve jobs' movie written by aaron sorkin. the premiere aired knee "made men". >> it's going to shift on the axis forever. two most significant events in the 21st century, allies win the war and this. >> you can't write code you are not an engineer. what do you do? >> the musicians play the instruments. >> some say michael false bender
looks more like cook than jobs. >> i think it will be great. one of the things i saw. i threw out the first pitch on saturday night. i had my apple watch in full display. i did not see tim cook's apple watch when he was speaking. someone had to promote. i guess it's just going to have to be me. >> bright hinge, i gets it's gone? >> no, no i still have it. it was a promise, but -- >> you know the wife says will you put that away? you're doing messaging, checking your stocks -- >> okay. i thought the whole idea was to do it furtively. >> adam cheffer is telling me who i should be playing on this thing. she finds this is a new way to get away with doing all the thing that tim cook suggested. no remember he said silence your cell phones and pass the samsungs. >> you mentioned first pitch.
we should show some pictures. this was at the fisties game on saturday night. >> yep. >> and you were tweeting up a storm all night long. >> going nuts. this was one of the most exciting things i have ever done. i got to meet schmidty and then i did nick the outside corner. most people bounce it just so you know. right before i went out, skipper hale from the debacks, he says you're doing a two-seam he said, listen. let me -- you do a two-seam it goes in the dirt you are choked and you will be boozed and you deserve everything that comes your way. >> you nailed it. here's chase. i brought chase luck. i had a chase jersey on. earlier i had a 20 jersey on he saw me in the hallway. he said boy, your loyalty runs deep. i saw you switch.
>> my favorite tweet was when you told the fanatic to own apple, notice trade it. >> the fanatic was in and out of apple. i said listen man, you don't -- just hold apple enough already. >> that's good form jim. good form. you are thrilled at that ball leaves your hand. >> we were doing a lot of high-fives and everybody was thrilled. >> did they win? >> of course we did. we're five straight the longest streak in a long time. we're going out to play the rockies with the worst eratchet. i think we're back bigger than ever. that's the point i made with chase. >> that's great tape. we'll get kramer's mad dash and count down to the opening bell after a short break. don't go too far. by the time police arrive on a crime scene they could have little to go on. a vague description. a single piece of evidence.
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time for the mad dash. we've got about seven minutes before the opening bell. chevron? >> i thought goldman was a tad downbeat today when they took their oil price down a bit. they're going to an outright sell of chevron. john stump bought a lot of stock. he's at wells fargo, but is a board member. this company mass not gault a lot of stock, and goldman questions how quickly they can do dividend boost. so they pushed that one. but just keep in mind there's still a lot of company, a lot of brokerages, going up and down on the oils with an unsteady group and einhorn's admonitions about the frackers continue to churn through the hedge fund
community. >> not often even in these days when you -- it's always worth mentioning. >> you may not like the oils but this is a great american company. >> let's move on to another american company. >> yelp. piper says this one is not going to happen. they lowered to 46. yelp! yelp yelp! >> there it is. it's coming. >> i think the speculation is afteria after yahoo disposes of. >> aliblebaba is first. though there's no plan under way at yahoo to yet separate that out. >> i come back david. people are still talking about the verizon/aol deal and the coming consolidate action among portals and what tim armstrong will do. this is a natural property. grubhub is a natural property, we know about these unicorns to
have a vertical where you literally, you know expedia is out there. expedia is a good company, trip adviser, you could make it with one butting you could travel. that's kind of what people are talking about. whoever does that could be able to beat against google which is what everybody wants. they want to stop google. >> more on google later. charlie ergen having some interesting things to sea after we taped after our live interview on thursday. for that we'll have the open bell and a lot more to watch on "squawk on the street." stay with us.
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las vegas sands. >> i thought the sands was a little late. this is macau. winn stock has also gone down. of course petro bra they down very being. we see most people saying neutral things. you know amer i source a.b.c. that has been look with mckesson and -- cowen downgrades that today, and you have these consumer products groups being just kind of maybe on the outs with target and its food group. credit suite starts with a buy. i think that they're the winner in the group. >> two years is going to -- inspiring on white way so they can get sold. >> yes, and i had management on last week. jong they have to sell but it
may not matter. >> somebody makes a big. they have a natural yogurt coming. i think that takes the country by storm. there is the open bell a look at the s&p on the top of your screen. down here the big board, ubs announcing a new partnership, and over at the nasdaq the u.s. goefl association and fox sports doing the honors there. >> altera though the bill it's out of the big up better than 6%. >> vago was rumored as wanting to buy, consolidate the industry. cocorvo, the microdeal. that was significant. and xpi an aquirer. fewer players, better margins. the margins on some of these
companies are so much better. only micron seems to be in the death throes of a battle over d-ramps. even there they might deny it. i think this is a halcyon gauge for combinations of the semis that we thought were going to have to happen a long time ago when national semidid its consolidation. >> just to reiteration. there were principal-to-principal talks last week. it doesn't appear advisers are involved. intel is pretty well versed on how to do m & a, but they have at least rekindled the talks after intel was rebuffed with the bid for altera a company that since then has reported a lousy quarter, had its annual meeting on monday and you can act by written consent to throw off is the board of directors.
that would be some time before something like that could occur if it were to occur at all. >> brian sorb mild-mannered. usually he's a gamer, so to speak. first guy -- involved when i read a fantastic q&a on reddit a infirm tiff site that my oldest daughter said, watch this. brian has a lot of different things going in the 3-d world, in the smallest semiconductor, that is obviously something that gordon moore, founder, pioneered. this would be a major move after mcafee, which i thought was not that great of a deal but you want to be in the telco high-end space, altera does programmable logic, a very sophisticated form of semis, so we'll see what happens. >> intel does their work. >> that's why i was surprised
that they saided a combination. and better than just buying back stock, which has not really worked for them long term. >> as we bump up against these levels. dow is in a narrow range. we talked about the narrow range all year long. is this never short a dull market or is this bring your register -- >> i think it's never sell a dull market. when you have pnc, morningstar is up -- i'm talking about financial services as well as banks, that's a great leadership group. the most breakouts that i saw this weekend when i was, looking at the charts were in the financials. that's where the action is. that's positive. >> we do have conoco telling reuters over the weekend they see cap ex steady. it's not doing a lot for a lot of the oil services. >> and chevron is cancelling some projects. i love the action in the home
retailers. that's where it's all good. watch tjx later this week. they have germany doing very well. they have homegoods doing very well. that might be an interesting sleeper play. >> urban core tjx, pbh, fossil kohl's, the worst performer on the s&p yesterday. >> i thought it was overdone the. breen recommends that you buy urban. that does report tonight. very undervalued stock, because the flagship has finally turned around. very well-run company after a shaky period for a while. >> gas is up 22 cents in three weeks. we'll see if that has an effect later on. >> again you always have to default to what the credit card guys said. they said the money is being saved. that's incredible given how littles save. >> if you're living on a fixed income over these last seven years or mork it's been brutal.
>> as your cds roll over you're stuck. >> or municipal bonds get called. >> right. there's just no place to put it. and i think that's what has driven a lot of the dividend stocks. a lot of the dividend stocks like the conagras came on last week, general mills, but the real state of the investment trusts are not doing it for you. >> how about baba down about a percent, being sued by gucci and some others, arguing that they knowingly make it easy for counterfeiters to sell. the company says it has no merit. >> i went to indicate spade's outlet outlet, no, it terns out it's the counterfeit land. if everybody has been on canal street -- this was a bad attempt at a joke. canal street. there is a propensity to -- there are chinese factories that
just produce counterfits, and they are really really hard to spot. they also have a tremendous counterfeit watch business. they have not come up with an apple watch. tim from cupertino tim has not called in yet. >> does he usually? >> once on the tenth anniversary show. >> it would be great if he called the watch. >> he could always message me, thank you, or i'll call you back. >> on baba the crackdown to a certain extent on counterfeiting on the site is thought perhaps to have cricketed to a smaller growth that might have otherwise been the case. these guys were sued previously by the same group, then they
withdrew the lawsuit, and now they're back again. it's been going on for years and year. >> greece so so intransigent. we know that germany has been the big winner. this thing just doesn't end. it's kind of amazing that you have the whole continent doing better except for greece and no one wants to cut greece a break. yeah, it is going to come to a head. i am worried about it. one of the things that i think is terrific is europe has been able to come back without russia by the way, the numbers out of russia, you're down 40 50 60%. >> if you haven't exited already. >> brazil is bad. russia india is still good. china now coming back mexico do a bit better but bric has been
just ick. >> good morning, bob. >> good morning, guys. europe a bit rocky. let me show you what's going on there. obviously there's concerns about greece going on. we're a little exhausted about that but the greek banks are running out collateral at this point. it's been down for basically on the down trend for over a year. over in australia, we had a very big spin-off a big mining spin-off. it built and spun off large assets into south 32. this owns a lot of big aluminum coal manganese, no one was sure how to value this thing. it was as high as dlsh it opened at $2.13, australian dollars, and closed at 209, down a bit. i think that was a bit disappointing. we'll wait to see how that goes here but here in the united states bhp trades of course
bhp is down. clf is also to the down side. the material names are notably weak. a lot of people are watches the south 32 deal and you were mentioning ann and ascena here. that's quite a valuation for that. it's funny that the names associated with these two companies, lane bryant dress barn charming the names are more famous than the company itself. ann taylor 18 billion market cap. that's it. that's a small, small cap a name. veers on microcap. ascena is only ann is a bit higher at this point, this is part of the broader consolidation here. still too many retailers out there, still more overstore than
anywhere else in the world. it was 56% a fewiers for ann, that really matters in this kind of environment. that may have been a factor wile they were sold. apparel shows up a bit. chico is up abercrombie, francesca, all fractional gains, as you can see here today. oil was near the high for the year overnight. that has put pressure on the airlines. virgin, southwest, american are weak. i've been noting the major indices have really kind of bifurcated. the transporting are down 5%. that's a big of a strange bifurcation. finally jvp morgan starting its conference today. we asked our friends about that. the last ten years this conference has gone on in the three days it's been happening,
netflix is a big winner. 2.6% average returns. google has new media, does very well. google is also up 80% of the time. then again during the jpmorgan tech media and telecom conference going on right now. right now the dow is up five points. >> thanks a lot, bob. good morning, rick. >> good morning, carl. well it seems as though for the last three, four years, everybody wanted to look for rates being higher. yes, i'm oversimplifying, but we know it's true. now they have flipped. they basically are looking for lower rates. maybe it was the great total returns for 2014 but what i can tell you is that everybody seems to be wanting to swim the other way, looking for rates to go lower, but they popped against this morning, and they've been very stubborn. that's an area to pay attention to you see it on the one day.
twot-day might more enlightning. open up the chart a bit, and i think the best way to understand what's going on is to start around the beginning of march. we can see how quickly the buying turned to selling, does it mean revert? i can't tell you. let the market speak for itself. it certainly seems like it's the type of market where you're more inclined to be selling into rallies. that's what some of the contra-traders say going against the grain a bit. if we look at what's going on 30s, minus 5s, hovering just below 150, but the story really still is more about flat and the reece steepening. let's look at the chart from january 2008. leading up to european qe wet a read bout of flattening that put us on par of a level we haven't seen in recent years. recently it's been steepening. let's look at two days of bund.
it's alternates interesting, we can see the dax has had a pretty good year but it's not really as aggressive right now with respect to history as the s&p or the dow so let's look at the dollar index, we can see how both those patternsee to date are very slav. cart, back to you we are getting some breaking news, a u.s. appeals course has upheld the patent infringement verdict against samsung. however the court is reversing part of the verdict, the $930 million verdict that apple won against samsung back in 2012 either way it's probably pocket change for apple, but the vertebra remaining intact. >> there's so much chatter how
strong the watch is selling, why they have to advertise so much and whether they're doing the high -- remember this is not the driver. it's cell phones. last week we got great numbers out of the china for upgrates of cell phones. to me the watch is very much a 2016 story, not 2015. >> u.b.s. saying even though the retention rate is down a bit, apple is the only vendor that can expect an inflow. everybody else is leave on a net basis. >> that's a very big ticket purchase, too. trying to figure out the retail sales. apple is on top, and the stock i know a lot of people have just just given up on it. and i say, are you kidding me? >> how can you be disappointed with apple stock? one of the greatest performers of all kind. i feel like i'm back in philly throwing snowballs at santa claus whether we come back some
eye-opening comments from dish network about google and the nfl. you'll hear what david -- jay walker has grave warnings about the future of technology including drones and social 3450edia, when we come back in a minute. ♪ if you're looking for a car that drives you... ...and takes the wheel right from your very hands... ...this isn't that car. the first and only car with direct adaptive steering.
the streaming of video to mobile devices or to your home for over-the-top broadband packages certainly is proliferating. we are just at the very beginning, whether the offerings are sling tv from dish or so many others that are already out there and many more to come. one key question -- what will shift the balance of power? the nfl is a key superiority. i asked charlie ergen, whether
he says google perhaps in the bidding. >> do you think google will ever buy some rights to air nfl games? >> yes. >> you do? >> i do. >> why? >> they have the ability to stream. they have youtube. there's no reason for them to not get involved as the nfl looks at streaming, and decides what they're going to do. they would be a good partner. >> that will be the moment. >> the. >> whether it's that or something else we're far enough down with sling tv we know that the world changes. we know the world will change. it's no different -- i think the analogy i would give when reed hastings and netflix was giving out defts in the mail he realized that streaming was the future even cut back his business to the chagrin of his
shareholders, but he had the guts to do long term the right thing and look what he's achieved. the reason that the -- his netflix over-the-top service has been so successful is they eliminated pain points. you didn't have to wait for the movie. you've got it instantly. things likes sling tv eliminate ping points for customers. >> aggressively advertising last night on "mad men" i noticed. >> wasn't that something? >> this is contracts are long term, many of them not up for years to come the nfl contracts, but you talked about this many times, jims as a possible. certainly mr. ergen seems to agree. >> when you talk to the programming people behind the scenes. all you hear about is we are doing the longest-term contracts possible because of google. they're just trying to get there -- >> programmers are the one pushing the nfl for the length of contract.
we're talking 2022. directv runs through 2022 many of the other agreements run at least another five years, i believe or more. >> extraordinarily long-term contracts. i'm told over and over again it's the programmers behind the scenes say it's not one network over the other. it's lock in keep google out, because they recognize that google has so much money to spend, that they can't compete. >> i'm re-reading "three blind mice" and when monday night football went to espn that was the beginning of a big crack in that fissure, you know what i mean? >> a generational change stop trading with jim in a moment. "squawk on the street" will be right back. ut people? why are we so committed to keeping you connected? why combine performance with a conscience? why innovate for a future without accidents?
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just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room. fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. well for the first time since march 2nd dow hits a record high settling back just a touch, but we did get there. we'll watch that as the morning goes on. meantime "stop trading" with jim cramer.
>> go pro has this great ecosystem. there are a lot of people who got down on go pro. and then over -- i think this one could make a comeback. not my favorite name. >> obviously cautious about the long-term sustainable. they think the replacement cycle is longer than some think? >> yes, they do. having my stage manager kyle ramari wearing thinks go pro during the entire game it is part of the firm ament. he was filming everything. i mentioned verizon and apple to chase. >> i'm jealous of that as a life experience. maybe one day the metz will let me do it. >> i pointed up here get my dad -- so you don't do a tom brady or 50 cent i tell you, you bounce it up there. >> 50 cent was one for the ages.
>> that will live forget. what's on mad tonight, jim? >> we have a company call club corp. i've been focused on these roll-up. i notice valiant is one of the hottest stocks on earth. >> i go almost every day to a club corp property. that's where i swim. >> this is a growing business. >> is it? >> it is. i'm always worried about oil and gas. we'll see you tonight, jim. >> remember you step and throw. >> ice that arm. >> step and throw. 2:00, a torn rotator didn't stop me but the four-seam, the two-seam will end in the dirt brady-like breaking news at the top of the hour. don't go away. sfloo in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus?
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dow just his a new record. just a shade below that right now, up about seven points as we get busy for a week of fed-speak. let's get to diane olick. some breaking news on housing this morning. >> hey, carl. homebuilder sentiment down two points in may to 54. monthly sentiment index, 50 is the line between positive and negative. we're also still in the heart of the spring housing season. traditionally the busiest for builders. the builder's chief economist, david crowe says consumers are exhibiting caution and want to be on more stable financial footing before purchasing a home. builders are less confidence overall, but the sentiment was kind of strangely mixed, again indicative of the nahb's three components. they rose one point to 64. buyer traffic dropped one point to 39. current sales conditions fell
two points to 59. regionally on a three-month moving average, builder confidence in the south and the midwest each rose one point to 57 and 55 respectively. in the west it dropped three points to 55 for more. of course, realcheck.cnbc.com. >> diana, thank you. tepid interest in the apple wash, that's ubs today, but it raised estimates for iphone sales saying apple is gaining market share, so kind of a mixed picture for apple. tim cook did take the opportunity to give a quick plug over the weekend when he addressed the graduating class at gw. have a listen. >> they asked me to make a standard announcement. you have heard this before about silencing your phones. so those of you with an iphone just place it in silent mode.
if you don't have an iphone please pass it to the center aisle, apple has a world-class recycling program. for more let's bring in steve milanovich the author of this report. why do they says they botched -- that was your word -- the apple watch launch. >> we have lowered our numbers about a week ago to $31 million, but today's report is a global smartphone, almost 9,000 consumers in six countries around the world probably the largest survey and it's finding that apple continues to be extremely strong. the stickyness is very clear and it's china china china. we're finding that -- and we're also finding apple watch interest is highest in china relative to the other five
countries that we surveyed. >> so how does this impact the stock? i know you have a $150 price target. how much of it is the watch. how much is the stock trading and what about earnings? >> i think the watch is a bit of it. frankly with relatively and a half -- we're looking for about 7% of the install base to buy a watch. it really does come down to the iphone. so we continue to have a buy and 150 price target. >> hey steve, if you look at a chart of apple, it's struggled to break out of the range since the beginning of march. how does the move that so many hedge funds have been the seller of apple, affected the ability to rise from here. particular larry as goldman
pullet it was move favored trades last year. >> but it does appear to be consolidated. i think there's still more up side to come. a couple near-term catalysts might be -- we'll likely hear more about the beat streaming product, certainly more about appear 8 tv. the whole over the top is getting more press. we also had apple pay results, which are encouraging, so we need a moderate gains over time but still going higher. >> steve. >> there's also speculation that they might have a major upgrade on apple maps coming. i know there was another buy over the weekend. we're all trying to work on the what jesusen ace bid means. do maps become significant in the ability to advertise to people moving forward, if they can pinpoint where you are to the inch? >> yeah i think maps are very
strategic to apple. they do continue to make small acquisition along the way. it's a platform war. it's apple, google facebook you know maps is one of the key weapons in that war. so i think we'll continue to see apple invest strongly. >> quickly, steve, you mentioned the china numbers, where is the street consensus, and are you above that? what's going on in china that gives you so much confidence? >> that's a good point. we did raise our iphone forecast for the june quarter to 48 million from 43. consensus is about 45 and our evidence lab, iphone monitor is actually suggesting 51 million units or so for the june quarter. what we're finding is the number -- i should say the amount of searching in china is still growing more than double year over near. many ale has been able to
maneuver, but as it becomes more and more of an international company and sells more of its products abroad with china taking the number two spot isn't that going to affect it? >> it could over time apple is going so fast s. it's almost loss a business. in fact taking to the company's earning call i got the sense that the gross margin could be reduced more than two points year over year. that's clearly a headwind but the demand is so strong it maybe by next year when the demand lightens up so that may kind of help results hang in next year despite the currency hit next year. >> not that it's material, but for those who are curious, we seep seer various surveying looking at appear 8 watch demand looking for -- that i guess are a bit weaker than historic trends. you seem to be saying the watch is on target essentially -- >> you're basically referring to
our surveys. yeah, we did take our watch numbers down a bit, because we are finding, for example, in this survey about 8% of the 9,000 consumers indicated they might buy an apple watch. in the last survey it was more like 10%. on the other hand we're seeing the mix of watching is better than i would have expected. it's liking almost like half that and about half the apple watch, a more expensive version. units may be weaker but pricing mae about a bit better. >> steve, thanks so much for joining us. >> thank you. meantime a big deal in retail ascena which runs dreg barn and lane bryant agreeing to buy ann for 2.1 billion. courtney has more. >> good morning, carl. we have a big deal here in the works, the parent of ann taylor and loft joining ascena retail
group. well, the deal is less than what activist engine capital and head fudge red adler suggested ann was worth back in august. it is still a $21% premium to friday's closing price. there had been some spec thags a the largest shareholder, which owns 9.5% would take the retailer private. of course that didn't happen. both boards approved 9 deal expected to close in the second half of the deal as ascena's $1r50 within three years, as well as quote, significant accretion to earnings and in excess of 20% thereafter. and ascena retail group may not be a household natures, but the brands likely are s ascena has 3900 stores currently.
the acquisition is nearly as large as ascena's current mark cap and brings annual sales to 7.3 billion from 4.8 billion. ann has struggled recently as lower-priced fashion retailers have taken market share. it's had to promote heavily to compete. ann taylor and loft will be the highest price points in ascena's portfolio. jeffrey's analyst points to this deal saying this illustrates an ongoing potential for m & a activity in the aparity space. he specifically calls out chico's, guess and mike on the kors ascena's ceo david jaffray will be on "mad money" tonight with our very only jim jameser. >> courtney thank you up next stocks just dipping below record territory. so how should you play they
record-breaking markets? more on that when "squawk on the street" comes right back. the network that monitors her health. the secure cloud services that store her genetic data the servers and software on a mission to find the perfect match. and the mom who gets to hear her daughter's heart beat once again. we're helping organizations
dow earlier today. what could the investors be focusing on. guys, good morning to you both. tom, a big topic of conversation this morning is whether recession should be reentering our vocabulary. after q1 and some of these q2 estimates -- >> i think it's premature. q2 seems to be not as good as we thought. i theo we had at least a few years before we have a real conversation, and the way we get there is straightforward. is the one thing that's lagging are those imbalances so we would argue the consumer is pretty decent shape. i recognize that growth has been
disappointing by any standard but we would argue that it probably has at least a few more years. >> even after april retail sales. don't think this is the frog in the boiling water? >> everyone focusing on that headline what did the consumer do in that quarter? the consumer printed 2% right? so understand why you actually had a any any of outcome? it was almost entirely cause of exports or the trade sector excuse me. if consumers fundamentals 70% at the end of the day -- >> tom, i think the concern is beyond the first quarter, things aren't looking better as we move into the spring when it was supposed to pick up not to mention adding to the data misses that is the reason why i
say q 1 will be the -- there's no question that april number was disappointing, even with that disappointing outcome you're looking at a consumer that probably will be 2% in the second quarter. so again, in all of a sudden may comes in on the soft side yeah, maybe we'll have to revisit the thinking but you're still looking at a 2% consumer. >> art, is it the optimism snazz holding it up? >> i think tom is right about the final print on gdp being negative but i also think it's anybody's guess as to how good good the second quarter will be.
in the skyrocketing movement and both those trends have broken. i think that's gotten better. i think the yield on ten years has certainly stabilized a bit. a much more stabilization. i certainly think that energy prices starting to be spent and not saved, the paradox of thrift certainly came into play in the -- and it becomes a positive, you know as we hit the dads and grads season i think that will be an important catalyst for us. >> nonetheless, art, the fact is as we realize that the first and second quarter taken together in the first six months of the year, the economy might actually have shrunk the stock market pushes to fresh record highs. deutsche bank suggests that the growth is -- and actually the
financial system is fragile, but do not underestimate the degree to which ample -- will further boost asset prices. this is a disconnect, isn't there? >> yeah if there's a question there, simon, and i suppose there was, let's go with the fact that you're making an assumption -- >> i'm sorry, art. forgive me. let me ask you the question. do you think this stock market is hitting record highs, when the economy is actually shrinking in the first half of the year? >> well first of all, i don't think the economy is shrinking for the totality i think the second quarter gdp printless north of the first quarter. secondly the argument that it's just ample liquidity, which there is is part of the driver but i think we buy stocks because they earn if you look at earnings and earnings expectations they were certainly beat and i think it
will be one of the key drivers there, and i think the expectations for the energy sect oor lack much better than the first half. what we are forgetting simon, and i think this is important, is the consumer will in fact play a major role in the economic growth of this country. it's about 770% of what drives gdp, whether it's creating more jobs on a monthly base whether it's wage price pressure, whether it's lower energy prices, which we clearly have on a year-over-year basis, i think the outlook looks much better than our estimates and the ability for, you know corporate america to do a great job at doing that driving earnings. >> we'll get a lot of earnings and of course yellen and evans, fisher are all on the deck for the week. thank you so much. when we come back a live interwould you say head of technology media and telecom
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wall street conference season is in full swing. one of the oldest and most watched gatherings kicks off in boston today, j.p. mooringen's extravaganza which gives investors access to hundreds of ceos. that's where we find our own kayla tausche who is joined by kurt simon. >> well, simon, it's an extravaganza indeed. more than 4,000 investor meetings taking place this week. this conference kurt is in its 43rd year but sometimes you think san francisco with tech
but why is it in boston. >> it's not just tech, but it's tech, meania and telecom. and the institutional money managers are in boston so it's a natural place for our corporate clients to want to visit. you haven't been giving them a lot of public companies or newly cup companies to invest in ipos in q 1 basically cut in half. >> the ipo market in the tech sector, we average 10 to 15 a quarter, so there is no question it's down. a lot of these institutions are active and raising significant a little of money. that's really what's taken some of the volume for the ipo market. >> kurt it's simon hobbs. a lot of is might be more like
tech after vising bought aol. can you talk us through what the feeling is what the narrative is about where the next bounce of the ball might? >> sure. i like your first name simon. the first question is it will be around mobile they have over 100 million mobile subscribers, so for them it's a -- we're still earley todays in the digital, mobile ad marks. >> there was a suggestion they're aiming squarely at google longer term at a time when fans are more interested in other things than search and advertising. what do you feel about that? >> again, similar mark but i don't think it will be squarely a goal in any way. >> it's interesting, though, how much deal making has been taking
place in some of these heavily regulated markets. i think some investors having surprised at how strong a hand washington has played in some of these deals. are you healing the specter of washington being a bigger part of the conversation? >> you know to a external extent. there's no question with a couple deals blocked in the last month or for a weeks, i think there's -- that we work on at any one time. i think ar sharing the risk of not close, and things like you know breakup fees and reptory covenants are certainly much more prominent than they were -- but i think they're at a risk of being blocked. >> interesting to see how much m & a we have seen in the technology space in particular. there are some people saying maybe we're getting to a point in the cycle where companies are mature, growth is low, and we're at the top of the cycle.
because of the last time we saw this many deals and this much volume of deals actually being announced. are we at a mature point in the cycle? what's driving this? >> i hope no. i think it's relatively early days. i think, you know with large-cap companies want to acquire growth there's a lot of targets out there. i so i think we're in the early days here. salesforce is the biggest one that people are potentially talking about right now. 80 times forward ebitda is what the deal would be valued at of course, if it were to happen. are you seeing companies pay up at multiples that make sense to you? or are you thinking we're getting into a arrive territory here? . and you think about thiol valuations out two or three year. >> before we wrap. what percentage of your business is coming from activists?
>> so i would say we're spending probably a third of our time with teams on act investment. >> that's incredible. we haven't seen the end of that story. >> always is. >> kurt i'men, the head of technology media appear jpmorgan chase. we're send it back to you in new york when we come back, pricelines's champl weighs in and where we should be focused now. also the comments made earlier this month concerning the risk. the dow is down just six points. we're back in a moment. but utilities can now predict where the power will go out, within a few city blocks. working with ibm they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely to occur. and send crews exactly where they're needed, when they're needed. ibm analytics from the internet of things
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comcast business. built for business. good morning, everyone. siem sue hererash here is your cnbc news update. amtrak service between new york and philadelphia resumed this morning following last week's deadly train derailment. infrastructure repairs have been made in complete compliance with federal railroad administration directives the governor of anbar province says isis fighters have killed at least 500 people in the battle for ramadi. iraqi video shows the iraqi army retreating. secretary of state john kerry
says he believes that isis will not hold that city very long. >> it is possible to have the kind of attack we have seen in ramadi, but i am absolutely confident in the days ahead that will be reversed. european foreign and defense ministers gathering in brussels to discuss plans to deal with the overwhelming number of migrants trying to get into europe. they want to stop human trafficking by hundred dollarsing down smugglers and destroying their boats bankrate.com spent their savings from lower gas prices on necessities such as groceries or resident. 23% saved or invested the savings with millennial more likely to save than any other age group now back to squawk. the ceo of apple is urging college graduates not to live on the sidelines of life. in a rare public speech, tim
cook told an audience of 25,000 at george washington universities to solve problems fighting justice and that it was false, he said to suggest that they had to choose between doing good and doing well. >> the sidelines are not where you want to live your life. the world needs you in the arena. no matter what you do next the world needs your energy your passion, your impatience with progress. don't shrink from risk and tune out those critics and cynics. >> so in the world of tech what should they focus on? joining us now is inventor jay walker founder of the priceline group and chairman of patent properties. good morning. >> good morning. >> what needs to be done now? >> they need so solve problems
and faster with impatience. he's echoing the global themes we're living in economic times where problems are piling up our our desks and we can't solve them fast enough. he's basically say invent new tools. >> what are those tools? >> simon, it turns out the big tools are networking, on the anniversary of facebook networking turns out to be a business par. big businesses are trying to network with other r&d around the world. it used to be we did it ourselves. no more. we have to go metaphoricly and find people we have never found before. >> that's been true for probably 10 15 years. propose would bemoan the fact that the great problems of life the way we get our food the way that california gets water remain unsolved in a whole generation of bright minds has gone into social media. >> i don't think so.
i think we're always impatient to see immediate changes, but then we see fob foible go from zero to a billion users in a few years. we're immune to the changes around us. the new i phones new technologies businesses take a while to get in gear but right now, those lights are flashing red. the productivity is declining. that's an issue. >> so in five years' time if we follow through, how different does the world look to solve that productivity gap? >> it depends on whether or not we start to learn to connect with people and ideas outside our own. i read a small public company. how do you connect with r&d in every say, every country, if you're doing it by yourself you can't get it done. >> jay, you gave a heck of a presentation at the -- scared everybody, apparently audience talking about the end of the world. anthrax was in there, anarchists, what is the doomsday scenario, and what are you
warning about? >> i get to see a look at technology on the up side and down side. when they invited me they said give a provocative talk that's not business but could affect all businesses. >> these same technologies also run the risk of changing our world for a lot worse, and they're dual use. so i spoke about the scary side. i spend my days working on the positive sides for the most part. >> in social media? >> no bioweapons on drones essentially the white house lawn the next day had a drone land on it. that's a real problem. other than the that same technology, aerial drone technology is being used to unlock enormous business opportunities. so we need to figure out as a society how we keep up with the down side of technology but get it into our product tiff numbers. if we don't we won't have jobs we don't have competitiveness, and at the end of the dale we'll
do you -- it's not going to -- >> do you think the market will do it on its own? >> yeah americas are pretty good at that. we wsh we deploy our place pores faster. it's why sock of that starts in the, and moves out glockly. >> good to see you. >> let's get over to courtney reagan. >> this is one worth watching. shares of l.e.d. lighting maker up. potentially seeking a -- the offering is cree intends to make -- shares are down about 3% year to date but again you can see they are up more than 5% right now on the session. david, back to you. >> thanks very much courtney reagan we want to look at shares of
altera this morning. they are up rather sharply. we can tell you talks with altera and the presumed suitor intel have once again taking plain. they did get in contact with each other about the potential recomes of talks under which -- it's unclear exactly how detailed those talks were or where they are on price, to refresh people's memory, it was "wall street journal" that reported some time back. then we told people that while intel had offered as much as $54 ashare to acquire altera altera said no and intel walked away from those talks. one week ago, but now late last week again, people familiar with the situation indicate there were principal-to-aspirin tall talks. we'll see whether they'll follow through involves price and whether they can get a deal
done. whether that remains unclear. altera shareholders have spoken up quite significantly over the last few weeks, making clear they would love to see a deal that $54 a share, which did represent as much -- a price at which they would be quite happy selling their shares to intel, altera i'm told said all the right things in terms of shareholders value, it is somewhat vulnerable in that those shareholders can act by written consent for a place the board of director 2100 days after the annual meeting. but it does give them at least half, should they want to go down it. so once again, talks with the principals having taken place late last week and we'll have more as we get it. >> i wonder how badly intel needs this deal. i know the sentiment han sort of down on intel. whether it's this or at
acquisition. >> and of course in terms of customer of intel, they're also bidding on a new chip to produce it for altera but this is video in mobile devices. i mean if you want to think about it most simply we all know where that's going. >> growth. >> yes. >> keep an eye on that. coming up just how big is apple's opportunity in china. when will the company overtake the -- a new report from fbr coming to you in squawk alley. we'll be right back.
more "squawk on the street" after this. computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move wherever you are. and start working on your next big idea. ♪ ♪
just within range, there's still apparently some confusion among the trading community about whether we're poised to break up our break down. bob pisani is on the floor with more. >> there is some confusion, because the indices aren't going in the same directions. that's causing some dow. let me show you what we're talking about they ought to be moving. here's the good news we're at a new headline and that was up about 2.4% year to date. the transports though hit their highs way back in december and have not moved up
to new highs. not even close. utilities slightly different story, also down 5% because interest rates have been moving have been moving up. a slightly different story. why is this happen the disparity between industrials and the transports. the u.s. economy is still improving, health care has been great this year unitedhealth in the dow is strong. disney is doing well. aerospace has had a good year overall, so boeing has been doing well. the do it yourself home improvement business has been particularly strong. so broad swaths of the u.s. economy are represented in the dow industrials that are doing well. that's what the industrials are supposed to be doing. now look at the -- you'll see biand large there's big problems with railroads like union pacific and airlines like american and united. u.p.s. ises on the weak side. there's a slight problem here. but because of the way
commodities and the dollar versus acting i think people are giving this a break, not as much concern as there used to be about it. you had oil moving down so dramatically. but otherwise is now started rebounding so oil is up about 25% this quarter alone. that's an enormous rebound. that's why we're seeing some pressure, but why the oil stocks have been rallying. we get these strange movements. also coal and oil shipments are down weighing on the railroads recently. unfortunately that's not changing that much. kansas southern last week withdrew their 2015 revenue and volume guidance because of uncertainty around the shipments. we're talking about oil and coal. they do a north/south route in the united states. mexico a big source of their income. i get guess, sieming, because of the strange movements in commodities and strange moves in
the dollar we are getting a big impact in the transport sector. that's why i think people are not that concerned right now, as long as we keep moving forward on commodities starting to come off the bottom. >> bob, thank you very much. bob mentioned rates. the 30-year yield is up 3%. that gets your attention, rick santelli. >> well it doesn't surprise she, and i think the personality of the interest rate market globally has changed over the last several months. i would like to welcome mike special guest. thank you, rasheer for coming over this morning. >> good to be here. thanks. >> everybody in chicago loved reading your piece, the federal asset bubble machine in the "wall street journal." maybe you can tell me, there's a lot of talk about disinflation and deflation. as i look at art and collectibles, there's a lot of financial says showing a different type of pricing
personality. explain. >> well, if you see what's happening in the global economy for the last 20 to 30 years, which is that inflation as measured by the consumer prices has been systematically moving down. inflation about two decades ago, globally averagesed about 60%, 70%, and now we're down to about 2%. asset prices i think that's something which is not -- that hasn't changed. the federal reserve's thinking is there's no consumer price -- so let's still -- without realizing the world has changed and excess money finds its way into ate prices in this world of capital floats. >> taking that into consideration, let's go in two areas, first, it's hard to find a control setting for the u.s. economy, but seven or eight years -- is the beginning. don't you thing, left to its own
devices without any outside involvement, or any type of policy directly injected into the economy, we would have heal some extent on our own, would they not have? >> i think if you look at the cycle, it's been a traditional often economy after a big debt bubble, which is that it takes four to five years for the economy to heal and then you get some sort of recovery. the disappointing thing here is in the seventh year of the recovery and showing no signs of escape philosophy. i think the federal reserve's policies, what they have done is just promoted too much risk-taking. i think they had widened the wealth gap by the 1% to ben get a lot from the incredible in asset prices a and consumer prices really haven't done anything. that's sort of helping the average consumer rather than hurting the average consumer. >> you know you used a word
that i find interesting, because i think it applies to so many areas. it's just faith. you said that they want us to have faith in the fed. for your final 45 seconds, sir, the b.i.s. bank for international standards -- or settlements, excuse me has done extensive research on dysinflationary k4579s which is the corner democrat stoneses of many of -- can you finish up the segment. >> briefly what the b.i.s. has found is there's no relationship between economic growth and inflation. there have been many% in prewar history, with consumer price deflation. and there's no link with that. instead weather made to bled it's always bad for economic growth. if you end up deflation in asset prices, that's bat for growth. the only reason you end up with
deflation and asset prices is if you have a bubble in the first place. that's what our research shows, asset prices today across the board have never been this overvalued in such a every asset price is expensive. not just one is the case in 2000 and twen. >> we're going to have to leave it there, thank you, thank you for that explanation. it's all yours. >> thank you very much rick santelli in chicago. there's a battle brewing in the hamptons, and the result of that battle could mean that wealthy beach goers will not be able to use that private helicopter to beat the summer traffic. more on that, after the break.
welcome back to sidewalk on the street i'm courtney reagan. leap kansas frog trading down over 3%. the company is delaying its earnings report for the quarter and full business year because of an accounting charge related to depreciation. leapfrog was expected to report after the bell today, carl back to you. >> court, thank you very much. officials in the hamptons voting to introduce new rules restricting helicopter flights in the area but wealthy residents hoping to keep the
skies free for themselves robert frank is live with the details, hey robert. >> reporter: hey carl you could file this under billionaire problems. hearing has just started in the courthouse behind know decide a new rules that would limit or disrupt thousands of helicopters that take the wealthy to their beach homes in the hamptons. they have an evening curfew as well as limiting to one takeoff and landing per day. now those flights have increased dramatically in recent years with crowd sourcing and special apps that make that seat from new york to the hamptons $500 and last year there were 15,000 private flights into and out of hamptons. some busy days more than 300 flights into and out of east hampton. now the biggest impact would be on the charter companies like blade, they're not commenting but talking about using seat planes as well as other airports like month talk to reroute around east hampton. another company called gotham air who just came up with a different approach. they purchased new anti-noise
helicopters that are very quiet, that are exempt from the restrictions, and they have just today, conveniently launched an app like yuber that allows you to book that quiet helicopter into and out of east hampton to get around the rules. again, we don't know the answer yet. hearing going on right now. we may know today whether the rules take effect back to you. >> okay. robert thank you very much. they could always fix the road of course it's a possibility. talk to you later, robert frank joining us there. now john fort to find out what's happening in five minute's time. >> well we have talking about the things along the current trajectory. china could be apple's largest mashlgt soon. what are the implications of that? also hacker claims he was able to take control of the plane's engines from his seat. we'll have more on that. and also tim cook gave a commencement address and showed a different side of apple's leadership perhaps in that look at his speech.
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♪ ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ ♪ she can print amazing things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ ♪ my mom works at ge. ♪ ♪ checking out the marketing here, s&p 500 is flat holding near a record high. consumer discretionary spots have been a bright spot. we're going to get a few retail
names, reporting earnings this week tomorrow the biggie walmart is out with home depoet. later on in the week lost target, and gap on thursday. big question around the american consumer. and whether it can carry us into the second quarter after we're looking at flat to negative growth in the first quarter. all of those signs have done relatively well. >> negative growth for the first two quarters combined. that's the cutting edge of where people are, and yet still we hear new records on the stock market. in the meantime warning that greece is now in the end game we'll have more on that call in half an hour. >> we've heard that one before though. >> well it is because they don't have any money left. let's go over to "squawk alley." good morning, 8:00 a.m. google headquarters in mountainview, california 11:00 a.m. here on wall street. "squawk alley" is live.
♪ welcome to "squawk alley" for a monday. ceo of the daily mail north america, good morning, john. kaylee kaylee touch live in boston. we'll hear more from in just a few moments. john fort also here first up this morning, group of luxury goods makers suing alibaba claiming the giant knowingly made it possible for counterfeiters to illegally sell products. gucci is among one of the big names. counterfeits have long been a problem for alibaba with the ceo calling them quote a